| |
| |
|
Stocks & Mutual Funds Information |
|
|
|
Parachute Investing
Ever jumped out of an airplane? It's OK ifyou have on a parachute. Pretty dumb if you don't. Every buy any stocks, mutual funds or ExchangeTraded Funds? It's OK if you know how much youare willing to risk. Pretty dumb if you don't. Parachute investing is buying an equity with a parachute so you won't risk all your moneyor, better yet, give back the profit you have madeas the stock or fund went up and then goes down.If you bought that hummer at $12 per share andduring the past couple of years seen it go up to$52 you don't want to give back that niceprofit, do you? With a parachute you can savemost of it. How? When you invest in any stock of fund youmust know how much you will risk before you buy itand how much of the profit you are willing togive back when it turns down. Take that beautyat $12. Instead of going up it went down. Areyou willing to agonize as it drops to $5? If youhad a parachute you would have jumped out of theplane before it crashed. If you had an exitstrategy for your stock you would have sold itbefore you lost a big chunk of your cash. The secret of a safe investment is an exitstrategy. When you bought Mr. Twelve Dollars youshook hands and told him I'd like to be yourfriend, but if you change your name to TenDollars I am leaving. Maybe that that is notvery nice, but nice doesn't cut it in theinvestment world. Mr. Twelve Dollars said I am going up andI want you for my friend. Please follow me and ifI falter you can leave and we will part friends.Now that makes sense. You trail along and afterit goes to $52 it does falter. Do you know whereyou are going to leave or are you going to rideit go back down to $12? In other words do youhave your parachute on? That parachute is your continuing exit strategythat is in place every day. In the investmentcommunity it is called an open trailing stoploss order. Any broker can put this in place foryou. You might be lucky enough to have a brokerwho knows where to place stops, butunfortunately there are not many of them. The brokerage industry does not teach itsemployees (brokers) how to protect customers'money. If that is the case you might want to usethe old standard 10% rule. Have the broker placean open stop every Friday at 10% of the closingprice of that day as it closes higher. Neverlower the stop loss. Brokers hate this as itmakes them work, but that is what they are therefor and that is how they earn their commissions. With your parachute you can always protectyour original cash purchase from a big loss and asyour stock advances you can lock in profit asthe stock advances. Every investment should have a parachute. Al Thomas' book, "If It Doesn't Go Up, Don't BuyIt!" has helped thousands of people make moneyand keep their profits with his simple 2-stepmethod. Read the first chapter athttp://www.mutualfundmagic.com and discover why he's the man that Wall Streetdoes not want you to know. Copyright 2005
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
Big Buildings Can Mean Big Economic Disaster AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New York City, to be the world's tallest building, economist Mark Thornton offers a history-based theory of the relation between super-buildings and the economy. Thornton surveyed economic performance worldwide following the completion of each of the world's tallest skyscrapers, and suggests what these events foretell. You Don't HAVE To Be Trading As a novice trader, you'll often feel the need to trade.You may be bored or frustrated. Overvalued & Underbought With all the bad news that has been dumped upon the economy for some reason the stock market is going up. Why?The SEC (Securities and Exchange Commission) has just set up new guidelines for core earnings. Market Experience of a Naïve Stock Operator Sometime in the third quarter of 1997, someone told me that I should play the stock market. Knowing nothing about the stock market, I turned to some colleagues to seem to know a lot about it. Its Snowing The Winter Games for the Olympics are coming up soon and many will want to go to see the giant slalom event. That's the one where the skier starts off from the little hut at the top of a long slope, picks up speed and makes his way around poles on the way down. Picking Mutual Funds to Outperform the Market With over 6,000 mutual funds available, it may be tempting to pick funds from a popular star or index rating system. Savvy investors, however, balance multiple factors in their selection process. Stealth Bull If you have been watching the stock market at all you are probably very confused. You are not alone. Parachute Investing Ever jumped out of an airplane? It's OK ifyou have on a parachute. Pretty dumb if you don't. War Market There is no question that the stock market is being affected by war jitters. When it looks like peace we have a strong rally. Hedge Fund Advertising Have you seen all those big full page ads for hedge funds in the Wall Street Journal, the Financial Times, Investors Business Daily? Youhaven't. Maybe they are being drowned out by the regular mutual funds who continually tell you how great they are. Understanding the Bulls and the Bears If you've ever flipped on the television to CNN Financial or paged through the finance section of your local newspaper, you may have seen or heard references made to "the bulls and the bears." If you didn't know what was meant by those terms, you're about to find out. A Stock Market Investment Plan that Never Lets You Down The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market's potential to help them in making quick money with a big M. Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing Have you ever thought of investing? Do you have a family that you would like take care of? Does the idea of making money with stocks, bonds, mutual funds and real estate interest you?Investing is essential to making money. Whether it be stock investing, investing online, real estate investing, finance investing, investing in bonds, investing in mutual funds. Never Lose Money Never lose money in the stock market again. Yeah, I know. Stock Insurance You have a lock on your house. You have a lock on your car. The POWER of a Proven Stock Investment Plan When you invest in the stock market for ever-increasing cash dividend income, verses trying to make a buck in the stock market, your mindset will change. There will no longer be a fear of losing money in the stock market. Alfred E. Newman What! Me worry?Many of you remember the cover of MAD magazine. It was one of my favorites. Stock Trading Secrets? How often have you come across an advertisement or e-mail proclaiming to "teach" you the stock trading secrets that Wall Street Insiders don't want you to know? Usually included in the descriptions of these trading products are claims such as "Make 10K monthly in minutes per day", or "Learn the secrets of Professional Stock Brokers", etc. etc. Option Spread Trading Spread trading is a technique that can be used to profit in bullish, neutral or bearish conditions. It basically functions to limit risk at the cost of limiting profit as well. Paddle Your Canoe At some time in your life you have been on a river in a canoe and hopefully you had a paddle. You know about being up the creek without one.
|
| home | site map |
| © 2006 |