People often ask me what the secret is to buying good and cheap stocks. It seems like all of the “good” stuff that you hear everyone talking about is always priced so high. So how then do you get in on the ground level? Where most of the profit is to be made?
One instinct that people have is to buy cheap stocks. Though this allows you to get into the “game” with a higher number of stocks, you have to remember that these stocks were cheap for a reason, and certainly do not guarantee profit. For this reason, you need to make sure that when you buy cheap stocks, you make sure they have a lot of potential.
Do not purchase stocks lightly. Take each purchase very seriously, and ask yourself why you feel it is a good investment. Pay close attention to the company’s track record. Try to find if there are any concerns about the company you are looking into.
Looking at the stock’s track record is crucial. You will want to pay special attention to the stock’s EPS, sales, equity, and free cash flow growth rate. You should also take a look at the MOAT ( A moat is a protective shield that prevents other companies from invading their territories).
So when exactly, are the good stocks cheap?
You will want to keep a close eye on the market, and take advantage of these opportunities when the market is bearish, or when a good stock appears cheap because of missing data, or some other type of temporary problem that would impact the stock value.
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Everywhere you look you can see the wrath of a bunch of beat up drug stocks. For a few of the ultra contrarians out there this is the time to bet the farm on undervalued drug stocks. One of the key components to watch is how much cash each individual stock generates. The whole picture says bet on the pharma group when it is trading at a low multiple of earnings, sales and cash flow. The rational behind this theory is that if one or all three of these attributes are in place then the drug pipeline of future products is one giant bonus but without any overstated price buildup around the pipeline. It’s a way to get in on the pipeline for free.
While the pharma group as a whole can be tricky to navigate it is nonetheless undervalued by many of the top analysts. When the analysts start to come out from under the rocks and start buying the group as a whole this may very well be the trigger point for the average investor to get in at or near the bottom of an undersold market. The timing for this seems to be now with many of the big stocks trading as much as 30 to 40% off there highs of last year. Buying a stock that has had no fundamental changes over the last year but is selling at a large discount seems to be a very prudent move.
In addition to the obvious undervalued plays in the market when you throw in the new drug developments some of these companies have on the horizon; the fishing indeed looks promising. There are so many new drug prospects on the market that address huge target markets that finding a pharma with a positive new release is like doubling up on the icing on a cake.
Not only are there major releases coming but there are also major changes in the way modern medicine may look at treating disease. There is a huge and successful movement under way that is called virbrational medicine. It is powerful in its techniques and becoming more accepted daily by traditional Newtonian doctors. Because our bodies consist of 99% water and the new transmitter is water the outlook for this technology is terrific. The theory of this major movement is that “less is more” and with the recent advancements and with a broader acceptance by western doctors the prospects look compelling and very promising.
Naturally if you are looking to make a move in this direction with you investing it helps to have a system that can predict these major trend moves prior to the fact. For a closer look at such a system check out AEStocks where our latest month return was 38% and our 3 month return was 83%.
Trey Hayes a retired Counterintelligence and Counterterrorism expert left no stone un-turned when it came to protecting Americans. As the founder of Alpha Equities Trey has build a very impressive record o selected winning stock trades. Using 17 unique factors Trey takes the guess work out of trading. Over the last 4 years his trades have produced a non-cumulative return of over 964%. In the last year his return exceeded 400% and for the latest week of May 15, 2008 his return was an impressive 26.6%. So if you seriously want to make money trading check out this remarkable system at Alpha Equities. Our URL is http://aestocks.com
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Many investors identified stock investment as trading, but I identify stock investment as investing into the business of the company. Let me share how do I pick my stocks.
First I’ll do a business analysis on the companies:
Company A sold 100 million units of product A at $1. Then the next year, company A sold 120 million units of product A at $1.20 (sold more products at higher price). Company B sold 100 million units of product B at $1. Then the next year, company B sold 120 million units of product B at $0.80 (sold more products at discounted price). Which is a better company?
