Let’s face it.  Both professional and amateur investors will lose money on a stock from time to time.  This can happen when a sudden bad news event surfaces about the company you are invested in.

Like the recent Walmart Mexico scandal.

It seems that people high up in the Walmart organization knew that bribes were being made to officials in Mexico to cut through the red tape to open new stores.  This has put their competitors at a disadvantage.

And Walmart stock dropped suddenly on the news.  Or a few years back when the Enron scandal broke.  In that case the price of the stock ultimately dropped more than 90% — much more than 90%, actually.  That’s a devastating loss.

Bt the difference is the professionals keep from turning a small loss into a big loss.  They live top play another day.

And the way they limit their losses is with a technique called Read the rest of this entry »

The past three months have been a frustrating time for stock market investors.  After making a major move up from August through February, and even March, the stock market seems stuck in a trading range.

Which way will it go?

The prognostications on this question are a bit maddening.  Many feel the market will make a major move on up, citing that companies are still cheap relative to their earnings.

Others say with equal conviction that the market is setting up for a significant correction.  I just read one analyst’s comment that all of his charts are lining up like he has never seen before – like some earth shaking event, driven by hidden forces, is about to happen.

Even Walmart, that bastion of capitalism and stable stocks, took a Read the rest of this entry »

Don’t let the Master Limited Partnership name throw you.  They aren’t that hard to deal with.  And I’ve had great success with some MLP’s.  As a matter of fact, I had a fantastic investment in Mark West Energy – which is an MLP.

For your purposes, MLP’s trade just like a stock.  By that I mean they have a symbol, and you can buy and sell them in seconds – just like a stock.

But they can have really good dividends associated with them.  I was (and still am) getting paid a 20% dividend on the Mark West Energy MLP I invested in near the bottom of the 2008 crash.

How can they do this?  Because they get special treatment from Read the rest of this entry »

When I was a young boy I remember on warm summer evenings hearing snatches of conversation my parents had with our neighbors the Dunham’s.  Children pick up on all kinds of things like this, as all of you parents already know.  These summer conversations I’m referring to often centered around the Soviet Union, and the evil communist, and the possibility of nuclear war.

It was in the fifties, and the cold war mentality was going strong indeed.  Our neighbor even built a bomb shelter.  And I heard the obligatory conversations about who he would let in and who he might have to shoot after the holocaust.

These are strange sounding conversations today, but I don’t believe they were so Read the rest of this entry »

Have you ever wondered what pork bellies are?

It’s kind of a funny name for an investment, isn’t it?  Before I got into trading options on commodities I used to hear about them and wonder what they were.

Pork bellies are the underside of a pig — the right and left side of the belly.  They are what bacon is made out of.

And they are serious business.  If you own a contract of bellies and the price goes up just $1 a pound you make $400.  Of course, if it goes down $1 a pound you lose $400.  Wow.  That’s some kind of leverage, wouldn’t you say?

Pictured above is a pork belly.  Looks kind of like bacon, doesn’t it?  Because that’s what they make bacon out of.

Now you know.

To your health and prosperity – John

P.S. If you enjoy these simple explanations about investing, you may be interested in my latest book Stock Market For Beginners.  It teaches you about the stock market and how to invest in simple terms just like this post.  And by the end of the book, you will have started an investment account and put on your first trade.

And know what you’re doing, too.

So if that sounds interesting, just click here for more information  Yes-Tell Me More About Stock Market For Investors.

You sure hear the “evil speculator” term being thrown around a lot these days.  From the sound of it, speculators are the source of all of our problems.  I swear, I’m just waiting for someone to try to round them all up and burn them as witches or something.

But before everyone gets a bit too hasty, maybe we should think about what a speculator is.  And maybe we should all take a look at ourselves in the process.  Because I think there might be some surprises in store if we do.

Definitions vary, of course, but a speculator is someone who’s main intention is to make a profit in the financial markets by buying low and selling high.  They focus more on price.

An investor, on the other hand, probably does some serious research into the value and profits of the company they are investing in.  They are trying to make a return on their capital through dividends.

There may be some overlap here, but you get the idea.  Speculators want to make money primarily by investment prices going up.

So let’s think about this?

Have you ever bought a stock, and the reason you bought was you were hoping it’s price would go up so you could sell it at a profit?

Hmmmm … you might be a speculator.

Do you have a 401k at work, and Read the rest of this entry »

When you invest in stocks, you actually buy shares of stock.  So what is a share of stock anyway?

Let’s think about a pizza pie.  And let’s say you and your friends all chip in and buy a pie together.  So you will all share slices of the pizza pie.  I just said the word “share,” didn’t I?

So you cut the pie into slices.  And you share the slices with your friends.  They each got their shares of slices and you get your share.

Now let’s say you and your friends want to buy a business together.  Maybe a nice wine shop to go with the pizza.  So you will all share the business.

You cut (divide) the ownership of the business into slices (shares).  And you Read the rest of this entry »

You hear and read about Wall Street all the time in the news.  And that’s no big surprise.  Because the New York Stock Exchange is on Wall Street.

But have you ever wondered how it got that name?

Here’s how that happened.

When the Dutch had settled in New York around the year 1640 there was a big earthen wall on the northern end of their settlement.  It was there presumably to keep out Indians and other encroachers.  Somehow I think the Indians may have had a different point of view on who exactly were the encroachers.

In any event, there was a street that Read the rest of this entry »

The New York Stock Exchange is just an auction.  You know, like an auction where there’s a guy talking real fast to a bunch of buyers to sell Grandma Mable’s rocking chair and other furniture so she can move to Florida to be near her grandkids.

And different people keep bidding a higher and higher price until someone discovers they bid the highest price and now they own the rocking chair.

That’s all the New York Stock Exchange (NYSE) is, really.  An auction.

But instead of selling rocking chairs, they sell Read the rest of this entry »

Many forms of insider buying are completely legal and you can improve your odds of investing success by knowing when it’s happening.

Insider buying is a matter of public record and is very easy to research.  One place you can look is in Yahoo Finance.  Just go to www.Yahoo.com, click the Finance option, pick the stock you are interested in and click the insider buying tab.

You’ll see some VERY interesting information.  You will see insider selling and insider buying.

Insiders sell for many reasons.  They may be selling because Read the rest of this entry »