Learn Wealth Creation

Fear And Panic And The Stock Market

Last night in the US, the Dow Jones Index closed at under 8000 for the first time in five years. That is a huge difference from the highs last November before the Credit Crisis started to unfold. Many people are panicking now, and maybe they deserve to, maybe not. Instead of focusing on the fear, why don’t we concentrate on how best to take advantage of the current Stock Market conditions.

Buy, Sell, or Hold?

A great question and one that only you can answer. There are certain Share Strategies that will make you a lot of money right now, and there are strategies that you can use to completely protect your investments too. Combining the two strategies is a good way to make a lot of money right now.

Educate Yourself And Learn The Stock Market

Now is the time to be learning as much as you can about the Stock Market and to become financially educated. The roller coaster ride has not finished yet, and when this mess is all over there will some massive opportunities for those who are smart and savvy investors. Huge fortunes will be made in the coming years from the Stock Market, and there is still time to learn from what is happening at the moment.

Fear and greed are the two driving forces of any market, and in particular the Stock market. Greed and some over the top investment vehicles have got us in this current financial situation. The future of Share Investing calls for more solid and protective strategies.

That’s it for today, just wanted to touch on the Dow closing below 8000 and to share that it is not the end of the world just yet. Go out and get prepared, and then you will reap the benifits on the next Bull Market.

Is It Easy To Make Money Investing In Shares?

In today’s post we are going to look at investing money in the Stock Market, and will discuss some of the Share strategies that are available to use in this current economic climate. Not all wealth creation strategies are created equal, although as we have discussed before it is usually not the strategy that loses you money, it is the mindset in charge of it.

Making Money And Keeping It

So the trick is not just to make money  when trading stocks, it is to keep it as well. Making a $200,000 profit is not much fun if you follow it up with a $300,000 loss. There are some great share strategies that will not only allow you to make a lot of upside potential, they will also allow you to protect your capital 100%.

We have spoken in the past about using Put Options in combination with you Share Trading Strategies. By giving up a few percent of your possible gains, you can have complete peace of mine knowing that if the Market turns against you, you will have full equity protection.

Some of you may not like to give up some of your gains, and there is another part to this strategy that may swing you in favour. Of the Shares that you do want to invest in, look for ones that offer a good dividend yield. There are many quality Shares that offer a dividend that will nearly equal the price of a long term Put Option. In doing so, you will not have to give up any of the upside potential at all.

So know we know how to make money and to protect our investment, we still need to know when to take your profits from the market. Many Share Traders will take their profits too quickly and will miss out on a lot of future profit because they get scared they will lose money. There are many mechanical trading systems out there that can systematically take your profits according to technical analysis, yet this can be a full time job in itself.

A much more simpler system that will only take you a few minutes is to sell your Put Option on the shares and then purchase another one that is nearly ‘At The Money’. By doing so you have essentially locked in all your profits, yet you can continue to take advantage of any upside potential without the fear of losing it.

Many people like to over complicate trading and come up with all manner of rules and techniques to get money in and out of the market. When you want to create real wealth, go back to basics, protect your capital and lock in all profits. You can make money in the Stock market, and you can keep it all too.

Protecting Your Capital In The Stock Market

As mentioned previously, the goal of investing in anything is to preserve and protect your capital, and through sound research and advice, make a good return on your investment. So let’s look at some further ways that you can protect your capital, this time in the Stock Market.

For those who want to become Stock Market investors, this can actually be quite a simple exercise, yet most investors will never use this extremely powerful strategy. By utilising a Put Option against any stock that you have gone long (bought) on at a strike price that is the same price as what you purchased the Shares at, then you can have complete capital protection in the event the share price moves down.

By giving away a small percentage of potential upside profits, you now have complete asset protection, and just as importantly you have the ability to sleep well at night, knowing that your Share Portfolio is protected in the event of any market downturns.

Many Stock Market investors do not like to give any of their profits back to the market, even if it is to insure their portfolio. If you were to ride a Bull Market for several years and make some very large paper profits, can you image how it would feel to have your profits nearly wiped out in the event of an economic crisis?

One of the major forces of Market movement, greed, stops the average investor from buying a Put Option, or insurance, against their portfolio. To become a successful investor, and to ride out the turmoil and Stock Market Crash as well, it is a wise decision to give back a little of your profits.