Stock Market Prices and Buying Strategies
Before you make a decision about the purchase of a particular stock you should do an extensive research and analysis of the company that issues the stock. During your preliminary study, however, the price of the selected stock may start to increase.
This increase may be caused by a major breakthrough in the industry or an announcement about the company, which makes the stock a hot deal. Additionally, even a small positive comment about the company may lead to the turning of traders' attention toward the particular stock.
Once the future increase in the price of the stock is sensed, traders may pile up to further drive the price up. The opposite process may be implemented for the purposes of decreasing the price of the stock.
Initially you have selected the stock so that you can participate in its growth. However, now that the price of the stock has started to increase, you are deprived of investment premise for executing the trade.
The good news that has increased the price of the company's stock has led to the mismatch between the actual value of the stock and the market price.
Nevertheless, if you still decide to make the trade you will no longer be an investor but a speculator. This is so since you haven't bought the stock because of its potential for growth. The stock's price was artificially inflated by speculation.
On the other hand, the opposite may happen, namely that the price of the selected stock falls. You can only benefit from this since you will be able to purchase the stock at a lower price. However, you should see whether the fall was not due to some inner company problem which may reflect in one way or another on your future returns.
If no problems can be found within the company, a stock with a falling price may represent a good long-term investment. However, you should not jump into the deal, but instead make all the necessary investigations so that you decrease the possibility of investment failure.
http://www.stock-market-investors.com/stock-strategies-and-systems/stock-market-prices-and-buying-strategies.html
Sunday, 15 November 2009
Asset Allocation Basics
Asset allocation is the spreading of assets among different categories of investments, typically among stocks, bonds and cash. It provides protection against drastic market volatility and the corresponding fluctuations. When you allocate your assets you should have in mind different factors, the most important one being your risk tolerance.
Often believed to be one of the most important factors that may influence your chances of success in stock investing, many experts advise asset allocation to be practiced with the greatest caution.
When applying asset allocation you should concentrate on combining stocks, bonds and cash in different proportions. The process of asset allocation is the selection of the percentage by which each investment category will be present in your portfolio.
http://www.stock-market-investors.com/stock-investing-basics/asset-allocation-basics.html
Often believed to be one of the most important factors that may influence your chances of success in stock investing, many experts advise asset allocation to be practiced with the greatest caution.
When applying asset allocation you should concentrate on combining stocks, bonds and cash in different proportions. The process of asset allocation is the selection of the percentage by which each investment category will be present in your portfolio.
http://www.stock-market-investors.com/stock-investing-basics/asset-allocation-basics.html
Value Investing Basics (IV)
Value Investing Basics
Intrinsic Value Defined
Most of the current accounting standards fail to accurately reflect the value of intellectual property assets. As a result they are rarely reflected in the financial statements of companies.
Market value reflects tangible assets, whereas intrinsic value reflects intangible assets, such as trademarks, patents, brand, R&D (research and development) and many others. These intangible assets represent the driving force that pushes the future growth of the business.
The calculations surrounding intrinsic value are complicated. However, you can refer to the many sources that execute the estimations for you. Some of them are MorningStar.com or Reuters.com.
No matter which way you select to calculate the intrinsic value of a stock always leave some room for error. You can also check whether the source has made the required room for error.
Value investing requires you to practice the necessary patience and hold the stock over the long-term. With time your patience will be well rewarded.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Intrinsic Value Defined
Most of the current accounting standards fail to accurately reflect the value of intellectual property assets. As a result they are rarely reflected in the financial statements of companies.
Market value reflects tangible assets, whereas intrinsic value reflects intangible assets, such as trademarks, patents, brand, R&D (research and development) and many others. These intangible assets represent the driving force that pushes the future growth of the business.
The calculations surrounding intrinsic value are complicated. However, you can refer to the many sources that execute the estimations for you. Some of them are MorningStar.com or Reuters.com.
No matter which way you select to calculate the intrinsic value of a stock always leave some room for error. You can also check whether the source has made the required room for error.
Value investing requires you to practice the necessary patience and hold the stock over the long-term. With time your patience will be well rewarded.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Value Investing Basics
Value Investment Selection
In order to determine whether a stock is qualified as a value one, you should look for these basic criteria:
1.The Price to Earnings (P/E) Ratio
It should fall in the 10% of the lowest that is typical for the sector in which the company falls.
2.The Debt to Equity Ratio
It should not be greater than 1.
3.The PEG
It should not be greater than 1. This shows that the stock has been overlooked by the market and as a result its value is below its real one.
4.Earnings Growth
A record of consistent Earnings Growth should be provided over a long period of time. You should look for an earnings growth from 6% to 8% for a 7 to 10-year time period.
5.Stock Price
The price you pay for the stock should not exceed 70% of the intrinsic per share price of the stock.
6.The Price to Book ratio
It should not be greater than 1.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Value Investment Selection
In order to determine whether a stock is qualified as a value one, you should look for these basic criteria:
1.The Price to Earnings (P/E) Ratio
It should fall in the 10% of the lowest that is typical for the sector in which the company falls.
2.The Debt to Equity Ratio
It should not be greater than 1.
3.The PEG
It should not be greater than 1. This shows that the stock has been overlooked by the market and as a result its value is below its real one.
4.Earnings Growth
A record of consistent Earnings Growth should be provided over a long period of time. You should look for an earnings growth from 6% to 8% for a 7 to 10-year time period.
5.Stock Price
The price you pay for the stock should not exceed 70% of the intrinsic per share price of the stock.
6.The Price to Book ratio
It should not be greater than 1.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Value Investing Basics (II)
Value Investing Basics
Value investors have a long-term focus. They buy and hold stocks for long periods of time, waiting for the market to correct the price of the stock to match its real value.
Therefore, when considering a particular company the first thing that a value investor does is the examination of the business's fundamentals. If there is nothing wrong which can be attributed to the low price, then the stock is a perfect option for an investment. After the market corrects the price, the value investor is rewarded for his/her patience.
A decrease in the price of a stock may be an indication for a value investment candidate. However, sometimes the market is right when decreasing the price due to problems with the fundamentals of the business. Some of the reasons for the decline may be a fall in the earnings or revenues. Additionally, the industry may have experienced a change, which has affected the product line of the company.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Value investors have a long-term focus. They buy and hold stocks for long periods of time, waiting for the market to correct the price of the stock to match its real value.
Therefore, when considering a particular company the first thing that a value investor does is the examination of the business's fundamentals. If there is nothing wrong which can be attributed to the low price, then the stock is a perfect option for an investment. After the market corrects the price, the value investor is rewarded for his/her patience.
A decrease in the price of a stock may be an indication for a value investment candidate. However, sometimes the market is right when decreasing the price due to problems with the fundamentals of the business. Some of the reasons for the decline may be a fall in the earnings or revenues. Additionally, the industry may have experienced a change, which has affected the product line of the company.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Value Investing Basics (I)
Value Investing Basics
Most investors regard value investing as purchasing cheap or discounted stocks. However, this investing strategy is more than this.
Value investing refers to the purchase of stocks that have been overlooked by the market and as a result their price is below their real value. This means that the real value of a stock is not correctly reflected by the price at which it is traded.
If you are a value investor you should pay special attention to the business fundamentals. The latter should be on the top of your list of criteria and priorities. Only after this should the other influences be considered.
Business fundamentals that you should study include:
•Earnings growth
•Cash flow
•Dividends
•Book value
These should be of higher importance than the rest of the market conditions that may influence the price of the stock you have selected.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Most investors regard value investing as purchasing cheap or discounted stocks. However, this investing strategy is more than this.
Value investing refers to the purchase of stocks that have been overlooked by the market and as a result their price is below their real value. This means that the real value of a stock is not correctly reflected by the price at which it is traded.
If you are a value investor you should pay special attention to the business fundamentals. The latter should be on the top of your list of criteria and priorities. Only after this should the other influences be considered.
Business fundamentals that you should study include:
•Earnings growth
•Cash flow
•Dividends
•Book value
These should be of higher importance than the rest of the market conditions that may influence the price of the stock you have selected.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
Stock Price Influences
Stock Price Influences
Stock prices are vulnerable to many market changes. However, there are three major influences that have an effect on the ups and downs of the prices. You should become familiar with these influences in order to be able to identify whether the change in the price gives you a signal to sell, buy or do nothing with a particular stock.
Business Fundamentals Change
The first influence is a change in the economic conditions in the market. If a particular company experiences a steady increase in its revenue and profits, then it represents an attractive investment to investors. As a result, you can expect that the price of the stock will increase as investors bid for its purchase.
The opposite is true if the particular company experiences a flat trend of its revenue and profits or even there is a decline it them. As a result, investors will show no interest in the stock and the price of the latter will fall.
If a company incurs debt or executes an acquisition its price will be again influenced. However, the effect of these will not be felt immediately.
