Sadly for the Fed, when it comes to the biggest (not to mention most indebted) U.S. generation, the Millennials, the Fed has failed in indoctrinating them with the most basic fallacy of modern and not so modern economics – that one must spend, spend, spend their way to prosperity. After reading this book, you will be as smart as any stock market advisor and competent to handle your own investments. Toxic-mortgages, the collapse of the housing market and highly rated junk bonds backed by these mortgages. And when you buy a put option, you believe the underlying stock or index will go down in price by a certain date. By the time you’ve read it, the market has already reacted and you’re selling low or buying high.
Right now there is talk about another housing bubble already and the stock market has certainly gone almost straight up. Most think the market has only gone up during this slow economic period because of Federal Reserve policy and when that changes, the market will correct by a large percentage. When you buy a call, you believe the underlying stock or index is going to go up in price by a certain date.
Learning how to read a company’s annual and earnings report is crucial to understanding the financial health of a company and if you should buy stock in the company. Learning at least the basics of reading charts can be important showing you where the company’s stock has been and where it might be going. If the debt rating of a nation keeps declining despite interventions, cut your losses and sell any bond funds holding that nation’s stock.
If you rely on news reports to decide to buy or sell, you’ve acted hours or even days after the institutional investors have acted. However, you should be careful to own bonds or stock funds across the entire world, such as an Asian fund and a European fund. Set up automatic price points to sell investments so that you don’t have to watch the news for a reason to bail out of a stock. If you want to invest in a country, buy an international mutual fund that holds significant holdings in that country or buy stock in companies that do extensive business there.
You’ll retain liquidity over buying stocks on their stock market and dramatically simplify tax reporting. So, plan what you would be buying well in advance so that you do not end up buying the wrong stock. If you invest all your money in just one stock with a hope of it giving thirty to forty percent returns, then you might be losing a heavy amount if your guess or predictions do not come true.