Your Questions About How To Pick Stocks

Sharon asks…

Where can I learn all the smallest nuances of how warren buffett picks stocks,?

and all the technicalities of analysing and filtering through balance sheets for relevant information? Actually, I have read many books on Buffett, but he hasn’t set out the exact tools and techniques that he uses for value investing, in detail. Where can I learn these tools and techniques in detail? I am willing to go anywhere to learn these techniques. Please suggest.

John answers:

I think you would have to ask mr. Buffett himself although i doubt he would say.

Charles asks…

help picking good stocks right now?

my economics class is making us pick up to 10,000 dollars worth of stocks and were going to compare how much we would end up with after a couple weeks so just tell me something that would be good to pick.

John answers:

Ok, to win this game you have to go balls out. All or nothing, you will need to be very speculative and you will either win or you’ll loose all the money. Is this a game with 1 winner, or are you graded on how well you do and stuff like that? If it only has 1 winner I’d look at small company, penny stocks because they have a great likelihood of going up big or going bankrupt. If its more of a stable performance then try to find the sector that is heading up and jump in that. Another way to pick is to find out what companies are about to release earnings that are expected to be good, then buy those and hope their earnings are good.

Linda asks…

Can I save/plan for retirement with just $100 a month?

If I can, can someone explain HOW in LAYMAN’S TERMS?

My job does not offer benefits or 401k etc etc…

So I think I have to go somewhere to open an IRA?

I tried reading online what a ROTH IRA is but it makes no sense to me.

I go to the bank to set this up? Put money in an account? Then do I have to pick stocks? How does this all work… I don’t get it.. I can’t just add money to an account and leave it alone, correct?

John answers:

Yes you can save for retirement for just $100/month. I have open many Roth IRA where people start out with $50/month and later increase it. Majority of mutual funds allow you to invest a minimum of $50/month. What is a mutual fund? Its where a pool of investors put their money in the hands of a professional investment expert. The investment expert will use the money to buy stocks and/or bonds from many companies. So basically you will have an expert pick what stocks to buy and sell and you don’t have to do anything. I invest in at least 5 different mutual funds right now. The average annual rate of return of my Roth IRA has been 9.1% in the past 5 years. In the past 5 years, lots of bad things have happened in the US economy with bailouts, recessions, unemployment, wars, etc. No matter what was going on in the world, I continue to invest $400/month and thats how I have a high return in my Roth IRA.

What is a Roth IRA? Its an individual retirement account created by Senator William Roth (who is now dead) during the late 1990s. He knew that social security will not be sufficient to provide income to middle income retirees in the future as cost of living goes up. It is up to individuals to take financial responsibility of their own future. With a Roth IRA, you can put money into it and your money will grow tax-deferred. That means any interest or gains you get will not be taxable. When you put money into it, you cannot claim tax deductions. When you are age 59 1/2 years old, you can take money out and it will be free of taxes. Currently, you can put in a maximum of $5000/year into your Roth IRA ($6000/year if you are age 50 years old or older), Non-qualified withdrawals of the gains or interest before age 59 1/2 will result in 10% penalty tax. Though, there are exceptions to this rule.

Where to open a Roth IRA? I do not suggest you go to the bank as they only offer fix rate accounts that gives very low interest rate. While you are guaranteed not to lose any money, the interest rate is so low that it will take a lifetime for your money to double. I suggest going to investment firm or an online brokerage firm. I do not suggest you buy individual stocks. In order to buy stocks, you have to buy it at a whole price. For example, if a price of stock was $100, you are only able to buy 1 shares with your $100. If the price of stock was $101, you would have to invest $101. With mutual funds, you can buy fractions of a share. For example, if price per share for a mutual fund was $25, then you would own 4 shares. Thats why mutual funds are so affordable. Before investing in mutual funds, you should carefully read the prospectus to see if that mutual fund is for you or not. There’s many mutual funds out there that fits the needs for all types of investors.

James asks…

is there ever a sure thing in the stock market? what is the best way to pick a stock how does steve cohen doit

John answers:

Only one sure thing in the stock market, and that is fluctuation. The market will go up and the market will go down. The real trick to making money is to make good guesses as to which it is going to do and when.

Examine the markets, choose a stock with a good record of dividends and capitol gains. Compare it to the performance of other stocks in the industry, and compare its performance to the overall market. When it is all over, it still comes down to paying your money and taking your chances.

Personally, I don’t have the nerve or the education to play the stocks. I invest in mutual funds. Use the same methods, study past performance (though this is no guarantee of future performance), study the portfolio held by the fund, study turn-over in the portfolio, study the fund management and the stability of that management. Look at the record of dividends and capitol gains disbursements. Then decide if you want to play it safe, take big gambles, or small gambles. It is actually best to spread your investment among several funds in different categories. Invest part of your funds in safe growth/income funds, and only invest what you can afford to throw away in high risk funds. Put the rest in low or medium risk funds. That will give you relatively safe growth, some mildly risky chances for big profits, and a chance to either make big profits or loose your butt. With risk spread, you probably won’t loose evereything.

Doc Hudson

Lisa asks…

i know exactly how to pick daily winning stocks , unfortunately , i have absolutely no money to invest with ;

i know exactly how to pick daily winning stocks , unfortunately , i have absolutely no money to invest with ; what can i do at such particular stage ?

John answers:

Hey, just bringing this old question up for a vote.

If you have not found the answer you are looking for, please, feel free to use one of the following links from my personal collection:

My post is simply to encourage you to pick a “Best Answer” or to assist you in finding the answer.

Thank you!

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