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Storm Clouds Gather Over World Markets

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Guest consa

Stock markets around the world are braced for bad news from the US this week when official data is published on consumer and business confidence in the wake of two devastating hurricanes, soaring gasoline and oil prices, and softening demand for residential property.

Traditionally, October is the month when markets pull back, the most dramatic example being the 1987 crash. Stock market historian David Schwartz said: 'The FTSE-All Shares index fell by over two per cent in the last two trading days. History hints that last week's big two-day drop might turn out to be much more than a temporary correction.'

http://observer.guardian.co.uk/business/st...1587819,00.html

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Don't say I didn't warn you:

Does this mean you'll be watching your shares like a hawk in the coming weeks? How do you know when to cut and run without leaving it too late? Or will your shares be 'safe'?

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In practice, I go "short" by purchasing "puts". A put is an option which is the opposite to a call.

With a put, you win on the downside, when the price falls. With a call, you win on the upside, when the

price rises. To get this payoff, you pay an upfront sum called a "premium". Your risk is limited to the

premium. So for example, you might pay 100 points for a Dec. Put on FTSE struck at 5400. If FTSE rises,

and clsoes above 5400, you lsoe the whole premium. If it falls to 5200, you would collect 200 points.

The cost of this insurance, depends upon the volatility that option slelrs expect

How would I go about purchasing puts to hedge against falls affecting my portfolio? I'm just a small investor but I'd like to consider locking in some of the last years gains until we see which way the wind is blowing.

Cheers

Edited by 2MeterBear

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Don't say I didn't warn you:

"A sharp slide in the US stock market could start within a few days."

i'm in agreement with you Bubb,although I don't share the apocalyptic vision globally.

US consumption will slow,no doubt about it,but in tandem with that will be more wealthy consumers looking at more efficient solutions.....that's why I'm so bullish on japan.

they have the best technology on the market at the moment to conquer this propblem......toyota and honda are the world#1+2 hybrid car makers.....honda also worlds biggest motorcycle manufacturer.

...not to mention the most enegy efficient TV's etc.

As the US slows,the dollar(and sterling) will weaken.this drop will only be brief,while the effects of more competitive US exports filter through.

I'm playing this one with a "reverse" psychology.....as the US and UK slow,the yen will get stronger,so the value of my holdings will rise once converted back.

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  • 334 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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