Knowing When to Sell Your Stocks

January 1, 2013 Category :Invest| Stocks 0

Knowing when to end something is extremely difficult. For example, starting a relationship is easy. Knowing when to end it is difficult. When it comes to stocks we tend to have the same emotions. We find it difficult to pull the trigger or sell button. We may have invested months or years holding this stock and lack the mojo to step up and end it. Here are some tips on when to sell.

Determine the trend of the overall market. Nothing is more frustrating than to buy great stock picks in a declining market. It may buck the trend but will have trouble doing so.

Sell before you buy. What that means is have a plan. Do your research. Study the product or service, the balance sheet, projected earnings, cash on hand, and debt ratio. Do a sector analysis. Ask yourself: Is this stock in a sector that is leading the way in the market? In other words, position yourself in stocks that are on the cutting edge of a given industry. Next, set a sell target based on your research.

Use some technical signals. A simple tool is the 200 day moving average. This is a long term indicator. If all is well your stock should remain above its 200 day moving average. If it starts to fall below it, start to reevaluate your position. There may be some factors at play that may be unknown, such as a forthcoming earnings report that does not match expectations. Use “stop loss” orders. This is an order to sell your stock if it falls to a specified level. That way you will protect your profits. If you have a losing position, follow the same rule. Place your stop loss at a point where you take a small loss. Do not let your losses run. Losses are like profits. When they start moving, they keep going. Profits grow and losses do also.

Finally, don’t try and pick the top of the market. If your stock reached your target, sell it and move on to your next trade. Don’t torture yourself if the stock keeps going higher.

How to Find a Reliable Stock Broker

December 11, 2012 Category :Stocks 0

A stock broker is similar to a sales person who is responsible for buying and selling shares to a variety of clients. Many stock brokers work for brokerage firms like Merrill Lynch or Charles Schwab. Your stock broker is considered the middle man between the stock market and the client. There are many qualified and reputable stock brokers available, but it takes some careful research to find the most reliable one.

Investment Style

The first thing you should do when choosing a stock broker is consider your own investment style. Decide where your priorities for long-term investments lie, whether you want a full service broker or not, what kind of investment research you need, what your accessibility preferences are, and whether you want a customer support system or to handle investments on your own. This information can help narrow down the search as prospective stock brokers.

Broker Regulation

Next, look at the broker’s regulation. A legitimate stock broker is regulated by the stock exchange. Request the broker’s registration number and compare it to the number registered by the local stock exchange.

Commissions and Cost

Many investors care about the cost most of all. Look at the stock broker’s current commission rates and whether or not they require a minimum balance. The commission rate often varies with the minimum account balance, if applicable. Be aware of hidden fees of the investment process, especially when a broker seems to have lower-than-average rates.

Reputation

Any time you choose a stock broker, reputation is key. The reputation of your stock broker is what will put them above the rest and prove their reliability. You can check the stock broker’s reputation by contacting the Financial Industry Regulatory Authority (FINRA). The FINRA maintains a broker verification service that will provide you with in-depth reputation information. Find out if the broker has had disciplinary action against them by visiting the North American Securities Administrators Association (NASAA).

Practice the Basics Playing the Virtual Stock Exchange

November 1, 2012 Category :Stocks Off

Although there are many fine investment services for stock selection, in the long run, the most successful stock investors are those individuals that choose their own stocks to buy and sell. The problem comes in knowing how to choose the right stocks to invest in. Not only knowing which companies are good choices but under what conditions they are good buys and how long a stock should be held before selling it.

The key to success is knowledge and skill. This, of course, is no different from anything else in life, but with stocks there is a problem with knowing how much skill you have. You may have a strategy of analyzing a company but not know how effective it is. An investor can analyze past stock price movements, but this is no guarantee that the future will be like the past. Economic conditions are different today than in the past, and the only way to know how much skill you have is to apply it to real time conditions.

