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Purchasing CFD reports - help needed pls!

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BearCuban12

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Gday All,
I am new to the world of investing in shares and think I have made a fairly decent mistake.

I bought 350k of shares on the 4th nov just before the recent drastic falls.
Have lost about 115k in 14 days. started with 150k in the 4 banks 100k in the 3 miners. and bits and pieces of MAH, NWH, AAX, PDN, BLY, WSA, OSH, PLA, WOR (and yes BNB at 1.08)

I am now reeling in the fact that had I waited 30 days would have saved myself 150k approx, and am kicking myself for buying at the top of a bear rally and not the bottom. I do however plan on putting another 300k in when the market seems to have fully bottomed.

anyways.. I am looking at buying a CFD report to try.
The 2 that I am considering are the Australian Stock report http://www.australianstockreport.com.au at about 800 bucks a year, and ASI club at about 5 grand for a lifetime membership (and they guarantee that you will double your money in 14 months, otherwise they will refund the membership money in full. I am leaning towards ASI, but it seems a lot of money to front for something that to me is unproven.

Any comments on the CFD reports or my portfolio and trading actions are welcome.

thanks in advance
one nervous new investor
 
Heres a tip

Do not feed the bear

Protecting your capital is more important for the stock noob
Learn how to protect your positions with a stop loss, position sizing and by using options strats. Most of the newsletters have made shockingly bad calls all through this bear market so be warned.
 
I'm sorry for your loss.

$115K in 14 days Yep, you could do with some help.

I'm not going to not going to ramble on telling you what you should have done, I will leave that to others, and there will be many!

Looking at your current situation, I would forget about CFD newsletters.

I would suggest you use CFD's to hedge you remaining shares against further loss's, until a defined bottom is in place. This way you can protect what you have left. The market is trending down, and may do so for quite some time.

With the rest of your funds you say you are prepared to invest, consider this:

We are heading into a recession. Some sectors do reasonably well during this period. Do some research of your own, or at least get some advise from professionals as to the best companies in these sectors.

The sectors to be considering are:

Utility stocks
Health care
Consumer staples
Alcoholic beverages
Household product makers
Tobacco companies
Gambling stocks
High quality cashed up companies

I am not going to give you the reason why these sectors may be more profitable than others during a recession. I will leave that for you as your homework.

Good Luck!
 
thanks guys.

MoXJO - What do you mean by "feeding the bear"?

Gundini - How do I hedge my remaining shares using CFD's

I have bought these shares as a 24 - 36 month investment, so with the exception of BNB, I am not too worried - what do you think?

thanks
 
'Feeding the bear' refers to throwing large chunks of money into a bear market in the hope of a rally only to see it move lower. Do not gamble in this market on the possibility of a rally with your life savings. Better to have the cash and wait it out.

Hedging with cfd's is simply shorting (betting) on the price going down so you make money. If you have 200 bhp shares then you sell to open a 200 bhp cfd position. You will stop losing money but you will not gain anything until you close out one of the positions. I’m not a big fan of cfds but it is a simple way to hedge.

You can do the same thing with a put option or by writing a call option except that 1 option covers 1000 shares. Then you get into buy and write combos delta trading strats etc. You will have to do your own research as that was only scratching the surface.

Remember to protect your capital first and foremost. Do not gamble thinking it is investing with large sums of money. Maybe do some homework on writing a put option or call options. Did I mention not to gamble.

I am not a financial advisor so do your own homework
 
Hi Guys,

Say you buy some stocks today and hedge with short CFDs, are actually taking a larger risk if a severe bounce occurs? as they sometimes occur after severe market corrections.

Just throwing this up for opinion if buying today, to hedge or not to hedge for a long term portfolio?

cutz
 

Hi Bear

Sorry about your trading losses. However, I do not believe that all is lost in your situation. I also note that you have shares in the 4 banks. Have you thought about selling covered calls on your bank shares?

Cheers
Happytrader
 

If you hedge to the same exposure between your stock holding and CFD, then there is no net market risk. What you lose in short CFD (assuming a bounce) will exactly be offset by what you would gain in the stock holding.

There would be some transaction costs, of course.

Buying today and then hedging it 100% seems meaningless, because market movement will not affect your P/L, so you might as well enter the market later. You would probably hedge only if you have an existing holding.
 
you need to be aware that CFDs utilise high proportion of leverage.

If you intend to also utilise hedging as a strategy, these two factors represent a considerable increase in complexity for your investing.

as such, this adds additional risk factors.

I am not aware of your level of investing sophistication, however I would be VERY wary of jumping into CFDs without a period of study, then learning by using demo accounts.

You can wipe out thousands of $ in seconds, due to the leverage factor.

let alone making mistakes in strategy or execution errors.

very sorry about your losses.

I suspect the vast majority of ASF members share your pain, at present (me included)
 
BearCuban12

Did you end up going with the ASI Club? I am looking to join with them and am after some feedback from ppl that have experience using thier service?

P.S well done on the 14k up.. was that using asi???
 
Personally, I would avoid all newsletters and tip sheets. Learn at least the basics of charting, and seek to then buy perceived bottoms and sell perceived tops. For example, buy 20 years of end of day price data and intensely analyse a daily chart of CBA (at ~$1000-$1200 for the data and chart program, far better value than a tip sheet). Self-reliance is an important element in trading.
 
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