Author: Douglass Gaking

What Is a Stop Loss Order? Why Use It? And Why Not?

pexels-photo-159888.jpegYou may have noticed that your online broker offers a few order options when purchasing a stock or other security. I wrote in my review of the Robinhood app that many reviewers on the App Store blamed Robinhood for paying too much for a trade when the real problem was that they did not understand and properly utilize Robinhood’s limit order option.

If you simply post the default market order, your order will go through at whatever price your broker and another trader agree upon a few seconds or minutes later, which might not be the same market price you see on your screen. That could be frustrating if the price goes up in that short period of time, which is not unusual.

A limit order makes sure that your trade won’t go through any higher than a certain price. If the price of the security goes up between the click of the order button and when the trade actually happens, the broker won’t buy it for more than the customer wants to pay for it. It will wait for a cheaper trade to be available or the order to expire.

There are tons of order types being used in today’s technology-driven trading environment, most of which the average investor does not even know about. Commercial investment brokers like the popular online ones usually only offer a few order types, and it is probably for the best, as we are about to see how complicated they can be.

A novice might notice that his broker offers the option for a stop loss order and wonder what that means. He could hit the ‘help’ button or Google the term to see what it is, and at first glance it may look like an interesting idea. Let’s dig deeper into what it is and what the broader implications of it are before we use it to make a major financial decision. Continue reading “What Is a Stop Loss Order? Why Use It? And Why Not?”

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Book Review: Sons of Wichita

sons of wichitaThe Koch family has tried for decades to keep itself out of the spotlight while building the 2nd largest private company in America. However, as this biography explains, they haven’t done the best job of it. Daniel Schulman details the Koch brothers’ lifetime of conflict with business competitors, political opponents, their companies’ shareholders and employees, and each other. It feels a bit like if someone wrote a novelization one of those epic long-running soap opera TV shows, except this all actually happened.

Whether you take interest in the history, business, politics, or psychology and sociology of it, it is a fascinating story. Schulman does not make it clear how he feels about the Kochs or their politics. He simply writes the details and gives a fair assessment of the situations—and there are some bizarre and complex situations.

The Kochs are probably the most influential family in America that you don’t know anything about, so this thorough investigation of their businesses, family, charity work, and political action is well worth reading.

Is Going Back to School Worth the Cost?

people-woman-coffee-meeting.jpgWhether or not to continue one’s education is one of the top questions in personal finance. Even for financial experts, it is not an easy decision. However, there are some great ideas and some great information out there that can help you make the best choice for you. It may be easier than you think. Continue reading “Is Going Back to School Worth the Cost?”

Book Review: Lords of Finance

Lords of FinanceLords of Finance is described as the story of the four central bankers who set up the world for the Great Depression. However, the reader can expect to get a whole lot more than that from this book–whether he wants it or not.

It is mostly written in a biographical style, with more incidental details than necessary. The financial side of the story is explained, but not with as much depth or clarity as many other books of this type offer. Some general claims about the macroeconomy are made without enough explanation about macroeconomics to back them up. Continue reading “Book Review: Lords of Finance”

Does Trump Deserve Credit for the Stock Market?

As an advocate for economics education, I get upset when I hear bogus economics claims being made in politics and the media. When this happens, consumers are fooled into spending irresponsibly. Voters are fooled into supporting policies detrimental to the economy. This has been on my mind lately as President Trump doesn’t let a day go by without taking credit for how well the U.S. stock market is doing. Continue reading “Does Trump Deserve Credit for the Stock Market?”

Book Review: University of Berkshire Hathaway

university of berkshire hathawayThe market is flooded with books about Warren Buffett. This is the 5th one that I have read. Some books assemble or quote Buffett’s writings; others reverse engineer Buffett’s investment strategy. Often these authors seem to be trying to convince you they have inside information or trying to indoctrinate you into the Buffett cult. University of Berkshire Hathaway is not one of those books. It has details you won’t find anywhere else, which makes it a relevant addition to the prolific repertoire of books about Buffett and Berkshire. Continue reading “Book Review: University of Berkshire Hathaway”