eToro - Need Help understanding leverage x5

Mr.Saver

ESonic wrote: »

But do we not all have to make a guess when investing?

No, we don't have to. History has proven that a diversified portfolio will provide positive return in a long enough time frame.

ESonic wrote: »

I think my investment are safe

It depends on your definition of "safe", in my opinion what you are doing has the same success rate as tossing a coin and guess. What makes it worse, if you guessed right about the coin toss result, you are unlikely to have a strong impulse to do it again. But if you guessed CFD right, you are very likely to increase your bet and do it again.

ESonic wrote: »

Then I'm going to put all my money into that business.

Good luck.

bowlhead99

ESonic wrote: »

@bowlhead - Why didn't you invest more money and when do you plan on selling your shares or are you not bothered because it is such a small amount?

.

Why didn't I invest more money? It's a question many of us might ask ourselves with the hindsight that something has gone up over 500% in three years. Frankly it didn't look super cheap when I was buying them at $100 a share; a company not making cash profits with unknown future competitive threats. So I was happy to dabble with a grand or so back in 2015/16 - to see what might happen in the long term - but I didn't want to spend thousands.

As some article put it, risking capital in Netflix is an act of faith, not rational decision making as there are so many unanswerable questions about future growth, future competitive threats and what effects they will have on Netflix's operations. Any valuation range is some opinion on how to a weight the average of a lot of upside potential and potential downside too. I don't have a 'final' end target for my current holding. It remains to be seen whether the streaming market gets more fragmented with players like Disney wanting to take back their franchises.

Fortunately after I had cashed out half my shares over the years at a good multiple of what I'd paid for all of them, the general US market and tech downturn last year (without too much Netflix-specific bad news) had taken the price back to the $250 range by Christmas, which was back at the level it had started the year at - despite having been over $400 at some point in between.

As my pension is now bigger than it was a few years ago, I was happy to put a couple of thousand back in; and in the few weeks since then, streaming services had a good Golden Globes and they announced price hikes which will hopefully bring in more per customer without scaring the existing customers away. So my modest holding of 20 shares, which was worth about £4k last month is now more like £5-6k, today pre-results.

In context the amount is over 1% of the pension in which it sits - which is large enough to keep me interested in how they are doing (if it doubles or halves in a year it will make a difference to my overall result) but not so large as to cause distress to my retirement in a couple of decades if things go wrong. I have other single-company holdings in the pension which are bigger, but not many, as the majority of my pension is allocated to ITs/ investment companies or funds.

ESonic wrote: »

. I am bit disappointed the pound didn't drop. I don't understand why it went up?

There was a brief drop on the initial announcement but as reality set in that there might not even be an exit at all if everyone is so staunchly against compromising and another public vote might happen; and hopefully wouldn't be a no deal (due to parliament not really liking the idea of that) ; and Corbyn probably wouldn't get in because DUP would support the govt in a confidence vote despite their differences: then the pound might not be doomed after all, so it rebounded strongly within half an hour or so and ended the day where it had started.

londoninvestor

Only tangentially related, but this article about trading on earnings information before it was announced (by hacking into the SEC's servers) caught my eye.

Even knowing the earnings before the rest of the market did, the alleged miscreants still lost money 23% of the time!

ESonic

Mr.Saver wrote: »

No, we don't have to. History has proven that a diversified portfolio will provide positive return in a long enough time frame.


It depends on your definition of "safe", in my opinion what you are doing has the same success rate as tossing a coin and guess. What makes it worse, if you guessed right about the coin toss result, you are unlikely to have a strong impulse to do it again. But if you guessed CFD right, you are very likely to increase your bet and do it again.
Good luck.

"Past performance is no guarantee of future results." There is a risk to every single investment.

I do think the FAANG's are good stock to invest in and the are safe bet - as they have always been doing well over a year period. I've always regretted not putting much money into Amazon/Netflix 5-6 years ago. That is when I've really thought about going into investing and then life took over.

I didn't know what CFD's were and now I don't think they are so bad. People are too scared of losing money, sometimes you need to take risk. The money you saved up for investments - just imagine they are not your money. Buy some CFD stock and watch it make you money. It's much better than them index funds which takes 5-10 years to make any decent return.

bowlhead99 wrote: »

.

Why didn't I invest more money? It's a question many of us might ask ourselves with the hindsight that something has gone up over 500% in three years. Frankly it didn't look super cheap when I was buying them at $100 a share; a company not making cash profits with unknown future competitive threats. So I was happy to dabble with a grand or so back in 2015/16 - to see what might happen in the long term - but I didn't want to spend thousands.

