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2009-01-10T19:51:00.001-08:00

Fundamental Analysis?

2009-01-10T10:39:00.000-08:00

Fundamental Analysis is the traditional way of looking at the stock market. It consists of looking at a company's financial statements, P/E ratios and so on.

This method is based on one simple idea that strong companies will tend to make a profit and grow, in turn that profit and growth will make money for the shareholders of the business. In other words by investing in strength your portfolio will grow faster.

What most fundamental investors try to do is wait for the market to crash. When it does they sweep in and buy strong companies that will not go out of business. Companies like McDonalds, Microsoft, Coca Cola, are all big companies that are very big and the odds of them failing are very small.

Fundamental analysis assumes that the market is inherently bullish. By buying strong companies at a low price you are pretty much guaranteeing that over a long period of time you will make money in the market.

There are two types of investment styles, growth and value.

Value investing is buying companies that as of today are very strong, have a solid cash flow, and a solid business plans. An example of this would be if Coke drops to $30. The stock would be well off its highs and we all know it is not going to run out of customers anytime soon.

Growth stocks are stocks that need a little help, but they have a strong promise to get it. An example of this is US steel. The recent market crash and lack of demand for steel has brought this stock from its highs in the $190s to around $40. However President Obama's plain to build roads will increase the need for steel and therefore increase the profit of US steel.

In general Value investing seems to outperform growth investing.

High Yield Investing - The Way to Succeed is by Taking a Risk

2009-01-10T10:37:00.000-08:00

High yield investing can be an exciting game, but many people don't succeed. The reason why they don't succeed is because they simply pick the wrong investments. This may be why you haven't succeeded at these investments. They are high risk and the wrong investment can result in a terrible loss of money. The idea behind these investments is to gain the best return

But how is it you're going to do that?

Well, the first thing you need to do is research. You have to look at how the stocks perform. If you don't, then you are taking a bigger risk than ever. You have to look at company profits, what their trend is like, and whether or not they've got some promising news regarding predictions for their company.

Does this take time? It does take time, but it is time that is well spent because it is your money at risk. You also want to make sure that you don't invest more than you can afford to lose. This is why so many people find that they lose rather than gain. These are usually the "I lost everything" stories that you hear.

So remember, you're going to do tons of research on the stocks that you're interested in. The idea is to get high returns and not experience incredible losses. But to keep that from happening, only invest as much as you can afford to lose. That is a huge rule of thumb in the investing world. However, as long as you play your cards right, you have a better chance of success.

2 Stock Market Strategies For Your Portfolio - You Have to Be Strategic

2009-01-10T10:29:00.001-08:00

Entering the stock market without a plan? If you are, you are treading on dangerous ground. Then again, you may have already entered the stock market and you're not quite able to figure out why you are not getting the performance that you feel you should have. Your portfolio is just not achieving any returns or the returns that you wish it would.

This is where stock market strategies come into play.

You have to have a strategy in place for everything you do. It doesn't matter if it is the stock market or how you get to work each and every day. Strategies are very important.

Here are two that you can use:

• Diversify your portfolio - This means having different types of investments in your portfolio. You don't want to have all of the same stock or all individual stocks. You need to have mutual funds, bonds, and index fund investments in there as well. That way you diversify risk and where you may lose in one area, you may gain in another.

• Margin buying - This is only something you should try if you can afford to. It is where you borrow money to buy stock in hopes the stock price will rise to pay off the loan. Many use this to get more stock.

So diversify your portfolio as much as possible and you can use margin buying to do just that as long as it is within your means to do so. These are great strategies to use when you feel that you are just not performing on the market the way you should.

Basic Stock Market Strategies - Identifying Undervalued Stocks

2009-01-10T10:27:00.000-08:00

If you can't seem to get yourself straightened out in the stock market, it is time to try a new strategy. Anytime an existing strategy does not work for you, you have to try something new. You can't keep trying to push the same strategy over and over again. This is something that a lot of people do, which is why they become deadlocked in the stock market.

