Published:
January 23, 2008
This will be short and sweet, folks.
I think that by year's end, you will
thank me.
I do not limit myself when I am
investing and/or trading, and
neither should you. There should be
no restrictions on what you buy as
long as you understand what it is.
For example, some people just buy
stocks or options. I disagree with
limiting yourself in this way.
My philosophy is that you should be
familiar and comfortable with all
the different types of investments
because they all serve different
purposes and come in handy at
different times.
If you were, say, putting together a
table, you wouldn’t just have a
hammer, would you?
My point is that you have to
understand that each type of
investment represents a different
tool in your investment tool box, so
to speak, to help to accomplish your
financial goals.
You should become familiar with
stocks, options, bonds, and ETFs
(Exchange Traded Funds) at the very
least.
Stocks: Stocks, as you know or
should know, represent ownership in
the underlying company. In other
words, when you buy a stock you
become an owner of that company. You
can make money from stocks in two
ways. First are the dividends that
the company may pay out, and second
is the price appreciation of the
stock.
Options: Options are also called
derivatives because they derive
their value from what the option
contract is based on. In other
words, if you buy a call option on
XYZ stock, the call option will go
higher if the underlying stock goes
higher. It “derives” its value from
the underlying stock.
Bonds: When you buy a bond, you are,
in essence, making a loan to the
entity that issued the bond. The
entity that issued the bond could
have been a business or the
government. You make money with
bonds from coupon payments and price
appreciation.
ETFs (Exchange Traded Funds):
Obviously, these investments have
become popular over the last several
years, and I think that they are
absolutely terrific. ETFs can be
used as a proxy for bonds,
commodities and other assert classes
and indices without the expense of a
mutual fund. They also trade like
stocks.
Money strategy now for busy people…
Here is a strategy that I want you
to employ right now that I believe
will make you between +40% and +50%
by year's end.
I want you to buy Citigroup
(NYSE: C, $26.36) here. I have
not recommended a stock in a very
long time. Every single stock that I
have recommended in the past has
gone higher. I believe that this one
will not be any different.
I know what is going on in the
economy and the stock market (e.g.
the mortgage meltdown). I know that
oil is about $100 a barrel, the
unemployment rate is 5%, and what is
going on internally with Citigroup,
but I believe that at $28 or $29 per
share, it is a good long-term buy.
They are paying a dividend yield of
just under 8%. If you buy the stock
and simply wait for the price to
appreciate, you will receive this
nice dividend while you are waiting.
If you are not 100% convinced with
regard to Citigroup, you can buy put
options on your position as
insurance.
My price target is $40 by year end.
This is not counting the dividend
that you receive.
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Jason Jovine
Contributing
Editor
The Tycoon Report
About Jason Jovine[includes/bios/jasonjovine.htm]
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