Bottom Feeding

| By admin In Editors comments | Comments Off

Ok so the market dropped out from under us, but most of us have been there before and those who have are now set to make a profit. Now no one is smart enough to pick the bottom of this slide, but the bottom will come.

As usual we will be overwhelmed by this Bear Market ^(http://www.ucontext.com/cbhop.php/4314/0/6df071ea38f216913f8cf3c7301fd484/bear+market) but rest assured it will turn and those who are prepared will reap the rewards. It is my opinion that it has a bit further to go and looks like it will last a while longer.  Once we get over the effect of the mortgage crisis in the US and the oil prices we should see some improvement.

It’s all about opinions: Once we see the end of the daily deluge of bad news from the media, then opinions will change. If you are ready you can start to pick up the bargains and believe me there are some real bargains just sitting there for the taking.

We have seen stocks that are in no way involved with either mortgages, or oil, fall dramatically, ask yourself why. Why would a very profitable company with excellent figures and excellent prospects, suddenly see their stock price on the floor? Well sentiment has a lot to do with it. That’s right sentiment.  In my opinion 60% of stock traded on the market are bought on sentiment.

I sit here day after day and watch stocks go up and down, seemingly for no reason. What is it that drives the market?  Why do those involved all seem to follow a trend, and how does the trend evolve?  Why is it a stock can be trading down, or up many dollars within a couple of hours, and who sets the trend anyway? Well it is you the investor. You react to the trend, every time, be it Bear or Bull, it is the reaction of the investor that makes the trend.

Bear markets are a part of our lives, and I have seen many come and go. They seem to end when familiarity sets in and those in the know, with the spirit, start buying stock that has been unrealistically forced down. Those smart people start to see the value in those companies; sales, profit earnings, take over possibilities, and just the real value of the stock that hasn’t changed one little bit from when it was trading $20 higher.

Now is the time to stop listening to the media hype start listening to your own gut feelings and have the nerve to act. No one has ever lost buying on the bottom of a Bear Market. Start doing some hard yards and earn what you make. Be prepared to break away from the crowd. I know it takes a lot of fortitude but you will not get rich overnight playing the stock market. It is a nerve racking business and you have to loose sometimes to make it, but there are reasons why some win and some loose, and it’s called due diligence. Look for those companies that are improving and growing even in this horrible market. When sentiment changes, so will the market. Some will be ready to reap the rewards, will you be one of them.

MR (ed)

 

Editorial for August at

http://www.Expandingwealth.com

Know the Pros and Cons of Investing that You Should Look out for

| By John Lundin In options | Comments Off

Investing

If you are planning to get into the area of investing, you may have to think about several points and thoroughly think about them. Among them is the amount of cash that you are prepared to outlay for investing. If you put your cash in bonds, mutual funds, options, or stocks, you must come up with a certain amount for you to buy a unit or open an account.

In regards to financial investments ^(http://investments.ca), two kinds of units are commonly traded on the market – short-term investments as well as long-term investments.

The main difference between both is this: short-term investments are meant to give considerable returns within a short period of time, while long-term investments are intended to last for several years or so and features a slow but progressive rise in return.

When your objective as an investor is to boost your wealth or keep the purchasing power of your capital over time, then it is vital that your investments must grow its valuation that somehow matches the inflation rate. Owning a diversified portfolio of equity shares and property investments might just be a good long-term strategy compared to having just fixed-term investments.

You must have an investment portfolio that is spread across different sorts of investment products so as to effectively minimize your risk. It is a classic application of the phrase “Don’t put all your eggs in a single basket.” The many investment products available these days are becoming a lot more complicated as large and institutional investors trying to outperform each other.

As an individual investor, you only have to invest on something you feel comfortable with and not on investment products you don’t have an understanding of. You need to be definite with your investing criteria because it’s crucial in weighing your alternatives. If you are uncertain, the right approach is to get good advice.

View this site and know more about investments ^(http://investments.ca) for more tips about making your money grow.

Investing 101 ^(http://amzn.to/thi3Pg)

ExpandingWealth.com

Investing

Buying Bad Debt Soaring In Recognition For Businesses

| By Nathan F Hollingsworth In Investment Strategies | Comments Off

Bad Debt

Buying bad debt has become a new source of profit for many agencies, not just debt collection firms. Understanding the potential for profit, a large number of investors have sought to buy the rights to delinquent debt portfolios from companies such as banks, credit card agencies, and even health care providers, realizing there is money to be made when these accounts can be acquired for such a small cost.

