Hedgers aim to profit from the very price change that hedgers are protecting themselves against. Hedgers want to minimize their risk no matter what they’re investing in, while speculators want to increase their risk and therefore maximize their profits.
When an investor burns his finger, he then come to a conclusion that investing is dangerous and then begins to take a firm decision of not returning towards it. However, within a short time, he loses his patience and then opts for other forms of investment.
It is important to understand the fact that when the inflation rate goes down, it does not mean that prices are actually declining. It only indicates that the rate at which prices are going up has slowed down to a certain extent.
What is a “Commodity”?, What is a commodity exchange? , What is Commodity Futures?
Global markets went for a toss after Lehman Brothers filed for bankruptcy and Bank of America decided to buy Merrill Lynch for $44 billion. Lehman Brother’s announced that it is filing for bankruptcy came after all potential buyers walked away.
An ETF combines the valuation feature of a mutual fund, which can be purchased or redeemed at the end of each trading day for its NAV, with the trading feature of a stock, which trades throughout the trading day at prices that may be substantially more or less than its net asset value.
We have some time or the other, met someone who claimed that their financial portfolio was doing great, until one fine day it wasn’t. All this happens, mainly due to aggressive trading, picking the wrong stock, getting out too early and so on.
The most common and traditional form of diversifying one’s portfolio is by diversifying across various asset classes, such as equities, fixed income, real estate, commodities like bullion and crude etc. However, many investors will readily sacrifice this discipline when a particular asset class is faring exceedingly well. As a result, their allocations become distorted.
An investor who may like to invest in banking stocks presently will be limited by the number of stocks he can buy. On the other hand, a combination of banking stocks and a banking fund can do wonders both in terms of diversification as well as potential to benefit from the possible rise over a period.
Equity investing requires skill both in terms of stock selection and monitoring the progress of the companies included in the portfolio stock prices move to anticipate events as well as reflect the current events.