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Step 1
To make money in stocks, try to stick with large cap stocks. These are companies such as Apple, Coca Cola, Caterpillar, John Deer, and the list goes on and on. Make sure that these companies do not have a lot of debt on their balance sheet.
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Step 2
Look towards small cap stocks once we are out of this recession. Small cap stocks return the largest gains after a recession. Try to only pick a few small cap stocks because they are hard to predict. If you get 1 out of 4 picks right with small cap stocks, you will still make money.
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Step 3
Invest in stocks that pay dividends. Dividend paying stocks pay your money to simple own their stock. Not only will you gain residual income, but the stock price will increase as well. Please read my article "How to Find High Paying and Safe Dividend Stocks" for more information.
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Step 4
If a company is beaten down for no apparent reason other than the fact that it is following the markets path, invest more on the dips. This will allow you to decrease your basis in the stocks.
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Step 5
Try to avoid chasing "hot" stocks. Stocks that have a quick run up usually fade out quickly. Make sure to use stops to protect your gains. Don't become too greedy with a stock. If it is turned into a winner but you fear that it could go back down again, sell half of your position. That way, if the stock does drop, you still locked in a gain. On the flip side, if the stock continues to rally, you will still catch the upside.
Comments
Viol said
on 6/8/2009 Thanks for the info.