Looking from a profitability perceptive, Company A is a better company. This is because despite rising the price of its goods, it is still able to sell more of its product, and resulted in expansion of its profit margin. This is a sign that the quality offers by the product is of superior quality, or this is a sign that the company possess certain competitive advantages.
As for company B, it tries to sell more of its products by lower down the price of its product (giving discount), thereby attracting more customers to buy its products. There is nothing fantastic about its business and management. Does this company sounds like some of the shopping malls in your neighborhood? Some shopping malls are only crowded with people when there is sales going on, when it has no sales, the shopping malls are so much quiet.
So what kind of business or industry will consumers willing to pay a higher price and possibly buying more at the same time?
1. Iron ore & copper suppliers (CVRD, Rio Tinto, BHP Billiton, Freeport Mcmoran, Southern Copper) Iron ore and copper supplies are mainly controlled by a few huge miner companies. So steel makers do not have much choice but end paying a higher price for the iron ore year after year.
2. Strong branding retailers (Apple) iPod from Apple costs $200 - $300 plus, somehow consumers are still willing to pay for this kind of price. Innovation is recession free, ever since Steve Jobs goes back to Apple, we have seen more and more innovative products coming out from Apple.
3. Oil rig contractors and oil services companies (Diamond Offshore, Transocean, Swiber Holdings, Schlumberger) As price of oil rises, demand for oil rigs increase as well. Oil rig contractors rise the rental of oil rigs to as high as USD600,000 a day now, and yet there are still demand for oil rigs.
4. Toll road companies (Anhui Expressway, listed in Hong Kong) If you need to drive from point A to point B, and the road that leads to point B is an expressway, you still have to go through this road even though price of toll fees increase.
5. Healthcare (United Healthcare) High price of healthcare services do not reduce the number of patients.
6. Niche industrial companies (Tai Sin, Armstrong Industrial, Yip’s Chemical, Garmin Ltd and Google) Some industrial companies that have niche technology or competitive advantage enable them to command a higher premium for their goods and services.
After identifying the industry or companies that I’m interested in, then I’ll do a financial analysis, reviewing their cashflows, debt level and valuation. I do not want to overpay a stock even though the company looks very solid.
If all looks ok, I’ll invest some first, and buy more if fundamental continues to look strong.
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There are stock market sites and blogs that tell you how you can earn from just a small cap investment. Of course, anyone who wants to get rich would understandably jump at the opportunity. But getting rich is not a quick scheme and no get-rich-quick books will tell you that it happens overnight. It does not happen overnight. Even if you think you have the most reliable penny stock listing in the world, it still does not guarantee financial wealth.
Many people get the misconception that millionaires, or at least those who are better off got luck. Luck has only a little to do with it. It’s all hard work. There are even people who life a low profile lifestyle but have fat bank accounts. Then there those who claim that they got rich because they have a dependable penny stock listing and they want you to try it.
Don’t get fooled by this hype. Today there are so many opportunists who would do anything to get a piece of your savings. The penny stock market is one of the attractive avenues for them. If you want to get rich from your penny shares, follow these tips:
- Do not spend beyond your means. Always keep in mind that the general rule of thumb is always to buy shares at low price. When the value appreciates and when the time is right, sell it. But do not use up too much of your savings. Just allocate portion of it. A safe margin would ten percent. And spend only for the list that you personally picked and not from those who suggested it to you.
- Learn and master the basic language, the slangs and the major concepts of the trade. Any penny stock listing is useless if you don’t know how to translate them. And to do that, you have to understand the back and front ends. Along that path you will be encountering so many stock market terms that may be alien to you. Terms like the PE ratio, ticker signs, liquidity, etc. Understand them and learn them by heart.
- Have a realistic commitment of your investment money. Your stock list is supposed to showcase the hot stocks to bid. However, the list can change overnight. What is hot today may not be hot tomorrow and that happens all the time. Always double check on which penny stock you think is most likely to expect profit for you.
- Learn about the trade continually. Your penny stock listing cannot exist alone. It needs partners. Because in this business, the survivors are not the rich, the smart, and the strong. The successful investors are those who keep track of constant changes. These are the stock market trends.
