Monday, February 18, 2008

Completely RISK-FREE Way to Buy Stocks

Interesting Article :-
Completely RISK-FREE Way to Buy Stocks
Let me prove it to you...
By Brian HuntEditor In Chief, S&A Investment Research
Dear Reader,
I want to show you a technique that should change the way you invest, for the rest of your life...
Done right, it's a way to buy stocks that eliminates all of the downside risk. Not some of the risk – all of the risk.
Using this simple technique, you can arrange your portfolio so it will be impossible for you to lose another penny, ever, in stocks. Even better, you’ll still get 100% of the gain.
In other words, if you buy a stock and it drops 50%, you shouldn’t lose a dime. And if it soars to 1,000%, you keep every penny.
It’s kind of like buying an insurance policy for your portfolio. But, it’s even better than that. Because, done right, this “insurance” won’t cost you a thing.
In short, you get a risk-free investment in common stocks – for free.
This is the perfect setup for long-term investors who are seeking capital gains, but can't afford to lose any money.
You can adopt this strategy, buy all of the most promising businesses you find, whether they're risky or not, and never worry, ever again, about losing a single penny.
How is this possible?
Let me explain...
Step 1: Collect the Cash
The key to this technique lies in dividends. This is where it all starts.
To correctly use this strategy – and ensure you don’t lose a single penny on your investment (while keeping 100% of the gain) – you first have to find high quality businesses paying a stable dividend.
Generally speaking, these are not hard to find.
I’m talking about the Coca-Colas of the world. The Microsofts. The Exxon-Mobils.
But there is a catch.
Not every stock – blue chip or otherwise – pays the kind of dividend we’re looking for. In order for this strategy to work, the dividend must cover the “cost” of the investment.
What’s your cost?
The risk you assume by making the trade. Namely, what you’ll lose if the stock goes south.
If you invest $1,000 in a stock, your “cost” in this case is anywhere from zero to $1,000, depending on when you get out. But, believe it or not, there are companies in the market right now that will cover this cost for you – in part with the dividends they pay.
So the first step is finding the right company with the right dividend.

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