How to Invest ?

[Doodles]

Originally Posted by pteron

The difference is of course that these people all make money off other peoples money. Anyone can make money if they can legislate to create a monopoly and require people to use that monopoly.

For the sake of full disclosure, I have to tell you I'm a CPA. But, hey I don't make the rules I just enjoy them.

[smurphny]

Covered calls work in bullish environment only - there is no protection to the downside.

Zonker, covered calls work this way: You own the stock and sell calls on those stocks--you are covered. You collect the money from someone on the other side of the trade who has bet your stock will go up before the expiration date of the option. (Remember, options are diminishing assets, If the underlying asset remains unchanged, they lose value over time.) If your stock goes above the strike price by expiration date, you have sold your stock to this person at the contract price. This can only be ABOVE the price you held the stock at when you sold the option. You have lost your stock but gained dollars from where the stock was when you sold the options. If the stock goes down, you still own the stock and keep the amt you were paid for the options, the premium. If the stock stays the same, you keep the stocks and the premium. So, in all cases, your only risks are in owning the stock, should it tank, in which case you still have the premium from the options or crying over the fact that you lost your stock which kept going up. Selling covered calls is an old, safe, dowdy strategy, used by very conservative investors who usually keep their large cap, stable stocks for long periods of time. Stock goes up: you keep premium.
Stock goes down: you keep premium. Stock stays same: you keep premium. In two out of three cases you keep the stock and the premium. Also, if it looks like your stock is going to go up and hit the strike price and you change your mind and want to keep it, you can buy back the options.

[pteron]

Originally Posted by Doodles

For the sake of full disclosure, I have to tell you I'm a CPA. But, hey I don't make the rules I just enjoy them.

QED

[denverd0n]

Originally Posted by Saucy Sailoress

So - if financial advisors don't know what works well for sailors, then perhaps sailors do...

You got one financial advisor who didn't want your business. If you were going to buy a boat and the first broker you talked to asked you your budget, and when you told him, his response was "Well, you don't need me" would you then give up on ALL brokers!?! Of course not! You'd go find a broker who was willing to work with you.

Why on Earth would you NOT do the same when it comes to a financial advisor?

Seriously, if you really have some money that you want to invest, then you either need to find a good advisor, or educate yourself enough to decide on your own investments. If you don't want to spend the time to educate yourself, then go with the kinds of investments that you already know about. Maybe that is nothing more sophisticated than CDs or even a simple bank savings account. Putting your money there would be better than jumping into speculative schemes based on internet advice.

Again, everyone wants desperately and completely to believe that the investment decisions that THEY have made are the right ones. As such, they will try hard to convince YOU to make the same decisions that they have made. Doesn't matter if your risk tolerance, your time horizon, your available funds, or anything else is different than theirs. They don't even bother to ASK about these things--they just tell you how great their own, personal get-rich-quick scheme is.

This is exactly like asking "what boat should I buy?" What happens when someone does that? They get answers that are all over the board. Some of the answers are just plain idiotic. Some of the answers are very good--or at least WOULD be, if the OPs situation was exactly the same as the posters. Most people will spout answers without even asking the OP where he/she wants to go, family size, sailing experience, or anything else.

Through it all, the answers will be filled with personal prejudices and assumptions. And almost no one will give the only really correct answer to that kind of simple question, which is (and always will be) IT DEPENDS!

It is scary to me to think that there are people out there who might consider spending tens of thousands of dollars on a boat, based only on the myriad answers they got to the question "what boat should I buy?". It is even SCARIER to me to think that someone might spend tens of thousands of dollars (or more!) chasing get-rich-quick schemes based only on the myriad answers they got to the question "how to invest?".

[Doodles]

Originally Posted by denverd0n

You got one financial advisor who didn't want your business. If you were going to buy a boat and the first broker you talked to asked you your budget, and when you told him, his response was "Well, you don't need me" would you then give up on ALL brokers!?! Of course not! You'd go find a broker who was willing to work with you.

Why on Earth would you NOT do the same when it comes to a financial advisor?

Seriously, if you really have some money that you want to invest, then you either need to find a good advisor, or educate yourself enough to decide on your own investments. If you don't want to spend the time to educate yourself, then go with the kinds of investments that you already know about. Maybe that is nothing more sophisticated than CDs or even a simple bank savings account. Putting your money there would be better than jumping into speculative schemes based on internet advice.

Again, everyone wants desperately and completely to believe that the investment decisions that THEY have made are the right ones. As such, they will try hard to convince YOU to make the same decisions that they have made. Doesn't matter if your risk tolerance, your time horizon, your available funds, or anything else is different than theirs. They don't even bother to ASK about these things--they just tell you how great their own, personal get-rich-quick scheme is.

