Your Questions About How To Pick Stocks

James asks…

what is the best stock pick for 1000 dollars today?

John answers:

When investing, you have a choice of investment opportunities, the more opportunities you invest in, the more you diversify your risk but the returns are equally more modest. The optimum for the growth of your portfolio isn’t to invest in one opportunity nor is it to invest in all opportunities though investing in all is far better than investing in just one. The optimum is somewheres in between, Warren Buffet has said that the optimum is about 6 or 7 positions if you know what you’re doing. However with a small amount of money, you can’t afford to diversify across multiple positions leaving you with only investing in one position which is known to be the worse possible investment scenario however there are index funds that track the index and investing in these is effectively investing in all opportunities which though not the optimum portfolio to have, is far better than just one single investment. The best stock pick for $1,000 today, if that’s all you are going to have in your portfolio, would not be a stock but rather a no load, low fee index fund. There are Exchange Traded Funds (ETF’s) now such as VTI and SPY that trade as if they were stocks.

Mary asks…

What were the best stock picks in 2008?

I know past performance doesn’t predict the future of a stock and all that…but I’m curious. What were a few of the stocks that did the best in the year 2008?

John answers:

McDonalds and Wal mart were the only 2 DOW stocks up for the year.

Betty asks…

whats are SOME good stock to invest in for 2 weeks?

ok so i have an assignment in school and on monday i have to choose a stock to invest in for 2 weeks. for the sake of the assignment i have 1000 dollar limit to spend on shares. who ever earns the most profit will win a prize. now no one really has knowledge on stock so please help me on this thanks. p.s. im sure google will be picked first because its high price per share

John answers:

Anytime picking a stock for a contest ya want to pick one that will give the most bang for the buck…these are the high risk, high reward penny stocks.

I like a bunch right now but my favorite over the next 2 weeks is Itronics (ticker: ITRO) only because it’s sooo low and may pop any day. They are having an excellent quarter but the stock price is still very low. One share is only .002 …this means you can buy 1/2 million shares for $1000.
I could guarantee if you had 4 weeks instead of 2 it would be a contest winner but it may pop big in 2 weeks also. Your classmates picking stocks like Google and Apple will not win the contest. That I can guarantee you. Those are not short term contest winning stocks. You need a penny stock to winbecause they move the most on a percentage basis. Go with ITRO.
Good Luck.

Full disclosure: I own about 14 million shares…..that’s how sure I am they are going much higher.

Donald asks…

stock market?

details on how to trade shares in stock market

John answers:

The first thing to do is go to the library and check out a couple of books on investing. One of those books should be on technical analysis. The other on investing in stock and fundamental analysis.

The next thing to do is set up a practice portfolio on Yahoo finance and pick some stocks that you think might do well. Pretend that you bought them at a certain price and see how well you would have done or how badly if you had really purchased them.

Next open a brokerage account either with a local broker or an on line broker. The on line brokers will be less expensive and give better service in my opinion. You will need to fund the account. Different brokers have different minimums. I would suggest starting out with $5,000 minimum, but that is up to you.

If you are thinking about trading stocks rather than investing, you will need to read carefully about technical analysis.

Carol asks…

with the stock market so up and down….what picks do you recommend?

i like individual stocks, mutual funds have too many fees
is vanguard still good to buy its at $120 today?

John answers:

Too many fees? Really?

Fidelity’s Spartan Total Market Index Fund has a fee of a tenth of a percent and Vanguard’s is 18 tenths of a percent (0.18%). That’s dirt cheap. It is extremely unlikely that any small investor can match that in the mid-to-short term.

The odds also say that you will not beat those funds total return over any 5-10-15, or 20 year period.

Part of the reason I hesitate to answer your question is that you didn’t ask the most important question in stock picking: What price? Almost any stock (exchange traded stock of noticeable size) is a good stock at some price. Great companies can be horrible performers for you as an individual investor if you pay too much for them.

The only stock I am currently considering buying right now is BRKB, everything else is too pricey for new cash. Berkshire came close to my buy range today…but not low enough for me to pull the trigger and actually buy.

I only own a dozen or so individual stocks as long term investments, Berkshire is among them. For the most part I have lost faith in stock picking as a “science” and have moved to index mutual funds for the bulk of my long term stock investing. (I have invested in mutual funds for more than thirty years and in index funds for almost that long. The only non-index mutual funds now are part of my 401k and profit sharing plans).

My speculative fund (never more than 10% of my total net worth) tends to be invested in special situations rather than stocks per se. Currently, nothing looks that good to me. Most of my speculative port is in cash…waiting. I have some in NLY and I would have another hunk in PTY if it wasn’t so d*mn over priced right now. A piece in COSWF purchased last year when the price was excellent. And a piece in ABX, although that is part of a rather complex range bet on gold…not for the faint of heart or the novice. (it involves options & futures speculation on the near term movement of gold…)

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