Your Questions About How To Pick Stocks

Lizzie asks…

Any good Stock picks?

I just made a killing on a stock anlaysts pick last month while watching CNN. I sold my stocks in EGLE and now I am looking to buy something else. I am looking to get lucky again. Let me know what companies you like and why. I will research them over the weekend and hopefully by a large chunk on Monday’s open. Thank you

John answers:

Mariner Energy. Oil is near $84.00 a barrell, they have key exposure in the Gulf of Mexico and low debt compared to their peers:

http://finance.yahoo.com/q?d=t&s=ME

Just won 23 high lease bids in the Gulf of Mexico for exploration & production:

http://biz.yahoo.com/prnews/071004/lath131.html?.v=14

Business week had a postitive article on them too, “Smooth Sailing Ahead”:

http://www.businessweek.com/investor/content/oct2007/pi2007108_534631.htm?campaign_id=yhoo

Ruth asks…

I have 4500 to invest for next three months. What stock should I buy now.?

I have 4000 to invest for next three months. What stock should I buy now.?. Please serious help …Thanks

John answers:

To Start Investing

It takes a long time to learn the stock market and it would help if you read some books from your library and information online. It would also help if you did some practice trading with play money. You can do this by using a watch list in Yahoo Finance > My Portfolio. Just pretend you bought some shares of your choice.

No one can tell what you should invest in the market. You need to decide what’s right for you at the present time. Before you start investing, the first thing you need to decide is what risk level you want to take. CDs backed up by the government has about 3-4% annual return for the long term with a low risk. Bonds or Bonds Funds has about 5-7% annual return for the long term with a medium risk. Stocks or Stock Mutual Funds has about 8-10% annual return for the long term with a high risk and are more volatile than Bonds. A person can make more than 10% annual return with the right investment. Usually the more risk you take, the more return you will have, but not always.

The stock market is basally made up of stocks and bonds. Investment managers pick a group of stocks to make a mutual fund or a group of bonds to make a bond fund. They even put a mixture of stocks and bonds together and call it a Growth & Income Fund.

1- MUTUAL FUNDS: Mutual funds have a group of stocks (could be around 100+) invested in different sectors, and manage by a professional. Managers have lots of schooling for investing in stocks, around 8 years. So I think managers can pick stocks better than I can. There are lots of different kinds of mutual funds and they have different risk level. There are 100s of funds that does not charge any fees to buy it’s shares and they are called Noload Funds. There are also some funds called Load Funds that charge about 5% of your investment. You can make a buy or sell order anytime of the day for mutual funds shares but it will not go in affect until the close of the day. Most funds has trading restriction and you may not be able to trade more than 4 times a year. That’s because it makes it hard for the fund to make a good return if there is to much trading in the fund, causing the fund manager to make more buys and sells and keep more cash on hand. Mutual funds are meant for long term investors.
2- STOCKS: Stocks is more volatile than funds unless you spread you money in several different areas and know witch area will do best. There are 10 stock sectors and over 100 sub-sectors to choose from. Stock trading restriction is only a few days, not like mutual funds. If you own stocks, you will need to keep up with all the company’s business so you don’t get stuck with a bad stock. That could take a lots of time. If a person buys just a few stocks he probably is hoping to make a bigger return but he may be taking more risk. If that’s the case, look at the leverage ETFs that represents a large group of stocks. That could be another choice.
3- ETFs (Exchange Traded Funds): ETFs are like a mutual fund but trades like a stock and that is the main differences between ETFs and stocks and mutual funds. There are some ETFs that represents Index’s. An Index is like S&P or DOW. Index’s operate just like a mutual fund with a group of stocks in deferent sectors, manage by professionals. You can’t buy Index’s because they are not for sell. A company owns them. But you can buy a mutual funds or an ETF that has the same stocks as the Index they represent. There are a lots of different kinds of ETFs for someone to choose from. There are some that represent almost every kind of sub-sector. And there are some that have 1x leverage, some have 2x leverage for aggressive investors, and some has 3x leverage for more aggressive investors. If you wish you had more money to invest, the 3x is like having three times the amount of your money in the market. You will make more in an up market but lose more in a down market. One example; S&P500 1x vs S&P500 3x:
S&P500 1x …… 2010 = +12.8%…..4/29/11 YTD =…+8.4%
S&P 3x (UPRO) 2010 = +36.4%…..4/29/11 YTD = +26.9%

To buy stocks or funds, you need a broker account. You can open an account online or in a broker house and it is free to open. You can find several good discount brokers that charge $8.00 and under per stock trade and no fee on Noload Funds. If you only have a small amount of money to invest, it may be best to start in Noload Funds because of the broker fees. Most broker websites have good research tools. Some popular broker websites are Fidelity, TD Ameritrade, E-trade, Scottrade and others. You need a min. Of $500 to open an account in Scottrade and $2,500 for Fidelity. Other sites may very on the min. And you need to be at lease 18 years old. If you not 18, you might could get your Dad to open an account for you.