How it Works

The individual or company buying bad debt bids a|1a0d10d48db33e4d66e49e15d3bc6beb total debt ^(http://www.ucontext.com/cbhop.php/4314/0/bd73b42d5e795f1fca2498fb0bb71458/total+debt) due to purchase the account. The creditor agrees to the sale, desperately in need of cash for their own business functions and no longer having the resources to pursue unpaid debt ^(http://www.ucontext.com/cbhop.php/4314/0/9ae0ad75fff2a39193d2cd5735de8c04/unpaid+debt).

Most of the time, the purchaser can buy the bad debt for pennies on the dollar. Spending only a fraction of the actual potential for financial reward allows the investor an opportunity to reap the fruits of a small amount of labor.

By selling the bad debt, the creditor is relieved of the negative debt and the responsibility of collections, meanwhile recovering a portion of what was owed them. This means the debt purchaser is now the party charged with collection of unpaid debt, and there are two means by which an individual might decide to do so.

New portfolios can be created and sold to debt collection agencies by repackaging the purchases, which secures a small profit for the buyer. Because the agency pursues the full debt owed, they will stand to profit from the bargain, while the debt buyer has already achieved the goal of reaping a profit. This is called passive debt buying.

Pursue the debtor him- or herself. This requires greater work and greater drive to complete the task, since debt buyers don’t have the same motivation as the original creditor. Still, if the purchaser has the resources to go after delinquent debt, he or she can multiply the profit margin.

Why it Works

The reason buying bad debt works is because everyone involved is satisfied with the outcome. The creditor who sold the portfolios has recovered working capital for their own business, and any collection agency involved will be grateful for the opportunity to increase their own profits through debt collection ^(http://www.ucontext.com/cbhop.php/4314/0/7839b3f05974fce9b8b61a0fbc7b6b74/debt+collection) practices.

Because the debt was purchased for a sum less than the total debt owed, the debtor can often settle for a smaller payment amount and clear their credit record. Most importantly, the debt purchaser reaps a profit from either the pursuit of delinquent debt or the sale of debt portfolios to a collection agency ^(http://www.ucontext.com/cbhop.php/4314/0/e1f4f61489b325fbca535238afeb5938/collection+agency).

Next, explore more important facts and resources on business debt collection ^(http://www.debtcollectionsteps.com/business-debt-collection.html), in addition to commercial debt collection agency ^(http://www.debtcollectionsteps.com/commercial-collection-agencies.html) options.

Bad Debt

Expandingwealth.com

Investing In the Stock Market – The Alternatives

| By Colin Burr In option trading | Comments Off

Investing In The Stock Market

Why put yourself in a position exactly where you are affected by the roller coaster of market volatility? By Christopher Music

With all of the volatility of the stock market ^(http://www.ucontext.com/cbhop.php/4314/0/f19b18f69dfcc10a12850cdfaf93a2b0/stock+market), have you ever wondered what alternatives are there towards the stock market ^(http://www.ucontext.com/cbhop.php/4314/0/f19b18f69dfcc10a12850cdfaf93a2b0/stock+market)?

1 option to investing in the stock market, particularly throughout occasions of exceptional volatility is in a Fixed Index Annuity ^(http://www.ucontext.com/cbhop.php/4314/0/da5b5d2f9ffe27aa5939b63cba1abaf9/index+annuity) (FIA), a hybrid between a fixed and variable annuity, for long-term growth.

What’s an annuity?

An annuity is an insurance product provided through insurance businesses that grows tax-deferred more than time and may offer a lifetime revenue throughout retirement.

The advantage of a fixed index annuity ^(http://www.ucontext.com/cbhop.php/4314/0/da5b5d2f9ffe27aa5939b63cba1abaf9/index+annuity) is the fact that they are fixed annuities, which indicates that the principal is assured and there is a assured minimal rate of return on these kinds of accounts.

The -index- part comes in because annual returns are based in component on the cost improve of a stock index (excluding dividends), such as the S&P 500. When the market goes up, a portion from the gains on an annual basis, up to a -cap–say 5 to 10%, are locked in and credited to the account as interest. When the marketplace falls, no losses are posted in the account.

The reason these annuities make sense for retirement planning is that the account balances can never go backward. This means that the market can move up, down or sideways and just gains are credited. Furthermore, a few of these annuity contracts have riders that can produce guaranteed income for life.

The investing landscape has changed.

This last credit crisis has confirmed a few interesting information: ?1st In order for an investor to accurately assess risk, he must know all relevant material facts regarding an investment. This is impossible when there’s wide systemic misinformation or undisclosed information, resulting in a gross mispricing of risk. An illustration of this this is the mis-rating of mortgage-backed securities from Moody’s and Standard & Poors.

