Diversified Investment Holdings

Invest in businesses you can understand and ‘put your arms around’. It’s important to establish your circle of competence as an investor. If you don’t understand what the company does, or how they make their money, their strength, their weaknesses, and competitive position how can you forecast future cash flows in order to make a proper valuation of the company? For example, take the time to understand what a company does by going to the mall or online and checking out thei

You will often hear traders use the term trading range, when referring to either an entry or exit point of when to buy or sell a stock. What they mean by the trading range is the high and low price over a certain time period. The bottom end of the range is a support price, and when traders would want to purchase securities. The upper end of the range is a resistance level and where traders would want to sell securities. A strategy that follows this technique of trading is

We are almost 10 years into this bull market, and according to some analysts it is just a matter of time before the market simply runs out of steam and falls flat on it’s face in not so many words. Meanwhile, others will point to the decline in 10-year interest rates as a recession indicator. But if you look at it critically there is some evidence to the contrary and it might be the best time to stay invested in the short-term. The S&P 500 price earnings (P/E) ratios and no

Put options are a contract which gives the buyer the right but not the obligation to sell a specified amount of an underlying security within a time range at a specific price. Conversely if you are the seller or writer of a put option you have the obligation to buy the security at a predetermined price within that time range from the buyer. So, for example let’s say shares of ABC Corp are currently trading for $100 per share. Investor A is bearish on ABC Corp., so they buy

The purpose of diversification is to minimize correlation risk within your investment portfolio. In a simplified example say you had two Investments A and B. If investment A went down 10% in a given year you don’t want investment B to be correlated to investment A such that it also goes down proportionally. Ideally you would want Investment B to be negatively correlated or at least correlated to a lesser degree such it doesn’t go down on a 1:1 ratio. This should firstly b

Writing covered call options is a method to earn additional income utilizing stocks you already own in your portfolio. For example, say you own 100 shares of company XYZ which you purchased for $45 per share. In January you think the stock won’t go up much so you write a call option expiring in 120 days with a strike price of $55 for a fee of $2 per share less a commission of $10. You would therefore collect $190 (100 shares x $2 per share - $10.00 commission) at the time o

One of the main benefits of real estate investing over stock market investing is control. For example when you purchase a stock you or your financial adviser have no control over the performance of the company. If the performance of the company deteriorates and the stock price goes down the only decision available to the average investor is to either sell or hold their shares. Meanwhile, if you have an under-performing real estate investment control allows to take actions s