One strategy to use is to identify undervalued stocks. But how do you do that?

Well, you have to look at a company that has a lot of revenue. They are sitting on a lot more money than what their stocks are reflecting. That is one basic clue that you can look out for.

The company will also use what is called internal rate of return to measure multiple projects against each other. This helps them understand the profitability of a project. This can help you identify their potential.

You need to look at liquidity ratios, their cash flow statement, and pretty much any of the numbers that you can get a hold of because there is a chance that the stocks will soar at some point. Once it is realized how undervalued these stocks are, everyone is going to want a piece of that company.

So make sure you do your research. Finding undervalued stocks is a great strategy to use if you want to finally get ahead in the stock market. You shouldn't have to keep using the same strategy over and over when there are so many new ones out there that you can use.

Option Trading - 6 Warning Signs of a Bad Advisory Service

2009-01-08T22:09:00.000-08:00

There are countless subscription-based option advisory services available for the individual trader. If a service enables you to significantly increase your returns, it will likely be worth the cost. Unfortunately, there are a lot of bad option advisory services out there as well, services that will actually lose you money.

How can you tell the difference? Here are six warning signs of a questionable option trading service:

1.) It sounds too good to be true. Yes, it's true you can make a lot of money trading options. Options are leveraged instruments after all. But that means you can lose a lot of money, too. In order to make monster-sized gains you either have to be very, very lucky or you have to take monster-sized risks. Beware the services that imply or suggest (legally, they know better than to come straight out and claim it) that you'll soon be able to retire and live a life of tropical luxury.

2.) References to secret strategies only the pros know about. It would be nice if there really were secret strategies you could adopt to consistently make lots of easy money. Unfortunately, there aren't. Professional traders may employ a variety of advanced strategies, but these are not closely-guarded secrets. Any option advisory service using this sales line hopes you're new to trading options and have yet to discover the many options-related educational websites offering a wealth of free information.

3.) Long only strategies. If an option trading service merely provides a list of call options (or put options) for you to purchase, run the other way. Simply buying calls or puts is, in general, a sucker's game. It's the options equivalent of buying lottery tickets. Or here's another analogy from the world of basketball: imagine that someone offered to pay you $1000 for every basket you could sink from half-court and that you could take as many shots as you wanted. Sounds like a pretty good deal, doesn't it? But here's the catch. The other part of the deal is that you have to pay $100 for each shot you're allowed to take. I think it's safe to assume that you're going to go broke a lot sooner than you're going to become a millionaire.

4.) Touting recent winning trades only. There's nothing wrong with a service marketing itself on the strength of its successes. But a huge red flag should be raised when a service hypes a select few of its trades to show you what you "could have made" had you been a subscriber. Read the promotional material very carefully. Did those winning trades represent all of the service's recommended trades? Unless the marketing material expressly says otherwise, my guess is that there are a whole lot of losing trades they're not telling you about.

5.) Little or no transparency. Any legitimate option advisory service offering true value will be open about their results, their offerings, and their methodology and processes. Don't be seduced by hype and marketing gimmicks. Demand a track record or some other method by which you can establish some genuine level of trust or confidence prior to subscribing.

6.) Get rich quick. Trading options can be very lucrative compared to trading stocks. But beware any service that tries to convince you that you can make a ton of money in a short amount of time with limited start up costs and virtually no effort on your part. You don't have to be obsessed with trading options in order to be successful. Trading doesn't have to consume every waking moment of your life. But don't be tempted to jettison your common sense, either. Anything you want to be successful at is going to require time and effort.

Conclusion:

I do believe there are legitimate option advisory services out there (I've benefited from some myself), but there are a lot of bad services out there, too. Keeping the above checklist in mind will help weed out a lot of the ones you will do very well to avoid.

