Best Stocks to Trade For Tomorrow with logic 07-Jan | Episode 445

Open your Trading account in mintues with Zerodha

When you buy a stock option how much are you actually paying for that option? What are you paying for? Not many people realize that a large chunk of the option they are buying might not even be for the underlying stock.

I don’t know what all the fuss is about penny stocks. They take your money go to zero and everyone seems to think that is a great deal. Not me, there are 3 reasons why I will never trade penny stocks.

Financial industry insiders invested more than $91 million in their own stock according to Thompson. Traditionally, when you see insiders buying a stock it’s a very positive sign. Company insiders clearly have a good grasp on their company and industry. When they buy, positive news is on the horizon. Now, one insider buying stock is an interesting data point. A whole heard of insiders buying stock is a huge signal.

Inflation is setting in and every day costs are going up. Food prices are up. Gas prices are up. The cost of everyday living is accelerating, and it’s starting to hurt. With more and more disposable income going to buy everyday essentials, consumers are finding themselves in a quandary.

Before taking a position in any of the financial stocks everyone needs to know this new challenge. Here’s the interesting part…this government oversight is only starting to be discussed. Who knows what other restrictions the government will place on the broker dealers. I’d wait for these new developments to ripple through the industry before taking any position in these stocks.

Buffett invests $5 billion dollars. Now that’s no small sum. I certainly don’t have that much money. But he’s investing in a way you and I never could. First he’s not buying stock on the open market.

Foreign goods are prevalent in the US, and some exposure internationally is a good thing. Apparently I’m not alone, Warren Buffett is all over the news these days – the topic – his travels overseas, and his focus on investing there.

One of the newest investment categories is Exchange Traded Funds or ETFs. These funds offer the diversification of a mutual fund without many of the problems. In the last few years alone, ETF ownership has skyrocketed. According to The Wall Street Journal more than $560 billion is invested in these funds. ETFs provide an easy way to structure a portfolio and enhance returns.

There are several ways to go short. You can borrow stock from your broker…if you have a big account, are authorized for margin, and your broker wants to lend you the stock. Another way to short the market is to buy put options. If you time these options just right the profit potential is huge, but remember all options have an expiration date. Lastly, there are ETFs that are designed to short the market.

MLP stands for Master Limited Partnership. It’s an investment vehicle that normally purchases energy related assets… like pipelines. The company runs the assets and distributes most of their profits back to shareholders. Here’s the cool part… most of the distributions are tax free or tax deferred.