The important thing to remember is that a change in the business leads to a change in the price of its stock. So, you should learn to notice the underlying business changes before they are reflected in the price of the stock.
Sector Change
Every company is part of a particular sector. Some sectors are influenced by different cycles, which in turn are reflected in the price. Therefore, being a smart investor requires you to be able to spot the cyclical changes that may influence the price of the stock.
The bad news is that if the whole sector experiences a major change, all companies are influenced no matter of their business fundamentals.
This means that no matter how well your stock may perform, if the whole sector sinks your stock will sink too. On the other hand, if you hold a badly performing stock, but the prices of the stocks are artificially inflated, the price of your stock will also increase.
Market Cycle Change
Generally, the market experiences different cycles. It goes up and down or stays flat.
As a result your stock will be influenced by these movements. It may move in accordance with the market or go against it. The latter is especially true about smaller companies, which often times don't follow the market trends. However, large-cap stocks generally move in accordance with the market up to a certain point and then get their own direction.
Stock Influences Application
By studying the changes in the business fundamentals you may get an idea on whether to purchase stocks of a growing company or sell such if the company is getting in a worse position.
Sector changes are most of the time a temporary events. Nevertheless, a major change may require you to reexamine the viability of your stocks. The time may have come to say goodbye to your stocks. You should make a careful analysis on the ability of the company to adapt to the changes that have occurred.
Changes in the market cycles may be beneficial to investors, because they may provide you with the opportunity to add new stocks to your holdings. Additionally, if the price is high enough being pushed by the market cycle, it may be time to sell it and use the proceeds to purchase additional stocks when the price is down again.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-influences.html
Stock prices are vulnerable to many market changes. However, there are three major influences that have an effect on the ups and downs of the prices. You should become familiar with these influences in order to be able to identify whether the change in the price gives you a signal to sell, buy or do nothing with a particular stock.
Business Fundamentals Change
The first influence is a change in the economic conditions in the market. If a particular company experiences a steady increase in its revenue and profits, then it represents an attractive investment to investors. As a result, you can expect that the price of the stock will increase as investors bid for its purchase.
The opposite is true if the particular company experiences a flat trend of its revenue and profits or even there is a decline it them. As a result, investors will show no interest in the stock and the price of the latter will fall.
If a company incurs debt or executes an acquisition its price will be again influenced. However, the effect of these will not be felt immediately.
The important thing to remember is that a change in the business leads to a change in the price of its stock. So, you should learn to notice the underlying business changes before they are reflected in the price of the stock.
Sector Change
Every company is part of a particular sector. Some sectors are influenced by different cycles, which in turn are reflected in the price. Therefore, being a smart investor requires you to be able to spot the cyclical changes that may influence the price of the stock.
The bad news is that if the whole sector experiences a major change, all companies are influenced no matter of their business fundamentals.
This means that no matter how well your stock may perform, if the whole sector sinks your stock will sink too. On the other hand, if you hold a badly performing stock, but the prices of the stocks are artificially inflated, the price of your stock will also increase.
Market Cycle Change
Generally, the market experiences different cycles. It goes up and down or stays flat.
As a result your stock will be influenced by these movements. It may move in accordance with the market or go against it. The latter is especially true about smaller companies, which often times don't follow the market trends. However, large-cap stocks generally move in accordance with the market up to a certain point and then get their own direction.
Stock Influences Application
By studying the changes in the business fundamentals you may get an idea on whether to purchase stocks of a growing company or sell such if the company is getting in a worse position.
Sector changes are most of the time a temporary events. Nevertheless, a major change may require you to reexamine the viability of your stocks. The time may have come to say goodbye to your stocks. You should make a careful analysis on the ability of the company to adapt to the changes that have occurred.
Changes in the market cycles may be beneficial to investors, because they may provide you with the opportunity to add new stocks to your holdings. Additionally, if the price is high enough being pushed by the market cycle, it may be time to sell it and use the proceeds to purchase additional stocks when the price is down again.
http://www.stock-market-investors.com/stock-investing-basics/stock-price-influences.html
Has the Time for Selling Stocks Come?
Has the Time for Selling Stocks Come?
When your stock turns into a winning player you may become frustrated about whether it is time to sell it. Many financial advisors recommend the avoidance of selling a winning stock, whereas other specialists claim that selling is an inseparable part of the trading process.
Consider the following case. You have purchased a stock that has become winning. One of the alternative courses of action that you can undertake is to sell the stock and enjoy its profits. On the other hand, you can keep the stock and wait to see its future development.