Stock Trading Personality

2009-01-08T22:00:00.001-08:00

Everyone has a different personality. So it makes sense that everyone has a different stock trading personality. Some people trade very aggressively and like to go after the short term movements. Some people are less aggressive and like to ride the longer term trends.

Finding your trading style is very important. If you try to be too aggressive and your personality isn't the same you might get too stressed out to make good decisions. On the other hand if you are very aggressive and are trying to trade long term trends you could end up getting bored with the market and stop trading all together.

Trading on the same ground as your personality will help you want to stay in the market and learn from your mistakes. And learning from your mistakes is the only way to succeed in the stock market.

When you are developing your own strategy there are a few questions you should ask yourself.

1. What time frame do I want to trade? Are you willing to sit by your computer for an hour a day placing trades and exiting them? Do you want to ride a stocks trend for several months? Do you want to just buy strong companies and not have to worry about it again for 20 or 30 years?

2. What do you want to trade? There are stocks, ETFs, currencies, and commodities. Do you want to specialize in 1 area or spread out into different areas?

3. Do you want to trade options? Perhaps you want to invest in short term options which allow you to make higher returns, but also force you to trade shorter timeframes. Maybe you just want to use them to sell covered calls on your stocks.

Once you have answered these questions you will have a better understanding of how you should approach the market.

Which Online Stock Broker Best Suits You?

2009-01-03T10:50:00.000-08:00

Online stock brokers have helped in raising the whole standard of trading service. Now traders can trade almost all financial instruments from the comfort of their home and with more market information and better tools. There are now a number of online stock brokerage firms available who fit to every trader needs. Some offer generalized services while some others offer specialized services.

Trading through online stock brokers offer many advantages over through traditional or full-service ones. First and foremost advantage is the reduction in trading costs - because of their automated trading procedure online brokers charge much less fee than traditional. Second is the speed of trade execution - online brokerage firms can execute market orders almost instantaneously. Other advantages include better accessibility from anywhere in world, better control over decisions, access to real-time or near real-time market information and news, and lest human interfere with trading procedure. But trading through online stock brokers not suit all types of traders, especially who lack much knowledge. As the whole procedure is managed by computers, inaccessibility problems and system delays can cause problems for traders.

As said earlier there are different types of online stock brokerage firms available to fulfill different trader needs. Below is one reasonable classification.

1. Full-Service online stock brokers - These are firms which offer advice and assistance, and a whole range of products to trade on. But in return of their high personalized service they charge high. They are best suited for traders who need assistance in making decisions and risk management, and are also good for infrequent traders having no time for things like technical analysis.

2. Discount online stock brokers - Greatest advantage with these firms is discounted commissions. They charge much less than full-service firms but they do not offer much trading advice and assistance. Discount brokers are suitable for traders who have good trading knowledge and are able to make their own decisions. There are also some deep-discount brokerage firms who charge amazingly low fees. But never expect personalized services from them because usually they only get your orders executed.

3. Day trading online stock brokers - These firms take trading to the topmost active and automated level. They tend to offer cheapest commission schedules, fastest market access and order execution, systems loaded with a variety of tools, and much more. But they demand traders to fulfill certain account requirements which are usually unattainable for a normal (less active) trader. Day trading services best suited for day traders and scalpers.

Markets Suffer Their Worst Run For Generations

2009-01-01T10:40:00.000-08:00

The final week of 2008 passed with many markets recording their worst annual performance for generations. Equities finished above their lows, but still finished down by at least 30%. The S&P 500 closed 2008 down 38%, while the Nikkei closed down over 40%. The 'lost decade' rolls on ever more for the Japanese stock market. Perhaps the most remarkable performance came from commodities; at one stage, oil and copper were up 47% and 23% respectively, only to finish the year down 46% and 48%. Despite being at the epicentre of the financial crisis and approaching zero interest rates, the dollar had a good year against the Euro and an exceptional year against the pound. Sterling collapsed against most currencies, nearing parity with Euro and earning the nickname "The British Krona" as a reference to the doomed Icelandic currency.

