Credit Card ’s Talk

When investing in a stock it is easy to become distracted and lose focus. Maybe your stock has been going down recently and you are afraid of losing any more money. Maybe you have found another stock you are interested in buying, but you need to sell your other stock first. Maybe you don’t like the ups and downs associated with investing in an individual stock. While all of these scenarios are natural feelings, you need to go back to the reason you first invested in a stock and ask yourself these 5 questions.

1. Is the money I invested "extra" money that I can afford to lose or at least hold on to through the rough times?

2. Do I have additional money to invest if another opportunity arises or am I locked into one stock?

3. Would I still buy the stock today?

4. Am I able to tolerate the volatile nature of individual stocks or should I consider investing in something that has less volatile price movements?

5. What do I hope to accomplish through investing?

If you are investing money you are going to need soon, you should not be buying stock. Stocks can be very volatile, especially in the short term, so only risk money you can live without. Secondly, make sure you do not overextend yourself in one stock. It may be a great stock, but unforeseen events happen all the time and it is bummer when it happens to your stock. If you see an opportunity to purchase another stock, there is no need to rush. If you think a stock is a good buy today, chances are it will still be a good buy a few weeks or a few months later.

If your stock has been declining recently, then you need to determine whether something has changed fundamentally in your stock. It may just be a short term price fluctuation rather than the financial condition of the stock. If you bought the stock before it went down and nothing fundamentally has changed, then why would you sell the stock now? Some individuals may not be well suited for investing in individual stocks. At some point, one of your stocks will go down significantly. How will you respond to that? If you can’t handle the volatility, consider investing in mutual funds or something with less daily price movements.

Finally, if you are investing for retirement or for a college education, don’t worry about checking your stocks every day. Over time, stocks tend to reflect the financial strength of the company. However, many factors can influence the day to day stock price. Stay focused and remember why you are investing.

Alan Reisch has a degree in finance and has worked as a licensed broker for two large investment firms. He recently started http://www.1stock1.com a free investment information website.

Stock options are an excellent way to reduce risk in trading or to leverage your capital. While advanced stock option strategies are for experienced investors only, the basic option strategies can also be used by novice traders.

Basically an stock option is nothing complicated. There are just a few things to consider. There are two basic option types which are the call option and the put option.

The call (put) option gives you the right to buy (sell) a stock at a fixed price before a certain date, the expiration date. The option expires at this date and does no longer trade. Until this date your strategy should have worked out, otherwise your stock option expires worthless.

Buying the stock option is nothing else then buying the stock itself. Just that you need much less money to buy the option instead of the shares and that the option expires one day. But the rest is almost the same. When the stock moves, the option moves as well.

The difference and the big advantage of options is the leverage involved. To buy the option you need about 10% of the capital which would have been needed to buy the shares directly but with the same profit potential. There lies the risk as well.

One option contract equals 100 shares. If you want to own 1000 shares of Microsoft then you either can buy the 1000 shares at the stock exchange or you buy 10 Microsoft option contracts at the options exchange. You will figure out that there are many options for one stock. The reason is that options have different expiration dates and strike prices. The strike price is the price where you could buy the stock if you want.

In the praxis you don’t want to buy the shares through the options so this remains a theory. Most options are not exercised but sold before expiration with a profit or expire worthless otherwise. So the option is just a bet with limited investment. You can never loose more than your option purchase price with the basic option strategies.

There are various combinations of covered and uncovered call and put options. Different strike prices and expiration dates have different option prices, leverage and risks. To learn the basic option trading strategies you must first explore the possibilities of simple call and put options.

Instead of a short sale you could buy a put option. Instead of going long in shares you buy a number of call contracts. Following the option prices for several days will show you that the option price decreases slowly although the stock price hasn’t changed at all. This is the price you pay for the leverage.

David A. Sorenger is a stock market expert and provides detailed information on stock options trading at his web site http://www.StockTradingABC.com

Greed - The Ugly Duckling of Investing

Ah, yes, that evil five letter word can get one into a some hot water when it comes to investing in the stock market now can?t it? I?m sure we?ve all been there, at one time or another, where the evil has overcome and we think; hold on for a just a little bit longer and I can make even more money than I could if I sold right now. Greed can be defined as an excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth. Yes, that sounds just about right, certainly relates to stock market investing now doesn?t it?

