CAT | Stock Investing
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Investing for Beginners: Research
0 Comments | Posted by cashschool in Quick Cash School Success Steps System, Stock Investing
We’ll continue our Investing for Beginners guideline with conducting research. By now, you should have read up as much as you could about investing and have started up a Wall Street Survivor free fantasy investing account. That way you could, using fantasy money, understand how to place trades and certain ins and outs of the stock market. You’ll now want to begin researching for the stocks you are going to purchase with your own money.
The reason I tell you to begin researching for different stocks from the one on your Wall Street Survivor account is that if you are like most beginners, you’ve either picked out stocks that have plummeted or you’ve picked out stocks that don’t reflect your age group. By age group I mean, certain stocks represent certain age groups. If you’re young and far from retirement, you can afford to take risks because you’ll still have years ahead of you of earning an additional living while letting that stock grow. Remember, as Benjamin Graham believed, the general trend of the stock market is an upward trend. This is a key thing to learn in investing for beginners. Many will not have the ability to wait out the harsh times and will lose a lot of potential earnings selling a stock way too soon. On the other hand, if you are a person close to retirement, you’ll want to purchase stocks that are an almost sure thing, Blue Chip stocks, which can earn you dividends, may go up a few points and rarely crashes.
Investing for Beginners Check List
- Choose stocks
Investing for Beginners: Choose your reasoning
Before you decide which stocks you are going to purchase, you should conjure up a plan that is focused on what you wish to achieve in your stock ventures. Do you want to make a quick buck? Want to achieve financial independence? Have some money for a rainy day? Or do you want to supplement your retirement funds with a stock portfolio? There are numerous reasons you could want to get involved in stock investing, just make sure your reason is truly honest with yourself or else you might find yourself disappointed later on.
Avoid the media when investing
My biggest problem when I first started investing was exactly this. I’d watch all the investing broadcasts and quickly invest in stocks based on their tips. I’d do a little research and just make the purchase. I’ve kept every one of these stocks and none have shown a profit. I keep any stock that’s price declines because it is not money that I don’t consider vital to my well being. In other words, I invested this money with the mind set that I might lose it and if I do that is fine. But I also know that the general trend of the stock market is an upward trend, so there are good chances these stocks may eventually prove profitable.
Additionally, many companies either pay analyst or have an influential effect on the analyst to recommend the stock. If the company is a major sponsor or the parent company of the station the analyst is broadcasting on, why would the analyst ever speak poorly about the company’s stock? Get what I’m saying?
Investing for Beginners: research industries
What are the current trends right now? What are the industries that have proven strong through the test of time? What industries will the future hold?
These are all questions you have to ask yourself when determining your investing strategies. The industry you’re planning to invest in may make or break your stock portfolio. If you paid attention to the recent real estate and banking collapses, you can see why the industry you select can determine your successes. One of the most prevalent industries in the past 20 years has been medical and health care stocks. Medical research and health care will always be needed as long as humans exist, so its a safe bet we won’t see the medical industry collapse, but don’t quote me on that one, you can never tell with this economy.
You should also have a familiar knowledge of the industry to truly understand the ins and outs of it.
Investing for beginners: Choose stocks
When choosing which stocks to invest in, there are a variety of circumstances that surround it. The way I do it has proven beneficial to me so far. Is there another way that would prove more profitable for me? It’s possible, matter fact, it’s probable. But I’m not going to search through hundreds, or thousands, of different methods in hopes of finding that better method. I’ll stick to the one that is based on my beliefs and has a strong foundation.
Penny Stocks
Depending on the stock type, I may choose to use certain figures or tools to determine if I’m going to invest in the stock. As a young adult, I like to choose penny stocks. They offer the best chance of gaining substantial profits. Think about it, if I start out with $500 dollars and I purchase a stock that is currently selling at $50 a share, I can only purchase 10 shares of that stock. Now if that stock goes up $2.00 a share, I’ve made 20 bucks. Now if I take that same $500 and buy 500 shares of a stock at $1.00 a share and that stock only goes up by $0.25, I’ve made $125. Not bad at all. Now I know you’re going to say, “yeah right! Penny stocks are up and coming companies which usually fail, leaving stock holders empty handed.” While this can be true, many times it isn’t true. Google started as a penny stock, I even have a gold stock which I purchased at $1.07 a share about a year ago and is currently, as I write this article, hovering around $4.00 a share. I expect this stock to reach $5.00 in the future. What I’ll do when it does is I’ll sell 75% of my shares as profit and leave the remaining 25% in the market hoping the stock will continue to rise in price. That way if it plummets, at least I got out early and if it rises, well then I’m still making a profit. I search the internet for penny stocks and do as much research about the company, their management, their future plans, and their impact on the world before I make my decision to buy it. I then put it on my watch list and to get a true idea if the price is violently fluctuating (volatility). If after a week, I’m happy with my findings, I purchase the stock.
