Monday

Options Are Your Stockbrokers Best Friend, Not Yours

Stockbrokers and financial advisers make their living off your assets.

Stockbrokers are continuously looking at the accounts they 'manage' for ways to create commission, they of course, would like to make you money as well but that is not #1.

Enter stock options, this is the stockbrokers commission gift that keeps on giving.

Options are a contract that allow you buy or sell a particular stock in the future at a particular price.  You can speculate with options (without owning the underlying stock) or you can take the other side of the trade by 'writing options' (when you own the underlying stock).

Statistics show that speculating with options is a fools game with very few participants making money.

Buying the stock and selling the call option strategy is supposed to create income with little risk and it does that but it does even more - for your financial guy!

What it also does and your stockbroker won't tell you is create a nice stream of income for the stockbroker, he makes commission when you buy the stock, sell the call and sell the stock (or write another option).

As always, be careful of your financial guys intentions.  Ask yourself, should I invest in stock options?  If he asks you to start 'investing' with options, watch out!

Saturday

Iraqi Dinar Revaluation Is Bogus

The rumors have hit a fever pitch lately.  I heard the other day from an 80 year old grandmother that she was buying Dinars to get rich.

REALLY?!

The scoop is that after the fall of Saddam's Iraq, the Dinar become mostly worthless.  George Bush said that the Iraqi war would pay for itself a hundred times over.  I believe he was speaking figuratively, not literally.  Some conspiracy theorists took and take that to mean that the US will profit when the Iraqi Dinar is revalued and supposedly, the US and China have a stockpile of notes.

And some people, you may call them investors or speculators, I wouldn't, think you should buy Dinars now hoping to profit along side the US and China.

There is no free lunch.  If you want to send your money to someone and hope that they send you actual Dinar notes and not forgeries and then hope again that somehow there is a revaluation and if there is, that somehow, it works in your favor, go ahead, I'd rather take a nice trip to Las Vegas with the money and at least get a comped meal out of the deal.

If you think this is a good idea, you should read my book.  Learning what not to do is just as important as learning what to do if you intend to make money investing.

Thursday

Dirty Stockbroker Trick

With 2011 behind us and looking now at 2012, some people will start to look at their portfolio to make some changes, maybe decide that they can invest for themselves.

As a stockbroker, the dirty trick that most use to keep clients on board is to compare results but we weren't comparing apples to apples.

Here is the trick and it would work excellently this year given the results of the stock market in 2011, here is what I mean.

In 2011, the S&P 500 lost under 1% but with dividends, it actually gained 2.1% so make sure that you know that when your financial advisor calls you to tell you that he made 1% and the 'market' lost money that you realize that he is not telling you the truth that you paid for nothing, that you could have done better by yourself by buying a simple index fund.

Same thing with the Dow Jones Industrial Average which gained 5.5% but with dividends 8.4%.  You get the point.

An educated investor is hard to fool and take advantage of, that's you!