This is why a virtual stock exchange becomes so important. Although there are differences between the virtual environments that are available, most of them are available free from investment brokers who want your business when your are ready to buy and sell in the real word. The virtual environment will allow an investor to learn stock trading in real time with real companies. The only difference between the virtual world and the real world is that the money is fake.

This type of trading is not only a way to test your skill, but it teaches you lessons in the real world about trading stocks without losing any money. The only cost to you is your time, and this is the way it should be.

Another aspect of a virtual stock exchange is the ability to test an angle or system in real time without risking real money. There are many investors who come up with a system for a specific type of company or situation and you may be one of these people. The system has shown success on paper with past data, but you may be hesitant to use real money on it. This type of virtual program will enable you to test your system without any risk. If it is a successful method, you can then commit real money to it.

Learning How To Pick Stocks Yielding Significant Returns

October 14, 2012 Category :Stocks 0

There are many different strategies that can be used by investors to generate significant returns. The strategy that best suits your investment style is based upon your tolerance of risk versus reward. Some investors attempt to take outsized risks when investing in a company in an attempt to generate a significant reward. Other more cautious investors choose more stable investments by choosing stocks in established companies. Either strategy can lead to significant returns dependent on choosing the appropriate stock.

Over time there is evidence that a significant portion of the market’s total return is through dividends. As such, the slow and steady strategy of purchasing stocks in stable dividend paying companies may yield significant returns over a longer period of time. This is due to the power of compounding. By collecting dividends and reinvesting the proceeds, your stock investments will compound and grow over a period of time and often provide outsized earnings. When selecting these stable stocks many people view certain ratios such as the p/e ratio (price to earnings), debt to equity ratio, and the dividend yield on the stock. In addition to this, it is also useful to read financial news and financial statements to keep abreast of developments in the economy and industry the company is doing business in.

Selecting stocks using this strategy often involves monitoring companies that you believe have some competitive advantage over their competitors or have access to a market that can provide significant growth in the future. Before you purchase a company you should monitor the stock price for a period of time and attempt to locate a good entry price. Stock prices can fluctuate widely from day to day and selecting an appropriate entry price can determine the ultimate profit or loss from the trade.

If you choose to invest in a company with a less attractive history, you should be aware that there is a higher chance that you may ultimately lose your capital. However, you also have the potential to earn a significant return from your investment. When choosing companies with less proven track records (or no history of earning revenues as in the case of some companies like pharmaceutical companies in the developmental stage) selecting a company is often based upon a technology or patent that the company may be in the process of developing. Read their annual reports and become familiar with the technology or drug that they are developing and the potential for approval. In certain situations, having a developmental drug approved may lead to very significant gains in the stock price and may lead to significant return on your investment.

How To Create The Proper Retirement Plan

September 13, 2012 Category :Funds 0

It may take a little more work that you desire, but creating the proper retirement plan isn’t that hard. You just need some structure to get you going. It all really starts with budgeting what amount you will need when you retire.

Some people have farfetched plans for depending on social security and retirement savings from a single job to get by in their retirement years. This is poor planning. In fact, this isn’t really planning at all. The days of social security are fading fast and no one works at one company from the start to the end of their careers. Retirement planning has changed because people have to depend on themselves. Individuals that want to retire one day must make plans. These people cannot run on auto pilot and expect everything to turn out as it should. Some serious planning has to be done.

The beginning starts with analyzing what you spend now. This is a good indication of a portion of what you will spend when you retire. Some habits may change, but many will not. People get more set in their ways as they age. This means that they will typically eat the same things and go to the same places. Most of them will not become extreme givers to the poor or good friends to the wealthy. The average citizen will simply be looking to get by on their retirement dollars.

What you must consider is that old age brings more health issues. At this point you will have a lot less insurance coverage because you are not working. People have to consider this and prepare for this as well.

