Many years ago, a close friend of mine bought stock in a company that manufactured large recreational travel vehicles. The kind that sleeps eight, cooks for an army and is seen on many of our vacation highways. This friend had it on good advice, his father- in-law, that at thirty-dollars a share this stock was a sure thing. Well, wouldn’t you know it, just after this chap bought the stock the first energy crisis hit this country and these gas guzzlers were in less demand then venereal disease. The stock went almost instantly from thirty dollars a share to three. Looking at the possibility of taking a huge loss or “waiting it out” my friend decided he would hold and wait it out. After all, until he sold the stock the loss was only a “potential” loss. Thirty one years later I ask him what ever happened to that stock and he told me it was in the safety deposit box down at the bank. I think this example goes a long way in showing a major difference between equity trading and futures trading.
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