Stock Market Basics

Useful Stock Tips

Stock tips are a dime-a-dozen, the problem is where can you get some that will actually work out for you and your portfolio. No matter where you go on the internet, TV or the radio, you’ll see or hear about someone else who has the right investment tips for you. Unfortunately there’s more misinformation out there than there is solid reliable leads. Here are just a few stock tips for you that will help your future.

Never take the word of someone else as an investment tip. If someone is giving you the “inside scoop” on a particular stock, you need to make sure for yourself. There are laws against inside trading, so for an average trader or investor to have any good information, it’s highly unlikely.

Never buy all of your shares at once, you should buy into any position incrementally. Stocks rise and fall all the time so to lower your cost basis. Most likely you’ll never be able to buy at the bottom so you need to be prepared to buy more when the price falls. Typically I wait for an 8% pull back from the stock’s recent high or 5%-8% drop from my cost basis before buying any more shares.

If you’re still looking for good solid reliable information, but not sure where to go. I use Yahoo Finance as well as The Street.com. Jim Cramer has been a never-ending resource of good stock leads for me. Not only is he entertaining, but very well aware of the stock market. I listen to his “suggestions” on what stocks or sectors are looking good, but I still don’t buy into the company because he thinks it’s good. I do my own research into the company to see what he sees or doesn’t see.

Diversifying your portfolio is very important if you want to protect your you profits or minimize your losses. If you go ahead and invest of your money into one company or sector, you could lose a big portion of you portfolio in the process. As I said before, all stocks rise and fall and that also goes for complete sector at times. That is why you need to invest across the board (equities, bonds, precious metal and other commodities). Divide your investments into several different vehicles, typically no more than 20% into any one sector or stock.

Look for companies that offer dividends, larger companies are the ones to look towards. Dividends are a return of the company’s profits that are distributed among the share holders. Let’s say the company’s stock is $20 per share and they have a 10% annual dividend. Each year you would receive $2 per share (paid quarterly) for just own the stock no matter what the stock price is. So even if the company loses 5% value on the stock price, you’ve still made 5% on your investment.

In later posts, I will offer other stock tips that will also help increase you gains.

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Stock Investing Tip Of The Day

Anyone and everyone who is considered a trader or an investor can always use a stock investing tip. The question is, where can you find some good tips? Investment tips can range from many different things, but to know which ones are right for you and your goals in life. So here’s a few tips for you to consider.

First thing you have to ask yourself is, how old are you? Depending on your age will determine what kind of risk you should take. Starting young in your financial future is the best thing you can do to secure your later years. If you’re in your twenties then you can take a little more risk than a person in their forties. If you experience a setback in your portfolio, you’re have time to make it up.

What about if you’re going to retire in just a few short years? You need to start moving your retirement account into “safer” investment. When you reach the time where you are soon to be retired, you should have built a decent looking portfolio, so you’ll want to secure what you have than risk a good chunk of it if something goes wrong.

Where can you go to find reliable stock tips? In my opinion, you should only trust yourself and the research you do on each of the stocks you are going to invest in. I find many of my leads by just following the daily blogs and media sites. I’ve found some great leads on twitter and Facebook as well, but just because someone gives me a “good stock tip” doesn’t mean I just jump into the stock. I follow up on each of these leads myself by looking into the company’s financial reports and balance sheets as well as listening to their conference calls and earnings report. More times than not, you’ll receive some bad tip and lose a bunch of money in the process.

Learn how to read the technical charts as well. Many traders and investors learn to do technical analysis. Technical analysis is looking at a stocks performance by studying the charts. history repeats itself and that holds true in the stock market as well. It’s too much for me to get into here in this post, but I will in a later one.

Never buy all your shares at once. when you decide to build a position in a company, you need to do it incrementally. This way when the stock price drops, you can buy more on the temporary weakness of it. This will help reduce your cost basis and increase profits.

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What Stocks To Buy

Everyone is looking for what stocks to buy in today’s market. That is why it important to do your research on a regular basis to keep up with what’s going on. The stock market is changing everyday and to make sure that your portfolio is growing, you need to stay informed. In today’s economic environment it’s hard to make sense of most of what goes on on Wall Street. No matter what report is released for the day (retail sales, unemployment, existing home sales, GDP, etc.), it seems to not effect the markets the next day.

Just recently during earnings report season, Bad economic data was coming out through the week, but the earnings reports were beating the street’s expectation. The DOW’s closings for the week were so erratic which swung over 400 points. Bad news came out on Tuesday, but the DOW finished up 250+ for the day only to come down 300+ on Wednesday.

So when it comes to knowing what stocks to buy, you need to do your research and your due diligence. If not, you’re not going to be able to make profits in your portfolio. It’s been said many times that for each stock that you invest in, you must do at least one hour per week on researching the company as well as the sector it’s involved with. What may be a good solid company when you first bought the shares may not be a few weeks or months later. Stay informed and you won’t get taken by surprise.

I never buy all my shares at once. I buy incrementally to help lower my cost basis (average price per share). I know before I buy any shares of a company how much money I’m willing to invest in total. If I’m going to invest $20,000 in a company, my first purchase will be for $5000 in shares. So if the price per share is $50, I buy 100 shares. If the stock drops 5%-10%, I’ll purchase another 100 shares. But if it drops more than that for no apparent reason other than it was dragged down by the entire market, I’ll buy 200 shares instead because I know that the company is still solid and doing the right thing that when Wall Street realizes that the stock was oversold, the price will be right back up to $50 or better.

A lot that goes on with making money on Wall Street has to do with timing. you need to be in the right place at the right time. To make sure of that, you need to do your research to know what stocks to buy.

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