However, you should consider the following steps regarding the second option. They are required in order not to lose the profits you have acquired.
1.Examine Company's Fundamentals
The first thing you should examine is the fundamentals of the company that has issued the stock. This is required in order to see whether the company has stable fundamentals. Failure in the latter may lead to a fall in the price of your winning stock.
Make a careful examination on such things as cash flow, debt, sales and etc. If there is a problem don't wait for the market to notice these problems and quickly sell the stock before the price has fallen and you have lost your profits.
2.Set a Target Price
When you purchase a stock it is a good idea to set a target price, which if reached triggers the selling of the stock. The target price of the stock may be both above and below the current level. This means that if the stock increases or decreases to a certain level you should sell it.
The setting of an upper limit is many times required for the purpose of insuring yourself against the potential inability of the stock to sustain a market price that is above a certain level. A bad event may trigger the fall in the price and as a result you may lose your profits.
Additionally, many investors know how much they want to get from a stock and establish the upper level. Once reached, they dump the stock.
3.Watch for Events Suggesting It Is Time for Selling
Many events can have a negative effect on the value of your winning stock. Thus, you should carefully consider them and whenever they occur you should embark on selling. Such events may include:
◦Too much attention from the media
Too much attention on the part of the media may lead to artificially inflated prices of the stock since many investors show interest. After the hype passes the price may start to fall and result in the loss of profits.
◦Slowed growth of the stock.
If you possess a growth stock, it is good to consider its selling after it has reached the point at which its growth speed has started to decrease. This is required because the market shows negative attitude toward growth stocks that are unable to sustain their growth.
◦Better investment opportunities
It may turn out that there are other stocks that provide better returns. The latter may present a lower level of risk as well. Thus, it is recommended that you consider the selling of your stock and purchasing one of these.
◦Decreased or Eliminated Dividends
At one point or another, the company issuing the stock may start to decrease the dividends it pays to shareholders. If they are also completely eliminated, then this may indicate that the company is undergoing some change or problem. This represents a good reason for selling the stock and avoiding losing your profits.
Many financial experts advise the selling of part of the stock. The rest is left to grow further. In this way you get part of your profits and let the rest generate further returns.
Finally, don't be too hasty and make frequent trades just because you have obtained some profits from a stock. The commission fees that you will have to pay for the frequent trades will eat up your profits. Thus, several winning trades per year are just enough to fill your account with profits.
http://www.stock-market-investors.com/stock-strategies-and-systems/has-the-time-for-selling-stocks-come.html
When your stock turns into a winning player you may become frustrated about whether it is time to sell it. Many financial advisors recommend the avoidance of selling a winning stock, whereas other specialists claim that selling is an inseparable part of the trading process.
Consider the following case. You have purchased a stock that has become winning. One of the alternative courses of action that you can undertake is to sell the stock and enjoy its profits. On the other hand, you can keep the stock and wait to see its future development.
However, you should consider the following steps regarding the second option. They are required in order not to lose the profits you have acquired.
1.Examine Company's Fundamentals
The first thing you should examine is the fundamentals of the company that has issued the stock. This is required in order to see whether the company has stable fundamentals. Failure in the latter may lead to a fall in the price of your winning stock.
Make a careful examination on such things as cash flow, debt, sales and etc. If there is a problem don't wait for the market to notice these problems and quickly sell the stock before the price has fallen and you have lost your profits.
2.Set a Target Price
When you purchase a stock it is a good idea to set a target price, which if reached triggers the selling of the stock. The target price of the stock may be both above and below the current level. This means that if the stock increases or decreases to a certain level you should sell it.
The setting of an upper limit is many times required for the purpose of insuring yourself against the potential inability of the stock to sustain a market price that is above a certain level. A bad event may trigger the fall in the price and as a result you may lose your profits.
Additionally, many investors know how much they want to get from a stock and establish the upper level. Once reached, they dump the stock.
3.Watch for Events Suggesting It Is Time for Selling
Many events can have a negative effect on the value of your winning stock. Thus, you should carefully consider them and whenever they occur you should embark on selling. Such events may include:
◦Too much attention from the media
Too much attention on the part of the media may lead to artificially inflated prices of the stock since many investors show interest. After the hype passes the price may start to fall and result in the loss of profits.
◦Slowed growth of the stock.
If you possess a growth stock, it is good to consider its selling after it has reached the point at which its growth speed has started to decrease. This is required because the market shows negative attitude toward growth stocks that are unable to sustain their growth.