Stocks started 2009 on the right foot, with a broad based rally that took the Dow Jones within above the psychologically important 9000 level. The Dow hasn't managed to successfully hold this level since the first few days of November. Commodities looked to be willing to make good some of the losses generated throughout 2008, with oil continuing to move above the $40 a barrel level.

The coming week is dominated by the UK interest rate decision, which comes on the back of Halifax's announcement that house prices dropped 16.2% last year. This was the worst annual fall on record, bringing prices back to 2004 levels. The Bank of England also warned that the impact of the credit crunch was likely to intensify in the next few months. The MPC is expected to cut yet again to 1.5%, bringing UK rates closer to near zero US levels, and widening the gap between Sterling and the Euro. Friday also brings the all important US Non Farm Payroll figures which are expected to show another drop in the region of 500,000 jobs.

Jason Goepfert of the SentimenTrader.com, points out that the latest AAII (American Association of Individual Investors) Sentiment Survey puts US investors as having the lowest allocation of stocks in their portfolios since 1991. The level of cash hoarding has reached record levels. According to Goepfert, the only two times when cash allocations and stock allocations reached similar levels (around 40%) was 1991 and 2002. Both occasions were good contrarian indicators.

Beginner Stock Market Investing - What You Should Know

2008-12-27T14:15:00.000-08:00

Whether you are interested in long term investing in the stock market or shorter term stock trading, the only way to become successful is to go through a learning process.

This is one of the biggest components missing from most investors and traders, and always has been. They simply jump right in and start trading Stocks or Options with no background and without having spent any considerable time learning what goes on. This is why there is such a bad feeling whenever "stock trading" or "stock market investing" is brought up, especially in a Bear Market or Recession.

Yes, there are some who read a book or a page on a website and then get started, but that is not enough. In a raging Bull market it may be enough, as the majority of stocks will rise like a ship in the ocean with the tide rising, but as soon as the market turns, then what? Most successful stock traders and investors have read many books and in today's times, have access to study large amounts of information on websites via the internet. Not one book and one or two web pages.

Many people get involved (jump in) when the markets are rising quickly and they hear about other people making large amounts of money. The effect of a rising market will compound the perception that it is easy to make money in the markets, not because it is, but only because the market happens to be rising. This is similar to someone who makes their first trade and it ends up being profitable. That person now thinks it is easy and they are successful. This is far from the truth.

People overlook the reality of what is actually going on and zero in their attention on the possible profits that can be made (greed). Not only that, this is also the time when you will see other people and businesses publicly announcing their incredible track record of profits to draw in potential customers.

We spend so much time in school, from primary education through High School and into College to learn about possible career choices, yet when it comes to stock investing and stock trading, there is a misconception that anyone can do it.

Take the time to learn as much as you can to build a good foundation before getting involved in this field. Just like when you go to College and take general classes to build a foundation before taking classes that specialize on one area, stock trading and investing should be no different.

What Drives Stock Prices Up and Down?

2008-12-22T11:41:00.000-08:00

Stock market behaves like all other market in a competitive economy. The market price of a stock is determined by the supply of stocks from the seller and the demand of the stocks from the buyer. Basically, supply and demand rules are at work here. If more people want to buy a stock (demand) than people who want to sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall. In the bull market, when the price performance of stocks is great, everybody wants to buy in. This makes a bigger demand side in the market, and cause the price to be higher. On the contrary, in a bear market, the demand is less than the supply, hence the drop of the price.

The internet boom in the late 1990s and the recent commodity boom spurred a high demand from the investors for the internet and commodity stocks. The performance of the IPOs was extraordinary. The 2008 financial crisis, on the contrary saw investors fled the stock market and left nothing to be spared. The stock market index plummeted to the worst level since the Great Depression years. This come to another piece of thought that stock prices are also very much depend on psychological elements, such as fears and greed.

