Save Copies of Vital Documents

February 27th, 2012 by admin No comments »

Save Copies of Vital Documents ImageThe impact of disasters like last year’s Gulf Coast hurricanes is often long-term. As victims try to put their lives back in order, they frequently face the challenge of locating important documents that might have been lost or destroyed.

For many people, it takes a disaster to remind them of the importance of having copies of vital documents safely stored somewhere other than their homes.

A recent study commissioned by The UPS Store and Mail Boxes Etc. franchise network disclosed that 58 percent of those surveyed said that natural disasters have made them more aware of this need.

Yet only 21 percent of respondents have started preparing for a natural disaster. Of those who have started preparations, just over half indicated that they have taken steps to copy important documents.

The UPS Store franchisee Steve Spicer recommends that people make copying important documents a yearly ritual.

“Tax time is the perfect time to inventory and copy necessary papers,” he says. “We encourage customers to bring in important documents along with their tax returns. It just takes a few minutes and a few cents to duplicate each document.”

The survey indicated that a vast majority of respondents – 71 percent – consider their birth certificate to be among the most important documents to copy. Other documents cited include financial records, such as wills, bank records and credit card information (34 percent); insurance information (31 percent); social security card and related information (29 percent); and the deed for their house (20 percent).

Investing Without Brakes Is Hazardous To Your Portfolio

February 25th, 2012 by admin No comments »

Investing Without Brakes Is Hazardous To Your Portfolio ImageThe business of investing in stocks is an inventory “buying & selling” business. Naturally, the companies that sell stock to the public want you to buy and hold it forever in order to maintain its value. But if you are buying without any selling, you are literally driving without any brakes. That is a horrifyingly unsafe position for your principal. The most effective defensive brake system for your money is a stop-loss order on your stocks.

A stop-loss order is an order you give your broker to sell your shares if a stock falls below a certain price. You can select a stop-loss price for your stock based upon chart patterns or a percentage drop from your purchase price. And some brokers automatically move them as a stock moves up in price to lock-in profits for you.

The first time I learned this lesson (not the last unfortunately), I was just 18 years old. One of my early stock purchases, recommended by a stockbroker from a famous brokerage firm, was stock in a famous airline – just before it trailed off into bankruptcy. Had I read this article before the airlines’ financial calamity, I would have rescued most of my $5,000 and prevented my own financial calamity.

But you cry, “The greatest investor Warren Buffett is a buy & hold investor!” No, I’m afraid he is not. Mr. Buffett mainly buys whole companies or controlling interest in a company. He buys control so that if there are problems with the company, he can hire/fire/make changes. If there are critical problems with the company whose stock you own, the only control you have to protect your principal is to sell.

When a public company goes bankrupt, 70% of the time the shareholders receive no money at all. How many stocks do you want in your portfolio worth $0? I know exactly how many that I want, and I know that stop-loss orders prevent it from happening.

There are a few “loss-recovery” methods, but you’ll never sell enough covered calls to recover from a stock trading under $5, or be able to buy puts on a stock that has been de-listed from an exchange. But the nearly certain protection is to place a stop-loss order on the stocks you own. You can choose any percentage loss amount (5%-25%) based on your experience, but you must have a stop-loss order in place to protect your capital.

There a zillions of old stock market sayings. Here is one of them for those of you who are still skeptical, “If the smart-money has sold and moved on, what type of money still own the stock?”