Going Against the Conventional Investment WisdomWritten by Terry Mitchell
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However, I have been able to trade successfully with short-term momentum already established by market. Why no-load market index funds instead of individual stocks or Exchange Traded Funds (ETFs) that mirror various market indexes? Because no-load market index funds allow leveraging and short selling without need for a margin account. Also, some of these funds allow twice-daily trading (which is important for exiting early on bad days). In addition, fund company I use doesn’t charge redemption fees for actively trading its funds. Most fund companies, even those that specialize in no-load funds, charge these fees. Like I said at beginning, I’m not going into great detail, especially about my more aggressive strategy. However, I should define some terms so all of this will make more sense to those who are novices in world of investments. What is leveraging? Leveraging, in this context, is ability to buy shares of a stock or mutual fund and realize a multiple of its gain or loss during time you hold it. For example, if you buy a fund leveraged at 2 times a given stock index and that fund goes up 20%, you realize a 40% gain. However, if it goes down 20%, you incur a 40% loss. With individual stocks or ETFs, you need a margin account to do this. With a margin account, your broker is loaning you money on “margin” at a rather high rate of interest to cover leveraged (or extra) amount. Obviously, this could be very risky and costly. However, there are some funds that have this leveraging built in at no cost to you. These funds automatically give you one-and-a-half or two times gain or loss of a given stock index. What is short selling? Short selling is when you sell a stock (that you don’t already own) immediately at its current market price while agreeing to buy it at whatever market price will be at a fixed point in near future. In other words, you are betting that stock will be going down, so you can buy it for less than you sold it for. Have you ever heard anyone say “don’t sell me short”? Well, this is where that term came from. Selling someone short is tantamount to treating them like a bad stock that you believe is going down. Yes, it’s backwards of normal process of buying and selling stocks. As with leveraging, you need a margin account to do this for individual stocks or ETFs. Your broker loans you money on “margin” (actually buying stock temporarily), so you can sell a stock that you don’t own yet. Once again, however, funds I use have this short selling mechanism already built in to them at no cost to you. For example, you can buy a fund that gives you inverse performance of Nasdaq-100 Index. When that index goes up 10%, fund goes down 10%; conversely, when that index goes down 10%, fund goes up 10%. There are even funds with leveraging and short selling built in to them, at no cost to you! For example, there is an available fund that goes up 20% when Nasdaq-100 Index goes down 10%. Of course, that same fund goes down 20% when then Nasdaq-100 Index goes up 10%. As you can probably imagine, these funds can be powerful tools for profit-making for those who know how to use them, but can be highly dangerous for those who do not. For more information about any or all of these concepts and to find out what kind of investment is right for you, contact your financial advisor and/or do your own research. Hopefully, I have provided some food for thought as well as several resources that might be helpful to you when doing your own research.
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
| | Investing Online Has Its Rewards: Find Out How To Take Advantage Of ThemWritten by C.C. Collins
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Now you can track and trade and get your news up to minute with online investment resources, many of which are free to use. This is turning former passive traders into active traders over night. There are dangers though, and they all have to do with education. Lack of experience can get you into a whole lot of problems, putting your money and retirement at risk. But a relatively little bit of education can take you places you never thought possible financially. So if you are ready to open those doors and get out of 2%-4% doldrums you need two things: 1)The education to become a good active investor 2)The right tools to make your job easy and fun, with as little as 2 hours per week investing I have put together a free resource for people wanting to learn more about tools of online investors. Http://www.investinginfo4u.com will get you started. But you will also need education to protect you from mistakes that a lot of first-time active investors make. And for that education, you can check out my book called “Scientific Wealth Strategies.” I guarantee that once you get started with active investing and you start to see returns over 10%, you are going to get hooked like so many others who have become active traders.
C.C. Collins is a Wealth Building Advisor and Author of “Scientific Wealth Strategies” at http://www.wealthscientist.com Find more information at http://www.investinginfo4u.com
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