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TFN Financial Dictionary | TFN Stock Screener
Taipan University
Frequently Asked Questions:
If the question below is underlined, simply click on it to watch a video of J. Christoph Amberger providing the answer.
A: Ever so often, we receive notes from people who wonder how they could possibly afford to invest in or, worse, trade our recommendations after paying for subscription fees to our services.
Let me be quite blunt.
If you have to ask this question, you have no business being in the market right now.
Investing -- and especially trading -- is something you do with your liquid capital, that is, the money you have left after servicing your debt, taking care of your family's financial needs, and providing for your retirement in the most conservative long-term fashion you can.
If you hope that a particular recommendation of ours will solve your financial problems in one fell swoop, you are sadly mistaken. The market is not an ATM. It will take your money, chew you up and spit you out much the worse for wear. If you have five hundred, a thousand or even ten thousand bucks at hand and they represent the lion's share of your liquid assets, you don't have capital… you have milk money. Use it to pay off your credit cards or put down a principal-only payment on your mortgage.
Do not play with it in the markets. Our publications, and especially our trading services, are not designed for you.
That doesn't mean you’re stuck, though. Use this opportunity to assess just what is the core of the situation. If you’re looking for ideas, I can recommend the self-help books of my colleague and mentor Michael Masterson. His way of looking at the world has created more wealth for more people than most stock gurus combined. And I can say that from first-hand experience.
Look at it this way. Trading is a specialized skill that requires complete control of liquid assets, diligence and dedication, risk awareness, and the capacity to handle potential losses. It’s like driving a racecar. Trading with money you can't afford to lose is like sending you out into rush hour traffic on the Washington Beltway on your daughter's tasseled Barbie bike. You may make it home alive, but you'll be in abject terror every turn of the pedal.
Come back to our services when you've got your financial house in order. I promise we’ll be here waiting for you.
A: New subscribers to our information services frequently want to know if there is any specialized set-up required to invest in our recommendations.
In most cases, a normal brokerage account will do nicely. We're complete agnostics as to what broker you should use: Get a discount broker or online broker that allows you to buy and sell charging the lowest fees possible. No reason to pay a fee for a full-service broker whose advice you may not use and who charges you the same amount no matter if you sell at a gain or a loss.
When it comes to foreign stocks, you may need a slightly more sophisticated set-up. Most American discount brokers should be able to buy and sell whatever we recommend without problems. Online banks such as EverBank offer the option of executing trades on foreign exchanges in the respective currency at quite reasonable fees.
In most cases that involve foreign equity, we will recommend a suitable American Depositary Receipt, or ADR, which trades on US exchanges just like domestic stock.
Option trading requires a much more advanced account. I will have our options specialists address these accounts in a different clip.
Can you send us money to invest for you? Absolutely not. We're a pure information business. We don't manage money and, other than your full satisfaction with our products and services, have no financial stake in your buying or selling specific stocks.
Q: What can I do to make sure I don't lose more money than I can afford in the markets?
A: What can you do to make sure you not only avoid losing your shirt on a stock… but also lock in the maximum gain on a winning play?
I have two words for you: Trailing stop. This magic formula requires that you enter a stock position fully aware that you might be losing money on it. Investing and trading means leveraging risk for reward. The higher the risk, the higher the potential reward.
Now, everyone wants to highest reward possible. But few people truly appreciate that to qualify for the reward, they have to deal with risk.
It's like trying to get a date with a beautiful woman. Unless you're willing to risk rejection and humiliation by walking up to her and asking her out, you'll be sitting in your corner nursing your Bud Light, all safe and sound and with your dignity intact. See how far that gets you.
Now, don't take dating advice from me: I haven't had a first date in decades. But a Trailing Stop forces you to determine, before you buy, what kind of money you think you can afford to lose on a stock -- and then be honest and realize the actual amount you truly CAN afford to lose.
We generally recommend you establish -- and observe -- a trailing stop of around 20-30 percent. If your 100 dollar stock begins to plummet, you cut your losses at 20 or 30 dollars. That's your stop loss. You can either pay your broker to observe it for you or you can (and probably should) observe it yourself. Hey, it's your money after all!
If the stock goes up to 200 and then starts to decline gradually, you'd still get out at either $160 or $140, up 60% or 40% over your original buy. That’s the Trailing Stop.
Define your risk level any tighter, say 5-10% and you risk being stopped out on meaningless daily fluctuations in stock price.
Trailing stops aren't fool proof. On rare occasions, when you'd really need them, a stock may fall so fast that the prices blow through your trailing stops before you can enter the password to your brokerage account.
Better luck next time.
So don't play with money you can't afford to lose in the first place, be disciplined in setting and observing your trailing stops, and take an active interest in the stocks in your portfolio.
A: Almost every day, we receive emails and phone calls of readers who want to speak to our analysts and editors. Just a quick update on a stock. An explanation of why a particular stock or option is ticking up or down. A brief insight what to do with the money Aunt Edna left them in their will.
To which we have to say, sorry.
We are a publishing business, and during, before and after market hours, we publish alerts, reports, editorials, buy, sell and hold recommendations on our websites and online and email publications.
But that's what we are: Publishers of information. We are not licensed financial advisors and we don’t want to be licensed financial advisors. Which means that under United States law, we can't as much as say "hold!" to a subscriber calling with a question about a particular stock. In fact, we can't even give specific recommendations or answer stock-specific in our live teleconferences and conferences, since our lawyers (and those of regulating bodies) still consider that individual advice.
Don't blame me. I'd rather have my editors research recommendations for you than warm a chair in depositions.
What we can do, however, is address your specific questions to the general readership of the respective editor. That makes sense to me since if you have a question worth answering, other readers may have the same. So please don't hesitate to send us your questions. Just don't take it personal if we can't be more personal in addressing them.
Q: How often do you update your recommendations?
A: We update our recommendations in both our printed and online issues as well as in our daily email alerts. Now, we have a half-dozen publications, each with more than a dozen new medium- to long-term recommendations in any given year, plus a dozen fast-paced trading services that each can issue dozens if not hundreds of buy and sell alerts.
Naturally, we will not update every stock every day. You will receive, in our issues and dedicated product sites, clear and concise buy and sell recommendations for most of our services.
You're welcome to contact us and request specific updates on individual positions. Due to regulations, we cannot address these questions individually, person-to-person, but have to include them in a published medium that the regulatory authorities consider "general and regular".
That's how it is: We are an information business and want to stay one.
So make sure you're signed up for our email alerts and that you have our services white-listed. It would be annoying to miss a timely selling alert because some self-appointed egg-head spam cop confused our alerts with mass marketing mailings for male enhancement products.
Q: What's with the fake accent?
A: Vot fehk Akzent?
Q: In your recommendations involving initial public offerings or IPOs, you frequently mention the "unlock date". What in God's green earth is an unlock date?
A: Whenever our editors look at initial public offerings, they pay particular attention to what is known as the "Unlock Date".
The unlock date is a point in time -- typically 180 days after the company's initial public offering -- when stockholders or insiders bound by a regulatory lock-up agreement can begin trading their shares. US regulatory authorities want to make sure that these insiders have no vested interest in pushing up the stock price in the first days of trading.
The unlocking of insider stock holdings may not always affect a company's stock price directly. But the volume spike created by massed selling -- in the case of insiders taking profits of the table -- can create price fluctuations and trading opportunities that our editors can cover.
If you have questions regarding investing and financial terminology, I recommend you click here for our TFN Financial Dictionary, which explains this and a few dozens other key financial terms in easy-to-understand language.
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