◦Better investment opportunities
It may turn out that there are other stocks that provide better returns. The latter may present a lower level of risk as well. Thus, it is recommended that you consider the selling of your stock and purchasing one of these.
◦Decreased or Eliminated Dividends
At one point or another, the company issuing the stock may start to decrease the dividends it pays to shareholders. If they are also completely eliminated, then this may indicate that the company is undergoing some change or problem. This represents a good reason for selling the stock and avoiding losing your profits.
Many financial experts advise the selling of part of the stock. The rest is left to grow further. In this way you get part of your profits and let the rest generate further returns.
Finally, don't be too hasty and make frequent trades just because you have obtained some profits from a stock. The commission fees that you will have to pay for the frequent trades will eat up your profits. Thus, several winning trades per year are just enough to fill your account with profits.
http://www.stock-market-investors.com/stock-strategies-and-systems/has-the-time-for-selling-stocks-come.html
Avoiding Bad Stock
Avoiding Bad Stock
Most investors often fall in the simple trap of believing someone who tells them that a particular stock represents the next winning bet. However, you should be very cautious when examining the possibility of investing in such a "promising" stock.
1. An example of a great looking stock is the one that looks absolutely healthy from the outside, but it is usually hollow and unprofitable in its core. Most investors that are attracted by these shiny stocks eventually find out that the companies that have issued them are not profitable and financially sustainable. These stocks are easily forgotten after a short period of time.
2. Another example of a bad stock is the one that is tied to the cycles of the business. This means that its price is very vulnerable to the changing cycles of the market. If you purchase the stock at a time when its price was high (due to high demand), you will soon end up with a worthless stock because of the changed cycle of the market.
3. Sometimes a stock may be really very profitable and a viable investment. However, you have entered the game too late at a point where the market has increased the price of the stock to a high level. No matter how good the stock may be if you buy high you will soon feel the losses.
Making the Right Investment Decision
In order to make a successful investment decision you should first of all select a company that has a reliable business. Additionally, the company should prove that it has good prospects for success in terms of growth.
Second, you should be able to find a price that coincides with the current state of the company and its future position. You should make a reasonable evaluation in order to avoid paying more than the company is really worth.
In order to determine the current and future value of the company's stock, you can refer to one or several of the many formulas for this purpose. However, you should not fully rely on them and try to develop your common sense feelings in order to pick the stocks that best meet your financial goals.
When you start the stock selection process take your time. Don't be too impatient and if a stock doesn't look very viable don't invest in it. There are plenty of other opportunities in which you can invest your hard-earned money. Analyze all the alternative investments and select the one that best meets your needs and goals.
Remember that you should try to avoid the described above bad stocks, which only look profitable but are financially hollow. Additionally, the best way not to lose your money is to invest reasonably and cautiously by analyzing every opportunity before jumping into it.
http://www.stock-market-investors.com/stock-market-advices-and-tips/avoiding-bad-stock.html
Most investors often fall in the simple trap of believing someone who tells them that a particular stock represents the next winning bet. However, you should be very cautious when examining the possibility of investing in such a "promising" stock.
1. An example of a great looking stock is the one that looks absolutely healthy from the outside, but it is usually hollow and unprofitable in its core. Most investors that are attracted by these shiny stocks eventually find out that the companies that have issued them are not profitable and financially sustainable. These stocks are easily forgotten after a short period of time.
2. Another example of a bad stock is the one that is tied to the cycles of the business. This means that its price is very vulnerable to the changing cycles of the market. If you purchase the stock at a time when its price was high (due to high demand), you will soon end up with a worthless stock because of the changed cycle of the market.
3. Sometimes a stock may be really very profitable and a viable investment. However, you have entered the game too late at a point where the market has increased the price of the stock to a high level. No matter how good the stock may be if you buy high you will soon feel the losses.
Making the Right Investment Decision
In order to make a successful investment decision you should first of all select a company that has a reliable business. Additionally, the company should prove that it has good prospects for success in terms of growth.
Second, you should be able to find a price that coincides with the current state of the company and its future position. You should make a reasonable evaluation in order to avoid paying more than the company is really worth.
In order to determine the current and future value of the company's stock, you can refer to one or several of the many formulas for this purpose. However, you should not fully rely on them and try to develop your common sense feelings in order to pick the stocks that best meet your financial goals.
When you start the stock selection process take your time. Don't be too impatient and if a stock doesn't look very viable don't invest in it. There are plenty of other opportunities in which you can invest your hard-earned money. Analyze all the alternative investments and select the one that best meets your needs and goals.
