Stock Insurance
You have a lock on your house. You have a lock on your car. You have a lock on your tool shed. Do you have a lock to protect your stock market investments?
Maybe you have a safe at home for your valuables such as jewelry, rare coins, special documents and even stock certificates. Wait a minute. Is that stock certificate protected just because it is surrounded with 3 inches of steel? Not really. The problem is that its value does fluctuate every day. It is OK so long as it is increasing because that is why you bought it. The broker told you to put it away and forget about it.
I hate to tell you this, but in the last 3 years that stock you own whether in your safe deposit box or in your account at the brokerage house might be worth a lot less. Wouldn't it be nice if there were some way you could protect that investment from a big loss? You can, but you will have to pay a premium, but you can set the amount of the premium yourself.
Some stocks you don't have to worry about. Isn't that true? You know, it's good ole AT&T. Mom bought that years ago and gave it to me when it was $55 per share. She said not to worry as it will go up and be there for retirement. Huh? You just looked and it is $14.00. Can't be, but it is. Now don't you wish you had bought some of that stock investment insurance? I bet your broker didn't tell you about it. They never do because you might end up with cash and take it out of your account and he wouldn't be able to make some nice commissions.
Most folks never heard of stock insurance. It has been there for years and years. Here is how it works. Call you your broker and tell him to enter an order for this stock with a loss protection and you are willing to pay a premium of 10% (you can set the percentage amount for more or less) and you want it to stay there until you cancel it. No, you don't have to send him a check. He might be a little puzzled at first until he realizes you are talking about on Open Stop Loss Order. He can enter that for you. If you had put that in place when AT&T was selling at $55 you would have sold out at $49.50 and today you would be about $3,500 richer for each 100 shares. (P.S. Brokers don't like to do this and will try to talk you out of it.)
You can do this with any listed stock to protect from loss of your investments. When you consider that the overall market is down about 40% in the last 3 years that 10% premium looks darn good.
A stop-loss order should never be lowered and should always be raised to follow a stock price up as it increases. It is not too late to do it. Call your broker today.
(c) 2005
Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exitingMore Stocks & Mutual Funds Information:
Related Articles
Mutual Funds are Dead
You may have wondered why your mutual funds have been going down for the past 2 years. The answer is very simple, but not one you will hear from Wall Street as they want you to send money.
Getting Even
I know there are a lot of you out there who would like to "get even" with the stock market. Many are on the diet of "I hope, I hope".
Is Your Garage Full Of Junk?
I have a 2-car garage. There are nice shelves on one side and a good practical workbench with a vice on the other side.
Dispelling Illusions of the Stock Market
How can you dispel an illusion unless you look directly at it? The magician distracts the eye with one hand while he does his manipulation with the other. You are looking in the wrong place and not seeing what is actually happening.
Two for the Money
Look back over the years and try to remember how many different stocks and mutual funds you have owned. Suppose you had owned only 2 different equities during that entire time.
The Golden Goose is Sick
It is finally catching up with them. The brokerage companies I mean.
The Skinny on Mutual Fund Investing
Mutual fund investing is a lot like Thai cooking. Everyone has heard of it, most know a little something about it, but very few actually know how to do it and do it well.
Protect Your 401K
Checked your 401K lately? Going back to about a year ago many of these retirement accounts have shrunk by 30%, some even more. What Happened?You have been putting money in for years and your employer may have been contributing to your plan also.
Will the Stock Market be Lower in October?
The stock market often closes a week in the middle of a "perceived primary-trend range." SPX closed at about 1,234 Fri, which is between a multi-year Fibonacci level at 1,253 (i.
9 Deadly Trading Mistakes!
The following are a list of nine things you want to avoid at all costs. Anyone of them can literally destroy your financial dreams and goals!1.
KISS Formula
There are formulas for just about everything, but it has been shown that the simpler the formula or method of doing a particular task the better it works. It has evolved down to KISS - Keep It Simple Stupid.
"Fears Only Enemy Is Action"
What a great statement!I just heard someone use it in the context of personal and financial success and it struck me as a brilliant summary of an issue we raise in the SMG Tutorials.Fear is a huge issue with a lot of traders.
Trading as a Business
What can I expect to make my first year of trading?We get questions like this one quite often. We find that most aspiring traders don't have a clue as to what to expect from the market.
Parachute Investing
Ever jumped out of an airplane? It's OK if you have on a parachute. Pretty dumb if you don't.
The Next Bull Market
We are already in it, but you can't see it. It doesn't look like the one we had in '99.
Finding A Good Stock
One of the things people are always asking me is how can I find a good stock. The answer I give does not please them.
Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips
Day trading is all about making buy and sell decisions. When you make a trade either your going to lose money or your going to make money, and some other times you will break even.
The Importance of Using Stop Loss Orders When Spread Trading the Financial Markets
A Guide to Using Stop Loss Orders Stop losses are market orders designed to allow you to limit your losses.When you place a stop loss you are instructing the spread betting company or stock broker to cut your position when it reaches a certain loss level (or in some cases, profit level - more later).
Discipline
One of the great "secrets" of successful people is discipline and it doesn't make any difference whether it is manufacturing, processing, servicing or investing in the stock market.Before you can have that discipline you must have a successful plan and stick with it.
Adding Funds
Someday you may want to retire and continue to live in the life style to which you have become accustomed. According to conventional wisdom you will need less money because you will have fewer expenses than when you had to go to the office every day.