Your Questions About How To Pick Stocks

Daniel asks…

If I don’t have any clue or any idea about stock market and would like to start investing, where do I start?

Is it posible with a small start up since I’m still a rookie on stock investment? If I start and my investment grows can I cash out right away?

John answers:

Study and learn and research for three to six months before you spend a dime. Investing is not a get rich quick scheme. The sites below offer many getting started. Also look for fantasy stock market games where you can pick stocks for fun and watch how they do. You can see a list of those at http://www.google.com/Top/Business/Investing/Games/

Michael asks…

What is the stock option recommendation for a regular American worker?

I want to buy a stock on NYSE as a regular employee. What is the best option for this type of stock option

John answers:

If you are not into a lot of risk I would recommend proven, blue chip stocks like McDonalds, Coca cola, and others that have a good record and also pay dividends.

If you don’t have a lot of money to invest (less than $5,000) than maybe one of the cheaper investment portfolios like PHY. (around $3 a share)

The key to any investment is research, research and more research. Make sure you understand the company and what they do or sell.

I would also recommend one of the online traders since they only charge $7 a trade. Most like Scottrade and Etrade are very reliable.

One further recommendation, Yahoo has some excellent tools in yahoo finance to help you including stock screeners and portfolio management. Before you invest, pick out a few stocks you are thinking about putting your money in and set up a free sample portfolio. You can set it up to show performance (gains and losses). Watch it for a month or 2 and see how much money you would have gained or lost. That may give you an idea of profits/risk before you invest any real money.

Donna asks…

Is buying individual stocks terribly unwise for individual investors?

The more I learn the more I agree with the experts that individuals shouldn’t invest in stocks.

Transaction fees eat away at your gains.
It complicates your taxes.
You have to do a long financial analysis on every stock you hope to buy.
Because of fees and analysis, you’d have to risk thousands of dollars in a few stocks to make any money.

I know the brokers want you to use their advice so they can charge you a fee for it, but they’re right that index funds and mutual funds are the way to go.

John answers:

I totally agree with you picking up stocks are difficult and time consuming, it is cheaper and more efficient to do index investing . Furthermore if you want to create a proper diversified investment portfolio, you should own at lest 20 stocks.
If you still want to pick up some stocks, you can still create a core-satellite portfolio with some index ETF and Mutual fund index as core, and pick up some selected stocks in order to try to enhance your portfolio.
Regarding Index investing, I’ve just finished index investing for dummies and I must say this book is quite good.

Joseph asks…

got some money for christmas and was wanting to invest some in the stock market?

What stocks currently (dec 2008) are ones which have great potential to rise? i was thinking of “bank of america” and “wells fargo”, any others which are currently down with the possibility of doubling, tripling, quadrupling?
this is for long term investing. im 34 and am looking at this money invested as retirement.

John answers:

Paulson has picked the winners in the banks and they are

BAC
C
JPM
WFC

For the long term go with oil & oil services

NOV
COP
BP
XOM
RIG

Thomas asks…

What degree do I need to become a stock analyst?

I wish to become either a stock analyst or broker. I am a finance major, although I have heard that I should change my major to accounting. Also, does it matter what school I should attend?

John answers:

Do not change your major but maybe pick up a minor in economics. As long as you are at a decent college, you should be fine.

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