A professional investor or amature speculator (which most of us little ‘uns are) cannot afford to wait 10, 20, 25 years for the market to recover to what it *was*. We’re not talking about a new gain on top of that.

It is far better to cut your losses at 10% max. That’s your stop loss limit. Your friend has already lost 40%. Why in the hell are you advising him to accept more losses?

“Oh, it’ll come back, don’t worry.”

How do you know? When? How much? To what level? To what it was, or beyond what it was, so he can catch up on what he would have earned if the market hadn’t crashed in the first place?

Limiting losses is a critical part of any wealth growth strategy.

Now I give you another tip, that is, delta neutral trading.

Everyone likes to pick the bottom. You may like to buy 1,000 shares of Citi-Group at $15.09, with delta=10.0. To neutralized the delta, you may consider buying December $12.5 put options, each with a delta of -0.26. Simply buy 38 CXZ at $1.09, costing $4142. This makes your initial investment $19,232 pus $38.5 commission, assuming you trade at Interactive brokers.

Now, if in one day C moves drops to $12.5, CXZ would be worth $1.99 each contract. The value of your initial investment becomes $12500 + 38*1.99*100=$20,062. If you close all your positions, you could make a profit of $753 (=20062-19232-38.5*2).
On the contrary, if C moves up to $17.5, CXZ would be worth $0.60 each contract. The value of your initial investment becomes $17500 + 38*0.60*100=$19,780. If you close all your positions, you could pocket a profit of $471 (=19780-19232-38.5*2).

C could easily move 5 dollars in two days. In that case, if you don’t adjust your delta during the course of the movement, you could make $3,573 (=3.39*100*38+10000-19232-38.5*2) on the way down or $1,907 (=0.32*100*38+20000-38.5*2).

For more enlightenment, please read the following page at http://www.thepitmaster.com/options/deltatrading.htm.
It’s easy to make money ….

I’ll leave it at that!

I seriously doubt Wilson has any secrets. I think he just enjoys trying to get a rise out of me.

1. Yea the markets have just had a hissy fit. I have a friend at work that is all worried about his 401K.. i finally convinced him not to dump everything… I told him to compare the market to this upcoming winter. We “know” at some point the market is going to recover and a boom will happen again.. when? .. I have no clue.. I told him.. If you had to bet that we would get snow between Now and Next April would he bet on that? He said well duh… I said the market is the same way.. You know at some point in the next 6 months we’re gonna get snow.. But what day(s) it will snow.. you have no idea for sure. so its best to have your bucket ready to catch snow before it starts snowing instead of having it snow for 4 hours before you realize it and try to run outside with a bucket in the middle of a blizzard hoping to get the most snow possible.

2. Even if retired, you aint going to cash out the whole thing at one time, your just going to bleed some income off those investments. My suggestion is to make sure you have enough cash in safe places to cover your living expenses for at least 6 months to a year at any given time… (like a money market or savings account)and any extra money over that.. leave in the market so it can continue to grow once the market turns around.

I dont even pay attention to what the market value of my investments are right now.. I focus more on how many shares of each fund I own and do anything and everything I can (once all my bills for the month are paid) to add more shares to those funds. I’ve Invested about $8000 this year since march.. but i have no clue what the true market value of them are… and I dont really care what it is.. Other than make sure my funds stay in balance with each other.. 25% in each of the following.. Growth.. Growth & Income.. Aggressive Growth and International..