The best thing that you can do is start investing. Keeping money in a savings account that is not earning any interest is a very unwise decision. It makes more sense to take the risks while you are young. Get involved in all the risky investments right away. Take more interest in the concept of stocks, but do not put everything into the stock market. Get some mutual funds immediate income secondary market annuities, and IRA plans as well. Be very mindful of the abundant amount of options that are available to you.

What you must immediately do is start saving money if you haven’t started. People that make excuses about not saving can usually find other ways to spend money. Be wise. Stop making excuses and start making investments.

How Invest During A Recession

August 29, 2012 Category :Invest 0

During a recession, there are many ways to invest and various investment approaches that can be utilized even when others investment options seems too risky. Unlike other times, during a recession, there are certain things that will be purchased continually, necessary items. While the housing market and other stocks may plummet, it doesn’t mean that it isn’t a good time to invest in those either. It is possible to still make money conducting wise investments, even when the rest of the world may be holding on to their dollars for fear of losing them. So, what are some safe items to invest in a recession period?

Precious Metals- Unless people are hiding under a rock they will see signs everywhere for buying gold. When the economy is in a recession, the prices of gold and silver skyrocket. The reason for this is that is the high demand and because it is tangible, like cash. The market hosts many ways to invest in gold. From gold bars, called bullion bars to mining stocks, there are many options to get in on the gold rush.

Food Commodities-As long as there are people on earth, they will need to eat. Buying stocks in food companies, especially food staples, it a wise investment. Food is something that is necessary so the market is steady. Even if the current state is a little low, when inflation hits it will make a good chunk of change.

Real Estate-While most people are trying to get out of this market, others are taking advantage of the lull. The real estate market will rebound and those who got in while prices were low will reap the benefits. Many people are catching on to the fact that the low housing prices won’t last forever. Because of this rush to get in the market, there is already an increase in the housing prices.

Agricultural Goods-Like food staples, agricultural items are a good investment opportunity. Things like crude oil and even coal are always in a great demand. With the prices of crude oil through the roof, it is a wise thing to invest in.

Foreign Currencies-Money itself decreases during a recession. Just because the US dollar is not worth what it once was, does not mean that other countries money is not booming. Foreign exchange is an excellent investment market to get into. Just taking an American Dollar and exchanging it for another currency can make a profit. Buying, selling and trading on the foreign markets can be lucrative anytime.

The Difference Between Private and Public Pension Funds

August 14, 2012 Category :Funds 0

When it comes to personal finance, there are a ton of different concepts and terms that one must learn along the way. One of the most important financial decisions we make in our lifetime revolves around the decisions we make about our retirement. Money we put away during our working years is meant to provide for us during our proverbial golden years. There are many ways of investing and saving for retirement, but the most popular ways of saving are pensions or 401(k)’s.

What is a Pension?

A pension is a retirement savings plan. These are generally provided by one’s place of employment or, in some countries, by the government themselves. A private pension is one that is not a large pool designed for citizens of a nation. This is generally provided by one’s employer and is partially paid for by both employer and employee.

Private pensions are typically only accessible through employment or membership with particular institutions. Public pensions are monetary assistance pools provided by the government to citizens of the nation, generally of a certain, regulated retirement age.

Public vs. Private Pensions

Private pensions are managed by employers and there is little government oversight of private pensions in many nations. Employers have restructured pension programs in ways that do not favor those who have been paying into the system for their entire working careers. Some have even seen their private pensions disappear entirely, such as what has happened to many who worked for now bankrupt companies.

Public pensions typically do not provide nearly the level of monthly support that private pensions do but they are safer. Unless something major happens to one’s national governmental system, public pensions will be available to citizens. Citizens do help pay into this program as well, by way of tax dollars.

Pensions – both public and private – are a means of providing retirement income to individuals. Private pensions are generally obtained through one’s place of work and entail financial contributions by individuals that are matched by employers. These are not guaranteed and there is often little oversight and protection for those with private pensions. Public pensions are those that are provided to citizens of a certain age and that are paid for with public tax dollars.