In reality, what makes you rich is not because you have a penny stock listing that guarantees success. What success means is dependent on how much work you are willing to put in your business. The ingredients to success are knowledge, rational analysis, and a roster of facts. If you want to be rich is really all up to you.
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One of the worst things that can happen in the trading business is to go broke. Of course, anyone would do anything to prevent it from happening. If you run out of your investment funds, the stocks and shares just keep moving on and never stop. Of course you won’t be able to operate anymore because you have no money to spare. That couldn’t be difficult to understand, right? So that this horrible vision of bankruptcy will not happen, it is important that you set your limitations in penny stock investing.
Nothing can be more obvious than that. No matter how cheap the stocks are, it is important to keep your reservoir full as well. The stock market trend is not predictable. You share can sell high today and you could lose it tomorrow. What if that loss was the last investment money you have? Sad story but this can happen to anyone who is not setting clear goals for themselves. This article talks about some random guidelines on how to keep your savings intact.
- Spend only within your budget. This is common sense. You can’t spend any more than what you only have. But what this means exactly is that if you are into penny stock investing, don’t pour in all your savings. Set aside a budget for your investment to bank roll. A reasonable margin would be not more than ten percent of your personal funds. Any profit made, you can always add it to your savings. But don’t go above the 10% mark unless you can really afford it.
- Know the loops in penny stock investing. In this same way as setting up a business, you have to understand the dynamics and the operations. This will lead you to better understanding of the trade. With it, you can make decisions with better precision, not accurate but better.
- Know the risks you may encounter. Known to everyone in the trade, penny stock trading ranks the highest in risk scale. The stocks lack liquidity. Fraudulent exercises are very possible in this arena. You could lose your money like bubbles bursting in air. But good investors are natural risk takers. They understand it like it’s at the back of their hands. With this mindset, you can set your investment funds better.
- Learn when to invest and when to hold back. Don’t get carried away if you stock price goes up. It can go down just as fast. So it is important to learn some timing strategies in penny stock investing. This should save you from losing more money and keep your savings steady.
- Do not think of your investment as gambling. If you lose the bet, you can’t have it back. So you bet another. Although stock market trading behaves somewhat similar, it’s not exactly the same. Investment aims for profit. When you get your share, you bank roll it for more profit. And you’re not the only one benefiting it. Gambling is just for entertainment. Penny stock investing is for serious money makers.
The list can simply go on. But no matter how sensible and persuasive these tips are, it’s really up to you. It’s your penny stock investing money. You have full authority over it. Small cap trading can make you smile a lot if you stop betting your money and start thinking of it as investment.
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It may not be the NBA Finals, but as Dallas Mavericks billionaire owner Mark Cuban once quipped, “If you don’t follow the stock market, you are missing some amazing drama.”
As the stock market continues to reach record highs this year, a majority of Americans feel confident about their portfolios and their equity investments. According to a March poll by business channel CNBC, 60 percent of Americans feel confident that their stocks will trade higher this year, even after the survey was completed during a downturn in the market.
The market has seen an extraordinary run since last summer, going from the 10,000s to the high-13,000. Americans are becoming more secure with their financial aptitude nowadays, and realize that regular stock investing over time can result in tremendous returns.
The stock market isn’t without its defects, but a practical, easy-to-understand advice follows the logic that stocks have historically outperformed all other investments, averaging a 10 percent gain in the S&P 500 since 1926.
It’s no real secret that a diversified portfolio over the long run is part of a smart financial strategy. But there are rules to investing, and I believe the new book “How Come That Idiot’s Rich and I’m Not.” offers up some common-sense solutions for everyone who wants to invest in stocks and mutual funds.
Trying to outwit the experts is fruitless. People [who go to Vegas] always tell you about the time they went and won, but they never tell them about the other eight trips where they lost. If you’re a hobbyist picking stocks part time thinking you’re going to outsmart Wall Street, you’re out of your mind.