This is exactly like asking "what boat should I buy?" What happens when someone does that? They get answers that are all over the board. Some of the answers are just plain idiotic. Some of the answers are very good--or at least WOULD be, if the OPs situation was exactly the same as the posters. Most people will spout answers without even asking the OP where he/she wants to go, family size, sailing experience, or anything else.

Through it all, the answers will be filled with personal prejudices and assumptions. And almost no one will give the only really correct answer to that kind of simple question, which is (and always will be) IT DEPENDS!

It is scary to me to think that there are people out there who might consider spending tens of thousands of dollars on a boat, based only on the myriad answers they got to the question "what boat should I buy?". It is even SCARIER to me to think that someone might spend tens of thousands of dollars (or more!) chasing get-rich-quick schemes based only on the myriad answers they got to the question "how to invest?".

+1 Excellent post.

[70AMX]

Originally Posted by 70AMX

I tell you what, since there is no way I am going to convince you of anything....why not come back to this thread 6 months from now and we will see how gold is doing.....I will bring dinner and if I was correct and Gold continues to rise....I will feed you....and if Gold goes down AND stays down....you can feed me my own dinner....OK?



But feel free on September 3 2011 to come and feed me my dinner.....I might not be Hungry....but I will eat it anyway.....Will you?

It is not September 3 yet........but I do believe that my points have been made already about where the economy is going and what asset would save you from disaster. March 4 2011 gold $1432 August 8 2011 Gold $1715......... And you ain't seen nothin' yet...........


Cat man do are you HUNGRY YET?


Shocker: JPM Sees Gold At $2,500 By Year End

Shocker: JPM Sees Gold At $2,500 By Year End | ZeroHedge

[70AMX]

Snippit from: Guest Post: It

3) G7 finance ministers have pledged to take any steps necessary to calm markets and “avert collapse in world confidence.”
Here’s the thing: All governments can do is print, borrow, or steal from taxpayers. These are exactly the policies that created a loss of confidence to begin with, and now they are pledging to restore confidence by doing the exact same things.
If they take action, the situation will only get worse. If they don’t take action, the markets will panic and the situation will only get worse. Rock. Hard place.
4) Trillions of dollars are sloshing around in the financial system right now desperately seeking some modicum of safety. With the wave of downgrades and money creation that’s coming, few asset classes look stable… so that little hunk of yellow metal is starting to look awfully attractive to a lot of investors.
5) Governments will do whatever it takes to keep the party going and maintain the status quo, whether it’s printing money into oblivion and sticking consumers with massive inflation, or sending police out into the streets to beat everyone into submission.
I really want to urge you to think rationally about your situation and ask yourself a simple question– do you feel secure having the entirety of your assets and livelihood under the control of a single bankrupt nation in the midst of a financial collapse?
If not, it’s time to let go of the excuses and take action.

[Delfin]

I certainly agree that everyone should take responsibility for their own investments, and understand why those who do well with a strategy will recommend that strategy to others who ask "how to invest?"

I'll just repeat that there is a fairly simple way for people out on boats to have an active investment strategy that is far better balanced than any other strategy I am aware of. That strategy is investing in commodity spreads that cover a broad range of commodity types. Those that say that commodity investing is too risky are probably correct if you are taking straight positions, betting that pork bellies or some such will go up. A spread is where you are long one leg of a commodity, for example August lean hogs, and short another, like October lean hogs. The historic trend is that the price range between these two will widen, resulting in profit. If they narrow, a loss results.

My suggestion, as before, is to investigate a firm called Moore Research that lists the entry and exit points for different spreads that historically have logical reasons for their behavior. A simple example is a current spread that is long Heating Oil and short Unleaded Gas going into late winter. The idea that heating oil would go up during the heating season faster than gasoline would go up when outside the driving season is not hard to understand or defend as a reasonable possibility of being repeated this year.

Since I posted this investment recommendation on April 4th, an account I opened for one of my kids is up 59%. Starting with $24,000, the liquidation value of the account today is now $38,000. This will likely not hold, but with persistent investment across a range of commodity types, by year end the account should be well up just as it has for my own account for years. While I like gold and have as much of it and silver as I can afford, gold over the same period is up 20%, and IMHO, has a great deal more risk involved than investing in a range of commodity spreads.

I recently set up a series of trades to execute on auto-pilot using the Interactive Brokers platform so I could go cruising, which is why I like this approach for sailors.

