| Buying and Selling Stocks and Options Q: How can I determine the best exit and entry points for purchasing stocks and options? - Mary P. A: Dear Mary, Whole books have been written on this topic! But here are some tips. When it comes to investing in individual stocks and mutual funds, the first decision you need to make is whether you are investing for the long run or short run. If you're interested in a company that has good earnings and prospects, it's best to "buy right and sit tight," as speculator king Jesse Livermore said (Maxims of Wall Street, p. 33). Or as J. Paul Getty wrote, "The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in his stride." (Maxims, p. 136) To maximize returns, stick with good companies that have a rising dividend policy. As Jeremy Siegel, the Wizard of Wharton, states, "Dividends are the critical factor giving the edge to most winning stocks in the long run" (p. 183). As for short-term trading of stocks and options (which by their nature is short term), I suggest you use some kind of technical trading system or trend follower to increase your chances of making money. Here at the Oxford Club, we offer a few suggestions: Set a protective stop 25% below the buy price to minimize your losses. When you have a profit, raise your trailing stop to lock in a profit. And when you double your money in a call option, best to sell half or more. I've quoted several times from my book, The Maxims of Wall Street, now in its 12th edition. It's not just a quote book but includes short stories and financial wisdom. Alexander Green gave me the title! He says, "Maxims is a crash course in financial education. Mark Skousen has collected a treasure trove of proverbs, slogans, stories, and juicy quotes. I refer to it regularly, and you should too." To obtain a copy for only $22 ($12 for additional copies - they make great gifts), go to www.skousenbooks.com. Q: "Do you recommend certificates of deposit, treasury bills, etc., for cash investments right now?" - Don B. A: Dear Don, The last time I recommended bank CDs and Treasuries securities was in the early 1980s, when they were paying 14% interest or higher! Treasury bonds paid 14% for 30 years - you can't beat that. But those days are long gone. Today, bank CDs and Treasuries pay less than 5%, and that's not enough to keep up with inflation (rising prices). I suggest you invest in high dividend paying stocks, as recommended in Marc Lichtenfeld's newsletter. Or my own financial and energy stocks, such as Main Street Capital (NYSE: MAIN) and Enterprise Products Partners (NYSE: EPD), both of which pay 6-7% annualized dividend yields and potential capital gains. Main Street has earned a total annual compounded return of 13% since 2007! Do you have a question about the market and the economy? Ask me below, and I'll respond in next week's column. Good investing, AEIOU, Dr. Mark Skousen | 
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