Fears, usually takes on two basic forms, which are fear of loss and fear of missing out. The fear of loss makes investors selling stock at the first sign of trouble. In the 2008 stock market crisis, fear was dominated the trading and investors. Everybody fears, panic and sell their stocks. Stock index plunged around 40 to 50% around the world. The fear of missing out compels investors to abandon the fundamental investing rules and rush to buy stocks so that they don’t miss out on another run. This will cause a lot of demand for the stock and increase the price. Greed is not unlike fear of missing out; the difference is that greedy investors are already in the market. They are not missing out, but they want more money and profits come on their way.

They are banking on the belief that stock market will always go up in price. The media also play a lot of part here. Information about stocks and company are available freely or almost freely in the internet, and that the media can drive and change sentiment of any given company and its stock just in a blink of an eye. Emotion of the investors (retail investors or fund managers alike), the amount of market participants and the media, fuel the volatility in the stock market. Two or three decades ago, it was uncommon to have index change of 2-3% in one day, yet now, we are witnessing DJIA and other markets around the world moving in that range in a heartbeat. Stock prices are more and more driven by the sentiment, emotion, and psychology, all of which are driven by the free flows of information from the media.

Analysts Know What They're Doing

2008-12-18T16:17:00.000-08:00

Although most people couldn't be more bored by the daily doings of the business community, I've always found them to be fascinating (or at least since my days at New York University, 1958-64, when I dallied in management, accounting, marketing and advertising.)

By way of explaining why the market interests me -- I assure you it's not because of the millions I have invested -- I once worked for the Commerce and Industry Association of New York, where I became familiar with some of the world's largest companies.

This sparked my interest in business, and it wasn't long before I found that following the antics of the stock market is a great way to watch the financial parade.

I've marveled at the way stocks behave when there's news affecting companies -- or when there's no news! I've been amazed by market analysts' comments about specific companies, industries, markets and economies. But the recent strange occurrences have taught me a great deal.

Stock prices are affected by many things. While earnings and potential are major factors, such things as price-earnings ratios, sales outlook, competition, quality of management (often based on a single executive) and the economy, among others, have significant impact. Nevertheless, the way stocks behave is inexplicable.

Individual stockholders (the little guy) buy a few shares of a stock with the hope that the company's sales and earnings rise. But, too often, a company announces earnings have doubled or tripled, elating stockholders -- until they find their stock has tumbled on the news.

Analysts explain the fall by saying sales and earnings are not likely to remain at such extraordinary levels.

Meanwhile, the little guy sees other companies report disastrous sales and earnings, but those stocks leap higher, based on analysts' statements that improvements are expected in the next quarter.

If a stock rises on expectations that sales and earnings would be higher, you'd expect some adjustment downward if a disappointing report comes in. But, often, that's not the case.

Then there's the tech stocks. Any stock that has anything to do with the Internet is regularly pushed higher -- these stocks don't follow the rules. They have risen en masse through the ceiling without explanation. Few of them have any earnings whatsoever.

Analysts tout some stocks and industries for weeks, pushing their prices up -- but, generally, their prices fall suspiciously not long afterward. Somebody made a lot of money on the moves!

As a market watcher from the outside -- I'm no Alan Greenspan -- I have to wonder: Who's minding the store? It appears stocks are being played like a fiddle.

While there are occasional investigations and arrests in connection with insider trading and market manipulation, we wonder: Are regulators watching the markets closely enough?

I wonder.

How to Start Stock Market Trading - Tips, Tricks, & Requirements

2008-12-11T17:44:00.000-08:00

While it is dangerous to attempt to oversimplify the complex world of stock market trading, it is still good to know the simple methods and norms that you will see during your experiences as a trader. The tips, tricks and requirements needed to learn how to start stock market trading are extremely important to learn and recognize. Here are just a few of them to help you get started in a successful manner.

