Your Questions About How To Pick Stocks

Betty asks…

What is a good site to learn about and trade stocks online?

I am interested in learning how to trade online. I want a site that will help me learn what stock to look for and let me trade online at low cost.

John answers:

I think a good site to begin your education is The Motley Fool (www.fool.com). They are an investment site for all investors and have a site www.caps.fool.com which allows you to trade stocks as and learn from more experienced traders. Additionally they have all sorts of information on picking good stocks. If you just want practice you can use www.top10traders.com which is good for more of the momentum trader aspect.

Daniel asks…

Should I invest in Mutual funds or Stocks in a Roth IRA ?

I am contributing to 401k and maxing it out as part of my employer’s retirement plan. The money in the 401k is getting invested in Mutual funds. I also plan to open a Roth IRA and would like to put $5000 (max amount). I have 30 more years to retire. At this point, is it advisable for me to invest the amount in the Roth IRA in mutual funds or in stocks ?

John answers:

You will get a bunch of different answers to this…and that’s because no one but you can really answer the question properly.

I also know this probably won’t be a popular answer in “the community” because I am a professional…and this site is popular with the ‘we hate professionals’ crowd. But, I wanted to take the time to give you some honest and unbiased info…regardless of voting results.

The fact that you are asking the question shows that you are probably not comfortable/experienced in picking stocks…and that brings up the question… Are you looking to buy stocks and hold them for the next 10-30 years+…or try to trade them like all the “hype” out there tells people they should do now?

Mutual fund investing is what I call “investing with training wheels”…you pay high fees and get diluted returns…but you have an ‘element’ of reduced risk…possibly…too. Also, $5,000 is what is considered “smaller amounts of money” in the professional investing world…so many “professionals” won’t bother working with you or educating you either…because they’re looking to “get paid”!!!

Your choices at this point are:
*Find an advisor that will work with you…based upon a growing long term relationship potential…and/or…
*Start educating yourself with various books and websites, etc. (Start learning about it)
*Pick a mutual fund or five and “diversify” your money…if you have 30+ years and will continue contributing each year…you should probably go with small cap aggressive stuff (okay, Small/Medium), especially when the market is still about 2/3 what it was and you have a long term outlook….but others will say “always diversify” (the watered down risk, remember) and tell you to buy small/medium/large funds in growth or value catagories and short/long term bond funds…etc.
*Pick one or two stocks and buy what you can with the money…but with enough shares it will actually make you money when it goes up (this is the “riskier” approach)

Either way…keep funding the company plan & as much as possible…keep feeding the Roth…then as the market recovers you can build up the “balanced” approach…but trying to make some amazing returns while the market is still full of such opportunities…is rational…especially for some young enough to have 30 years to work with….maybe, if done right…It won’t take so long to reach ‘retirement’ afterall.

Note: There are a number of websites that you can visit and start learning on our own too…feel free to email me for them if you’d like…otherwise…I hope this helped…don’t be a sheep…think for yourself.

Steven asks…

Does changing a guitar pick guard make it lose value?

I have a fender cd280s and I want to change the pick guard. I want to put a Gibson humming bird one but I was wondering if that made the guitar lose value in any way? I’m not a guitar expert that is why I’m asking.

John answers:

Hello there,

In most cases, any time you modify a guitar to take it away from stock, you decrease the value. With a newer, inexpensive model that is less of an issue than with higher end guitars or vintage guitars. In order not to have a decrease in value, you will need to find a buyer who likes the changes you made to the guitar. That makes selling the guitar much harder to do (without a decrease in value).

There is some work involved in changina pickguard. Denpending on what adhesive is used, what type of finish is on the guitar, whether the pickguard adhers to the finish or the wood, all are factors to take into account when trying to remove the pickguard without damaging the guitar. Damage the face of your acoustic guitar and you have trashed the resale value.

Then you need to find a pickguard that is the same size and shape. If not, you will see “tan lines.” The area under the pickguard will look a different shade than the part not covered up by the pickguard.

Here is an article to guide you.
Http://www.fretnotguitarrepair.com/repair/acoustic-guitar/pickguard.php

Later,

Laura asks…

What does this financial opinion mean?

Heard this recently: “When stocks are pushed up by fundamentals, a bubble results.”

What is this person trying to say? Is it picking value stocks causes prices to drop? I thought prices rise and drop independent of one reason or another. It’s a combination of reasons?

John answers:

Suppose the company had a good financial report. Maybe it had 2 good quarters in a row. The fundamentals would seem to be good and everyone wants a piece of a good thing so they bid the stock to an unrealistic high (the bubble). Then it is realized the fundamentals are not as good as now believe and the price falls. I think that is what is meant here

I am not sure I agree with this though

Sandra asks…

How does a small town girl get into the stock market?

My husband and I keep visiting the idea of trying the stock market. We are both educated people, just not in this area. What is the best, and most economical, way to begin? I don’t know if we should find a business in our area that handles this sort of thing, or if we should find something online. I don’t want to sink a lot of money into fees for our first go at this. We just want to try it out and see if it’s for us. Please help!

John answers:

Http://finance.groups.yahoo.com/group/TradingZoom/

– read the books listed on the front page, talk to the pros and follow their picks for a while to get a feel for how things work.

We have members from all over the world – not just the US – trading US equities.

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