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Stock Market Tips – The Two Different Methods Used to Amass Great Fortune in Stocks

When you invest in the stock market of any country you want to grow with the economy – the economy of America, China, Europe or any emerging market. When you invest in the stock of a particular company You wish you could grow with the company – you wish you were with Microsoft in late 1980s when it started to grow you wish you were with Internet companies in 1995 when they started to grow (you also wished you could have gotten out of them by 2000).

You make the maximum fortune in a stock by discovering and investing in some young enterprise which might later grow into a behemoth. A basic study of the stock market of any country will show that two very different methods have been used to amass great fortunes. Most of the big fortunes and many small ones were made largely by betting on the business cycle. Buying stocks in bad times and selling them in good created huge wealth. This is particularly true for those with good financial connections and advance information. For example take the commodity stocks – Iron and Steel. After decades of bust cycle they started their boom phase in 2002. Anyone who has invested in steel stocks in 2002 would be sitting on huge fortune today. The same steel stocks which were considered stagnant by 1960 is one the vibrant stocks today.

Another way to amass great fortune in Stocks is to find the really outstanding companies and staying with them through all the fluctuations of a gyrating market. This you need not even worry about buying the stock cheap at the lower end of business cycle and sell it high at the times of boom. I would give an example of APPLE Inc. Those who have studied the growth of Apple from McIntosh era of 1980′s to the bust cycle of 1990′s and the great revival during current period will observe this point. You would be today making enormous profits on APPLE Inc. Stock if you had stayed with it even during the troubled times of 1990s.

Online Stock Trading Tips – Tips About Online Trading & Day Trading

There are many online stock trading tips available on the internet, and it can be somewhat intimidating for a new stock trader to decide which tips they should be applying to their trades. I have found that one of the most effective ways to learn how to trade stocks is to pick a reliable program, and stick with that until you are more comfortable with the market. Once you have learned the ins and outs of stock trading, you can then begin to branch out and apply other tips about online trading & day trading to fit your individual portfolio.

While you do want to pay attention to these online stock trading tips, you need to be careful because there are times when some tips begin to circulate on the internet, and they turn out to be more of a rumor than an actual tip. Some individuals have the misconception that if they read it on the internet then it must be true– select your resources carefully and that will help you to succeed with your online stock trading.

So where do you turn for great online stock trading tips you can rely on? There are plenty of sources out there that have great information to help you get started on the right foot. You can read books, surf the net, and even read articles by top investors. There are newspaper columns that offer such information as well. Or, you may have friends or family members that are trading, and they may be willing to share their tips with you based on their own experiences.

Social media sites can have a plethora of online stock trading tips, and you can find these social networking sites all over the internet. Reading blogs can give you some good tips, and blogs can also keep you current on what is going on in the market. Another great place to get information is from forums where people post their tips, or membership sites that offer stock trading training or step-by-step guides. These membership sites usually have a small monthly fee, but that nominal fee is well worth the information that you will have access to. Don’t be shy to spend just a little bit of money in order to get the great information that you need to be successful with stock trading.

Those various online stock trading tips may be just what you need to get yourself a great plan of action in place. Of course you will find many more tips than you actually can incorporate, so remember that what works well for one person may not be right for you. Take it slow and research the market in order to determine the best stock trading strategy for yourself!

Stock Losses – Ten Tips On How Not To Burn Your Fingers In The Stock Market

1) Start with a small amount-

Remember when you invest in the stock market you can lose all of your hard earned money. And as a newbie you are likely to make all the wrong decisions. So till you gain some experience it is best to invest a small amount of money. Invest only that much amount which you are comfortable losing especially if you are investing for speculative purposes or quick profits. This will be your best strategy to minimize your losses as you begin investing in the stock market.

2) Keep an open mind and keep experimenting-

There is no single right or wrong way to investing in the stocks. Even if you follow some tips you have read on a website or have read a book on investing in the stocks or taken some friends advice, remember things don’t always happen as you plan or wish. So remember to keep an open mind and experiment new things.

3) Don’t be greedy-

We all have been taught this principle from childhood. So you may think why am I even mentioning it here. But greed forms a cloud on your mind that causes you to stop seeing the obvious and you don’t see the pitfalls which you could have easily spotted otherwise. When I started investing the only thing I kept thinking about was how much profit I would earn quickly if I acted on a stock tip. Even though I thought, I might make a loss, at the back of my mind, I would completely ignore that fact and behave as if I would never make any loss. Be practical. Don’t expect to earn $10,000 on your investment of $1000 in 15 days!

4) Buy the best stocks-

Trade only in the best stocks. Choose well established companies. There are some stocks that have high price volatility, which means there is a higher fluctuation in the daily price of such stocks. These stocks may give you higher returns but beware! There is a huge risk in investing in such stocks! You may make some profit on one day and the next day all your profits may get wiped off! So choose reputed companies even though they make have lower price volatility.

5) Use you own mind-

This tip is not meant to offend you. But this comes from my own experience. Do not blindly follow the tips given by friends, family, discussion forums or websites. Do not believe in rumors. I read the discussion thread on a forum and bought huge quantities of a particular stock. Now my stock has eroded 65% of its value. Only later did I find that the company I thought was going to give me huge and quick profits was on the brink of bankruptcy and was making straight losses for the last 4 years. All this information was available on the internet but it never occurred to me that I should do some research about the company I was going to invest in. So even if you have never invested before make your own mind and choose your stocks. Your guess is as good as anyone else and if you have followed tip1 you don’t have much to loose. Don’t forget to find as much information as you can, about the stocks you are planning to invest in, on the internet.

6) Don’t buy at 52-week high price-

Many finance related websites and the stock exchange website displays some basic details about each stock like its current price, previous days close price, stock charts etc. In addition you can find the highest price reached by the stock in previous 52 weeks. I bought my loss making stock at its 52 week high price only to find later that the price started sliding downwards. This may not be true in all cases but its better to avoid buying a stock at its 52-week high price.

7) Don’t pour more money to cover your losses-

There is a tendency to cover your losses by investing more money in some other stock you believe will earn huge profits. It’s best to avoid investing more money to cover your losses till you get some experience of investing in the stock market. This is one mistake I did not make but some of my friends did. There may be some macro events at play that may be affecting the entire market or a particular sector. Some examples are fears of a recession in the economy, this event will affect all the stocks to some extent. Take another example, imposition of new taxes in the cement industry will affect all stocks in the cement sector. So if you pour in more money into some other stock and some of these macro events are at play you stand to lose money in these new stocks as well.

8) Use Stock Calc Widget-

When you buy 10 shares at $10 and sell them at $12 then you don’t make a straight profit of $20! That’s because you have to pay brokerage both at the time of buying and selling of stocks. Stock Calc is a web based widget that I have created and use regularly to calculate the net profit or loss in my stocks. It can also be used to find the right price to buy or sell stock depending on your expected returns. It’s available to everyone for free on my website at http://www.bapatsoftware.com/stockcalc.aspx

9) Lookout for the hidden costs-

Look for other charges that your Broker charges you as well as the government taxes charged on stock transactions. Remember to factor that in your calculations as well.

10) Educate yourself-

Read a book or take a course in stock investing. This is what I’m doing currently.

Disclaimer: I’m not a financial advisor and this article is not financial advice. Please consult your financial advisor before making any stock or other investment decisions.

© 2008. Omkar S. Bapat