There are a few simple tips that you can observe that will help make you a much better trader. One is to not immediately jump on every "hot stock" that is being hyped up by the news or other investors. Often times, you will have missed out on the best part of the opportunity by the time the rest of the world is talking about it. Look for "hidden gems" whenever you can, as those represent a great chance to get in on the bottom floor and enjoy the entire rise of the stock's value.

Some tricks that can be used in stock market trading include using data and trends in combination with what traders call "signals" in order to help decide what moves you will make. Usually doing so requires some sort of computer program, but experienced traders who have been trained in the right way can recognize trends and interpret them on their own, as well.

Of course, the requirements of trading on the stock market include having a broker or brokerage site to help you make your trades. If you plan on making long-term trades, you can go with a full-service broker, but those who want to make many trades, such as day traders or swing traders, will probably want to find an online site or service that charges them very small amounts per trade.

Stock market trading can be a complicated thing, and no one should get into this type of endeavor without the proper amount of knowledge and resources, but it is not impossible to experience success on the stock market. The key is to learn as much as possible and be true to your strategies, but also open-minded to new possibilities, when appropriate.

Stock Market For Beginners

2008-11-25T11:05:00.000-08:00

If you don't know about the stock market and are trying to learn about it, you are most likely to experience a severe case of information overload.

Do a Google search for "stock market education" or "learn the stock market" and you'll be literally inundated with information. The same holds true if you look an Amazon or walk into a brick-and-mortar bookstore. The choice of books for stock market beginners is simply astounding.

In part, the reason why there's such an abundance of information on the stock market is because of the interest many people have in it. There's a market, and publishers try and cash on it. But on the other hand, there also is a lot of information to offer on the stock market. No single book can give you all the information you need.

As a beginner in the area of stock market investing, what must you do? The first thing you must realize is that a very well-written book about the stock market can be totally useless to you if it's inappropriate for your knowledge level.

You need to accept you're a beginner and go for a beginner's book or a website that caters to beginners. After you're absorbed that information, you can go back and look for more information that is better suited to your new knowledge level.

Nevertheless, you need to at least have some very basic knowledge. The stock market is nothing but a platform where shares of publicly traded companies are bought and sold. A share of stock is a claim of ownership in a given company: if you own a share of stock, you are entitled to a return on your investment if the company is profitable.

A publicly traded company is one where the shares are sold to the anyone who wishes to buy them, as opposed to a private or a family company, where the shares are not sold to the public at large.

But there's a great advantage to being a stock market beginner in current times. Because of the advent of computers and the internet, you can learn, build a paper portfolio, and follow "your" portfolio to see how it performs. The purpose of this exercise is to get you into the mindset of an investor without taking on the risk.

As you're learning and getting more comfortable with the investment world, you can consider getting a brokerage account so you can begin investing. Make sure you're aware of the requirements and terms of the account you will sign for, as well as the fees you will be charged.

One word of caution, though. Many people get involved in the stock market expecting to make a fortune in a short amount of time. Those are the people who fall for the first get-rich-quick scheme that is offered to them. Very educated people have entered the stock market and failed miserably. If you think making money in the stock market is going to be a walk in the park, you are mistaken.

Your best bet is to go for the long term. All the investing greats (Warren Buffett, Peter Lynch, and so on) emphasize that long-term investing is the way to go. Over a short period of time, the stock market is just too unpredictable, but as your investing horizon lengthens, the likelihood of losing money decreases.

Over 25-year periods, the stock market has always produced positive yields. So if you buy some stocks in solid companies with good fundamentals and hold on to them, chances are you're achieve decent returns.

Another good rule about the stock market for beginners is the need to diversify your portfolio. Simply put, your likelihood of losing money decreases as you invest in a broader spectrum of companies.

Of course, there are such things as bear markets, where stock values plummet across the board. But generally, when you diversify, your losses in one company or industry stand a better chance of being offset by gains in other companies or industries.

Understanding and getting into the stock market is all about being disciplined. As an investor, your ultimate goal is to remove the emotion factor from your investment decisions. You have to train yourself not to overreact to either an skyrocketing or plummeting stock.

