Please forgive me if today’s article is a little more disjointed than usual—I spent the wee hours of the morning (from 2:30am on) holding my 3-year-old’s hair and rubbing her back while she threw up everywhere…needless to say I did not get much sleep and she is home from school today so I’m writing this while sitting next to her listening to Scooby Doo play in the background (her favorite, but not exactly conducive to clear, well-thought-out writing!).
So if some Scooby snacks sprinkle into my answers today I apologize in advance! 🙂
First, Gilbert from the Philippines asks,
Hi Kung Fu Girl, You are truly exciting as watching Jackie Chan doing his kung fu stuff. My vision is to be an accredited investor so I’ve invested in gold & gold stocks since 2008 and still not anywhere near it. So I’d like to leverage my investment through options. I would like to ask for your help on options trading. I have been studying videos & publications by E-trade but I still can’t get it. Do you know any free publications about options that you can recommend to a newbie like me? P.S. I’m from the Philippines. Is there any way I could participate in private placements?
Hi Gilbert, thank you for your nice comment, and congratulations on your gold and gold stocks investing—it’s a great sector to be in although it probably will not “shoot the moon” this year unless the Fed and ECB announce a LOT more quantitive easing (money-printing). (Which actually is conceivable….so who knows!)
But I don’t think gold’s bull market is quite at the “mania phase” yet; possibly it is just beginning that phase, but it could still be a few years before gold and gold stocks really take off (and there could be significant corrections along the way, particularly if Europe implodes).
Basically, that’s my way of saying, “Patience, grasshopper”! 🙂
You will get there…I did not become an accredited investor overnight, and while I’m sure a few lucky souls do happen to “strike it rich on the big one”, the majority of us achieve wealth and accredited investor status the good ol’ fashioned way…through patient, disciplined investing and compounding over time. But you will get there, and quite possibly sooner than you think! You just need to get educated first (and you are here and interested in learning, so you are definitely on the right track!).
As for options as leverage, that’s a loaded question, particularly because you say you are a “newbie” (which is totally fine, but options/leverage can be dangerous in the most experienced hands, let alone “newbie” ones, so just be careful!). Options can be used in so many different ways and for so many different reasons…I am inferring from your question that you are interested in using them to speculate (rather than provide you with income and/or insurance). Because of this, if you do decide to use options to leverage your gold/gold stock investments just please use them with care, as leverage works both ways and can really hurt on the downside!
I also must tell you that as a rule, I don’t use options myself much to speculate. (My speculation tends to run to more speculative investment opportunities instead—for example I did buy Prophecy Coal last week, I invest in junior mining and resource companies, and I participate in angel investments in very specific cases in the two sectors that I know extremely well.)
That said, I do trade options sometimes for other reasons (insurance and income) and the best “free” options trading training I have found is through TD Ameritrade (but that is also the only “free” one I have personally used, so take that with a grain of salt). It may be similar to E*Trade’s, although I have heard E*Trade’s interface is terrible, so possibly their education isn’t that great either—I’m not sure as I’ve not tried it personally (I have an old E*Trade account but do all of my options trading at TD Ameritrade and sometimes even Wells Fargo).
You don’t need to be a TD Ameritrade customer to access their training (although they do use their platform for all of the examples), and you can access it here:
I want to issue one big caveat though…
Most free sites and training are great for explicit “how to” information, but usually there is no context provided, and I believe that context is where you truly make your money.
For example, you can learn “how to do a bear call spread” at TD Ameritrade, complete with a video/webinar and examples, but there is no explanation given as to why you would want to use this strategy in the first place, which stocks or ETF’s are good candidates for this strategy at any particular point in time, when to use this strategy and at what strike prices, etc.
And that is the knowledge you need to make money.
To find this all-important context, I would look to other successful investors (ahem, hopefully you will find a lot of us here on Kung Fu Finance…) and also consider subscribing to one or two paid-subscription newsletters. The best ones will give you that all important context and teach you, which is invaluable.
Finally, I would encourage you to read or listen to the interview I did with Louis James of Casey Research if you haven’t had a chance yet. Louis is an extremely savvy and sophisticated investor and spends the majority of his time analyzing these highly speculative junior mining stocks (the ones that have a chance to give you a “ten bagger”…the ones with the most leverage to your portfolio). But even Louis is very cautionary on achieving the vaunted “ten bagger”—see what he says about how to do that on page 14.
As for private placement offerings, most of them are limited to accredited investors (at least in the US—I apologize, I don’t know the rules for the Philippines although I assume they are similar to the US). This is because if the private offering has at least one investor who is not accredited, the issuer (the company raising the money) must make detailed disclosures to protect itself legally, which takes more time and makes it more expensive to create/draft the private placement memorandum. If the company doesn’t provide the necessary disclosures, it exposes itself to potential lawsuits, so most companies limit the offering to accredited investors. (Not fair, but sadly how it currently works!) So once you become accredited, and you will if you keep learning and taking action, you can participate!
Thank you so much for your great question, and I hope my answer wasn’t too long-winded! If anyone has any more great “free” options-trading education sites, please let us know in the comments below…I’m sure Gilbert isn’t the only one interested in options…thanks!!!
Hi Susan, Thank you very much – I’ve read your special report and have incorporated these three strategies into my 2012 financial plans. I especially appreciate the link to tradestops.com as I have not used trailing stops although I did know about them – sort of – but didn’t want to just let the market decide whether or not to sell one of my stocks. This solution is great because I can use this safeguard but still make the final call. Good job on the newsletter – I appreciate it being easy to read and not too long as I like getting my knowledge in shorter ‘bites’ each day! I’m wondering – do you have a book list anywhere on your website? Best regards,
Hi Leah, thank you! That’s great; I’m so glad it was helpful. Yes, I do have a book list on my site although I should definitely add to it:
Also, I am working on a “Getting Started” page that will organize all of my existing articles in a much better, step-by-step format, so hopefully that will help and be available soon.
Carlos in Texas asks, Which Singapore bank are you considering?
Hi Carlos! I am looking at HSBC and DBS…I prefer DBS because it is Singapore-only whereas HSBC is worldwide; however, the requirements for opening the DBS account are much more stringent and expensive. I will let you know how it goes! I found DBS through my SovereignMan Confidential subscription—an excellent publication for anyone interested in internationalization (there is a free version and a paid version). I am unaffiliated, just a happy customer.
James asks, How do I subscribe and receive your missives? Sorry to be unable to find this on your site.
No problem James, thank you for letting me know! I’m working on getting a better “banner” developed but currently there is a box on the right-hand side of every page that says “Get your FREE copy of…and you will also receive our free newsletter” etc. and then there is a box where you can enter your email address and click “Sign Up!”…That will add to you our email list and you’ll receive daily updates. I may toy with a pop-up at some point but really don’t want to annoy/bother anyone (although I think they do work, which is why they are so prevalent on the web!).
Thanks for your great questions! I love hearing from you, and really appreciate your contributions!
Thanks so much and have a great weekend!
To your financial success,
— Kung Fu Girl