Mid range & Blue Chip stocks
When it comes to investing in a mid range to blue chip stock, I like to look at the P/E Ratio and use Zacks Premium to find the best stocks to buy in today’s few hot industries
and once again do the same research on the company as I do with penny stocks. I don’t like to indulge into all of the statistics, they only confuse me. As I said, I’m in no way, shape, or form, an expert at stock investing, its strictly a hobby of mine. So, instead, I invest in stocks I feel comfortable with and in stocks that I feel the company possesses an attribute, whether it be in management, staff, innovations, etc., that can’t be undermined by another company. This makes the company unique and I can feel comfortable in it’s potential.
Investing for beginners can be a daunting task and it is a lot of trial and error. You won’t become the next Warren Buffet over night, as Warren Buffet did not become the billionaire we know him today as, over night. My first year in investing, I was down almost $3,000, but I stuck with it and put my money in some well researched stocks and today I can honestly say I’m in the green.
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5
Investing for Beginners
1 Comment | Posted by cashschool in Quick Cash School Success Steps System, Stock Investing
Being as intimidating as it may be, I’ve decided to create a guide about investing for beginners. Now, in no way, shape, or form am I a stock market expert. Rather, stock investing is a very big hobby of mine that I started off knowing nothing about and taught myself through reading and experiencing the ins and outs of stock investing. If you’re here, you’ve probably thought about investing but may have had no idea where to start or what to do. I’m going to give you the basics and resources I used to make me money through investing and hopefully you’ll have some fun with it, because it does get fun when you see your share prices rising.
Now as I mentioned when we started the Quick Cash School Success Steps System, you want to have a bunch of revenue streams bringing you in money. With that in mind, you need to keep updating your sites by adding keyword optimized and related content to it, submitting articles, and participating in blogs and forums.
Investing for beginners can be a very intimidating thing. Just look at any clip of Wall Street, a million things going on, people running all over the place, its organized chaos. On the other hand, it can be the greatest thing to ever happen to you. I remember reading somewhere, and don’t quote me on the statistics, that if you invested $5,000 in Walmart 20 years ago, it would be worth millions today. I’m here to tell you, it is not as bad as it seems and understanding the basics of the stock market can really boost your confidence and understanding of how to invest.
Investing for beginners basics:
This book gives you a great understanding of the basic entities of investing. Once you’ve read that, there are a couple books I’ve read that I’ll mention later. I don’t want you to go out and buy all these books right now and then decide you don’t like investing, now you’ve wasted extra money you could have used for something else.
Investing for beginners basic terms
These terms will be useful in the first part of this Investing for Beginners guideline. We’ll add more terms as we advance, but these will be enough to start off with.
AMEX: American Stock Exchange
Ask: The lowest price that the stock seller is willing to accept for a share of stock.
Bear Market Investor: An investor who believes the stock market is in the decline.
Bid: The highest price a stock purchaser will pay for a share of stock.
Blue Chip Stock: A stock with a long standing history of being a solid earner with increasing dividends. (Berkshire Hathaway & Coca-Cola come to mind)
Bull Market Investor: An investor who believes the stock market is rising.
Dividend: You could consider this a companies bonus to its shareholders. Certain companies give their shareholders a portion of their earnings to its stock holders. Some companies do it annually, some quarterly, and some (mostly small companies) don’t give out dividends at all.
Dow Jones Industrial Average (DIJA): Started by Wall Street Journal editor Charles Dow. It is comprised of 30 of the largest companies that reflect the American economy the most at the time. It is subject to change at any time to accurately reflect the American economy.
Market Capitalization (market cap): Multiply the outstanding shares of a stock by the price a single share. This is one of the key ways to determine the strength of a company you’re planning to invest in.
NASDAQ: National Association of Securities Dealers Automated Quotations. Approximately 3,800 companies compose this mainly technologically based stock sector.
OTC: Over the counter. Trades occur directly between two parties as opposed to exchange trading.
P/E Ratio: Price to earnings ratio. The ratio of the amount of a company’s earnings a stock earns for each share of stock. Divide the stock price by the amount of the company’s earnings per stock. For example, if the share price is $40 and the company earns $4 per share, the P/E Ratio is 10.
Penny stock: A stock that is priced under $5 per share and is traded on the OTC.
Wall Street: The birthplace and home of the American Stock Exchange. Located in Manhattan, New York and is considered the most important Stock exchange in the world.
Once you’ve gone over all of the basics, you’ll be ready to get started!
Investing for Beginners: Conducting your research
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