Remember that you should try to avoid the described above bad stocks, which only look profitable but are financially hollow. Additionally, the best way not to lose your money is to invest reasonably and cautiously by analyzing every opportunity before jumping into it.
http://www.stock-market-investors.com/stock-market-advices-and-tips/avoiding-bad-stock.html
****Bull and Bear Market Strategies - Damn Bloody Good Gems!
The stock market often falls under the conditions of the so called bull and bear markets. Intelligent investors are well familiar with the conditions of both and know exactly what to do.
Under a down market you have several options.
- One of them is to sell immediately in order to minimize your losses.
- Another option is to let the market work its way through the problem with no action from your side.
- A third option is to benefit from the stock decline and add some more to your portfolio. But, this should be done only if you don't perceive that there is something wrong with the company that has led to the stock decline.
- First of all, you can sell a part of the shares and use the money to repurchase the stock when its price falls again.
- Secondly, you can leave the market work its way through the imbalance with no action from your side.
- Thirdly, you can take advantage of the high prices and sell the stocks for a profit.
Never forget that it is important to base your decisions on knowledge not on feelings. This means that being educated about the company and the industry from which your stocks come from, the market conditions under which you operate will be of small importance to you.
http://www.stock-market-investors.com/stock-strategies-and-systems/bull-and-bear-market-strategies.html
Types of Stock Market Losses
Types of losses
Capital loss
Lost opportunity
Missed profit loss
Tips for Preventing and Dealing with Losses
•Evaluate the worthiness of a certain investment by measuring it against a US Treasury Note, which provides risk-free investment with relatively small returns. This will help you determine how much more the particular stock will bring you and whether the risk of sustaining losses is worth it.
•In order to avoid missed profit losses don't be too greedy and apply common sense when you see the price of your stock rising. Otherwise, you risk missing the high level and you will have to put up with a lower less beneficial one at best.
•Never console yourself that the losses you have sustained are just on paper and are not realized until you sell the stock. If you are convinced that the losing stocks still represent good long-term investment potentials, you should consider holding them disregarding the current lack of good performance. Otherwise, the paper losses will be turned into lost opportunity for each day you keep your stocks.
There is no person who likes losing money. However, you should accept the idea of losing some money from time to time. Additionally, whenever you notice that your stocks are losing their positions and their long-term prospects are not good, it may be better to sell them and move on to a better deal.
http://www.stock-market-investors.com/stock-investment-risk/types-of-stock-market-losses.html
Capital loss
Lost opportunity
Missed profit loss
Tips for Preventing and Dealing with Losses
•Evaluate the worthiness of a certain investment by measuring it against a US Treasury Note, which provides risk-free investment with relatively small returns. This will help you determine how much more the particular stock will bring you and whether the risk of sustaining losses is worth it.
•In order to avoid missed profit losses don't be too greedy and apply common sense when you see the price of your stock rising. Otherwise, you risk missing the high level and you will have to put up with a lower less beneficial one at best.
•Never console yourself that the losses you have sustained are just on paper and are not realized until you sell the stock. If you are convinced that the losing stocks still represent good long-term investment potentials, you should consider holding them disregarding the current lack of good performance. Otherwise, the paper losses will be turned into lost opportunity for each day you keep your stocks.
There is no person who likes losing money. However, you should accept the idea of losing some money from time to time. Additionally, whenever you notice that your stocks are losing their positions and their long-term prospects are not good, it may be better to sell them and move on to a better deal.
http://www.stock-market-investors.com/stock-investment-risk/types-of-stock-market-losses.html
Before You Buy Stocks
Before You Buy Stocks
No stock investment should be done without a thorough preliminary check on its potentials. This is required in order not to wake up in the next morning and wonder why you have put your money in this stock at all.
This is especially true when the question comes to long-term investing. It will never hurt you to make a close examination of the stocks you are about to purchase. If you don't do that your potential of losing money is highly increased.
In order to determine whether a certain company's stock is worth the investment you should consider the following criteria:
1.Company growth potential
What you should pay attention to is the growth in earnings and revenue. Additionally, the company growth should be sustained over longer periods of time.
In case the revenue lags behind with respect to earnings, you should dig deeper and try to find the reasons why this is so.
On the other hand, if the earnings are declining or keeping one and the same level while the revenue is increasing, it may mean that:
◦The company is launching a new product
◦The company is entering a new market
◦There are management inefficiencies
◦The company cannot compete efficiently in the current market
2.Company understanding
You should be well aware of the activities and purposes of the company and be possible to state them in simple words so that even a child can understand you.
