Lombardi Publishing was originally established in 1986 as an investment newsletter publisher providing stock marketplace suggestions to its readers. Nowadays, we publish 25 paid-for investment letters most of which provide stock market suggestions. Profit Confidential is our everyday no cost e-letter that goes to all our Lombardi Financial clients and to any investor who wishes to opt-in in to receive it. Written by Lombardi Financial editors who have been providing stock market advice for year to Lombardi consumers, Profit Confidential gives a macro-picture on exactly where the stock marketplace is headed, what sectors are hot, what sectors to avoid. Our two most recent and popular calls were telling investors to bail from stocks in 2007 and telling investors to jump back into the stock market in March of 2009. Timely stock market guidance that worked properly for the Profit Confidential loved ones of readers.
At this juncture, stock markets are pausing and showing some uncertainty. And, even though I do not pretend to have a crystal ball, I do firmly believe in adopting strong risk management to safeguard your investments and tough-earned capital. This is my very best stock marketplace assistance.
The last factor you want is to watch your gains disappear.
1 of my favorite techniques to shield investment gains is the use of put options as a defensive hedge against market weakness. This technique is called a protective hedge. Don’t be scared by the name or the fact that it employs derivatives, as the technique is straightforward.
Under this scenario, investors might be somewhat bearish or uncertain and want to defend the present gains against a downside move in the stock or the marketplace with the use of index put alternatives.
For those of you not familiar with options, a buyer of a put option contract buys the correct, but not the obligation, to sell a specific number of the underlying instrument at the strike or physical exercise cost for a specified length of time until the expiry date of the contract. Right after the expiry date, the certain option expires worthless and any responsibility is eliminated.
The buyer of the put option pays a premium to the writer of the choice, who gets compensated for assuming the risk of physical exercise. The writer of the put option is obligated to purchase the stock from the holder of the put really should it be exercised by the expiry date.
For the writer of the put alternative, the amount of premium received for assuming the risk is usually directly correlated to the volatility of the stock and marketplace. The far more volatile the stock, the higher the premium paid for the alternative. And low volatility translates into lower premiums.
You can get puts for stocks and sectors. If your portfolio is heavy in technology, you can buy puts on the NASDAQ. Or let’s say you have benefited from the run-up in gold and silver to record historical highs then a technique might be to acquire put alternatives on The Philadelphia Gold & Silver Index, which tracks 10 main gold and silver stocks.
If you are heavily weighted in technologies, you can acquire put choices in PowerShares ETFs (NASDAQA/QQQQ), a heavily traded put utilised for defensive purposes.
It’s that simple. Just take a appear at the different indices that closely reflect your holdings or put alternatives on individual stocks that you might have a big position in.
The world’s automakers know that, to grow, you require a presence in China’s auto sector, whether in it is a venture with a Chinese organization or as a standalone manufacturer of vehicles. The auto sector in China remains powerful, as the country is the world’s largest auto market, with an estimated 16.5 million vehicles sold in 2010, according to the Chinese Market Association.
Sales are showing some signs of slowing early in 2011. In the January-February period, vehicle sales were 10% year-over-year to 3.15 million vehicles in China, down from 84% growth a year earlier. While this is a concern, the absolute sales growth in China is still staggering.