A STOCK MARKET PRIMER FOR THE SMALL INVESTOR
May 15, 2012
With all the talk about Derivatives, Mutual Funds, Options, Puts and Calls abounding, EQUIDATA1 feels a little primer for the wary small investor is in order here after the latest Wall Street debacle.
Here are a few simple rules to follow in order to keep your sanity and guard against losing your shirt in the markets. Although there are dozens of investment strategies that the average individual small investor need not know about, here are some of the least important: commodities, limited partnerships, derivatives and any acronyms which sound like computer language including: TIGRS, M- CATS, STRIPS, UIT’s, REITs’, IPO’s and REMICs, also short selling, call writing and futures trading.
If you don’t know what these mean, not to worry, you don’t have to know to be a successful investor on Wall Street because these are legitimate investment strategies created for the professionals who can devote full-time to their intricacies.
For the average investor however these strategies are just too complex and tricky. You could read a dozen books, watch all the cable and TV shows, get an MBA from Harvard and you still wouldn’t know enough about this stuff to do much good. We think especially the MBA from Harvard.
Here are some things you needn’t know about:
Anything that eats or grows should be avoided. These are future contracts to buy or sell certain amounts of wheat, pork bellies, oats, or other such commodities within a certain period of time. Not that these can’t be good investment vehicles but they require an enormous amount of time to research and they are very complex when trying to invest in them and no matter what you hear about people making a killing in commodities futures, over 90% of investors in commodities, lose their shirt.
Options are agreements allowing an investor to buy or sell shares in a stock within a certain period of time for a specific price. Puts are options to sell and calls are options to buy. Most smart and successful investors stay away from options because they can be very time-consuming. This time could be better spent researching individual stocks to buy in the accumulation stage to later sell at much higher prices. The commissions alone should deter most small investors from getting involved in options.
Derivatives, in the most simplistic of terms, is the buying of a contract on a certain commodity, interest rates, currency values or… well..You name it… whose price is based on some future event. Derivatives are somewhat like commodities, except much less gray matter in the brain is required to engage in this futile effort unless you can control the future event! Enough said!
IPO’s stand for Initial Public Offerings of stocks. Once issued however, their price usually head south in a grand manner. Avoid IPO’s like the Plaque unless you have some inside information and can stand to hold on to the stock for years and years. Even then, it’s gambling unless you’re on the “INSIDE” of the deal.
These are Unit Investment Trusts or a fixed portfolio of stocks, municipal bonds and mortgage-backed securities. Yields are usually low and are not guaranteed. Commissions can be very high and the market can be limited when you want to sell. Although UIT’s are similar to mutual funds, we would not recommend either for the smart investor. Remember, you need not pay some fund manager a high salary for doing what you can do for yourself by devoting some time to researching stocks and keeping your eye on industry trends which are producing the biggest gains on Wall Street. The returns of from 50% to 300% for the average investor who does his own home work, is reward enough for the trouble.
Short selling is the practice of an investor selling stock borrowed from his broker in hopes of buying back a like amount of shares at a lower price and returning them to his broker. If the stock does go down, you can pocket the difference between what you sold it for and what you paid for it when you bought it back to replace it.
Obviously, if the stock goes up after you sold it short, you could lose not only your shirt but your shorts too and any other assets you may have as well. Let’s put it this way. It’s like playing Russian roulette with the gun half loaded for all but the most seasoned and savvy investor.
Convertible bonds are bonds, which can be converted into a fixed number of shares of the company’s common stock. The interest they pay are less than that of regular bonds and the appreciation is far less than that which can be obtained from the regular stock.
High Yield Securities or commonly known as “JUNK BONDS” pay higher yields due to the higher risk you take with then. Zero Coupon bonds pay no interest but sell at a discount and can be redeemed at maturity for the full face amount. The return is modest and inflation dilutes the value. If you ever need the money and cash them in early, you’re in for a staggering loss. In short, most investors should stay away from individual issues of convertible, junk and zero bonds.
The successful Stock Market trader need only to concentrate on the simple principle of Buy Low and Sell High and do his/her research on any company considered to be a good investment opportunity. Armed with the knowledge of how the Stock Market works and the pitfalls therein, any sensible person can make profits from trading stocks. To help in this endeavor Equidata1 has produced a Seminar which will guide small investors through the hurdles of making Wall Street profits. Available at AMAZON.COM.