?2nd The economic advisors of our government and corporate institutions were surprised that this crisis occurred. If they can’t predict future economic phenomena based on mountains of data and insight at their disposal, how can an average investor ^(http://www.ucontext.com/cbhop.php/4314/0/4ab831fa4a334728e4e9e17c9ddf803b/average+investor) have any idea what to do? The truth is that it’s impossible to know all from the correct data essential to successfully navigate the world-wide investment markets over the long term, not to mention the long term effects of arbitrary government fiscal and monetary policy.

?3rd The costs of investing within the market through mutual funds, the most popular form of investing, are very high. When all costs are included like portfolio management and trading costs for starters, the costs can easily exceed 3% in actively traded funds.

?4th As outlined by Dalbar (www.dalbar.com), the typical stock market investor made the average return of 1.87% from 1988-2008, while the S&P 500 averaged 8.35%. Why? Because amateur investors love to sell when the marketplace is down and buy more in periods of market bubbles. Empirical evidence has proven that people react irrationally under threat of loss and can actually become unattainable at the bottom of a market in order to -prevent further losses-.

How long will it take to make up a loss?

If an investment account lost 40%, then just how much percentage return would it take to get back to even? 40%? Nope. 66%.

The percentage returns derive from smaller numbers so it takes more return (and therefore more risk) to get back to even.

Some of these innovations within the insurance industry offer persuasive choices for the average investor ^(http://www.ucontext.com/cbhop.php/4314/0/4ab831fa4a334728e4e9e17c9ddf803b/average+investor). Insurance companies do 1 thing very well-manage risk.

Today there’s more risk within the investment markets than previously due to propaganda, authoritative opinion, and downright fraud.

Why put yourself at risk?

Why put your self in a position exactly where you are affected by the roller coaster of marketplace volatility? How important is peace of mind knowing that your account wouldn’t lose 1 penny when the stock market loses half of its value? Booms and busts are component from the investment game but I would imagine that the average investor has enough to worry about rather of worrying over losses in his nest egg.

If you want more information on Options Strategies ^(http://kendrickhuds74.newsvine.com/_news/2011/12/31/9844461-iron-condor-strategy),don’t read just rehashed articles online to avoid getting ripped off. Go here: Options Trading ^(http://blog.bodybuilding.com/kendrickhuds74/2011/12/30/iron_condor_spread/)

Investing In The Stock Market

Expandingwealth.com

Enhance Portfolio Returns By Writing Covered Calls

| By Joshua Samson In options | Comments Off

Covered Calls

Writing covered calls is a conservative investment ^(http://www.ucontext.com/cbhop.php/4314/0/5d1029fcf4a40f5421ffefc193621428/conservative+investment) strategy, but it also can be profitable. To write an option means to sell it to someone else. You are not selling your stock, but the right to purchase it at the strike price ^(http://www.ucontext.com/cbhop.php/4314/0/ea02a81734b3a6d14316c215fddd7e28/strike+price). This investment is considered safe because you have the option “covered” by owning the stock. Many people do not own the stock for the options that they sell. By owning the stock from the options, you have definite advantages over the average options trader. Here are some reasons to consider writing covered calls as your next trading strategy.

When call options are sold, the writer is paid a premium on each share of the contract. This means that a 100 share contract will earn $300 at three dollars a share. This money is yours to keep no matter what occurs. You are also the one who sets the amount for the strike price ^(http://www.ucontext.com/cbhop.php/4314/0/ea02a81734b3a6d14316c215fddd7e28/strike+price) of the stock or commodities.

Ideally, it is best to sell options on stock and have the options expire. In this way, you are retaining the stock and also keeping the premium money. Once an option is expired you can write a new option on the same stock.

If you sell or write a stock option contract for 100 shares of Company B, you may set the strike price at $50. Maybe you have paid $40 per share for your stock. Before the option expires the price may go to $60 a share. Because the stock soars in value, you will need to sell it to the option holder. However, you still make money from the sale of your stock, in the form of $10 per share minus commissions.

Suppose you sell a contract for one hundred shares of stock with a strike price of fifty dollars. Your original purchase price is forty dollars per share ^(http://www.ucontext.com/cbhop.php/4314/0/2bf3a1bf8f7d55474f322f158e16d56a/dollars+per+share). The stock may soar to sixty dollars per share ^(http://www.ucontext.com/cbhop.php/4314/0/2bf3a1bf8f7d55474f322f158e16d56a/dollars+per+share). When this happens you are going to lose your stock as the owner of the option will be able to make money ^(http://www.ucontext.com/cbhop.php/4314/0/09aa27a6d6deb0429a46bf60c3944378/make+money). However, you are still making money on your stock sale and your option premium.

as a style of trading is conservative as you face few risks. You also have the opportunity to make money more than one way. If you own stock and do not expect it to go up in value a great deal in the near who is interested in buying stocks or other investments such as commodities. You can purchase shares based on their ability to make money ^(http://www.ucontext.com/cbhop.php/4314/0/09aa27a6d6deb0429a46bf60c3944378/make+money) from options. You also can control the amount of risk that you take.