As some article put it, risking capital in Netflix is an act of faith, not rational decision making as there are so many unanswerable questions about future growth, future competitive threats and what effects they will have on Netflix's operations. Any valuation range is some opinion on how to a weight the average of a lot of upside potential and potential downside too. I don't have a 'final' end target for my current holding. It remains to be seen whether the streaming market gets more fragmented with players like Disney wanting to take back their franchises.

Fortunately after I had cashed out half my shares over the years at a good multiple of what I'd paid for all of them, the general US market and tech downturn last year (without too much Netflix-specific bad news) had taken the price back to the $250 range by Christmas, which was back at the level it had started the year at - despite having been over $400 at some point in between.

As my pension is now bigger than it was a few years ago, I was happy to put a couple of thousand back in; and in the few weeks since then, streaming services had a good Golden Globes and they announced price hikes which will hopefully bring in more per customer without scaring the existing customers away. So my modest holding of 20 shares, which was worth about £4k last month is now more like £5-6k, today pre-results.

In context the amount is over 1% of the pension in which it sits - which is large enough to keep me interested in how they are doing (if it doubles or halves in a year it will make a difference to my overall result) but not so large as to cause distress to my retirement in a couple of decades if things go wrong. I have other single-company holdings in the pension which are bigger, but not many, as the majority of my pension is allocated to ITs/ investment companies or funds.


There was a brief drop on the initial announcement but as reality set in that there might not even be an exit at all if everyone is so staunchly against compromising and another public vote might happen; and hopefully wouldn't be a no deal (due to parliament not really liking the idea of that) ; and Corbyn probably wouldn't get in because DUP would support the govt in a confidence vote despite their differences: then the pound might not be doomed after all, so it rebounded strongly within half an hour or so and ended the day where it had started.

I see, I don't plan on sticking around to find out what will happen when Disney releases their streaming services. My eToro account is just for short term investment. I mainly want to make big gains and then sell straight away, at the same time come across situations (CFD/Leverage etc) of which I have no clue what they mean - now I know what CFD/Leverage x5 means, and I only found out by investing in them.

I still don't understand why the pounds went up when every single news article I've read said it was going to go down. So everyone is wrong. I hope we get brexit so I can make more money.

londoninvestor wrote: »

What do you think the 1-year range of outcomes is for the FAANG stocks? i.e. what is the largest feasible % rise and largest feasible % fall you are planning around?

No idea, all I know they have generally been doing better than other known stocks. They are less risky.

masonic

ESonic wrote: »

"Past performance is no guarantee of future results." There is a risk to every single investment.

While that is undoubtedly true, you are trying to compare an investment strategy that has a high probability of success and only a very small risk of failure with a strategy in which investors on average lose all their money within a year.

I do think the FAANG's are good stock to invest in and the are safe bet - as they have always been doing well over a year period. I've always regretted not putting much money into Amazon/Netflix 5-6 years ago. That is when I've really thought about going into investing and then life took over.

They are a niche group of companies that have done well in the short term. Many other types of company have done likewise for a short time and then fallen out of favour and plummeted in value. If you planned to invest in these companies 5-6 years ago when they were better value then that is regrettable, but you are a little late to the party now.

I didn't know what CFD's were and now I don't think they are so bad. People are too scared of losing money, sometimes you need to take risk. The money you saved up for investments - just imagine they are not your money. Buy some CFD stock and watch it make you money. It's much better than them index funds which takes 5-10 years to make any decent return.

Let's see what you have to say about that in 6 months...

londoninvestor

ESonic wrote: »

"Past performance is no guarantee of future results."

ESonic wrote: »

No idea, all I know they have generally been doing better than other known stocks. They are less risky.

Good luck to you. You may be right, but I do think you are in for some pain if those stocks go the wrong way, and you don't have a handle on how much you could lose and whether you could absorb it.

System

Netflix falls short on subscriber and revenue targets
https://www.ft.com/content/4218a4e4-1a8f-11e9-9e64-d150b3105d21
Shares down 4.25% in after hours trading!

Malthusian

FAANG is a marketing label. There is no coherent connection between two advertising platforms, a straight-to-video publisher, an online discount warehouse and a positively ancient electronics manufacturer.

Any investor who talks about FAANGs has fallen for marketing and is not investing based on long-term or short-term growth prospects.