Buy Low Sell High

[william the wie]

How do people outsmart themselves in the markets to think anything else is the endgame?.

Rule two losses hurt much more than gains help.

In the modern market you can usually find an effective hedge at a price that will not prevent profit. If you can't find a hedge why are you even thinking of putting your money in that position?

Financial leverage amplifies this effect so only use structural leverage such as options to reduce risk. And do keep in mind that without a hedge no position is safe enough.

Just putting out this thread because a lot of the posts I'm reading lately one or both of these rules are being ignored in the China meltdown.

 

[B. Kidd]

Most investors ignore this. My wifes' investments hedged against mine which is why I got out of mine 2.4 years ago at a 16,500 level and paid for my retirement house shortly thereafter when my need was there. It's not only hedging, but timing, timing, timing.........

 

[william the wie]

Most investors ignore this. My wifes' investments hedged against mine which is why I got out of mine 2.4 years ago at a 16,500 level and paid for my retirement house shortly thereafter when my need was there. It's not only hedging, but timing, timing, timing.........

And buying at a low price. A decent and sustainable dividend price is my first metric then I check beta and options. It's strange that covered Puts pay so much. If they are exercised I just sell the shares rinse and repeat.

 

[AdvancingTime]

The reach of contagion has grown to the point where it can easily upset the fragile balance of our economic system. A complicated financial system built on credit and debt as well as a great deal of leverage is inherently unstable. For this reason caution is in order.

http://brucewilds.blogspot.com/2015/07/contagion-potential-reaching-new-heights.html