Everything you invest in has risk so you want to do your research before you put your money on the line.
For example, when McDonald's opens a new restaurant (please, don't call it a hamburger joint) they will investigate as many of the relevant facts as possible. The demographics of the area - age and income of those within a certain driving distance. Who, where and how much is local competition? The number of cars driving by each day will be counted and will be tallied at one-hour increments. Local labor costs must be figured in. The cost of acquiring the land and construction of a new building or rental of an existing location is estimated. These and many other factors are added up to get an idea of the approximate operating costs and amortization of fixed assets.
When they have all that then they will be able to figure out how many hamburgers will need to be sold to break even. This true and meaningful research to decide whether to risk money for investment - in this case return on investment or as Wall Street calls it, ROI.
Unfortunately, Wall Street also tells you to do similar research before you buy stock in a company. There is almost no correlation between doing research for ROI and doing similar research to determine if a stock is going to go up. There are thousands of companies that have excellent Operating Statements, but the stock goes nowhere year after year. One of the easiest ways to see this is to go to www.bigcharts.com , type in the symbol of the stock and check back on its price performance for the past 5 to 10 years. If it doesn't have a nice steady upward movement it will be best not to buy it. Also if the price action is extremely volatile you should also pass even if your broker says to buy it, especially if your broker says to buy it.
The type of research brokerage firms tell you to do means absolutely nothing as far as finding out if the stock price will go up. Wall Street-type research is basically worthless.
Let's says you have done some intelligent research and have found a stock or mutual fund that has been going up for the past several months or even years (these are very rare) and you decide to buy it. There is no guarantee it will continue to go up, but you want to limit your risk. How? There are a couple of very simple things you can do.
The first and simplest is to determine how much you are willing to risk in this investment. Maybe the stock cost $60 per share and you are going to buy 100 shares for $6,000. You decide you are willing to risk $1,000, no more. At the time you make the purchase you also put in another order with the broker. Tell him to place a Good Til Canceled Stop- Loss Order for $50 per share. If the stock drops to that price you are out.
The second way is to go back to the Internet and the above web site and print out a chart for the past one, three or five-year time periods. Then draw in a trendline along the bottoms of the price action. Connect a straight line along the lowest price. Usually you will have at least three places that will hit this line as it is progressing upward. When that line is penetrated you want to sell out.
Investing in anything without risk control could mean large losses of capital. Wall Street trained brokers are not taught risk control. If you want to preserve your capital it is up to you.
Al Thomas' book, "If It Doesn't Go Up, Don't BuyIt!" has helped thousands of people make moneyand keep their profits with his simple 2-stepmethod. Read the first chapter athttp://www.mutualfundmagic.com and discover why he's the man that Wall Streetdoes not want you to know.
Investing in Trash Company Stocks
Refuse is a serious issue in any society, about as serious as cleaning the water and air, even more so to some degree, especially if you study your history with regards to the plague. This is why it is considered one of the better long-term hold stocks to have in one's portfolio. Today people are living much longer generally due to cleaner living environments, proper trash disposal, sewer treatment plants and a relatively clean civilization.
Mutual Fund Ball and Chain
The broker told me not to sell because the mutual fund I owned had a 2% redemption fee and they would penalize me if I did.
Rebalance And Diversify
The stock market has not been very kind to your investments lately. Your broker knows this so you may have received a call from him suggesting it is time to 'rebalance and diversify' your portfolio.
A Stock Market Investment Plan that Never Lets You Down
The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market's potential to help them in making quick money with a big M. While those who tread with care and caution, often shy away for fear of losing. However, the stock market is not all about speculative gains or black Tuesdays. It is a place where committed companies look for raising money to fund their activities. Serious investors can actually create wealth not only for themselves, but also for the companies and the nation. A wise way to invest in the stock market is to empower your self with information. You have to know and learn about the company you invest in, from past records and future plans.