More information can be obtained by logging into http://wp.me/p1EYaQ-4
THE GREAT GOLD RUSH OF 2013 IS NOW FORMING
The world’s most precious metals, Gold Silver, Platinum and Palladium are produced in South Africa, Canada and Russia. Together they control 93% of the world’s platinum, 90% of the world’s palladium and 75% of the world’s gold.
They also control 72% of the world’s Vanadium reserves, 92% of the world’s Manganese and 85% of the world’s Chromium. All of the last three metals are vital to the U.S. defense industry and it would be in the best interest of Russia to cut off supplies of these metals to the United States.
Supply disruption from any of these sources could start as a result of the following:
1. Retaliation against the United States for placing stringent embargos on South African, Canadian and Russian products.
2. Mine closings due to strikes and terrorism.
3. Victory by Russia, Iran and other nations over Nuclear Arms treaties thereby unwittingly blackmailing the U.S. by threatening to cut off supplies of their natural resources to America and their Allies.
And as if the 3 reasons above is not enough to warn the public of things to come, take note of the following:
The recent monumental increase in U.S. debt and the decline in the dollar’s buying power has many countries worldwide shouting for the end of the dollar’s reign as the world’s reserve currency.
Recently, the official newspaper of the Chinese Communist Party wrote: “The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”
The United States dollar is already being abandoned by many countries and companies in favor of the Yuan, the Chinese currency.
There are two reasons why gold should be the foundation of any portfolio. One is the limited downside risk and two is the great upside potential.
Owning gold in these uncertain times will put you far ahead of the crowd in the years to come. Owning gold is critical to financial security; it is the ultimate form of financial security because it is cash. Not cash in the form of paper, but cash in the form of money and a prudent investor traditionally goes into cash in times of uncertainty. Gold is money in the form of cold hard cash and is held for safety, is liquid, mobile and retains its value in normal times. A cache of gold, hidden, will ensure that whatever happens, you will at least retain that amount of value.
The present outstanding billions of dollars held worldwide in relationship to the ounces of gold in the treasury, pegs the price of gold at about $ 3300 dollars per ounce if dollars were to be redeemed. In 1957, the U.S. had 650 million ounces of gold in the treasury and only $ 200 billion dollars outstanding and the writer sees no plausible reason given today’s deficit woes, why this trend will reverse itself.
Gold has made a comeback recently and we think we may again see it selling above $ 2800 dollars per ounce in the near future.
To get a copy of our White Paper “Gold selling for $3300.00 an ounce and you can’t legally own any”. Email us at email@example.com. Cost is only $ 20.00 a copy and you will learn how to cash in on the Great Gold Rush of 2013 without actually owning the metal.
Everything you will need to know to successfully Trade Gold Stocks is outlined in GENESIS, our Seminar titled:
“Principles of Technical Analysis and Chart Reading in Trading Stocks”.
Now available at AMAZON.COM.
ISBN # 09622444-1-4
The EQUIDATA1 INVESTOR VIRTUAL SEMINAR
PRINCIPLES OF TECHNICAL ANALYSIS AND CHART READING IN TRADING STOCKS
Featuring GENESIS, a proven system of stock
market trading based on stock chart analysis and interpretations.
This system evolved over the 17th and 18th century England and is based not solely on the scientific laws of supply and demand, which can be manipulated, but also on a 30 percent fundamental and 70 percent technical factor
(public psychological factors included). It is a system, while not infallible,has proven to work 87 percent of the time. It was unofficially adopted as the unwritten rule of stock market trading by the rich and powerful of the time. Secrets of this trading system are jealously guarded and still serve as the BIBLE for visual interpretation of future movements of stocks. Used by the great names of Wall Street insiders for over 100 years, this system is
indispensable for professional Day Traders and novice investors alike.
Now available on CD ROM at AMAZON.COM for only
Seminar produced for MS Word 7.8.9
The Seven Basic Chart Formations used to
forecast future movements of stocks
Stock and Market fundamentals as an aid in
forecasting stock movements
Spotting syndicate operations and their effect
on the supply and demand principle
Spotting Buy and Sell signals
When to switch positions
When to buy for the long or short-term
Riding the waves of profits on the coat tails of the insiders
Are you psychologically fit for Stock Market trading?
Exercising patience for profits…and much more
Online Technical and Tutoring Support included.
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