• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 9. Stock Selection and the Optio... > Remembering Your Conservative Profil...

Remembering Your Conservative Profile as a Priority

Even with a thorough grounding in options and their context, you must continually remind yourself of your personal goals, limits, and standards. The market is a playground full of temptations, and many well-intended investors become distracted from their sensible goals and drawn to the many dangerous but exciting high-risk, exotic, and potentially profitable schemes that are so visible and so popular. Conservative, fundamentally based strategies are not terribly exciting, especially in the media-focused market environment. The media tends to emphasize index movement, substantial point change in high-profile stocks, and market rumors and news. Even fundamental news like earnings reports is focused on variation between analysts' predictions and actual outcome rather than on the value of the company as a long-term investment. This scorekeeping is the popular game on Wall Street—at the expense of less exciting but more important fundamental analysis.

The market, as a media-driven “store” containing a vast array of products (stocks, bonds, commodities, and derivatives in many forms) is indeed a distracting place. It is very much an open market with barkers tempting buyers with promises of easy riches. Little, if any, attention is paid to the analytical, detail-oriented fundamental study of a company's financial statements and other financial information. Why should the media highlight a subtle change in a capitalization or working capital ratio? It is easy to report a two-cent variation between earnings and predictions or a four-point movement in the stock's price. So, your difficulty in maintaining your focus is a constant in the market. Your success, which may be defined in terms of losing less often than average, depends largely on making good decisions at the right time.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint