Your Questions About How To Pick Stocks

David asks…

YOUR OPINION ON STOCKS???!!!!!?

okay, you inhereted 10,000 from someone your goal is to maximize your profits by making wise investment decisions.

pick 4 stocks (companies) you choose to invest your money into… and how much money will you give to each company??

John answers:

I would put it mostly in preferred stocks. Features to look for include: 15% tax qualified, cumulative (so if they skip a dividend payment they still owe it to me), without a definite call or conversion date, and if it is callable (as in the company can pay you to reclaim the shares) then try to find one with a larger than base (usually $25, 50, or 100) call amount.

Indiapolis Power and Light 5.65% cumulative preferred (IPWLK) has a $100 base value (and call value) and therefore pays $5.65 every year in quarterly installments. It currently is trading at about $71 and that means the yield on money invested (not counting commissions to the broker) is a little shy of 8%.

While lots of banks and finance companies also issue preferred stock, I would avoid those. Simply go down the list of the almost 500 preferred stock issues that qualify for the discounted tax rate and pick those that come close to the base criteria.

If you buy these at a discount, like the example above, for $71 a share, and say I set apart $2,500 (one quarter) for each of the four, then minus broker commission, say $10 for easy figuring, I have 2,490 investable for each company issue, so I could get about 35 shares with the Indianapolis Power issue (the utility is now owned by AES, so you have to go there for the financial details of the company). If the company calls back the issue, then for my 35 shares they have to pay me $100 each. Since they only cost me $2500, I would have a $1000 capital gain as well.

Then simply find three more.

Jenny asks…

How can i follow a company and track the value of their stock?

Hey guys, I am a high school senior and i have this report due next month. We’re supposed to pretend like we’ve been left a $50,000 inheritance invested in some stock. We have to pick any stock/company and follow the value of the stock for a few weeks. Then, we have to figure out the best time to sell it. I have absolutely NO IDEA how the stock market works yet alone how to track it or even how to find a company and view the value of their stock.
Can somebody please help?

John answers:

Yahoo Finance has a ton of information including stock prices.

Here’s a link for information on Chipotle Mexican Grill. When is the best time to sell? That’s a tough question. I bought this stock last year but the price just keeps going up. I’ll likely sell when the price flattens out or starts to dip.

Http://finance.yahoo.com/q?s=cmg

Laura asks…

How to pick the right stock?

there are so many stocks, i don’t know which market to even look at!!! is there a website where it shows the past activities and current activities of a stock all on one page

John answers:

That page would have to be pretty big.

Paul asks…

How do i go about investing ino stocks?

For instance i have the money to invest where do I go to the bank? How do i pick the right stock? i really need more information. I have no idea how to start off Please help me someone

John answers:

Congratulations on getting started. It’ll help you more than you know!

How to invest depends on what you already know. We’ll assume that you’re beginning.

A good primer is How to Make Money in Stocks by William O’Neil. You can get it cheap just about anywhere. It’s widely available new or used.

Another good one is one of Jim Cramer’s books.

But books will only get you so far. At some point, you’ll also want to get at least a little training. There are some great education companies if you want to make the investment. Investools.com or optionetics.com are both very good companies as is tmitchell.com

For free, you can start by visiting thestreet.com. That’ll get you a pretty good primer so at least you’ll understand what the markets are and what a stock is, etc. If you get a chance, watch Mad Money on CNBC. Don’t trade any of his picks. Just use the show to get you to understand some basics and get a feel for the market itself.

Next, subscribe to something like investorsbusiness daily or something like that that can help you identify good stocks.

Do a quick search (at the top of the page) on ROTH IRAs. You’ll want to put some money in there.

Once you understand stocks, go to 888options.com. It’s a website that’ll help you understand options (what they do, how they work, etc). You don’t need to trade them, but the more you know, the more you’ll see how options can really be the safest way to invest (once you’re educated).

As you get more advanced, you might want a technical analysis book like Murphy’s Visual Investor or A Technical Analysis Course by Meyer.

If it’s discipline (which is crucial to successful trading), probably Trading in the Zone by Mark Douglas or Mastering the Trade by John Carter

I know that’s a LOT to absorb. Just take it one step at a time for now. Start slow, then as you figure things out, move out of mutual funds into ETFs and/or stocks.

Congrats again on getting started. If you have any questions, please let me know.

Hope this helps!

Susan asks…

Retirement investment: Is there any way to invest in one specific stock as opposed to the portfolios?

I want to invest pretax dollars in deferred comp, but I want to pick the stock myself and not have these retirement companies decide how it’s allocated… maybe a dumb question, but is this possible?
Then I’d be able to invest in my favorite stock at 70 % of the actual cost.

John answers:

If the company managing the 401 doesnt offer it, then no you cant. And usually the only single company you can invest in with a 401 K is the employer company stock.

You should call the plan manager and ask if its an option (though I doubt it )

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