So here you are six months after buying that old-new economy, click-n-brick, mid-cap, high-tech stock; or perhaps it was a new-old economy, large-cap, multi-national, conglomerate, low-tech stock. Let's say your stock has jumped 20 percent in seven months, a gain you expected to take twice as long. You've made a healthy gain and you're wondering what you should do now.To sell or not to sell?If you sell a stock you've held for less than a year and a day, your profit will...
The early 20th-century Gestalt psychologists developed some theories on perception that we find pertinent in explaining why vivid events tend to create a frame of reference.They noticed that people organize complex visual fields into coherent wholes, or gestalts, rather than seeing unrelated elements in isolation. And when organizing a gestalt, people like a focus. Recall the famous picture of the vase set off by profiles -- impossible to see both at one time.The Gestaltists came up with...
Being a Day Trader requires extreme attention to detail, an analytical mind, steel nerves, long hours, no one to tell you you're doing well, and the ability to do what you know is right when the whole market is telling you you're wrong.Are you ready for this? It certainly won't be easy, but can be very gratifying, and potentially very lucrative.Choose Your MarketThere is many more markets to choose from for a new day trader than in times past. Here's just a few of...
Most investors include interest-earning investments (also called "fixed-income investments") in their portfolios-i.e., U.S. government Treasuries, CDs, and corporate and/or municipal bonds. Key reasons to consider these types of investments are that they can:Provide you with a steady income. For most of these investments, you receive a set amount of interest on specific dates. This is beneficial if you're retired and want a dependable source of income or you need additional funds...
For the novice investor, stock options tend to garner one of two emotions: lust or fear. On one side, you have those who have been warned to never trade options because they are perceived to be too risky and difficult to master. One the other side, there are those who view them with awe and burn to understand them, fueled heavily by traveling stock gurus on the seminar circuit.But Options are just another tool in your investment arsenal, and every serious investor should educate themselves on...
Savvy investors know well that it's not just what you make that counts, but what you keep after the tax man takes his bite. That's become increasingly difficult, particularly for active traders, given the gaping divide between the top tax rate on long-term capital gains — just 20 percent — and the top federal income tax rate of 39.6 percent charged on interest, dividends and short-term capital gains. Toss in the dreaded Alternative Minimum Tax, and your real after-tax returns could...
Is it possible to predict how a security or group of securities will perform? There are no foolproof theories, but that hasn't kept investors and money managers from trying.Investors have traditionally used security analysis — the painstaking study of individual securities and companies — to gauge the relative attractiveness of various alternatives. But over the past four decades, the newer technique of Modern Portfolio Theory has emerged as a valuable tool for measuring and comparing...
Readers share a few more of the strategies that have cost them dearly. Learn the dangers of betting it all on the next big thing, locking in losses too fast and heeding the call of margin buying.A couple of weeks ago, I wrote a column about "Blond," a young investor with a plan to make a quick buck in the market. His notion was to invest $1,000, earn 10% in a week, tuck the 10% away, reinvest the thousand bucks, make another 10% the second week and so on. At the end of the year, he'd...
You Place in Advance a Waiting OrderA stop loss order is meant to alert your stock broker to close your stock positions when the price hits a certain price. For example you may want to get out of the stock position before it falls any further. You place in advance a waiting order in your broker's trading system. You tell your broker you want a stop loss order at a certain price on the stock. When the stock hits that price, your stop loss order becomes a market order. Your order will then...
Suppose you own two stocks — one that has risen in value and another that has done nothing but decline in price. Which one are you more likely to sell?You may be surprised to learn that many investors choose to let go of stellar performers rather than stocks that have lost money.1 Why? As long as they avoid selling a loser, they can rationalize that it will recover someday, thus vindicating the original decision to buy.2 When they sell, on the other hand, the conclusion that they made...
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