Keeping Greed out of Your Investing

We all have our own investment strategies, I?m not here to tell you what works best and what sucks wind, but one thing I do know, if your investing strategy involves greed you will probably ?lose? more often than you ?win?. It?s certainly not always an easy thing, to keep greed out of your investments, especially when you?re in a stock that?s on a nice uphill ride. Any prudent investment approach should contain some form of an exit strategy, simply put how you plan on getting out of (selling) the stock you hold. This would be one way to avoid greed, have a set price at which you intend on selling the stock, walk away with the money in your pocket and move on to the next investment. Not always as easy as it sounds though is it? Prior to buying into a stock you should have some sort of idea at what price you would like to sell it, hopefully you don?t have to hold it for 10 years in order for it to reach that price. Sometimes you buy into it and if you timed it just right, you start to see the price go up sooner rather than later. When you start counting the dollars you are making seems to be when the exit strategy flies out the window and greed comes creeping in. I mean, gee, who knew when you bought it that the stock was going to rise so high, so fast, why sell now when you could make so much more money? It would be downright silly to get out now when you could clearly make much more cash if you held on to it. Somewhere deep within your being, there should be something rejecting this argument, and reminding you of your exit strategy and how you?ve gone past the price you told yourself you were going to be out of that stock and onto the next one.

Take your profits when you can

Discipline is a big factor when investing in the stock market. By employing some self-discipline you can keep your head about your initial investment strategy and keep greed from banging down the door. If the stock you invested in has made a nice move, and you have made the money you hoped to make off of it, then get out of it while the getting is good. If it seems as though the price is going to continue to increase, then why not take out your original investment plus a small profit (if possible) and leave the rest. At least you wouldn?t be losing any money by taking your profits when they are presented to you. You could have the best of both worlds if you chose to employ this strategy, you made your money (or at least didn?t lose any) and if the stock goes to the moon you?ll be laughing all the way to the bank, or at least to your next investment. The other option, let greed take the wheel, you could make way more money if you don?t take any profits and let the whole thing ride up the hill. Sure, you could stand to make a lot more off of your investments and I?m sure many people do, but the problem with this approach, where is the top? And when it reaches the top is it going to stay there for a while or come crashing down at record speed? What if it reaches this peak while you?re on vacation, or sick and can?t get to your computer to make the all important trade? It?s amazing how fast all those profits can disappear and you are no further ahead then when you first invested in the stock.

The main point to all this? Greed has a home and a mother, just like the ugly duckling, just perhaps not in stock market investing. Obviously, investment strategies vary from person to person, and if you find one that works, and greed is a big factor, well, kudos to you, personally, I?ve never gained off my greediness, it?s always hurt me more than helped me. Anyways, now back to my point. No one can predict with 100% certainty (no one I?ve ever heard of anyways) what is going to happen with a particular stock or the stock market in general. If you are able to keep your head about your investments and keep greed out, you could stand to make some tidy profits so that you can keep investing, employing your investment strategy and hopefully making some decent money at the whole thing.

*Any information contained in this article should not be construed as investment advice, simply the thoughts and opinions of the author.*

Jennifer Mycock & Branden Moskwa of Tradeopolis.com

Tradeopolis.com, your stock market trading and stock investing resource, with access to articles on Stock market trading and stock investing. Penny stocks to mutual fund investing, tips and secrets and all the latest hot press releases.

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The world of trading and investment can be as frustrating as it can be rewarding! You need to be prepared…

Firstly, decide if you are a trader or an investor.

An investor is someone who enters the stock market inadvertently - usually via their superannuation policies. A trader is someone who makes a decision to buy and sell shares via the stock market. This can be done online or by using the services of a stock broker.

If you decide to become a trader - to win - you must have a survival strategy…

You need to study the market yourself - not just rely on ‘reading the news’, or listening to others advice and tips.

Take advantage of technology - computers, software, electronic data - all at your finger tips. Seek out charting software and appropriate internet sites - they are plentiful.

Ensure that you ‘manage’ your money and keep some in reserve.

Have the ability to quickly identify failures as well as successes.

Stock Market trading appeals to those who are a little adventurous - rather than just placing their capital into bricks and mortar.

But - be mindful that portfolio values are less stable than real estate as they are continually moving up and down.

However - investing in the Stock Market means that you are putting your money to work - be aware, and enjoy the gains!

Gay Redmile is the webmaster of several finance and investment sites. Having been a trader for most of her adult life - she understands the importance of undertaking research and knowing the market. For further important information visit her site at http://www.thestocktradingsite.com or if commodity trading interests you check out http://www.commoditytrading.com.

