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Networking 101
As a new business owner you must wear many hats. You will need knowledge of accounting, marketing, advertising, management, administration, inventory, sales, etc., in addition to knowledge pertaining to your industry. Since you may be very...
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Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing)
Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing) by: Janet L. Hall After reviewing your retirement plan, or lack of one, you might have had a huge eye opener to the...
Investing in Indian Real Estate
Indian Real Estate: "Undeniably tremendous!"
And, that is the undeniable verdict of a Price Waterhouse
Coopers study conducted on the investment environment in terms
of Indian real estate. Ever since the Government of India gave
its stamp...
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401(K) Investing For Your Retirement
The aging of the population and the potential failing of social
security has brought the subject of saving for retirement to the
forefront for many people. There are many avenues available to
acquire the nest egg that we will need to survive on...
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Investing Without Brakes Is Hazardous To Your Portfolio
The business of investing in stocks is an inventory "buying &
selling" business. Naturally, the companies that sell stock to
the public want you to buy and hold it forever in order to
maintain its value. But if you are buying without any selling,
you are literally driving without any brakes. That is a
horrifyingly unsafe position for your principal. The most
effective defensive brake system for your money is a stop-loss
order on your stocks.
A stop-loss order is an order you give your broker to sell your
shares if a stock falls below a certain price. You can select a
stop-loss price for your stock based upon chart patterns or a
percentage drop from your purchase price. And some brokers
automatically move them as a stock moves up in price to lock-in
profits for you.
The first time I learned this lesson (not the last
unfortunately), I was just 18 years old. One of my early stock
purchases, recommended by a stockbroker from a famous brokerage
firm, was stock in a famous airline - just before it trailed off
into bankruptcy. Had I read this article before the airlines'
financial calamity, I would have rescued most of my $5,000 and
prevented my own financial calamity.
But you cry, "The greatest investor Warren Buffett is a buy &
hold investor!" No, I'm afraid he is not. Mr. Buffett mainly
buys whole companies or controlling interest in a company. He
buys control so that if there
are problems with the company, he
can hire/fire/make changes. If there are critical problems with
the company whose stock you own, the only control you have to
protect your principal is to sell. More reference material for
this article is available at
http://investing.real-solution-center.com.
When a public company goes bankrupt, 70% of the time the
shareholders receive no money at all. How many stocks do you
want in your portfolio worth $0? I know exactly how many that I
want, and I know that stop-loss orders prevent it from happening.
There are a few "loss-recovery" methods, but you'll never sell
enough covered calls to recover from a stock trading under $5,
or be able to buy puts on a stock that has been de-listed from
an exchange. But the nearly certain protection is to place a
stop-loss order on the stocks you own. You can choose any
percentage loss amount (5%-25%) based on your experience, but
you must have a stop-loss order in place to protect your capital.
There a zillions of old stock market sayings. Here is one of
them for those of you who are still skeptical, "If the
smart-money has sold and moved on, what type of money still own
the stock?"
About the author:
Francis Kier has an MBA in finance and shares his two decades of
experience with investing and personal finance. More of his
articles are available at
http://investing.real-solution-center.com
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