If you study it, you will see that writing covered calls for trading is a relatively safe and conservative investment ^(http://www.ucontext.com/cbhop.php/4314/0/5d1029fcf4a40f5421ffefc193621428/conservative+investment). You can make money from stock or investments that you own without having to sell them. You also make profit through the sale of option contracts.

To learn more about covered call ^(https://www.borntosell.com) trading, go to Born To Sell. Born To Sell ^(https://www.borntosell.com/covered-call-tutorial/covered-call-writing)‘s website offers additional information about covered calls.

Covered Calls

Expandingwealth.com

 

 

Are Options Credit Spreads Really High Probability?

| By Donald Scott In Investing in the Stock Market | Comments(1)

Credit Spreads

The truth on trading “credit spreads“…You will learn why it is so important if you do not know how to correctly handle your option positions. Even though it is a well known trade we will take a good look at what can happen using this particular spread. This seems to be a good trade, but until you work with this trade, you will not know the high risk it can be. If it is traded alone this options “credit spread” can be very risky. By trading it alone I mean that it is not being protected by another option trade.

The first spread learned by most beginning option traders is the credit spread ^(http://www.ucontext.com/cbhop.php/4314/0/0cadcf98e53163a25921f7c2627e1704/credit+spread). It’s a very simple strategy, but what many beginning option traders ^(http://www.ucontext.com/cbhop.php/4314/0/dda6701c7049aeb2baa8a4ce34738772/option+traders) do not know is that this particular strategy can be very dangerous. There are many courses on the internet that teach this strategy, but the reason is not because it’s a great strategy, but rather, it’s simple, and it’s easy to sell. What I mean to say is that teaching credit spreads ^(http://www.ucontext.com/cbhop.php/4314/0/0cadcf98e53163a25921f7c2627e1704/credit+spreads) to beginning option traders is simply a great business, but the fact is, many option traders ^(http://www.ucontext.com/cbhop.php/4314/0/dda6701c7049aeb2baa8a4ce34738772/option+traders) who only trade credit spreads ^(http://www.ucontext.com/cbhop.php/4314/0/0cadcf98e53163a25921f7c2627e1704/credit+spreads) lose a lot of money ^(http://www.ucontext.com/cbhop.php/4314/0/aee91e9ac208b79bec693c51be413fd6/lot+of+money) each year. Not only do they lose a lot of money ^(http://www.ucontext.com/cbhop.php/4314/0/aee91e9ac208b79bec693c51be413fd6/lot+of+money), but it’s also a very stressful way to live. Let me explain why.

It is a known factor that an option trader can go into a “credit spread” with a 90% certainty that he will make money on this trade. Most beginning option traders believe in this trade. This is true, but do not close your eyes to the other side of this picture. Though you may have a 90% certainty to make a good profit on this trade, you need to consider what is going on while this trade is in play. People will not tell you about the high stress that is involved.

People don’t talk about how they can be way behind on the trade sometimes the whole time they’re in the trade. People don’t talk about how they get down to the very last day and they are risking 90% just to make a small 10%, and they don’t talk about how they can’t sleep at night and how they are praying to God for their stock to go up tomorrow. Finally, one of the most important things that nobody tells you about the credit spread ^(http://www.ucontext.com/cbhop.php/4314/0/0cadcf98e53163a25921f7c2627e1704/credit+spread) is that a 90% probability doesn’t mean that you’re going to make money nine times in a row and then lose one time. The sad truth is that you might lose 90% on your first trade. This happens often to new option traders.

The problem with the credit spread is that it’s a very directional trade. Even though it has Theta on its side, it has Delta and Gamma working against it. For the small amount of Theta that you get from a credit spread, you are picking up even more danger by trading this option spread with very high Gamma. What this means is that as the price of the underlying changes, the profit and loss on the trade also changes very quickly. This type of trade is a lot more volatile and risky than most beginning option traders are aware of.

Well to conclude this class on the risk of the credit spread, I’d just like to finish and say that there are many other types of trades that are much safer than this particular option spread. And if you do insist on trading credit spreads, try to combine them with other strategies so they are not so risky.

Looking to find the best education on Stock Options ^(http://www.sjoptions.com/stock_options_course_price.html), then visit www.sjoptions.com to find the best alternative trades to credit spreads like Broken Wing Butterflies ^(http://www.sjoptions.com/broken-wing-butterfly.html).

Credit Spreads

Next Page »

Page optimized by WP Minify WordPress Plugin

WordPress Mobile Themes