My Dad and I signed up for a 2-day stock investment seminar by TD Ameritrade at the Hilton Hotel in downtown Portland. My only other experience I had analyzing the stock market had been in my lower-level accounting class, and were didn’t necessarily learn how to effectively manage a portfolio or how to strategically buy and sell stock.
Needless to say, I was quite interested to learn how to create a profitable investment strategy.
Most people make the common mistake of buying stock in large companies that they never plan to sell. They simply sit back and cross their fingers hoping to generate a profit. It was explained that the reason for this misconception was that people perceive large and successful companies to have the best stock option. But even if the company has a history of success, it doesn’t mean that the actual stock will have the highest rate of return.
I’ll admit it: I was pretty skeptical. I was even more curious to see what was meant by this statement.
The speaker then explained how to conduct a thorough technical analysis to determine the health of the stock, and more importantly, WHEN to buy and sell it. Timing really is everything. The investment tools on the website made analyzing the health of stocks very easy to understand, and I was actually eager to try it on my own. The most fascinating aspect about the whole seminar was that the timing of investing activities should not be limited solely to periods when stock prices increase. You can still invest in markets that were trending flat and downwards AND still generate a profit by investing in options (contracts). Call options increase in value when stock prices increase (no-brainer there), but the value of put options is negatively correlated with the price of stock. When stock prices fall, the value of put options actually increases (Provided you’ve still performed a thorough technical analysis).
Until today, I had no idea there was a a way to generate profit when stock prices were falling. Very interesting… I’m now (finally) coming closer to raising funds for a Roth IRA.