(I continue to get alot of questions on trading and investments by Email and PM,
I thought it would be better to channel them through a thread. This way others can participate,
both in the asking, and in the answering. Apologies in advance, if I do not get to your question
quickly. Please feel free to send a PM AFTER you have posted a question here)

I had this one overnight:

I'll start with basic questions which should be easy to answer then move on - if that's OK with you?

e.g. How to put on a Stop-loss order:
Can it be left with the broker, or do you have to monitor it yourself?
Do online brokers allow stops to be placed?


Re: STOP-LOSS Orders.

Most brokers that I am familiar with allow you to place stop-loss orders.
And many good spread betting firms like IG Index, and Finspreads also allow them.

The truth is that I am not good with stop-loss orders. Mine seem to get hit at the wrong times, and I find myself out of a trade when I would have preferred to stay in. Where i do use them effectively is sometimes when I want to take a profit, I will place a stoploss order instead. I want out, and I dont mind being taken out of the trade at a profit. Occasionally the market keeps running in a profitable direction, and I will find I can move my stoploss several times before it gets hit.

Stop-losses are vital for many traders who take big positions with gearing. In stead of doing this, I use options. This way I get gearing and limited risk. I tend to use in-the-money options because i don't like paying time value. They are very effective for me, and yesterday I did about a dopzen options trades, which is more than usual, but I saw a good buying opportunity after the gap down on Wall Street, and I took advantage of it, by purchasing various calls, and then selling many at a profit in stages later in the day.

Here's one for you;

Where can you get a decent broker that offers Puts and Options?

Hey Bubb,

Thanks for this. I am certainly guilty of sending you PM's but realised you must get many of these. So I have some really basic questions.

I have followed your articles and cgnao's for while, looking at what you have to say and where you invest. I have an idea of what I would like to do and want to take a small section of my savings and invest it in a variety of things (i have a strong technology back ground and will invest in hi tech companies that I think are going to do well and are working on key technologies that may be needed in the next 6m-2yrs). I would also like to make some money on shares related to the housing market that may fall over the next few years and maybe profit from your suggestion (when you are right of course )

Initially I will keep my investments very low (several thousand, maybe 10k) - it's all I can lose without jumping of a building (ideally i don't want to lose any). You mention finspreads above. Who would you use (in my position) for a). buying shares, b.) buying shorts and puts c.) buying gold (probably the same as a i guess).

How much more do you think gold can increase? What could cause it to crash like it did in the 80's?

Which site do you monitor the market the most on? I have been to your website, there are a couple of options...

I have many many more questions but I am sure they will get asked. This is all i want to know right now.

Bored...

Gold is still at the beginning of a secular bull market. Even after the recent price run-up, it is still historically cheap compared to oil and other commodities. The fundamentals could not be better, yet the metal of kings is still not on the general public's radar.

When the people in the street wake up to the reality of inflation, a mania will unfold. Gold and mining shares will go parabolic. Only at that stage will a crash be likely.

What will kill gold? High real interest rates. They did so in 1980 and we are years away from that. Nominal rates have barely started increasing and have done so less than inflation so real rates are still very low. Until that changes dramatically you can be sure gold will keep climbing.

Good luck and buy some gold. You will not regret it.

On another thread, we've had people from on-line gold pool account companies plugging their services and are far from impartial.

I've read and read the arguements for and against Gold and was kind-of convinced. Goldmoney purchase prices on Monday were 279 /troy ounce. Having bought a grands worth, the spot price fell to 262 /troy ounce or less. I've just lost about 50 quid. In order to get that back, my gold has to rise by 5% and for it to have been a good decision, it needs to rise another 5% over the year otehrwise it would have been better in a mini-cash ISA.

It's all very well plugging gold like there's no tomorrow, but listening to advice like "just pile in - buy gold" will cost you dearly.

Your backing of Gold is touching - and something I now rely on to justify my instant loss. I wonder if, in reality, you should be giving people advice to wait a while and not "dive in". If both yourself and Dr. Bubb are so clued-up, you may be predicting market activity that's 6 months, a year or two years away. In the mean time, Gold may suffer serious correction, or may not be the destination of choice for all those spare dollars and pounds...

AF.

http://www.liffe.com/liffeinvestor/brokers/index.htm has a list. As for their being decent maybe someone else can answer that?

To be honest, if you had bothered reading the following post I made on 12 October, you would have waited for the price to correct instead of piling in. I am aching to add to my position since July but I am patiently waiting for the price to get around or below 250/ounce.

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=211848

It's all about market psycology. When it is time to buy, you will not want to. When you want to buy, it is not time to. It takes patience. Just don't make another mistake of selling if it drops further. Then it will be the time to buy.

the best time to buy is when you can afford it


yeah realy im serious.if you wait you may miss the boat, remember everything has its day and just look at anything that looks quite cheap now and dont try to catch the bottom.

catching the bottom is a good way of missing out alltogether.

its the reason i buy gold in physical and drbubb and others prefer shares.

for instance gold dropped a little the last couple days, wont bother me but if i had gold shares or more so options it would worry me very much.


just buy the physical its cheap now and hold it till it aint cheap anymore, and dont play the markets unless you want the greater risk.

physical gold is your own, but shares depend on the company, its the same as buying shares in anything, and gold options are even worse.Sure you could make more if it moves your way but i bet there is a few on this board licking there wounds today.

