While the details of tax regulations will vary from country to country, it is essential that you make use of tax regulations in your country to protect your investments going forward. There will be many different ways to protect your profits from excessive tax with countries such as the UK offering a pension fund or ISA “tax wrapper” for example. These basically allow you to buy and sell shares under a non-standard tax system whereby you may pay no tax or a reduced tax compared to traditional levels. However, why is tax planning so vital going forward?
Protecting your profits
In some countries you will have what is known as a capital gains tax allowance which basically allows you to make net profits up to a certain level per annum. Any profits above and beyond this level will attract taxation which obviously reduces your investment pool going forward. If you are able to place your investments/investment funds into a tax efficient wrapper then effectively you will either pay a reduced tax or no tax at all on your profits. This ensures that your investment pool stays as large as possible giving you more opportunity to increase the value of your portfolio going forward. Continue reading “Tax planning is vital”
The days of ignorance when investing in stocks and shares are long gone with the Internet opening up an array of different ways in which to research stocks and shares prior to investing. While many people still go with “momentum stocks” you should always do your own research to know exactly what you are buying, what the news is and what the prospects are. So, where do you begin your in-depth research of stocks and shares?
Broker research notes
The vast majority of traders use online services to buy and sell their shares as they are relatively cheap and quick. The chances are, depending upon which company you use, your online broker will have a research department (or access to research notes) which you should ask about. These notes will give you an in-depth look at different companies, and they are often free to customers, with forecasts for the years ahead. Whether or not you agree with the recommendation on these research notes, which are often commissioned by the underlying listed companies, they should make you think and look at things differently. Continue reading “In-depth research of stocks and shares”
There is an old proverb on the stock markets which is “sell in May and go away” suggesting that investors are better off selling up in May and coming back in November. The idea behind this proverb is that May to October tend to be relatively quiet periods for the stock market compared to November to April. A number of research reports over the years have highlighted this phenomenon as something of a regular occurrence with an average difference of around 10% on stock market performance over the two different periods. However, are we really bothered about the overall stock market if we are looking to trade individual stocks?
Just because people go on holiday, the summertime brings a different attitude and markets do seem a little bit calmer, does not mean there are not buying opportunities. Can you imagine the number of investors waiting for others to sell in May and go away so they can pick up cheap stock which has perhaps been oversold? Continue reading “Sell in May and go away”
Each day seems to bring a different story surrounding Donald Trump with reports that he is deeply concerned about UK government intelligence leaks in the US. He has promised to find those responsible for leaking images from the Manchester terrorist atrocity to the US papers. On the surface this has little to do with stock markets in the US but it does show there seems to be an underlying dislike of Donald Trump even within government circles. As a consequence, stock markets are likely to be very volatile over the coming months (and hopefully years) as the loose cannon which is Donald Trump continues to fire cannonballs everywhere!
Overbought and oversold positions
Only this week we saw Donald Trump bring forward his proposed budget which would see the US balance its books by 2027. We also saw the emergence of some of his main policies from the presidential campaign, i.e. investment in infrastructure, the military and the aim of increasing US economic growth. This prompted a relief rally in stock markets which had been under pressure since Donald Trump decided to sack the head of US intelligence services. These two issues perfectly reflect the highs and lows of life with Donald Trump and the fact that he could well become a traders dream. Continue reading “Is Donald Trump a traders dream?”
Over the last few weeks there have been major concerns that President Donald Trump would water down some of his “vote winning” policies amid resistance from other politicians. It therefore came as a welcome relief when the US government released budget proposals with the aim of balancing the books over the next decade. When you bear in mind the recent flow of negative news surrounding Donald Trump, investors reacted positively pushing markets higher.
What does Donald Trump want to do?
It will come as no surprise to learn that Donald Trump is again courting controversy with a raft of politically sensitive cuts in areas such as healthcare and food assistance programs. There will be increased investment in infrastructure and military spending with the intention of cutting $3.6 trillion from the annual budget over the next decade. This would allow the US authorities to “balance the books” and bring to an end a very difficult period for not only the US economy but also the worldwide economy. Continue reading “US markets react positively to Trump budget”
Many traders are happy to take relatively small to medium-size profits on a regular basis to keep their investment pool growing. As a consequence the idea of a stop loss limits is very appealing because it allows you to increase your stop loss limits as a share price rises and then bank a profit when it falls towards your stop loss limit. The idea is then gradually as the share price rises you’re able to limit your downside and maximise your profit.
