How To Do Just About Everything
By eHow Personal Finance Editor
Make Money in the Stock Market
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Making money requires work - even in the stock market. Most successful investors study a variety of sources and ask a lot of questions.
eHow Personal Finance Editor
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Comments
Anonymous said
on 8/8/2006 Are you one of the many people who have no time to do detailed analysis, but want to do some stock trading? Then these tips might work for you (no guarantee implied).
Buy a good stock when the market is really down.
Hold onto it for the long time. Only invest money in stocks that you can completely lose, don't invest a loan on stocks.
If the price doubles, sell half the number of shares.
If it goes up by a certain percentage (which you have to fix depending on your personality) sell some shares. If it comes down again, buy these shares back. You will have the same number of shares but would have improved your position.
If it goes down by a certain percentage (which you have to fix depending on your personality), buy some shares. If it goes up again, sell these shares and you would have improved your position.
Work on continuously improving your current position like this. I call it my "churning" method and have made decent returns using it in the past.
Anonymous said
on 8/8/2006 The Dow Jones Industrial Average is the 30 largest companies in the United States. First, get a current list of these companies. Now, find the dividend yield of all 30 companies. Dividend Yield = (Annual Dividend) / (Current Share Price). Now put equal amounts of money in the top 5 dividend yielding companies. Wait a year. Repeat this process and buy/sell so that you own the new top 5 dividend yielding companies.
The reasoning behind this strategy is that you are investing in big established companies that are in tough times. These companies will probably not reduce their dividend and you will be able to reap a high dividend while these companies recover. These companies usually have stellar management and loads of cash, they will most likely be able to find new markets and pull out of their rut, thus exposing you to higher than normal growth.
It is advisable to throw out any stocks that have been hit by very hard times. If you think badly about the future of any of the companies that this strategy tells you to buy, skip them and buy the next.
Anonymous said
on 6/30/2006 Here is a simple strategy that can take some of the emotions out of buying and selling while consistently providing good returns.
The Dow Jones Industrial Average is the 30 largest companies in the United States. First get a current list of these companies. Now find the dividend yield of all 30 companies. Dividend Yield = (Annual Dividend) / (Current Share Price) . Now put equal amounts of money in the top 5 dividend yielding companies. Wait a year. Repeat this process and buy/sell so that you own the new top 5 dividend yielding companies.
The reasoning behind this strategy is that you are investing in big established companies that are in tough times. These companies will probably not reduce their dividend and you will be able to reap a high dividend while these companies recover. These companies usually have stellar management and loads of cash, they will most likely be able to find new markets and pull out of their rut thus exposing you to higher than normal growth.
It is advisable to throw out any stocks that have been hit by very hard times. If you think badly about the future of any of the companies that this strategy tells you to buy, skip them and buy the next.
Anonymous said
on 11/22/2005 Take the time to do a careful evaluation of the history of the stock?s performance. Learn how to use the tools available, such as the graphing tools, and information about how to analyze the company, and stocks performance. It is possible to do very extensive analysis of a stock?s performance history, and to make projections of what to expect. This can take a fair amount time and research. In the end, the payoff will be a successful investment. Look for things like smooth type of growth, and not very large deviations in the price as the growth is taking place. Pay close attention to the company?s financial statement. It is best to see a growth and profit history in their financial statement.
Keep up in the news of what is going on. Do not directly follow through on rumors, and anything you read, until you have personally, and very carefully investigated the information. Don?t directly react on information from friends, or what people tell you. Most people loose in the markets, because they don?t know what they are doing. It is not a lottery or dart game. If it is treated as such, then the chance of loss is great.
Study the structures of successful mutual funds, to see how their investment strategy is done. You can use these funds to choose the best of what they are composed of, and build your own portfolio from them. In other-words, you can build your own type of fund. It is possible to make an annual growth of about 20% to 30%, including both the capital, and dividend payments. The dividends must be added back in to the investments, to compound the growth. Many brokers can arrange the account to be a DRIP (Dividend Re-Investment Program). This way, the shares will grow over time.
It is best to invest in a stock that has a good dividend, and also some growth at the same time. The dividend can make up for any shortfalls during the investment time. Make a careful evaluation in what you would accept as a growth, and dividend value. Never put large amounts in to only one stock type. If you want to concentrate mainly in to one sector, make sure you know the over all performance potential of the particular sector. It is good practice to invest in many companies, and have small amounts in each one, rather than have large amounts in only a few. In good practice, if it is possible, do not put more than about 7% to 15% in to any one stock. This way, any drastic negative change in any one or a few shares will not have a great impact on your total investment. A very good blue-chip stock an be the exception to this rule.
Since you should be investing in stocks with a history of progressive gain, the odds would be in your favor. It is best to have shares in at least two different, or more sectors.
When buying a stock, it is good to make sure that the shares you want to buy, have an acceptable amount of volumes of transactions for that category of stock. If the volumes are very few, the stock may be difficult to unload. Also, if a stock is doing very well, and goes extremely high for its type, it may be difficult to unload. A serious investor will monitor the investments several times a day. Make sure you can buy or sell from anywhere you are, in case something comes up. Set a policy of how you want to work. If you see a stock is sliding down too far, you can decide if you want to buy more on the way down, or jump out. This can be a hard decision. Many times it is best to jump out, take the losses on the one stock, and go for something else. If you follow the policy of not overbuying any one stock, the loss in relation to the rest of the portfolio will be minimal. You may set a policy where if a stock goes down by more than about 20%, it is time to sell. You may set different policies for different types of stocks. This also depends on the particular characteristic of the stock, and the expectation of its performance. If a stock is paying out a good dividend, this can make up for some of the losses along the way.
Sometimes a company can be having a minus profit in its report, and its shares are performing well. This can lead to be an unstable situation. There may be a subsidization going on. This can be risky. Sometimes companies get very large contracts to fill, and are paid up front in part, or in full. This may be keeping them in business, especially if it is a long-term contract. If the contract falls through, or there are complications, the share value, or even the existence of the company can be jeopardized.
Always do an evaluation of the type of sector that the company deals with. Have a dissent understanding about the markets that the company is working in, and the potential for its markets. You must have a lot of patients, and have a lot of tolerance. On the short term, there will be many ups and downs. Over time, the growth should show itself, if proper choices were made.
One must accept the fact that you will have some losses in some. But if things are done right, under normal circumstances you should come out on top.
My father used to tell me that we should only use the bank to keep our money for our general living needs. If you want to make money with your money, do what the banks do. Invest it in to the markets. The key is to use wisdom, and never be greedy or in a rush.
Anonymous said
on 11/22/2005 Buy stocks where revenue per share is higher then the current price per share.