Golden rules
A true hedge fund minimises risk. Therefore one of my golden rules is not to hold companies when they are reporting results: the volatility of the share price can be too painful. Inadvertently I shorted a stock on Monday whose results were due on Tuesday. The price fell on Monday and when I realised the results were due the next day I thought about buying it back. Thoughts did not translate into action, however, so it was a painful start to the week when the results on Tuesday exceeded all expectations. Since then, that loss was more than covered by good news in some of my other stocks but today there was another blow: one of the other companies where I'm short has been approached by a potential predator and the price is up 20%. Memo to self: death by a thousand cuts can be avoided by strict observance of golden rules.
posted by Whispering Walls at 10:55 am
8 Comments:
It could be worse - it could be your own money that you lost...
Don't short - you will sleep better at night.
I don't understand stocks and shares and all that - not that I have any money to invest in any case! - so when I read about them it's a different world. Like analysing the vocab and jargon, though!
WL - does the reference to the cello mean you play??
Have a drink.
wc - perhaps you ought to set up in competition with Danny DeVito with your very own version of branded limoncello.. at the very least you might get an invite to a party with his drinking partner Mr Clooney..
Here's a quick question - how do you determine whether an option is 'in the money' ? I've never quite been able to work out 'puts' and 'calls' and as someone who finds even spread betting a tad complex perhaps you could do an idiot's guide...
An "in the money" call option is when the share price is above the strike price of the option eg if the share price is 320p and there's an option to buy it for 300p, the price of the option will be 20p.
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