Alternative Investment Strategies

littlelogoOctober 28, 2015
Dudley Pierce Baker
Common Stock Warrants

Alternative Investment Strategies

 

 

A challenging investment climate, such as now, requires considering all of your investment options.

Whether you are investing in the resource sector or other sectors, i.e., bio-tech’s, pharmaceuticals, financials, etc. investors should be aware of and consider their alternatives before plunging in and merely purchasing shares.

Timing your entry is always of most importance and while never a black and white situation, you must be reasonably certain that the markets are trending in the direction of your desired investment, whether up or down.

As we write it appears the resource sector may, just may, have put in a bottom. While there is never a guarantee savvy investors might want to start establishing positions in some of their favorite companies. We see signs from the two charts below that gold has been outperforming the USD and the S&P 500 since August and this is giving us some confidence that the bottom may be in place.

sc-goldusd10272015

sc-goldspx10272015

If you believe, as do we, that it is highly likely that a bottom is in place in the resource sector then your confidence should allow you to step up to the plate and start taking some positions.

Alternative Strategies

In lieu of making direct purchases of the common shares of your favorite companies we encourage you to consider other alternatives, i.e. options, LEAPS or stock warrants, if any, that may be available. All of these alternative investments have a defined life and thus can expire worthless but can provide you with more upside leverage as the markets takeoff.

The use of these alternatives can allow you to reduce your investment dollars and thus your risk while allowing you to get into the game and provide you will potentially more upside leverage.

Let’s briefly consider your alternatives:
Stock options which are traded on the CBOE.com, Chicago Board Options Exchange, give the holder the right, but not the obligation, to purchase the underlying shares at a specific price and expiring on a specific date in the future. Stock options will have a maximum life of up to 12 months and investors/traders should determine whether this is a suffient time horizon.

LEAPS, Long-Term Equity Anticipation Securities, also trade on the CBOE and have the same definition of options but have longer lives of up to two years.

Stock warrants are actually securities issued by a company giving the holder the right, but not the obligation, to buy the underlying securities at a specific price and expiring on a specific date in the future. Companies frequently attach stock warrants to their private placements as an additional incentive for investors to purchase the units.

If you have the ability to participate in a private placement of a company in which you are interested by all means you should do so as those stock warrants might give you a considerable return on your investment.

Most investors overlook the fact that some stock warrants actually trade, as do their common shares on the TSX, TSXV, NYSE, AMEX or NASDAQ. Many of the stock warrants issued by companies in the United States frequently have lives of 5 years and sometimes much more giving investors more time for the companies to executeon their business plans and the the markets to perform to your expectations. Currently there are about 200 stock warrants trading in the U.S. and Canada in all industries and sectors.

If you would like more information on our unique database services, please visit us at http://CommonStockWarrants.com and sign up to be on our email list for exciting market related articles.

Dudley Pierce Baker
Guadalajara-Ajijic, Mexico
email: support@CommonStockWarrants.com
website: http://CommonStockWarrants.com

Disclosure:
Neither Dudley Pierce Baker nor CommonStockWarrants.com is an investment advisor and any reference to specific securities does not constitute a recommendation thereof. CommonStockWarrants.com is an online newsletter providing complete details on al stock warrants trading in the United States and Canada. The information and opinions expressed should not be construed as a solicitation to buy any securities mentioned in this service.

 

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