You are not required to know the subtleties of the particular business, but you should educate yourself on its operations and functions. Additionally, don't direct your attention to companies with sophisticated business models. They don't guarantee you higher profits. The latter can be gained even from companies with less sophisticated business models that provide almost the same efficiency.
3.Cost of investment
Now that you have done the necessary research on the company and have gained a thorough understanding of its structure and operations, it is time to see how much the deal will cost you.
Before paying for the stock, check whether the stock is not currently at its "hot" state, which may mean paying a high price.
A good tactic may be to wait until the market suffers the negative consequences of some bad event and its prices are down. In such a way you gain the opportunity of enjoying higher profits later.
If the price of the stock is too low, but you cannot see anything wrong with the company don't hesitate and buy it.
On the other hand, you should always assume the chance that your analysis has some flaws. In such a case, it is better to abandon the research for the sake of saving your money and not risking losing them just because you have been impatient.
Final Piece of Advice
Apply as much patience as possible and observe the stock for a while. Make all the necessary checks and analysis before jumping into the deal. If the conditions have changed it may be better to abandon your research and stock and head for the next opportunity by learning from the mistakes you have committed.
http://www.stock-market-investors.com/stock-strategies-and-systems/before-you-buy-stocks.html
No stock investment should be done without a thorough preliminary check on its potentials. This is required in order not to wake up in the next morning and wonder why you have put your money in this stock at all.
This is especially true when the question comes to long-term investing. It will never hurt you to make a close examination of the stocks you are about to purchase. If you don't do that your potential of losing money is highly increased.
In order to determine whether a certain company's stock is worth the investment you should consider the following criteria:
1.Company growth potential
What you should pay attention to is the growth in earnings and revenue. Additionally, the company growth should be sustained over longer periods of time.
In case the revenue lags behind with respect to earnings, you should dig deeper and try to find the reasons why this is so.
On the other hand, if the earnings are declining or keeping one and the same level while the revenue is increasing, it may mean that:
◦The company is launching a new product
◦The company is entering a new market
◦There are management inefficiencies
◦The company cannot compete efficiently in the current market
2.Company understanding
You should be well aware of the activities and purposes of the company and be possible to state them in simple words so that even a child can understand you.
You are not required to know the subtleties of the particular business, but you should educate yourself on its operations and functions. Additionally, don't direct your attention to companies with sophisticated business models. They don't guarantee you higher profits. The latter can be gained even from companies with less sophisticated business models that provide almost the same efficiency.
3.Cost of investment
Now that you have done the necessary research on the company and have gained a thorough understanding of its structure and operations, it is time to see how much the deal will cost you.
Before paying for the stock, check whether the stock is not currently at its "hot" state, which may mean paying a high price.
A good tactic may be to wait until the market suffers the negative consequences of some bad event and its prices are down. In such a way you gain the opportunity of enjoying higher profits later.
If the price of the stock is too low, but you cannot see anything wrong with the company don't hesitate and buy it.
On the other hand, you should always assume the chance that your analysis has some flaws. In such a case, it is better to abandon the research for the sake of saving your money and not risking losing them just because you have been impatient.
Final Piece of Advice
Apply as much patience as possible and observe the stock for a while. Make all the necessary checks and analysis before jumping into the deal. If the conditions have changed it may be better to abandon your research and stock and head for the next opportunity by learning from the mistakes you have committed.
http://www.stock-market-investors.com/stock-strategies-and-systems/before-you-buy-stocks.html
When to Buy and Sell Stocks
Sound stock decisions should be made on the basis of thorough company knowledge, not just on the basis of the price of the stock. A rising price most of the times means that the time to sell the stock is nearing. On the other hand, a falling price may signal that the time to purchase stocks is coming.
http://www.stock-market-investors.com/stock-strategies-and-systems/when-to-buy-and-sell-stocks.html
http://www.stock-market-investors.com/stock-strategies-and-systems/when-to-buy-and-sell-stocks.html
Pump and Dump Scams - All too familiar in our local bourse
How to Avoid Pump and Dump Scams
Advertisement If you have experienced the flooding of your mail box with offers and recommendations for the purchase of a particular stock that promises huge returns, be very cautious because you may fall in the common scam that is referred to as "pump and dump".
How Pump and Dump Stock Scam Works
Under this scam crooks purchase large number of a company stocks that are extremely cheap. They do it in such a way that no attention is attracted to their purchase.