Robert Shemin, JD, MBA, and Wall Street Journal bestseller, who was once considered the “least likely to succeed,” is a multi-millionaire who speaks to hundreds of thousands yearly, regularly sharing the podium with such financial luminaries as Donald Trump, Robert Kiyosaki, David Bach, Suze Orman and Tony Robbins. Shemin has worked with high-net-worth individuals for Goldman Sachs, helped create four companies, and been involved in over l,000 real-estate transactions. Find out more about Robert at http://www.claimmybonus.com
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Discipline is a necessary skill for any successful trader or investor. You must be able to control your impulses and emotions when dealing with the stock market. Many traders recognize that discipline is essential to success, but they also admit that it is very difficult to obtain. So how do they maintain control?
The stock market is chaotic, unpredictable, and confusing at times. The uncertainty is what makes many traders / investors feel anxious and uncomfortable. The best way for someone to maintain discipline through all the uncertainty is by establishing a structured plan. Trading with detailed plans, including entrance / exit strategies and a target profit objective, helps you to be less affected by the confusion of the market. Plans bring structure into an unstructured world and the more plans you have to follow, the less uncertain you will usually feel. Your plan will help you maintain discipline easier than others.
Extensive training and practice also helps successful traders maintain discipline. A successful business person never accepts the idea that they have reached the peak of their success. They are always involved in education and training to help enhance their decision making skills. Do your homework and learn as much as you can, so you can buy and sell with confidence in your decision.
Disciplined traders / investors also have a huge amount of self control. They do not let their emotions take over during a trade, whether they are good or bad feelings. Panic or victory should never affect your decisions with money. In order to keep a balanced and unaffected outlook, your emotions should be the same on the worst days as well as on the best days.
An optimistic yet realistic attitude is also essential to becoming successful in buying and selling stocks. Trust your intuitions with the market at times, don’t just buy a stock because everyone else is . This takes practice and attention to your mood. Never let your guard down and have trust in yourself when no one else believes. Any negative comments must be ignored.
Maintaining positive emotions, attitudes, and moods takes a great amount of psychological strength. The best way to maintain positive emotions is to be well rested and relaxed. It may be easier for someone to lose discipline and give in to a negative mood when they are tired.
Even though it may be difficult at times, maintaining discipline is absolutely necessary for a trader’s / investor’s success. Be sure to learn how to control your emotions and keep a positive attitude. This will help you trade consistently and profitably. Learning how to maintain discipline can help you not only in the stock market but in many other aspects of life as well. Good Luck!
TheSUBWAY: Small Cap Stock Promoters
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The SUBWAY has established a national reputation for providing investor relations services. We are a full service firm and work with you through each stage of the investor relations process. Risk Tolerant Investors, Public Corporations, Promoters : We have the best of all three worlds. The one source for High Risk High Return Education and Information. Public Corporations who are profiled on TheSUBWAY have had a great history of realizing the benefits of increased exposure in the marketplace.
Visit our Forum at (http://www.thesubway.com/small-cap-forum) to comment on small cap stocks, ask questions and talk with other investors.
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January 28th, 2008 by admin
One of the most important skills to have as an investor or trader is patience. You have to know how to control your impulses and not to act on emotion. Patient traders and investors have done their homework- They have precise entry and exit times and they stick to them. Sticking to your strategy is most important. You did research for a reason, you took the time to develop a strategy for a reason, now be sure to follow it.
First, Choose The Right Stock
It’s important to remember that there are many different stock opportunities and it is not necessary to grab each one. You want to be sure that the opportunities you take fit within your trading or investing goals. If the stock that you chose isn’t meeting your criteria, be patient and find a new one. There are always other opportunities available.
Wait For Your Entry Point
Once you have done your research and picked an entry point, wait for it. You may expect the stock to quickly fall to your entry point, but instead the price rises. Don’t panic. Just because the price rises doesn’t mean that it won’t fall. Don’t enter above your planned entry point because you’re afraid you’ll miss the trade. If you enter above it, you will lose some of your potential profit. Be patient. The stock will eventually fall back. Take some time to remind yourself why you decided on your entry point to begin with.
