Buy and Hold or Buy and Hedge – Which Do You Prefer?
I heard something on CNBC yesterday morning that compelled me to write this blog today. Steve Ratner, former U.S. Treasury Auto Advisor, was part of a panel reviewing the hype/excitement over the Facebook IPO. Steve is quoted during this interview as saying, “Individual investors shouldn’t be playing the stock market any more than you should take out your own appendix”.
The old hedge (Photo credit: Wikipedia)
He went on to explain that he feels that we as investors are unable to take information about the companies we wish to invest in, do thorough analysis and come to a reasonable expectation for share performance going forward. He feels that investors should be in market index funds only.
OptionsANIMAL Weekly 5-4-2012
Options Traders Market View – Sell in May, you will pay
An important part of making investment choices is to understand the context for the market and our current position in the long term economic cycle.
This is a discussion of my view of the US stock market today and its potential short-term direction. Today I will focus on recent market developments, including a look at the S&P500 (SPX) and its Volatility Index (VIX). My short-term view is that the market will remain stagnant to bullish in the short-term. A pullback, if it does occur, still represents a buying opportunity (see last Market View post on Mar 23, 2012).
OptionsANIMAL Weekly 4-27-2012
OptionsANIMAL Weekly 4-20-2012
Riding the Tides of the Market
Love to Surf? It May Assist You in Trading These Markets
I have compared trading stocks and options to many things. Some days the market makes me feel as though I am solving a puzzle with many jagged, sometimes complicated, pieces needing to be placed together as a cohesive whole. Other times I feel like a farmer – sowing new trades into my portfolio while reaping profits on others. Now that I live in southern California, I think my favorite analogy for the market is the ocean and its waves. The more we learn to work with the waves and the tides, and not against them, the more successful we will be in our trading enterprise.
OptionsANIMAL Weekly 4-13-2012
Trader Taxation: Do you know how your trading is taxed?
Traders spend a lot of time and money learning their trade. They take courses to learn how to make money in the market and realize their dreams of working for themselves. While traders try to learn about every aspect of their trading strategies they often overlook one important area. This frequently overlooked area is one which can cost a trader a significant amount of their hard earned profits. If you have not guessed it yet we are referring to taxes. Many traders don’t fully understand how their trading activities will be taxed until they have received their tax bill and it is too late. This article will supplement your trading education by explaining the tax treatment of many commonly traded instruments.
Stocks, Stock Options, Exchange Traded Funds (ETFs), and Options on ETFs:
These instruments are grouped together as their taxation is generally the same. The default rule is the gain or loss from trading these instruments is capital gain or loss. For tax purposes net capital losses are deductible up to $3,000 against other types of income such as wages, retirement distributions, interest, and dividends. Any net capital loss above the $3,000 is carried forward to future years where it is deductible at $3,000 unless offset by future capital gains.