Self-taught from 24 years of experience. Click my pic if you need more help.

Donna asks…

Which top five stocks would you pick, and which wouldn’t you pick?

especially now since the stock market is soo crazy now a days. i would also would like to know your reasons why you choose those stocks.

John answers:

Right, don’t pick any stocks now. Later …. I won’t pick any financial stocks because of the linkage to subprime mortgage fiasco. Pick 1. Oil stocks 2. Utility stocks 3 telecommunication stock. 4 organic food farm and store stock. 5 mutual fund investing in Latin America and Asia.
The reasons are same as always. Stock price goes up, make some money.

Mary asks…

What do you thing about these stock picks?

Im 19 years old and am currently looking at stocks to create longterm portfolio. I have done some research and looked around for some undervalued companies that have potential increase once again. I also have some mutual funds im looking at. What do you think about these:
CMGI (mutual fund)
CGMFX (mutual fund)
Provident Energy (PVX)
Countrywide Financial

John answers:

Don’t waste your money on mutuals….The returns after the comission rips suck….Countrywide is a good bargain buy right now for the long term….They were just bought out by B of A and their stock has nearly doubled since this occured last week…

Carol asks…

What do people think about these stock picks?

I read an ariticle on companies who could fail in 2009 (http://www.whybanksfail.com/index.php/2009/02/companies-who-could-fail-in-2009/). Hopefully at least one or two of these companies won’t fail. If I bought 100 shares of each I am bound to make some money right? I know this is risky but what do people think? The companies are Rite Aid (RAD), Dollar Thrifty Automotive Group (DTG), Six Flags (SIX), Blockbuster (BBI), Krispy Kreme (KKD), Sirius Satellite Radio (SIRI), Trump Entertainment Resorts Holdings (TRMP), and Bearing Point (BGPT).

John answers:

TRMP Trump Resorts Holdings has gone bankrupt. If the shares are still listed, don’t buy them or you’ll lose your entire investment: http://www.reuters.com/article/newsOne/idUSTRE51G05X20090217

KKD – Krispy Kreme. I wouldn’t trust this stock, but the donuts are nice. Have one of those instead. Seriously, franchises in KKD are going bankrupt everywere such as in Hong Kong: http://www.reuters.com/article/rbssRestaurants/idUSHKG10574320081027

BBI – Not sure. Blockbuster cut their dividend in 2005. It’s done better over the last 3 years, but it’s nothing to get excied about.
I’m 50/50 about this one. I wouldn’t buy it though. Blockbuster are working with Microsoft so you can watch movies on your mobile phone. Why would anyone want to watch a movie on such a small screen? Still, you never know.

SIRI – They were preparing for bankruptcy and may still consider it; http://www.reuters.com/article/mnaNewsTechMediaTelco/idUSN1632251620090216 I wouldn’t buy it.

DTG – It’s profit dropped dramatically in 2007 compared to 2006. The car rental company is struggling in the financial crisis. Might be better to see if it’s still standing when the recession eases. Too close to call.

SIX – A roller coaster amusment park. This is one of your better picks this is what I found: http://www.reuters.com/article/rbssMediaDiversified/idUSN1048228320081110
The share price has gone down a bit. Might be good if it gets above 35c a share. If you scroll down on this google link and look at net income Six Flags has made a turn around. It’s just whether they can sustain being back in profit that remains to be seen.
Http://www.google.com/finance?q=NYSE%3ASIX

BGPT – My charting and financial data software didn’t pick this stock up. Here’s the google link: http://www.google.com/finance?q=OTC%3ABGPT
They’re losing money. Probably worth leaving alone.

RAD – That’s a drugstore chain. They made a big loss in 2008 and only breaked even in 2007. The shares are down too. No good.

The only one I like is Six Flags (Six). Its shares would still have to go up for me to want to buy it. I guess when times are tough, people go on roller coasters. LOL.

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