SHORT - People!
Watching Jeopardy the other night, there was a category called Stock Lingo.
One of the answers was: "This style of investing takes place when an investor borrows a security and sells it, hoping to buy it back at a lower price to profit.
This style of investing is usually frowned upon.
" Of course, the question is "What is Short Selling?" This got me thinking why is short selling frowned upon? Has the general public been sold a bill of goods that investing is a one-way street and we must only focus on longing a stock? We must only Buy, Hold and Hope? Isn't this the same as driving a car that can only drive forwards and unable to drive in reverse? As we know, stocks go up and down; therefore, money is to be made in both directions.
Over the long term stocks will go up, however, sticking to a strict policy of buy and hold only helps you just over half the time and has gotten your investments beaten down in the recent market collapse.
The idea is not to start short selling right away, investors should understand the principal and the opportunities when they present themselves and understand the big picture when it comes to investing.
Although we cannot time the market, conventional wisdom tells us that at the peak of a market cycle, we should employ some sort of short sell to profit when a bubble burst.
We have seen two bubbles in the last 10 years to take advantage of this style of investing.
What is an investor to do, hang on? - suffer? If you are not willing to cash out and take profits, at least place a small short, perhaps 5% of your portfolio, so when the peak gives way and the markets begins to bottom out you can take some profits while your portfolio is going in reverse.
The TSX from June 2003 to June 2008 was up approximately 120%.
The average historical return is approximately 8%.
In hindsight, this was your opportunity to think about placing a short sell.
Here's a scary fact: if your portfolio has recently dropped 40% it must now create a return of 80% just to get back to its original balance! As mentioned, the historical average returns are around 8%, therefore, you are now left holding the bag simply because of the lack of knowing the whole picture when it comes time to invest.
That is why I have written an e-book and am spreading the word to as many investors as possible about the benefits of pairs trading.
This market neutral strategy will help you preserve capital and create income regardless of market direction.
Isn't that the main premise of investing? Investors are looking for a bottom, looking for a turnaround.
I believe it can start today, once you understand the concept and put it to work for you.
One of the answers was: "This style of investing takes place when an investor borrows a security and sells it, hoping to buy it back at a lower price to profit.
This style of investing is usually frowned upon.
" Of course, the question is "What is Short Selling?" This got me thinking why is short selling frowned upon? Has the general public been sold a bill of goods that investing is a one-way street and we must only focus on longing a stock? We must only Buy, Hold and Hope? Isn't this the same as driving a car that can only drive forwards and unable to drive in reverse? As we know, stocks go up and down; therefore, money is to be made in both directions.
Over the long term stocks will go up, however, sticking to a strict policy of buy and hold only helps you just over half the time and has gotten your investments beaten down in the recent market collapse.
The idea is not to start short selling right away, investors should understand the principal and the opportunities when they present themselves and understand the big picture when it comes to investing.
Although we cannot time the market, conventional wisdom tells us that at the peak of a market cycle, we should employ some sort of short sell to profit when a bubble burst.
We have seen two bubbles in the last 10 years to take advantage of this style of investing.
What is an investor to do, hang on? - suffer? If you are not willing to cash out and take profits, at least place a small short, perhaps 5% of your portfolio, so when the peak gives way and the markets begins to bottom out you can take some profits while your portfolio is going in reverse.
The TSX from June 2003 to June 2008 was up approximately 120%.
The average historical return is approximately 8%.
In hindsight, this was your opportunity to think about placing a short sell.
Here's a scary fact: if your portfolio has recently dropped 40% it must now create a return of 80% just to get back to its original balance! As mentioned, the historical average returns are around 8%, therefore, you are now left holding the bag simply because of the lack of knowing the whole picture when it comes time to invest.
That is why I have written an e-book and am spreading the word to as many investors as possible about the benefits of pairs trading.
This market neutral strategy will help you preserve capital and create income regardless of market direction.
Isn't that the main premise of investing? Investors are looking for a bottom, looking for a turnaround.
I believe it can start today, once you understand the concept and put it to work for you.
Source...