Allowing for natural volatility
While there are no hard and fast rules regarding stop loss limits many people like to give themselves 10% leeway on the share price. For example if the shares rise to £2.00 then they will set a stop loss limit at £1.80. The idea is that this will allow for natural volatility with a 10% reduction in the share price seen as a change in the share price trend. This may be too tight for some shares therefore you will need to adapt to the specific stock in question and general market conditions. Continue reading “Do not make your stop loss limits too tight”
The beauty of stock market is that there are always new technologies and new companies out there offering a different spin and a different way to do specific tasks and offer specific services. We look at the likes of Amazon, Google and Apple and it is easy to forget that at one time these were relatively small high risk companies but look at them now. Apple is the largest company on the US stock market followed by Amazon – Apple even has a war chest of $250 billion for expansion and acquisitions. So, out of small acorns….
Investing too early
No matter how efficient stock markets appear (on the surface they are highly efficient) some of the smaller potentially large stocks of tomorrow can be overlooked. We have seen this on many occasions and we will see this on many occasions in the future. Sometimes when you think you have spotted a new technology before the market has fully appreciated the company offering the service, it is tempting to go all in. Give yourself a large position before the stock market and other investors realise exactly what is on offer. Simple? Continue reading “Sometimes it pays to be late to the party”
There are many so-called “defensive stocks” on the stock market which include the likes of electricity companies, water companies, banks, etc. these are normally stocks which offer good steady long-term growth and an above-average dividend yields but will “not necessarily set the world alight”. On the surface these are the type of stocks which it is nigh on impossible to trade because they are only “steady performers” as opposed to momentum stocks. However, there are certainly situations where it is possible to trade defensive stocks.
Switch away from growth stocks
There are many different ups and downs on stock markets as those who invest will testify to. There are also occasions where the likes of technology companies, and other growth sectors, are the focus of investor confidence going forward. These are predominantly times when economies are doing well and everything looks good for the short to medium term. Very often you will see defensive stocks underperform during these “growth focused periods” with investors looking more for short term capital growth as opposed to long-term growth and dividend income. Continue reading “Is it possible to trade defensive stocks?”
In a highly convenient “leak” it has been revealed that Donald Trump will meet with executives from Apple, Facebook, Google and an array of other tech giants in June. The main conversation will revolve around the US government and an upgrade on its digital services which will bring more public services online. It is also believed that the issue of highly skilled immigration will be discussed in great detail as many technology companies fear they will lose access to skilled workers because of proposed immigration changes by Donald Trump.
Donald Trump has been very critical of some of the online services offered by the US government with outdated websites, large paper trails and unhelpful call centres discussed at great length. Like so many other people he believes that government services should be more intuitive, user-friendly and effective. The move from off-line services to the online arena has been extremely slow in some parts of US government and to be honest it is not just the US which is guilty of this. Continue reading “Donald Trump wants to upgrade White House digital services”
Like so many investors George Soros has found it difficult to judge the direction of the US stock market since Donald Trump became president. Despite concerns about the man himself and his ability to deliver much hyped policies, stock markets had continued to go from strength to strength until earlier this week. Amid dangerous talk of impeachment, the rumours of Russian interference in the US presidential election will just not go away.
Recent filings by George Soros indicate that he has increased his “put options” via the S&P 500 and the Russell 2000 indices.
What are put options?
Put options are basically the opportunity but not the obligation to sell a stock or a market at a predetermined level. In many ways they offer a kind of insurance when investors are unsure of the short to medium term direction of markets. It will be interesting to see which fund managers have increased their put options when the next filings are announced. Many believe we will start to see a shift towards put options in the short to medium term with concerns that the markets have pushed too far too quickly and Donald Trump could be in serious trouble. Continue reading “Does George Soros believe the US stock market will fall?”