You're essentially looking for signs of when to buy or sell a stock. You can't be emotionally attached to your portfolio. That's pretty much the mindset that will lead you to success while you're soaking up more and more knowledge about the stock market.

What Are the Main Advantages of Using CFDs Versus Traditional Stocks?

2008-11-20T09:23:00.000-08:00

Whilst Contracts for Difference (CFDs) are a relatively new financial product the advantages of using CFDs versus traditional stocks are many. Today will have a look at the main advantages of using CFDs compared with traditional stocks.

The top 3 advantages are...

Leveraging your account allows more profit and loss;
Small initial outlay - CFD margin; and
Trade world markets through the one CFD trading account

Leveraging your account allows more profit and loss

By far the greatest advantage of CFDs versus traditional stocks is the ability to leverage your capital. If you had $10,000 in share trading account then the most you could ever trade is $10,000. If your capital was all tied up in positions that you found another trading opportunity you would have to either sell an existing position or let the trade go by.

On the other hand, a CFD trading account with $10,000 in it would allow you to trade up to $10,000 and if you noticed another opportunity then your CFD account will allow you to take that next trade. This is called CFD leverage and it's by far the greatest advantage of CFDs versus traditional stocks.

The important thing to remember about CFD leverage is to keep it very, very small. As a basic rule of thumb you should not leverage your account at more than three times if you are a new or inexperienced CFD trader.

Small initial outlay - CFD margin

The next major advantage of trading CFDs versus traditional stocks is the fact that you only need a small amount of money upfront in order to control a much larger amount. This is known as a CFD margin. For example, if you wanted to trade a $10,000 position on Rio Tinto you would only need around 5% or $500 upfront in order to control that $10,000 position.

Contracts for Difference are almost exactly like trading shares except the CFD margin means your money is working so much harder you. You can imagine if you had a $10,000 position in Rio Tinto with $500 of your own money and the price of Rio moved 5% your favour then you would be sitting on a $500 profit. As you only put in $500 of your own money this would result in a 100% return cash on cash.

How To Make Money by Trading Shares

2008-11-12T10:43:00.000-08:00

It's easy to make money on the stock market; it is all about trading shares for more than what you initially paid for them, right? Well, this may be true, but there is a lot you have to know and learn before you can properly capitalize on opportunities that will allow you to follow this relatively simple goal.

That is what can be most maddeningly frustrating about the stock market: when it is broken down to its basic parts, it seems like it should be simple. However, those who know how to make money by trading shares also know that there is a lot of research, training and learning to be done before one will really become successful. Just the same, here are some guidelines that will help you on your way to stock trading success!

It is important to listen to friends, colleagues and family who are experienced investors, but do not automatically defer to their advice each time it is offered. After all, unless these people are living in mansions that have been earned by stock market successes, it is likely that they are not always right. Even if they have had a lot of stock market success, they still could be very wrong about one particular stock or another. While it is important to listen to more experienced investors, it is sometimes better to take away the strategies and lessons than the specific advice that they are offering.

Trading shares is not just about x's and o's, but there is a certain importance to having a sound investing strategy. The problem is that many investors have strategies that are quite different. These investors may disagree with how the others choose to invest, but they also may all be very successful in their investments. The key point to take from this is that there are many great strategies that you can use; the trick is to learn how and when to implement them.

Also, determine what type of trader you want to be as soon as you have a firm knowledge of the stock market and basic investing strategies. You should learn about the different types of trading, such as long-term trading or swing stock trading, which you can do through a training program or your own research (or a combination of the two). Before you can learn how to make money by trading shares, after all, you have to at least have a good understanding of how the stock market works. You must know how to analyze trends and use them to make the proper moves, and the only way to do this is through hard work, dedication and learning.

