Money Making Schemes

Nagesh answers:

Good news is often priced in long before the news actually breaks. Not because of any insider trading, but simply because that news was anticipated or rumored beforehand. If you intend to try to trade on news then you will be fighting a losing battle. There are a lot of people who are faster and better informed than you or I. Once we know about it, it is too late. But the small investor has advantages that the large investor doesn’t. It’s much easier to move 1000 shares, than it is to move 1,000,000. There is no conspiracy among the rich to keep the rest of us poor. It’s a simple matter of intelligence. Anybody with a modicum of intelligence can make money in the stock market.

Nagesh answers:

There are actually four kinds of people who make transactions in stocks. They are traders, speculators, investors, and market makers. Traders actually take advantage of the spread. Speculators require momentum. Investors are in for the long-term and are usually interested in dividends or growth. Market makers maintain liquidity and take countering positions.

You have describe speculation, which requires price movement (momentum speculation). The biggest problems with that strategy are that anyone who is guessing will be wrong more often that right, broker commissions will eat your bankroll (whether you profit or lose), and everyone else is trying it too, usually faster than you.

Nagesh answers:

There is so much to say. I’ll try to make this brief.

The amount of money you can make in the stock market is infinite. Also note that you can lose all your money much faster than you can make it.

The functions of the stock market is up (buy), down (sell), and sideways.

The two emotions that drives the market up, down, and sideways are “greed” and “fear.”

Go to www.finance.yahoo.com for more information.

Nagesh answers:

What you can do depends on how good you are. If you aren’t good, then you are gambling- and that’s luck. Given the hype and cons always around, it will probably be bad luck. If you can’t do it well, don’t do it.

Complicated game- requires knowledge, skill, instinct- and money. To make a living doing it as an employee of an investment bank requires the skill to manipulate and grow other peoples money. To make a living as an individual investor requires you have your own money. You make that money in some fashion, start investing and make it grow. You leave all the gain in, so there will be more growing all the time. When you have $1000 and your investment doubles, you gain $1000. But when your investments are worth $100,000 and they double, things start moving fast. The skill is knowing when and how to move your positions so that trend will continue- but you don’t take any out until it’s a large enough that is won’t shrink when you do, or will keep growing. How long that takes depends mostly on the times (opportunities are always changing) and your skill. You will not take a small amount of money and create a cash flow of any consequence any time soon.

I could now make a living from investing, but I have built portfolios worth 700K. The recession was an exceptional opportunity to multiply money, I have stocks that are worth 20 or more times what they cost me two years ago. I still take nothing out, because my everyday source of income meets my modest needs. Others who started at the same time I did (10 years ago) with the same money (10K) but failed to make the right choices probably have about 10% as much gain to show for it.

How you invest must match your ability and risk tolerance, as well as your nervous systems limits. Investing is unlike any other skill I know of, and I know many. Education and books get you started, but what really makes the difference in an average investor and a good one seems to come from how your mind works, almost like a genetic thing. Some are cut out for it, some are not. I’m fortunate in that respect.

I would suggest having an IRA for an investing base to grow financially stronger, but not expecting it to be a source of disposable income. For that- learn more valuable skills, or become a star performer in what you already know, thus be worth more money and probably get promoted. You would be surprised what a difference that alone can make in your value to an employer. Rare quality these days.

Nagesh answers:

There are actually a number of ways. Truth be told, making money in a bear market is a whole lot faster. Ill just run through a few of the ways to help get your started.

You can short sell the stock. Basically you Sell first, then buy back later. For instance, Sell at $10 and if the stock falls to $8, buy it back. You profited $2.

You can use options, and this get long.

Buy Put Options: The value of the Put Option rises as the stock value falls.

Sell Covered/Naked Call Options: If you own a stock and think that its going to fall in price, you can sell calls. This, contrary to belief is closer to short selling stock than buying Put Options is; in that you sell high and buy back low.

Naked Calls is when you sell a covered call without owning the stock. Very risky and advise you to not use this method.

If you dont know options, I highly suggest educating yourself first.

Last, own companies with a high dividend pay out.

I hope this helps. If not, Please contact me.

Christian Nago
CEO & Chief Investment Officer
www.intrepidtradings.com