After this the crooks embark on a vast campaign of pumping up the price of the stocks by telling stories of how the price will raise leading to high returns. Additionally, it presents the stocks as an opportunity to become an owner of very profitable business. The crooks predict the potentially high returns happening within the next few days.
The crooks encourage their victims to purchase the stocks until the price is low and thus take advantage of the eventual high profits. If they are persuasive enough and manage to attract people to the particular stocks, the prices of the latter will start to rise. This will be used by the crooks to support their predictions and further pump up the price by attracting more people.
Such scams as false press releases and analysts commentaries may be used to further increase the price and gain credibility.
After the price reaches a particular point the crooks sell their stocks making huge profits. This is also the time when company officials have expressed their concerns about the rising prices of their stocks.
As a result of the sold by the crooks stocks, the price starts to fall, which leads to the selling by the other shareholders. Eventually, the shareholders are burned by the scam and the company receives sometimes undeserved bad reputation.
How to Avoid Pump and Dump Scams
In order to avoid falling into such a scam, consider the person, who recommends you the purchase of particular stocks. If you don't know him/her or s/he doesn't possess the required credentials you'd better not purchase the stocks. Additionally, beware when you are offered quick and huge profits. They rarely turn out to be huge if profits at all. Finally, new products, big announcements and etc. may also be a sign of the next scam that you may fall into.
http://www.stock-market-investors.com/stock-market-advices-and-tips/how-to-avoid-pump-and-dump-scams.html
Advertisement If you have experienced the flooding of your mail box with offers and recommendations for the purchase of a particular stock that promises huge returns, be very cautious because you may fall in the common scam that is referred to as "pump and dump".
How Pump and Dump Stock Scam Works
Under this scam crooks purchase large number of a company stocks that are extremely cheap. They do it in such a way that no attention is attracted to their purchase.
After this the crooks embark on a vast campaign of pumping up the price of the stocks by telling stories of how the price will raise leading to high returns. Additionally, it presents the stocks as an opportunity to become an owner of very profitable business. The crooks predict the potentially high returns happening within the next few days.
The crooks encourage their victims to purchase the stocks until the price is low and thus take advantage of the eventual high profits. If they are persuasive enough and manage to attract people to the particular stocks, the prices of the latter will start to rise. This will be used by the crooks to support their predictions and further pump up the price by attracting more people.
Such scams as false press releases and analysts commentaries may be used to further increase the price and gain credibility.
After the price reaches a particular point the crooks sell their stocks making huge profits. This is also the time when company officials have expressed their concerns about the rising prices of their stocks.
As a result of the sold by the crooks stocks, the price starts to fall, which leads to the selling by the other shareholders. Eventually, the shareholders are burned by the scam and the company receives sometimes undeserved bad reputation.
How to Avoid Pump and Dump Scams
In order to avoid falling into such a scam, consider the person, who recommends you the purchase of particular stocks. If you don't know him/her or s/he doesn't possess the required credentials you'd better not purchase the stocks. Additionally, beware when you are offered quick and huge profits. They rarely turn out to be huge if profits at all. Finally, new products, big announcements and etc. may also be a sign of the next scam that you may fall into.
http://www.stock-market-investors.com/stock-market-advices-and-tips/how-to-avoid-pump-and-dump-scams.html
The Long-Term Scope of Stocks
In order to become an educated stock investor you should always keep in mind that stocks are an investment tool that gives the best results over the long-term. Only then their positive rewards can be felt.
It is advisable to move your assets to more secure investments when you foresee that you will need some cash out of your stock investments. Some potential parking places include fixed income investments (e.g. bonds, bank CDs) or other products that are characterized by substantial stability.
A planning of three to five years ahead of the time you will need the money is recommended. Reasonable judgment is required in order to make a good prediction on when exactly you will need the money so that you can plan ahead the reallocation of assets. After you have determined that you should select the stable products to which you can transfer your assets.
http://www.stock-market-investors.com/stock-strategies-and-systems/long-term-scope-of-stocks.html
It is advisable to move your assets to more secure investments when you foresee that you will need some cash out of your stock investments. Some potential parking places include fixed income investments (e.g. bonds, bank CDs) or other products that are characterized by substantial stability.
A planning of three to five years ahead of the time you will need the money is recommended. Reasonable judgment is required in order to make a good prediction on when exactly you will need the money so that you can plan ahead the reallocation of assets. After you have determined that you should select the stable products to which you can transfer your assets.
http://www.stock-market-investors.com/stock-strategies-and-systems/long-term-scope-of-stocks.html
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