The open to buy spreadsheet example is not a long term solution to managing your stocks. In my view, they are a poor idea because the choice to buy or sell on the basis of current market price has not been considered. This results in a disconnect with the stock market and the inability to exit stocks that you don’t want.
Stocks are assets that are purchased and sold to produce a profit. Assets should be managed using sophisticated financial concepts. Stocks are not assets and should not be managed in such a way that takes away from the position of the investor as the sole investor and buyer.
OpenTo Buy Schemes Can Be Negatively Impacted
The buy and sell spreadsheet example seem to suggest that there is a benefit in selling when the price has dropped and a benefit in buying when the price has risen. There is no specific reason for this. It appears to suggest that there is a trade off between long term and short term and as long as you are not too long term your buy and sell activities will be profitable. The same claim was made about the penny stock when it was first launched.
Trading with the long term in mind and with the intention of breaking even with minimal losses are usually a mistake when it comes to the stock market. You need to be prepared to lose money if you do not have proper knowledge of stock analysis and you need to know how to evaluate information in such a way that your traders do not suffer. You can make money from short term trading but the expectation should be that you will lose money in the long term trading.
Stock trading involves technical analysis of the prices of stocks and cash flows. Financial issues like dividend payments, debt management, and capital structure are important considerations. However, the principle behind trading stocks should be the same whether you are trying to make money in the stock market or trying to reduce your debt.
The stock market is not a casino and a trader’s claim that the stock market works differently from the lottery is just not true. Trying to improve your chances of success by just reducing your losses is just self-defeating.
For example, it makes sense to trade when the price is low but you cannot support yourself with a strong profit margin. It makes more sense to use your capital for paying down your debts and future payments if the price is low. At the same time you can use the profits to offset any losses you have incurred on bad shares.
Long term stock market trading is a challenge. If you expect to be successful, you need to adopt some discipline and strategy and apply that discipline to your trading decisions.
You need to find a good stock broker who can help you buy and sell stocks. In some cases it is also beneficial to go into partnerships with a broker and ETF fund. The transaction costs of investing in ETFs are a lot lower than in stocks and mutual funds and a bond fund can provide a risk-free alternative.
I have had great success with dividend reinvestment plans, which allow you to “payback” the dividend. This allows you to accumulate a lot of dividends without risking too much capital.
I have also developed a fund manager, which has reduced capital costs. One of the problems with private equity is that the cost of capital can be very high. If you own a management fee fund, you could use these funds to finance this type of fund.
Your broker can also help you invest in a stock that will support risk of loss. In fact, many brokers provide their clients with a protective margin account which can provide a great deal of flexibility. SEE ALSO : open to buy spreadsheet
