Your Questions About How To Pick Stocks To Buy

Mark asks…

Trading stocks, What’s the catch I am missing here?

I was wanting to open a stock trading account for day trading, put $10,000 in it. So lets say I put that 10 grand all in Johnson & Johnson stock, which I buy at 67.71 one day, then it closes the next day at 68.61, & I sell it for that. That is a $132 profit in one day.(plus the -$7 or so trading fee).

Is that it? you would have $132? I know its not easy getting the right picks and all but just wanted to confirm if that is the basis of how it works, and you just have to have the skill and knowledge/connections to buy the right stock.


John answers:

It would be $14 commissions, you have to pay for the buy and sell. And your logic is faulty. Yes, you would make $125 on one trade. Now you have your $10,125 the next day and you need to pick another stock. Let’s say you get lucky and make another $125. Now you have $10,250 but you have to pick another stock the next day. On the third day the market goes down 100 points on the Dow and your stock loses $150. Now you are down to $10,084 with commission costs. But you still have to pick another stock to keep trying to work your scheme. The market goes down again, 80 on the Dow and your stock loses $100. You are now in the red.

In order for your plan to work you have to be right every day. If you pick ONE good stock and hold it over a few months at least, you only have to be right once.

Note to Raysor and JoeyV – as tempting as it is to answer an obvious question with a smart-ass answer, keep in mind that most investors on YA are young and very inexperienced. Many are kids who don’t even invest, just want to learn. I’ve been answering questions under a few accounts for a long time, and I went through the same phase as you, answering stupid questions with smart-ass answers. I’ve learned to be more patient, although I still let one fly now and then.

James asks…

How are stock prices affected by the economy?

In my finance class we have studied stock prices. After doing numerous problems, it seems that the stock price is higher when the required rate of return is lower and the stock price is lower when the required rate of return is higher.

However, in my notes, I have a chart that shows that during a recession the general level of interest rates decrease, and that it is a good time to buy stock because the stock price is low. Then when the economy picks back up, the interest rates increase and the stock price goes up. When interest rates peak, the stock market slows down and it becomes a good time to sell stocks because the stock prices have increased.

Can someone please explain this chart. It seems contradictory to what I have learned about stock. Why are stocks cheaper during a recession?

John answers:

Really? During recession, stock price gets cheaper? How come we don’t know that. Look no further than the gas price, it just keep rising reaching the sky. For real estate stock, that may well be true because people cannot afford houses, automobiles, clothing etc. But fertilizers, the price is kept increasing.

Look at utilities, the phone bill keeps increasing, the internet charge keeping increasing too. The first that gets hurt the most is the hospitality.

Stock price affected by the economy is only partially true. It’s sector related.

Mandy asks…

Placing a pre-order at one store, picking up at another?

Hello! So I pre-ordered an iPhone at Best Buy, but I, like many others, got the annoying email about how much they care, but your phone won’t be ready for up to 28 days.

So, even though the store I pre-ordered the phone at is out of the one I got, there are about 4 other stores in my area who have it in stock. Would it be possible to just go to a different Best Buy to pick the phone up, or are the adamant about you sticking with the store you placed the pre-order at?

John answers:

I would say it’s possible for you to transfer or cancel your current pre-order and just pick it up at the store that has it in stock. Call them and see for yourself 🙂 more accurate information from them then us!

Sharon asks…

How to pick a good breeder with a good breeding stock…?

When you really know nothing about hip scores and such.I (in the future) want to buy a South African Boerboel Mastiff, my dream dog.It is VERY important to me that my future dog is in great health (and hopefully hip displasia free, which is a big concern)

What hip scores do you look for? What are other things do you look for?

On most of the sites I have seen, the boerboel breeders seem to have good intent with their breedings (breeding to better the quality and such instead of just breed for $$$) and most post the scores of their breeding sires and dams.
and by hip scores, I of course mean the parents :p
Maybe you should try ”google” Bri, it’s a wonderful invention.
thank you nosaj and julie..exactly what I was looking for.

John answers:

If you are talking about OFA hip scores, nothing should be bred unless it has a rating of either good or excellent. IMO, a *fair* hip score is not good enough to be bred. I’m not sure how the Penn Hip scores go, so maybe someone else will chime in about that. I’ve only used the OFA when I use to breed Dobes.

Steven asks…

How can I Customize a rifle for hunting.?

I live in Ontario, Canada. and recently picked up a Hunting and Firearms License. but have no firearm. I was curious as to how i would go about being able to customize a firearm that i would like to use for hunting. Possibly Custom Stocks and others. Do i need to buy a special firearm to be able to do all the customization?

John answers:

If you don’t know what customizations you want or need then you have no need for ANY. The reason to customize a rifle is to improve it in some way that makes it a better tool for your purposes. Since you have no experience and no purpose you would be changing things just for the sake of changing them.

Find a rifle you like and that fits you and learn all about it. Then and ONLY then you may know what you want or need.

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