A Guide to Stock Market Depressions

2008-11-08T08:59:00.000-08:00

The idea of stock trading during depression is widely misunderstood by investors and non-investors alike. There are a lot of misconceptions about when it is a good time to invest (or not invest), what you should do during an economic downturn, and even what a "depression" is. With this guide to stock market depressions, you will hopefully end up being better equipped to know what to do in an unfortunate economic situation to make sure that your own fortunes make a turn for the better.

When people think of the word "depression", they inevitably think of the Great Depression that followed the stock market crash of 1929. However, depressions are not all that uncommon, though an epic one such as the one experienced at that point in time are relatively rare. Still, the economy is a cyclical beast, and upswings and downturns occur naturally. As a smart investor, it is your job to learn how to make money during either type of period.

Stock market depressions are often misinterpreted as a time to sell all of your stocks and go into hiding while you wait for everything to get better. This is really not a practical solution to what is a temporary problem. In fact, sometimes it is best to invest during a depression, as one of the basic guidelines for investing on the stock market is to buy low and sell high. Well, when is the price of a stock ever lower than in a time of depression or recession? As you can see, these are not times to "shut it down" and wait it out, but instead to make smart, informed investing decisions while the prices of stocks are relatively low. When the upswing inevitably comes, you will stand to make a nice profit!

Long-term investors especially should be prepared to take advantage of the conditions caused by stock market depressions. If you are willing to be patient and hold onto a stock that you buy at a low price during a downturn, you will definitely see it rise in the future, if you made the right decision. As with all parts of investing, however, it is of paramount importance that you know what you are doing and what moves to make!

Who's Really Watching the Stock Market?

2008-01-12T08:02:00.000-08:00

When I studied public relations at New York University's School of Commerce, Accounts and Finance (now the Stern Business School,) a sage old professor told the story about a financial magnate who stopped to get his shoes shined on the way to his Wall Street office.

The garrulous shoeshine man waxed poetic about the stock market, eagerly talking about how everybody was making a killing in the market that was headed sky-high. He even offered the financier a few stock tips. The magnate couldn't get to his broker fast enough -- to sell! When optimism about the market reaches the man on the street, the theory goes, that's as clear a sell signal as you can get.

Some market watchers say there's a new economic paradigm -- the old rules no longer apply. They talk about the Internet, computers -- anything with a tinge of technology -- turning the economy upside down. Maybe.

Certainly computers, the Internet, et al, are here to stay. They are improving productivity by leaps and bounds, and they're developing at an astronomical rate. There's little doubt that many of the top companies will grow rapidly in the years to come, at least those who offer new, innovative services or provide the hardware or software for companies that do. A lot of investors in these businesses will find themselves filthy rich.

But, the red flag is waving.

As the saying goes, what goes up must come down. That hasn't changed, and never will. Neither will the various other economic fundamentals. Supply and demand, inflation, deflation, disinflation, recession, depression and the rest.

Wise investors have little to fear. America remains strong and continues to be the world leader, not only politically but economically. Long-term investments in our country's leading corporations are as much of a sure thing as you'll ever see.

But, I believe, Federal Reserve Board Chairman Alan Greenspan and the U.S. Treasury Department are not doing enough to protect the growing number of sheep-like investors from the growing number of financial wolves. They need to do more than jockey interest rates around while the potential for abuse of unsophisticated investors grows by leaps and bounds.

Any casual market-watcher can see there's more than normal "market forces" affecting stocks -- and the overall market. There's no way to prove it, of course, but it's clear the "big money interests" play the market like an accordian.

I've been watching the ups and downs of the market for some time. I've been following a number of Dow 30 stocks, the technology companies and various other market leaders for some time. I've learned, more than anything, that the current price of any stock is not based on earnings, the competence of management or its potential for profit. Rather, a stock's price is based on whether the "money men" want it to go up or down.

Big investors can't make money on a stock market that doesn't move significantly. They make their money either way -- up or down -- provided they know, and can influence, the direction. One thing's for sure. You, and I, will only know when it's too late!