Your Questions About How To Pick Stocks

Robert asks…

Favorite Guides/Books for Picking Individual Stocks ?

I plan to invest about 50,000k and half my monthly salary in No Load Mutuals
But after I learn more I want to take the other part of my savings account of 60,000 k and invest in individual stocks.
What are your favorite and easiest books that taught you about picking individual stocks ?
Ive looked on Amazon but so many books that I am confused.
Ive actually told family/friends over the years what companies I thought would be great company stocks to buy….I did great helping but hey it wasnt my money.
Now that its my own nest egg I feel more careful!

John answers:

A great book on investing is 100 best stocks you can buy:2008 by john slatter it is a 500 page book that goes in debt into what stocks show sufficent growth throughout the years and also explains how stocks are classified. It also give a good analysis on why diversifing your portfolio is important. It is a well trusted book because john slatter has had ten other books on stocks (ever since 1998) and is a well-known invest tycon. Plus his oppinion is well respected throughout the exchanges.

Paul asks…

How To FInd Low Float Stock Picks?

Can anyone recommend a website that identifies low float stocks that are about ready to breakout? Also I would like to find out where you can find stocks with positive earnings report information.

John answers:

If you mean penny stocks, all the sites are just “pump and dump” garbage. Don’t bother.

For small cap stocks, the proper tool is called a “stock screener”. Most brokerage accounts provide one. There are several free ones. Best depends on the features you seek.

You can also screen on recent earnings surprise, or follow it daily via briefing.com on Yahoo Finance. Link below. 2nd link is an earnings calendar of companies expected to report today.

If you think any of this leads to easy profits, you are mistaken. It takes experience to trade well on earnings data.

Maria asks…

Good Stock picks for 2008?

I invest 100% international (mainly b/c i am young) and i like to take somehwat of a risk. Here are the stocks i picked for 08, what do you think?

-EEB (Invests in various BRIC countries)
-WBD (Russian food company)
-EWZ (Brazilian etf that invests in ADR’s and other various assets)

I am new to investing, so i am wondering what you guys think.

John answers:

Nice picks as long as you are further diversified beyond these stocks… Any way I will tell you after you sell if they were good picks:-)

George asks…

Is radio shack a good stock pick (rsh)?

It has a high dividend. Is it worth buying? Will it go up or go bankrupt?
Ps does anyone good stock picks?

John answers:

I used to work for Radioshack, did it for 5 years. Radioshack was a trouble company back in the day in it is dying slowly, I would hate to see Radioshack gone. I joined their stock program i think in 2002 when stocks were worth about $14 and sold them when I quit around $30 a piece, that was good money. Now it is been in the mid $2 a piece. The problem is that the internet has been killing companies like Radioshack, we all remember circuit city. More and more consumers are looking at amazon.com and ebay for deals affecting companies that haven’t been able to adapt to the changes of the new generation. Radioshack discontinued a lot of small electronics that people used to go for (capacitors, fuses, ect) and fail to bring in the young crew. When I started we converted a 16 feet wall full of small electronics into a 4 feet of the same, just to give you an idea of the change. Now people look for those items online or local electronics, we referred so many people to our local electronics, that was bad for us as sales people and for radioshack. Even back in the day we had ugly leather case for $30 a piece, ebay had beutiful ones, at $5 even after shipping. I wish radioshack would survive so I could tell my kid, daddy used to work there. My little brother will scream my name whenever he saw any radioshack add on tv, so I do have a passion for the retail and would love to see it staying here, but I would think twice about investing with any physical retail company such as rsh, best buy, ect.

Sandy asks…

investing in the stock market?

i know the economy’s not so good right now, but i’ve always wondered this. is it possible to invest a very small amount of money in the stock market? like if i picked the right stock, could i turn $100 into $120? or does it not work that way? do you need a stock broker and huge amounts of money?

John answers:

One hundred dollars for the stock market today is a lot more than one hundred dollars in the stock market a year or more ago. Keep in mind that with a little money there may be a lot of strategies that will not be accessible to you; however, it is still doable through ‘penny stocks’- though you can get started without ANY money by virtual trading.

Here are my recommendations:

1. When you feel ready, open an online account. With $100 dollars to invest you will want to look at online brokers that do not charge a lot for commissions. I opened an acocunt with Zecco trading (www.zeccotrading.com) due to their inexpensive stock commissions. They (used to) charge $4.50 for stock trades which is fairly inexpensive as other places can charge $12.95 up to 1000 shares and then more based on the number of shares you are buying.

2. Get some education. Zecco trading has a very good education program which is free. They seem to cater to the newer investor like yourself and therefore provide a lot of basic education regarding the stock market as well as options market (though I would only stick with the stocks right now due to your small amount of investment funds) in hopes that you will open an account with them.

3. Get a trading/investing plan and strategy. You will find that a plan is necessary to help you know what to do. However, it would seem that a simple and basic plan for you to do now would be a “buy and hold” plan, where you would look at stock that has a hope of rising in value, buying it as it is low in value and holding it for a while including a couple of years, then selling when it’s value has increased. This strategy is also better for you when it comes time to pay taxes on your profits (should they occur) as taxation is different (less) for long held stocks (over a year).

4. Diversify you portfolio (You chosen assortment of stocks). A lot of companies have been hammered by the past year or so in the market and as such many companies are selling their stocks at their all time lows- some will make it and some will not. You will want to have a number of hopeful winners rather than just one. I would suggest 5 to 10 (yes, even though you only have $100).

5. Buy penny stocks. Penny stocks are stocks that generally sell for less than a dollar and as such they aren’t allowed on the larger markets. They are considered OTC (over the counter) stocks and are listed with OTC exchanges. You can find more information about them from www.pinksheets.com. For example, at one time Lehman brothers stock was selling for over $150 a share. They went bankrupt which sent our financial markets into a tail spin (and there was no bailout for them. What’s up with that?); however, it was a chapter 11 bankruptcy and not a chapter 7 which means they can still do business and possibly get back on their feet. They had been around for roughly 150 years and fell but they may get back up again. Their stock is trading at around $.047 a share. You can buy 1000 shares for about $47. You may lose the $47 bucks but then again in three years they may be selling at $8 a share (or higher). Wouldn’t that one trade decision put you on top of the world?

6. Follow the markets. Use yahoo finance for stock info as well as Google finance. Use their news sources to get information of the stocks. Use their charts etc.

7. Get some charts. You can get a free stock chart program from marketbrowser.com. I enjoy their charts and though a have spent thousands getting higher profile education and training I have found their charts to be very useful to me even now.

8. Use a virtual trader. Don’t feel like you have to actually spend money to learn the stocks (or options). You can access a free virtual trader at www.cboe.com after you register by inputting your email. This is the same virtual trader that is powered by OptionsXpress, which is my other online broker. I have been very satisfied with the virtual trader and highly recommend it!!!

9. Realize that there is a difference between virtual trading and real. You can practice with a virtual trader but it is not the same as the real thing. You sense that the markets are at their all time lows (recent all time that is) and so you feel that you want to get in on some of the action – well listen to that feeling, but prepare yourself also.

I hope this has been helpful to you.

By the way, there are myriad trading philosophies and strategies. Good luck on wading through them as you learn them. Over time you will develop a unique strategy and philosophy that fits your personality.

Good luck and good investing

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