Your Questions About How To Pick Stocks

William asks…

What stocks should i pick for my high school simulation?

ok… so im doing a high school simulation and we have to pick stocks to invest in. what stocks do u think i should pick that will make money in the coarse of three months? i need 3 good stocks, and 1 good mutual fund. any suggestions?

John answers:

Depends if you want to invest or try to win ?

ETFC and RAD would be on my short list of stocks that could up up huge. I posted this same thing last week but with CC on the list and it has gone up already…

Ruth asks…

Stock picker results wont load into my portfolio, says to sign in but I am already?

I am signed into Yahoo and am trying to load picked stocks into my portfolio. It says I need to sign in first, but I already am! Help!
I have tried several times today and last night. A friend also tried to do this using my account info from their computer and it wouldn’t work. This is my first activity on yahoo finance, or yahoo for that matter, Im not even sure where to find the customer service link, yikes!

John answers:

Why don’t you simply open up a new portfolio in another browser instance then open each of them placing them side-by-side on your screen then just copy and paste the results of the screener over to the portfolio. If the screener brings back too many stocks it was probably a useless screening criteria in the first place.

Susan asks…

What kind of P/E ratio do i look for when investing in stocks for the long term?

P/E ratio is Price-Earnings Ratio, but do i pick stocks with a high P/E or a low P/E?

John answers:

You want lower P/Es. A high P/E ratio indicates that the stock is already “too expensive.” But recognize that average P/E ratios will very by sector and industry.

Lisa asks…

Do you pick your own stocks and invest in the market?

What percentage of people do you think pick stocks, invest in the market? I know a lot of people are in the market through 401K and mutual funds. But I was curious what % actively research their own stock pics, and manage their own portfolio (the U.S.)

John answers:

About 20% of households in the US own stocks directly. About 10% of households own 85% of all stocks.

James asks…

Which test do I run for this stats problem?

“A young investor believes that he can beat the market by picking stocks that will increase in value.
Assume that on average 50% of the stocks selected by a portfolio manager will increase over 12 months. Of the 25 stocks that the young investor bought over the last 12 months, 14 have increased. Can he claim that he is better at predicting increases than the typical portfolio manager?”

The problem additionally asks me to find the hypotheses, the t-statistic, P-value, and make interpretations. I just don’t know which test to use to calculate anything. Thank you so much!

John answers:

This is a test of proportions with the following hypothesis:

Null Hypothesis: ProportionIncreasing .50

You can use the normal approximation to the binomial distribution to make your calculation. I’m not sure how the t-statistic is relevant. Normally, you’d use the binomial distribution for a sample size of 25.

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