[70AMX]

I think that the point you are missing is that the chance of all fiat currencies being printed to the moon (as they all are right now) means that the money your assets are valued in could be devalued to the point of almost being worthless, and When.....not IF.... we have a currency crisis your dollar...Euro...yen... Pound...ect may not be accepted ANYWHERE.....meanwhile gold and silver will be king and queen of all Money....repeating history as it has been doing for 5000 years. QE3 is about to become reality and anyone who is not prepared could very well lose everything. Paper assets are not protecting your future....Gold and to some extent Silver will (silver is not portable) protect you from what is coming....and it is money in every country in the world.

Snippit from ZH: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America. Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated | ZeroHedge

How bad could this get.........Bac rolls over and takes every other bank it deals with down too. Do you see how ugly the future looks if BAC goes down????????????????? Shirley we will have Tarp2/QE3 to the MOON ......... and don't call me Shirley.....

[Delfin]

Originally Posted by 70AMX

I think that the point you are missing is that the chance of all fiat currencies being printed to the moon (as they all are right now) means that the money your assets are valued in could be devalued to the point of almost being worthless, and When.....not IF.... we have a currency crisis your dollar...Euro...yen... Pound...ect may not be accepted ANYWHERE.....meanwhile gold and silver will be king and queen of all Money....repeating history as it has been doing for 5000 years. QE3 is about to become reality and anyone who is not prepared could very well lose everything. Paper assets are not protecting your future....Gold and to some extent Silver will (silver is not portable) protect you from what is coming....and it is money in every country in the world.

Snippit from ZH: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America. Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated | ZeroHedge

How bad could this get.........Bac rolls over and takes every other bank it deals with down too. Do you see how ugly the future looks if BAC goes down????????????????? Shirley we will have Tarp2/QE3 to the MOON ......... and don't call me Shirley.....

Shirley you won't get any disagreement from me, which is why about 80% of my fixed invested capital is in gold and silver bullion. However, it is not quite time to go the bunkers with a store of bullets and heritage seeds. That time may come, but in the meantime, I'll continue to try to make dollars trading commodities so I can buy more gold and silver.

[smurphny]

Originally Posted by 70AMX

How bad could this get.........Bac rolls over and takes every other bank it deals with down too.

But isn't BAC "too big to fail?" Looks like the smoke and mirrors put in place by governments may soon be insufficient to cover up the stupidity of their buddy bankers.

Your point about devaluation of currencies is important. We avoided "breaking the buck" in '08 but this will likely not be true in the near future. What does this mean...well, the safe mm fund you have your cash in will cut the par value of the $1 shares. This will affect almost everyone and especially those who think they are safe in mostly "cash." Gold could rocket higher than anyone believed possible.

[Doodles]

Time to cast off the dock lines I guess. :-). Glad I just had the bottom done ... We're ready to go!

[70AMX]

Originally Posted by smurphny

But isn't BAC "too big to fail?" Looks like the smoke and mirrors put in place by governments may soon be insufficient to cover up the stupidity of bankers.

Yes it is....so what do you think the politicians will do.......Print 24/7... devalue the currency more and make that can of Campbell's tomato soup cost $2.50 instead of the $1.50 it is today or the .65 it was last year. You have to make enormous profits (of which they tax you on) to try and keep up with that kind of inflation.....there is no way back from what they have already done.
I am not saying that this is the end of the world.......what's coming is just the end of the most prosperous period in world history.....what is coming is the loss of 80% of what most people have as assets.....the world will go on just fine....Really Cheap Toys (including Sailboats) is on the horizon and I can just see My Catalac 9m in the distance......I hope they will take GOLD for it..................

[MarkJ]

Originally Posted by 70AMX

the money your assets are valued in could be devalued to the point of almost being worthless,
.......Gold and to some extent Silver will (silver is not portable) protect you from what is coming....

Always buy when everyone is telling you not to. Always sell when everyone is telling you someing will go up.

IMHO Stocks have been overbought so they are coming off for a time. A good moment to buy.
Gold is vastly over priced and many who have been holding gold for a while (its often a long term hold) will be moving to crystalize their profit.

[smurphny]

It's interesting to think about the number of dollars available in the entire financial system and its correlation to inflation. When trillions evaporate as they did today, where do those paperbacks go? I think they just...well...evaporate from the total. No matter how many dollars are "printed" many just disappear in lousy financial times, never to be heard of again. So when the fed floods the system with more money (in one form or another) does it create devaluation? Are there really more dollars chasing the same number of assets as you would visualize logically, creating inflation? I don't have a good understanding of the mechanics of this and it seems no one really knows for sure what the effects of this kind of policy has in the long run. Most of the experts and pundits hem and haw when they are asked this question.

I'm with you Doodles, bottom painted and ready to escape from the mobs of starving people with my fishing pole as anarchy unfolds.