Читать книгу Investing in Gold & Silver For Dummies - Paul Mladjenovic, Paul Mladjenovic, Ted Sudol - Страница 50

When markets go up and down, it can be difficult to stay disciplined. Markets can’t be controlled by individual investors, but they can and should exercise self-control. People can let their emotions overrule their thinking and do the wrong things when they ought to do the opposite. It happens especially in fast-moving markets.

My client (I’ll call him Bob) had put $2,000 in a commodities brokerage account. Under my guidance, he purchased some options (see Chapter 13) on silver futures. Within a few weeks, the value shrank to $900. Imagine that: He was down 55 percent. Of course, he was very concerned (wouldn’t you be?), and we discussed the situation. I told him to stay the course because my research told me that the underlying asset (silver) was in a bull market and that this price drop was a temporary condition. In addition, the options that he purchased had two full years to go before they expired. This is an example of what happens in the marketplace; no matter how solid your research and logic, the market can go against you. If your research and logic were sound, then the odds would swing back in your favor in due course. He decided not to panic and stay the course.

For Bob, the discipline paid off. The $2,000 he speculated with became $4,000 a few months later as the silver market rebounded. Those options were finally cashed in for $5,000 about 12 months after the initial purchase for a gain of 150 percent. To this day, the account is still growing because we stayed disciplined and bought (and cashed in) at points that made sense. Bob could have panicked when it was at $900, cashed out, and jumped out the nearest window, but thankfully he stayed disciplined and reaped some excellent profits.

When you are in fast-moving markets, have a plan in place regarding how much you will put at risk, when you plan to get in, and under what conditions and price points you’ll take profits (or losses). Chapter 14 has some strategies to help you.