Take The Time
You must take the time once a month to review your investment portfolio. It won't take long - less than one hour, maybe 15 minutes.
Trading vs Investing
I often hear from people, "I don't trade. I invest. I buy a mutual fund and I hold it". Mr. Investor, did you know you are trading on a regular basis? Are you aware that mutual fund managers are changing their positions by selling certain stocks and buying others?
I Love To Lose Money
Well, not really. What I mean is I don't mind losing a small amount when I have to sell a stock or mutual fund that is going down or taking away the profit I have made. During this past 3 years I have made money each year because I was not afraid to sell. The great secret that Wall Street does not want investors to know is all about selling, not buying.
Yesterday I received my monthly issue of MONEY magazine. This issue has the special feature called "The Ultimate Investment Club" that highlights their picks for the top mutual fund managers. Let's see how their members made money for their shareholders.
You Wont Like This
Why? Because I am going to shatter your conventional wisdom as I have many times in previous columns about the lies that Wall Street continues to tell you. This time we are going to go deeper into the economy to unearth the truth about lies the politicians are telling you.
How Covered Calls Turned a Trader Around
Sidney felt sick as she looked at her latest OptionsXpress trading statement. In just 8 months, she had managed to turn her $120,000 account balance into less than $70,000.
If you have been watching the stock market at all you are probably very confused. You are not alone. One day is a hundred points up for the DOW and the next a hundred down. What is going on? There are many stocks that are going up and unless you are in the right ones you will be left behind.
What the heck am I talking about?
Ignore Stock Market Talking Heads
You should ignore analysts on TV, the radio, the newspaper and all other TALKING HEADS when it comes to investing! What stocks do they talk about? - The same old group, every day of every year - Why? Because they don't know any better, they are sheep like the general public, repeating what every economic textbook says and every other economist tells them to say. Everyday, the same companies are highlighted on the evening news -
There is a current movie entitled "Eternal Sunshine of the Spotless Mind". It is about a man who has had a painful love affair and will do anything to rid his mind of those pain thoughts of a former love. He sees an advertisement that offers just such a service. It seems his former lover has the exact thoughts and she goes through the same treatment. Guess what? They meet again, do not recognize each other, and fall in love again.
Caught in a whirlpool and being sucked under. No life vest or other device to save you. Gurgle, gurgle. Down you go.
Online Trading Strategy: Collecting Cash when Stocks Go UP - It PAYS to Know More than Others
When it comes to stock market trading it PAYS to have more knowledge than the rest of the pack. Pure gold can be harvested in each profitable trade that you accomplish.
Analyzing Growth Stocks: An Important Focus For Any Investor
Analyzing growth stocks is an important focus for any investor. This is especially important, since stocks are an irreplaceable part of any good investment plan, and since unbiased stock research is hard to find. Still, we need to look at the big picture once in a while. Since so much has changed lately, this may be a good time to "take stock". Many have reevaluated their investment strategies. The problem is that many of these reevaluations are moving people away from their goals. As the market has dropped, rather than moving toward buying at the cheaper prices, we've seen people move away from stocks, a strategy which has little long-term benefit.
Buy and Hold Investment Philosophy
Wall Street has been preaching the doctrine of Buy and Hold forever. The worst part about it is the small investor (and some big ones) actually believe it. Brokers and financial planners believe it, but when you show them they can get a better return by timing the market they just say, "It can't be done". They are either lazy or stupid.
Mutual Fund Honor Roll ? Buy High, Sell Low by Chasing Performance
Buy high and sell low -- It's not a typo.
Losses, not Profits, will Stop You from Trading in the Market
Should the market turn against you, it is important that you design a system that will produce as much loss as you are prepared to take. This loss, known as drawdown, is the maximum amount by which your trading float will temporarily drop at anytime. Doing this in advance, will help you avoid nasty surprises in the future. This gives you the confidence to continue trading when the good times start once more.
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