A few times per year, a client or friend calls me with a “stock tip” he or she heard from someone. I’ve never traded on these ideas for a few reasons. First of all, the tip is illegal if it comes from insider information. That alone is a showstopper. If the information is not from […]
Archive for Investing 101
Understanding the Wash Sale Rule
The IRS wash sale rule prohibits traders/investors from deducting losses from sales or trades of stocks or securities in a wash sale unless the trader is a dealer in stocks or securities. A wash sale occurs when a trader sells a stock or security at a loss and within 30 days before or after the […]
How to Trade Using Market Timing Signals
Strategies for trading can and should vary depending on the type of market timing system and each trader’s individual goals. AF Capital Management’s market timing system is based on technical analysis, specifically trend following, and is not meant for day traders. Investors can use different approaches to reach varying goals. With any of these approaches, […]
What is the Market Multiple?
During the recent market turmoil a client posed the question, if the economy is less than 30% likely to fall into a recession again in the near term, why has the market sold off so much so quickly? The answer is a constricting market multiple (fancy wording for fear). Wall Street rarely likes to use […]
5 Tips to Diversify
One of the easiest steps to help lower the volatility in your portfolio is the power of diversification. Along with diversification among asset classes (i.e. stocks, bonds, cash, precious metals) the types of stocks and bonds an investor owns should be diversified also. Stocks within each sector and industry tend to move in step with each other outside of micro-economic […]
Are Stock Options Risky?
As an advisor who specializes in using options to grow and protect clients’ assets I’ve been asked by a few clients if using options in their accounts is too risky of a trade for them since they want to keep any losses to a minimum. In each instance I’ve easily been able to reply that when […]
Understanding Risks in Investing
Understanding the risks of your investment choices is a key element in planning. Risk is not limited to how much one might lose in the markets. That’s only downside risk. Risk also includes opportunity cost or upside risk. While most investors think of an investment’s risk in relation to how much they might lose if it goes down after they buy it, upside risk […]
