WALKING ON THE ROPE TO
All we love the word "win". Either by that our pocket appreciates it or by the positive vibe that we provided in our inside. In these days where the uncertainty of the financial markets gives us slapping when you least expect, one has to be alert to grab an opportunity. The stock market crash ended with many fortunes overnight but caused the opposite effect to who invested to the low. The Stock Exchange has a stratospheric dimension with many planets that revolve around it. That is to say thousands of different products that you offer maximum security with a fixed yield acceptable and other products with a high rate of risk that you rewarded with unimaginable returns. Andre Kostolany, master of the speculation for 75 years, summarizes them well the idea that I propose for you to think. He said that “whoever has money can speculate, who has little money should not speculate but who has nothing ... has the obligation to speculate".
It is in the last part of the quotation which will dominate this financial blog for those people that life circumstances just have a few savings that will help them to survive within a year.
There are several points to demystify in which society is prone to false reasoning aspects of this financial world:
- There is only the Spanish stock exchange for the spanish walk you says that it is very dangerous to invest in the stock market because as the of Spain is going bad since there are no other options.
Friends investors, we have some top 50 stock exchange, which are the most important of the world. When 49 go wrong or there is always a regular in the profitability that will bring up a juicy until without knowing the company. As passing a quarter into a pouch in expansion is bored to manufacture money. It is sufficient just to check the average growth per quarter of the stock market index.
- It is impossible to enter this world that doesn’t even know where I can buy or sell! Oh! Look at a bank on the corner of home, I am going to ask!
Mistake! It must be borne in mind that in order to be able to invest we must go through a financial intermediary ALWAYS! But the second to take into account is that both a bank and savings bank as an individual must pass through the financial intermediary. That is to say, that if today I'm going to a bank X and I tell him that I want to invest, i paid twice various committees. The commissions that has that intermediary and the commissions that will ask you the Bank. Therefore, we surfer on the internet without fear and look for 10 brokers to verify prices. As a general rule will cost 50% less hiring a broker than a bank.
- To invest in stock market I need a minimum of 10,000€, but the risk that I hate is not rewarded with profit or loss obtained.
As I have previously said the idea is addressed to those who can contribute a small capital, between 500 - 1000€. If we buy shares amounting to 10,000€ in Inditex and earn in a month by 6% between commissions and expenses will be a benefit of 591€. It is succulent and attractive. On the contrary if we invest $ 500 in products traded as Inditex in the forms of call warrants and see how the Inditex shares have increased 6% in one month we raised in our position with warrants a 300%. Namely, 1500€ of profit.
- If I invest my money in stock market I can lose it all!
Obviously! You will not believe that the idea of winning large sums of money is linked to the security of not losing the capital. But we must indicate that a capital is distributed and is organized according to the quantity that we can own. It is not the same be a surplus between 50,000 - 100,000€ to one of 500-1000€. A capital of 100.000€ is distributed securely by using strategies that soften the risks and facilitate annual revenues that surprised anyone.
Fernando Martinez Guirado has a capital of 100,000€ for a life as a worker savings and decides to enter stock exchange by hiring a broker who manages investments.
This broker offers management of portfolio in the following way:
Rent fixed - 65%, 65.000€ in a deposit in the financial institution "Y" I will offer an annual 4.5% less tax (clear!). We obtain the aforesaid interest after one year. 65000 + 2398,5 = 67398€.
Equities - 30%, 30.000€ in investments in shares and financial instruments that have a low implied volatility with regard to marketable products. Ever the intraday! The intraday hurts more than gives joys and we'll only use this strategy when we see a good morning in the index that we find that each 10 generally 8 investments eventually in positive and 2 negative. Meanwhile our investments will be aimed to two terms:
Term 6 months to a year: 15000€ which will invest in companies with a view of improvement in that period and that not be touched whatever happens. A year has passed and we have to collect it sown, have won a 28,75% and lost 12.5%. In total a 16.25% gross. With taxes would be us 11,075%. Namely we would get 1661,25 €.
Within 1 day to 3 months: 15000€ that we speculate through of positioning ourselves in companies that have good trends. At this point we will win whatever happens. After a year the results are 53,32% positive and 32,35% negative. After taxes would have a return of 11.37% (1,705.5€).
Marketable products - 5%, 5,000€ we will use to speculate our positions in shares within a period of 1 day to 3 months closed to 100%. Put another way, if you buy today shares of Telefónica (1000 shares) by 10€ / action value (10,000€ more commissions) will not sell them in three months what happens, since we will also purchase 50,000 warrants Telefónica put with strike in 10€ with a premium of 0.06 € / warrant. In warrants have invested 300€ plus commissions.
Three months pass and there are two different situations that may occur:
The value of telephone has increased by 2% and stock traded at 10.20€ / action giving us a benefit of 200€ and the total loss of the warrants (cannot be closed before the end of the contract avoiding losses, you have to analyze the situation). In other words, we have lost 100€.
The value of Telefónica has declined by 2% and consequently action is listed to 9.80€ / action resulting in loss of 200€ in our investment in it. But we see how our investment in warrants has provided us with a 183,33% profit obtaining our capital of 300€ more 549€. At the end we left 349€.
This so-called hedging strategy to ensure benefits or considerably reduce losses and us usually serves for portfolios from 10,000€.
To finish with the example of the portfolio we must look at our operations of actions 1 to 3 months.
Positive were 53,32% investing in 5 companies and therefore warrants were lost in the following way:
Each investment warrants are 625€.
1. -60% (375€)
2. -53.33% (333,31€)
3. -81.6% (510€)
4. -30% (187,5€)
5. -47,35% (295,59€)
3,125€ between 5 when they purchased.
1.423,6€ when sold before expiration. Namely, loss of 1701,4€.
On the other hand, the losses were 32,35% putting our capital in 3 companies of actions.
(1) + 312,28% (1.951,75€)
(2) + 185,17% (1.157,31€)
(3) + 417,88% (2611,75€)
1875€ between 3 when they purchased.
7595,81€ when sold before or at maturity. Earnings of 5720,81€.
The benefit of marketable products was 4019,41 € with a yield of more than 80%.
In conclusion, Fernando would go to visit after a year to your financial intermediary and this would have to pay interest rates of 8,32% (9784,66€ - 15% fees) achieved without risking your capital aggressively.
For people who have a good economic pillar financial markets can be a walk in any rule but for which they do not have anything... practically we need to expose this small capital in highly volatile products to leverage us with unlimited returns and losses always limited to our investment to earn the same or more that a person has 20 times more money than us. The risk is great but the reward is even greater. The question is to hire a Manager with demonstrated results that offer us a profitability that we provide usually anyone, knowing that the risk is very high but the amount we put in their hands is minimal. You dare!