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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