Recovering losses from Stockmarket!

[tech/a]

Why not TRADE one stock as against invest.

There are many who know the movements of particular stocks intimately and can profit handsomely.

Futures and Index traders put all their eggs in one basket every trading session.

 

[cuttlefish]

An index represents a basket of stocks so arguably trading an index incorporates diversification. Trading only one stock with all capital would also be equally as risky as investing in only one stock. A single stock can go into a trading halt at any time and never trade on the market again. This won't happen to an index.

In relation to futures trading - commodity markets themselves are not going to dissappear overnight - i.e. there will always be a market for gold, oil, wheat etc. - so again this seems to have less risk than trading a single stock - though I would have thought allocating all capital to trading a single commodity would be risky as well.

All markets theoretically have a settlement/counterparty risk but the exchanges as I understand it have an allocation of funds set aside to cover this risk (whether this allocation is adequate in the case of a systemic failure is another question).

 

[diminike]

Why not TRADE one stock as against invest.

There are many who know the movements of particular stocks intimately and can profit handsomely.

Futures and Index traders put all their eggs in one basket every trading session.

Some people don't have time to watch the market every minute of the day.
Traders do not always sell with profit
And they trade in different stocks.

Dimi

 

[brty]

Cuttlefish has really nailed it here.

In property, commodities and indexes, the price will never go to zero. However there are many individual stocks that have done just that.

Even in trading it would be incredibly dangerous to put all your eggs in one basket with stocks. The fantastic century zinc mine was owned by Pasminco, the management of that company managed to have huge hedging losses, the share price went to 0. Yet the mine itself continues to go gangbusters producing huge profits for its new owners (who essentially bought from the liquidators of pasminco).

Share certificates are (well use to be) pieces of paper, a small percentage of ownership in a company that you have no influence over.

A commodity contract is just that, a contract.

A property is just that, a physical property that you control.

An Index is a large number of companies, hence a spread risk.

The absolute risk of any one share is always much greater than any of the others.

brty

 

[Trembling Hand]

In relation to futures trading - commodity markets themselves are not going to dissappear overnight - i.e.

That's what the Indian Futures traders thought as well before their market got pulled overnight to "control" food prices.

 

[peter2]

Ah, TH, I was thinking the same thing.

I was wondering if the buyers of an Indian soybean futures contract were able to sell or are they stuck with it?

I wouldn't expect that the Indian contracts could be offset with a US contract.

Cuttlefish: What were property values worth in the great depression, a meal?
Commodity prices did return, but could you survive the drawdown period?

 

[MRC & Co]

Why not TRADE one stock as against invest.

Trading one stock and putting ALL your investment capital in one stock at one time is a different story.

Beware of the black swan!

 

[cuttlefish]

Ah, TH, I was thinking the same thing.

I was wondering if the buyers of an Indian soybean futures contract were able to sell or are they stuck with it?

I wouldn't expect that the Indian contracts could be offset with a US contract.

Cuttlefish: What were property values worth in the great depression, a meal?
Commodity prices did return, but could you survive the drawdown period?

Why are you asking me about property prices when I haven't mentioned them at any time in this thread ?!?

My literal statement in relation to commodities was that commodities markets don't dissappear. I did not state that futures markets don't dissappear, in fact I mentioned counterparty/settlement risk exists in all markets. I also didn't say commodity prices don't fall and in fact stated that I thought it would be risky to trade only one commodity.

I don't trade futures and didn't even know there was an indian futures exchange but it sounds like the counterparty/settlement risk that I mentioned did eventuate in that situation.

I'm afraid I don't really understand the point of your post.

 

[Timmy]

Beware of the black swan!

OT, and probably not helpful, but all the swans are black around here (except the baby ones - cygnet? -, they are a sort of furry grey).

 

[MRC & Co]

OT, and probably not helpful, but all the swans are black around here (except the baby ones - cygnet? -, they are a sort of furry grey).

Yes, there are a few around here.

But look at the start of this thread, for very good reason.

Fair enough if you have a bit of cash you don't mind loosing and want to take a 'gamble' so to speak, but for 99%+ of people on here, it is not appropriate IMO.

Each to his own and if you can make it work, good for you, just ensure you don't give it all back over time as most do. Guys with this mentality are probably more prone to gambling and so, the first scentence in this paragraph rings even more true.

 

[nioka]

There is a best way and many other ways to recover losses and I don't profess to know the best but I know what worked for me.

1. Go back to basics.
2. Do some(plenty) research.
3. Adopt the policy of slow and steady wins the race.
4. Do your gambling at the race track and not on the stock exchange.
5. Don't under any circumstances put all your eggs in one basket unless you are prepared for substantial losses.
6. Have another go.
7. Accept the fact that there is both good advice and bad advice on this subject.