Gold a viable asset class. . . To outperform

Now with the US facing its worst economic problem since 1929 or perhaps worse of all time, it is important to note certain things:

1) US economy is the world economy's engine of growth if it stops then world economy stops to grow. . .

2) Not only US but Europe are in deep trouble. . . and Japan has been in a trouble now for 30 years that makes it worlds top economies in trouble all at the same time. . . this is not good news.

3) The banking and financial industry have collapsed in the west, this has never happened before as earlier there were industries that went bust but never the support for these industries i.e. Finance industry itself. . .

So what lies in store moving ahead. . . Governments all over the world are using the available options to them, namely on the fiscal front by creating newer projects and secondly on the monetary front by printing in more money . . . and printing in more than ever before. . .not exactly knowing what the impact of printing money is going to be in the long term and worse not knowing whether printing money would finish this crisis in the first place. . .However what this printing is leading to is lot of side effects associated with them. . .One for starters that we see is currencies of these countries heading southwards. . .U.K being one prime example wherein a pound has touched an all time low and in my opinion should fall even more. . .

Currently we are insulated from the monster called inflation as commodity prices have crumbled due to recessionary fears and fall in demand, however with so much money going into the system, inflation might come back with full force (not necessarily in India though, as we have been cautious in our money printing). Also major economies do not have too much flexibility with respect to the interest rates are currently the interest rates worldwide already are near zero (India again stands to gain again as we still have lot of space to maneuver on the interest rates). With so much money sloshed into the system, countries would tend to focus on 'real assets' or gold standard. Gold would tend to outperform, with more and more money getting printed in the system. The first signs of this are already visible with gold touching unprecendented heights lsat week. . . Hence when rejigging ones portfolio it is important that due attention is given to gold . . .

Risks of investing in a single trade in equity markets

They say that if you survive today, you can fight another day! Most inexperienced traders commit a mistake of investing their entire capital on few trades. Its what we call in common parlance as "All or nothing approach". What this ensures is that if you had started with an initial capital a string of a couple of big losses can put you out of trade. However the appeal to double / triple the returns becomes a motive strong enough to throw cautions to the winds. However every time a trade becomes a winner the entire capital is deployed to trading again and inevitable the wrong trade will take all of it away. As a rule people have different amounts that they would risk in a particular trade. Some keep it at 1%, others at 2%, however as a rule I think its not advisable to put more than 5% on a single trade. Even if the 5% capital is lost, it wont force you out of trade and although it would take you a 5.2% gain on your next trade to come back to the original value of your investment its still better than losing 30% of your capital on a single trade and needing 50% on your next trade just to recover back!!!So remember some key facts:
The more you invest in a single trade, the larger will you need to recover in the subsequent trade if the trade goes into a loss.
Always preserve some capital to trade for tomorrow, no matter how tempting the opportunity might seem
It always pays to go in with a trade, knowing where is the stop loss and more importantly sticking to the stop lossRemember this holds true for traders and not investors. For investors it makes sense not to diversify too much!