Sometimes you just have to take a deep breadth. And though I sometimes avoid information for fear of it influencing me adversely [journalists who know NOTHING talking up a situation, today I read the FT first thing.

Yesterday’s drops could be the start of a big fall. But i’m gambling it’s not. After the fear of today has subsided, I expect a rally. But I also expect a lot of volatility in the coming weeks / months [until something significant causes balance and so I expect to make short bursts of quick profits.

From watching the charts, I can see that many investors have the same idea. There’s a lot of buying going on amongst the selling.

But like I said yesterday, things are looking cheap from a certain perspective. So even if I buy today and we’re not at the bottom of the trough, I am pretty confident that I am buying at a low enough price that will eaily be surpassed shortly.

Unless I’ve got it all wrong. Which puts me in the same club as many other big names. Nobody knows anything.

I have what I call a market-stall approach. The stocks for me are just like bananas. What are they worth today? How much can I sell them for later? How many do I buy? How much working capital am I risking? How perishable are they?

Click to read daily comments and keep updated: http://www.wanttosaysomething.com/

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When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. I hope my sharing it with you will help you avoid making the same devastating financial mistake one of my former clients made.

This story begins during the height of the investment madness in 2000, just prior to the bear market. I had been managing an IRA account for Bob for around six years, with a better than average record of success. So I was surprised when Bob sheepishly called in July, 2000 to let me know he was transferring his IRA account, which had done particularly well during our latest Buy cycle going into the year 2000.

However, his tax preparer, a long time personal friend of Bob’s wife?s, was now also offering investment services, having recently received his Registered Representative?s license.

Fast forward to the end of September. It had become increasingly clear to me that the Bull market had run its course. So, in accordance with the Sell signal from our trend tracking methodology, we sold all of our mutual fund positions on October 13, 2000 and went 100% into money market. (See my article ?How we eluded the Bear in 2000? at http://www.successful-investment.com/articles12.htm). From our safe haven we watched the market crash and burn, causing most other investors to sustain double digit losses eventually reaching as high as 50 - 60% of their assets.

In 2002 Bob unexpectedly stopped by my office. As it turned out, things had not gone well at all with his IRA investments. As most advisors would have done, his tax preparer/advisor had quickly moved all of Bob?s assets into a variety of ?load funds.?

Of course, being newly licensed he was clueless (as were many licensed advisors) as to market behavior or analysis of any kind. The end result was that Bob?s portfolio lost in excess of 50% over the next 2 years. (Not to gloat, but my clients’ losses in the same period were non-existent.)

Unfortunately, the degree of loss Bob sustained was experienced by many investors who did not follow a disciplined and methodical approach.

What I find particularly distasteful is that Bob’s tax preparer misused his position of trust. He made financial decisions that he was not qualified to make, though his license implied that he did know enough to make them. So now we know what a piece of paper is worth.

This is no different than letting a newly graduated medical student with a fresh MD behind his name perform heart surgery. Or, hiring a new MBA grad to Chief Financial Officer of a Fortune 500 company. Yet the financial services industry allows someone to get a license (after a fairly short course) and to immediately start making incredibly important and far reaching financial decisions for anyone he or she can sell their service to.

This is a worrisome trend in this industry. A CPA friend confirmed that he has been approached many times by firms wanting him to offer investment services.

Why? It?s easy money! Accountants and tax professionals have a great business base. They are in a unique position of trust, because of the information their clients disclose to them. Whether they are employed by a company or they maintain an individual practice, there is probably no other person (other than your spouse) who knows as many intimate details of your financial life as your accountant/tax preparer.

To abuse this trust for personal gain?no matter how noble the motive may appear?is a total conflict of interest and a huge betrayal.

The bear market of 2000 has shown that investing must be a disciplined endeavor. Even most professionals have failed to recognize this. What busy accountant, in the middle of tax season, can put the necessary time and attention to a volatile investment market that may require action at a moment’s notice?

As for Bob, he?s still with his accountant, and in the same investments that brought his portfolio down. He?s hoping for a miracle recovery. As of this writing, the stock market is engaged in something of an upswing and Bob, I’m sure, is getting his hopes up that he will recover some of his losses. However, I shudder to think that this rally may come to an end and the bear market resumes. Where will Bob be then?

At 58 years old Bob is still playing Russian roulette with his retirement. He’s apparently unable to make a decision to move to someone who has the ability to make sense of market trends and the discipline to follow the signals they communicate. This is a decision that will have a profound affect on his financial future?and will determine whether his story has a happy or sad ending.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; ulli@successful-investment.com