10 Ways To Regain Investing Confidence

Investing in stocks is probably one of the riskiest investments anyone can make. Stocks are risky just by their very nature. Companies come and go. Stocks rise and fall and indeed many disappear altogether. Dividends are raised and slashed sometimes to zero. Stocks are also an incredibly emotional asset. Investors throw money into stocks and pull money out of them. They often end up buying at too high a price and sell at too low a one. A market collapse can scare the dickens out of even the very best investor.

The recent downturn in the oil and energy sector damaged a lot of portfolios and true to form, many investors sold out of some energy stock positions when they could not stand the downturn any longer. It was of course, the worst time to sell out but the reasons for getting out are totally understandable. The same holds true for those investors like myself who trade in options. It can make an investor sick to watch an option that he may have sold for 50 cents, run to $5.00. The losses sustained can be huge when not handled properly.

In this last downturn in December and January I received a lot of emails from investors who took losses or who could not figure out what to do and simply let their positions sink. They ended up being assigned shares at sometimes high prices and at other times they took losses when their positions expired. All of these investors asked the same question, how to regain their confidence to be able to risk their hard-earned cash, once again.

Let’s review this typical email and then look at some answers. Some of the email is adjusted into sentences to be better understood by readers.

Investor Questions On Regaining Investing Confidence

“Since taking losses on energy stocks, I have lost confidence, and am keen to set things right, as soon as I can. It is hard to concentrate and set a real plan. My prime requirement is to make some income from put selling (preferably not to own stocks), buy stocks, if an opportunity comes at a real good price, with a chance to make couple of dollars. Either way, it will be capital gain. I am not interested in foreign dividends as those are treated as income and is taxed fully. My goal for this year (2015), is to make 10K which is around 10% return. Please help guide me. What and how would you plan or go about making this much money. Am I overextended? This is the prime reason I need a mentor, and get out of this mess and then move on, as safely as I can.

Puts that are left after energy stock losses are held on the following stocks: MDLZ, BMO, BBT, PG, RY, T and stock held on HSBC, Manulife, Vale, ECA, MT. On ECA, VALE and MT I am not sure what I can do, unless I take more risk to write naked puts at lower value. Thank you. Bill.”

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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.