Wait For The Right Time To Sell
Once you have bought a stock, you have to know how to wait patiently for the right time to sell. All traders / investors must fight the urge to sell too early or too late. If you are a long term investor, it is important to have patience so you do not impulsively sell when the market starts to turn down or buy back at the top of the market. This usually results in losing your money.
If you are a short-term trader, you must also have patience. Even though short-term traders hold onto their stocks for a shorter period of time, they must know how to tolerantly wait for the best time to sell. Selling too early does not allow one’s profits to grow quickly. The same goes for holding on to a stock for too long, hoping that it will eventually go up if it hasn’t already. Don’t turn your trade into an investment. Accept your losses and get out. Most importantly, learn from your mistakes. Waiting for the right entry and exit points is key to every successful trade / investment.
Gaining Patience
One of the best ways to gain patience is to try to view the trades objectively. If you try to view the trades with the attitude that you are not losing out on something big, you may be able to resist the temptation to enter or exit early. A cold approach to trading may increase your tolerance and thus increase your profits. Just because you like the company that you’re trading or investing with does not mean you should stick with it regardless. Be objective and don’t bring your emotions into it.
Fighting impulse and being objective is the best way to become profitable. Patience is the most vital characteristic to develop in order to be successful.
TheSUBWAY: Small Cap Stock Promoters
(http://www.TheSUBWAY.com)
The SUBWAY has established a national reputation for providing investor relations services. We are a full service firm and we work with you through each stage of the investor relations process. Risk Tolerant Investors, Public Corporations, Promoters : We have the best of all three worlds. The one source for High Risk High Return Education and Information.
Visit our Forum at (http://www.thesubway.com/fusionbb) to comment on small cap stocks, ask questions and talk with other investors.
You can also visit our Blog to read more, comment, and/or ask questions about Stock Promoters at (http://thesubway.wordpress.com)
Submitted by Christine at NewSunGraphics.com
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January 28th, 2008 by admin
When traders lose money, it is often because they cannot control their emotions. Those who act on their emotions often make irrational decisions. So, learning how to control emotions when trading will be one of the most essential aspects to success. Successful traders can view the market objectively and are emotionally disconnected from market happenings.
Fear and greed are the two main emotions that traders need to overcome. They are both very powerful emotions. When humans foresee harm, they instantly feel trepidation and react quickly. In the market, reacting to fear usually causes a trader to make an impulsive decision that leads to a trading error. Fear of losing money may cause someone to sell a stock before their target price.
Triumphant traders are not affected by fear and greed. When a stock falls, they are not overcome by fear. They expect small drops in the market. When an inexperienced trader sees a stock reach its target, they are often driven by greed and keep the stock in the trade, hoping to make an even larger profit. So, set your target price, accept your profit and sell. You haven’t made a profit until you actually sell the stock.
Fear and greed are the main reasons why the inexperienced trader buys and sells at the wrong times. This is why skilled traders are able to use the volatility of the market to make large profits, while inexperienced traders lose, lose, lose. Regardless of what the market does, a successful trader has a plan and sticks to it.
While at first it may seem hard to buy and sell objectively, the more trading experience you gain, the easier it becomes. There are steps you can take to learn how to stay unemotional and objective:
• Limit your risk by trading with money that you can afford to lose. If a loss won’t really hurt you, it will be easier to convince yourself that the outcome is insignificant. Once you have convinced yourself that the outcome is not important, it will be easier to remain emotionally detached.
• Know your risk tolerance. If big risks make you uncomfortable, don’t make dicey trades. Start by making safe investments. As you become more knowledgeable and less emotional, start increasing your risks.
• Do your homework. Come up with a trading strategy and be sure to stick to it. Stay away from stock message boards until you gain confidence in yourself. They may have the ability to sway your emotions and thus sway your trade. Successful traders can think for themselves. They don’t let the stock boards tell them what to do.
• If you find yourself obsessing over your stock, you are starting to trade on emotion. Stop yourself from becoming attached and confidently remind yourself of your trading strategy.