Very well put. I expected a correction and sold all my mining shares for a nice profit. I have never sold any of the gold I am accumulating though, and plan to add to it shortly when this correction gives signs of being over. This is part of my long term accumulation strategy.

Don't be too concerned about 'losing' 50 Quid - Gold is going to trend upwards; but like many things in a market - it goes up and down a little bit along the road up the hill!

You should just sit on your current Gold holdings and perhaps buy some more when these 'market dips' appears again.

I have to agree with you about the recent 'plug' on another thread .......... this could even put people off buying Gold this way so it is counter productive!

Relax about your Gold - honestly it will do well in the mid to long run (I've got a large exposure in Gold bullion so you are not alone).

Cheers.

I am not sure about that i won't regret it, but i will invest in some. Thanks for the response.

BW
Your:
"i have a strong technology back ground and will invest in hi tech companies that I think are going to do well and are working on key technologies that may be needed in the next 6m-2yrs"

That is PART of a good plan.

However, I think you need to add:

+ Some notion of valuation. "Good" companies can be overvalued by the market, and once they get overvalued at some stage thay may fall back to undervalued, and so you can lose money even though the company has good products and is performing well,

+ Technical analysis. This can help with timing. The best time to invest is when I company's merits are being discovered by the market, and investors are flooding in. The wall of money can push prices up fast. But it is best when you have invested at an "inflection point" just as the stock is going from being boring to being exciting. Charts can help you find that point

Dr Bubb,

You may be able to help with this. I have an underperforming Endowment Policy. I've long been in a quandary over whether to trade it or not. It will mature in about seven years' time , having run since 1988, it has a surrender value currently of about £15K. If I trade it to get the cash I then have to find something else to do with the £15K. That is the downside of trading it in. On the other hand continuing to put £35 per month into it for the next 8 years knowing that it will probably underperform is not very encouraging. It presumably provides protection against inflation, to a degree, but it's hard to see its performance being otherwise useful.

Given the recovery of the Stock Market in the last three years, you'd think the muppets could have got it back to performance on target. They couldn't even do that. So I have little confidence in Prudential (formerly Scottish Widows) pulling any great tricks in the years ahead, when I suspect the stock market will not be scintillating.

Have you any suggestions? Should I surrender it back to Prudential? Should I sell it to a trader? Should I just keep it? Any advice gratefully received.

Malco,

I am not an IFA, but here's my common sense advice.

Try to sell half, and shop around for the best price you can find, as the best price will not be achieved by selling it back to the insurance provider- or so i understand. Take the money, and very carefully learn how to trade using only a part of it- like 10-20% . Once you have demonstrated that you can make money for three months, increase the amount you are managing.

"I've read and read the arguements for and against Gold and was kind-of convinced. Goldmoney purchase prices on Monday were 279 /troy ounce. Having bought a grands worth, the spot price fell to 262 /troy ounce or less. I've just lost about 50 quid. In order to get that back, my gold has to rise by 5% and for it to have been a good decision, it needs to rise another 5% over the year otehrwise it would have been better in a mini-cash ISA."

Physical Gold is ungeared.
Bigger returns will come from geared investments, and Gold shares have a kind of gearing, since they will often trade for $100-200 per ounce of in-the-ground reserves.

But with geared investments, you have a greater need to get the timing right, and that is a story in itself...

Yeah so buy propertyy in Aug 04 and tech shares in 2000. Just buy - buy - buy - anything! Anything has it's day, so buy. What a numb-skulled thing to say.

What does "afford" mean anyhow? If you have a large portfolio of investments and cash, does that mean you should sell everything and put it all in gold? Should you sell the wife and buy gold?




what reason?
a ) if you wait you may miss the boat
b ) everything has its day
c ) catching the bottom is a good way of missing out alltogether

so:

a ) if you wait you'll miss the boat on gold but not gold shares?
b ) gold will have its day but gold shares won't?
c ) trying to catch the bottom with gold will mean you'll miss out, but trying to catch the bottom with gold shares won't?



for instance what?



The reason gold dropped a little and gold shares dropped more was down to the fact that a ) gold shares profits are geometrically effected by the price of gold, so gold shares will both appreciate more and be knocked back more by gold price fluctuations, and B ) gold miners borrow to mine for gold so gold price increases make more and more of their mines feasible and their loans seem more manageable. IF you are a gold bull, which you say you are, it makes more sense to invest in shares as this will give you more bang for your buck. In other words you will be able to "afford" (your word) more gold exposure.

And this is not a "for instance" of a ), B ) or c ).



This is assumes everyone agrees that gol dis cheap. If they did, it wouldn't be the very next second. So there are plenty of folks who don't agree with this view (I offer no oppinion here). That means folks must form a view from the various oppinions. You mak eit sound so cut and dried. If investment were ever that we'd all be billionaires ... but then we wouldn't be as there'd be nothing cheap to buy. Where do you get you blaze oppinions from?




Somebody said this was "well put". Actually it is meaningless.

"Physical gold is your own" And? So? What? So are my faeces. Does that make them desirable???

You might think you can imagine the price of "your" gold to be whatever you like. The truth is it is dictated by the market. That goes for shares and any other tradeable asset. Given the right market even stock market shell-quotes can have a decent value. And anything can becoem worthless. Look at degrees!

Besides, how do you know your physical ingots don't have a lead core!