Securities and Exchange Commission Chairman Christopher Cox said Tuesday to Congress that the SEC will broaden existing rules prohibiting naked short selling of banks and broker dealers in a bid to protect Fannie Mae and Freddie Mac.
Short-selling is a type of speculation, where a trader sells securities he doesn't own; essentially, it's a bet that a stock will fall. Naked short-selling is when a trader makes such a bet without arranging to borrow the stock first. The SEC already has rules limiting naked short-selling in certain circumstances.
I made this video last year but it details how this new ruling will effect you. The video explains in every day language what you can do to protect your capital from the hedge fund gunslingers and professional traders.
Watch the video as my guest. No registration required.
After you view the video you will have the knowledge on how to protect your portfolio, while at the same time reducing your risk exposure.
A bad trade is like a dead fish: The longer you keep it, the worse it stinks.
Good Trades
When a trade is making money, the market is telling them they are right and to let the position ride.
Don't ever do this ...
Winners don't add to, or "average", losing positions. They dump the trade and go looking for a new opportunity. Successful investors may add to the winning trades. When ahead, they press their advantage while remembering that at any time the market can turn on them and prove them wrong.
In trading keep your mind clear and do not get emotional about a trade. Remember you are not married to a stock rather you are in the dating game.
Even after Treasury Secretary Henry Paulson made a statement ensuring that Fannie Mae and Freddie Mac would remain as presently constituted to carry out their mission it was not enough to satisfy most investors.
Both Fannie Mae and Freddie Mac hold about $5 trillion worth of mortgage guarantees in this country, roughly about half of the 9.5 trillion mortgage debt. Their survival is paramount.
The trouble with these two companies is the latest depressing factor in the current credit and confidence crisis that the United States is going through at the present time. This type of negative information is depressing for stocks and weighs on the minds of investors. This type of mindset is similar to the early seventies when we witnessed the last prolonged bear market.
There are no quick fixes to our current set of problems, only trading opportunities.
We live in a capitalist society and these are the cycles that we go through every 30 to 40 years. This is the price we pay for living in a free society.
My new eight minute video shows in detail how easy it is to avoid disaster stocks like Freddie and Fannie. I also show you in very clear terms how to fortress your portfolio to withstand any type of financial tornado that blows through the world economy.
I am constantly amazed that some of the simplest tools available to technical analysts are often the most effective. One of these simple tools is parallel trendlines. I have used them to identify planes of support and resistance on the charts.
At times, these parallel trendlines will form channels. Commonly, a market will stay within a bounded channel for a sub- stantial period of time. However, these trendlines are not limited to channels of equal width. The weekly corn chart reveals a market which has followed the same angle, or plane, of movement for much of the past three years, but within channels of various widths.
There are three primary applications of this tool which are very useful. The first is to expect a market to respect existing parallel boundaries of support and resistance. Second is to expect a significant change in market action when a boundary is significantly violated. And third is to expect the market to eventually resume trading on a parallel plane at a new level. The weekly corn chart is a good example of all three applications.
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