• Don’t trade just to trade. Even though the stock market can be an exciting place, and you probably feel like you are missing out on something, don’t buy a stock for the heck of it. Instead, learn how to anticipate the market. Trading more often will not result in more profits. In fact, the cost associated with trading more often may actually cause you to become more emotionally involved. Wait for the ideal entrances and exits.
• Taking a loss is a part of trading. Instead of letting your emotions control you after a loss, come up with a plan for managing them. Some people say that your first loss is your best loss. This is because you will hopefully look back at what you did wrong and learn from it.
If you can learn how to trade without emotional involvement, you will always be more successful. The best way to learn how to emotionlessly trade is not to think of the stock as a company, but just think of it as a stock. As you gain more knowledge about the market, you will become a more confident trader. Begin by taking small steps to overcome your emotion. Study the market, and do your homework. Once you can think objectively, you are on your way to becoming a consistent and profitable trader.
TheSUBWAY: Small Cap Stock Promoters http://www.TheSUBWAY.com
The SUBWAY has established a national reputation for providing investor relations services. We are a full service firm and we work with you through each stage of the investor relations process. Risk Tolerant Investors, Public Corporations, Promoters : We have the best of all three worlds. The one source for High Risk High Return Education and Information.
Visit our Forum at http://www.thesubway.com/fusionbb to comment on small cap stocks, ask questions and talk with other investors.
You can also visit our Blog to read more, comment, and/or ask questions about Stock Promoters at http://thesubway.wordpress.com
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January 20th, 2008 by admin
Market orders
When you buy stock, the simplest type of order is a market order an order to buy or sell a stock at the market’s current best available price. It doesn’t get any more basic than that. Here’s an example-
Kowalski, Inc., is available at the market price of $10. When you call up your broker and instruct him to buy 100 shares “at the market,” the broker will implement the order for your account, and you pay $1,000 plus commission.
I say current best available price because the stock’s price is constantly moving, and catching the best price can be a function of the broker’s ability to process the stock purchase. For very active stocks, the price change can happen within seconds. It’s not unheard of to have three brokers simultaneously place orders for the same stocks and get three different prices because of differences in the broker’s capability.
The advantage of a market order is that the transaction is processed immediately, and you get your stock without worrying about whether it hits a particular price. For example, if you buy Kowalski, Inc., with a market order, you know that by the end of that phone call , you’re assured of getting the stock. The disadvantage of a market order is that you can’t control the price that you pay for the stock. Whether you’re buying or selling your shares, you may not realize the exact price you expect (especially if you’re buying a volatile stock).
Market orders get finalized in the chronological order in which they’re placed. Your price may change because the orders ahead of you in line caused the stock price to rise or fall based on the latest news.
Stop orders
A stop order (or stop-loss order if you own the stock) is a condition-related order that instructs the broker to sell a particular stock only when the stock reaches a particular price. It acts like a trigger, and the stop order converts to a market order to sell the stock immediately. The stop-loss order isn’t designed to take advantage of small, short-term moves in the stock’s price. It’s meant to help you protect the bulk of your money when the market turns against your stock investment in a sudden manner.
Say that your Kowalski, Inc., stock rises to $20 per share and you seek to protect your investment against a possible future market decline. A stop-loss order at $18 triggers your broker to sell the stock immediately if it falls to the $18 mark. In this example, if the stock suddenly drops to $17, it still triggers the stop-loss order, but the finalized sale price is $17. In a volatile market, you may not be able to sell at your precise stop-loss price. However, because the order automatically gets converted into a market order, the sale will be done, and you prevent further declines in the stock.
The main benefit of a stop-loss order is that it prevents a major decline in a stock that you own. It’s a form of discipline that’s important in investing in order to minimize potential losses. Investors can find it agonizing to sell a stock that has fallen. If they don’t sell, however, the stock often continues to plummet as investors continue to hold on while hoping for a rebound in the price.
Tips to turn $1000 into $1,00,000, articles on stock market trading and investing. To get detail about the stock market and finance visit http://www.2stocktrading.com
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