Your Questions About How To Pick Stocks To Buy

Thomas asks…

Where Can I Find A List Of Penny Stocks for Free or Something Similar?

Made a couple of hundred dollars selling some old junk so I decided since the money isnt really needed why not invest in the economy and maybe get lucky. I was looking for some penny stocks, does anyone know where I can find a list or something that will help me find some penny stocks for free. When I Google it, it just comes up with a bunch of people that want me to give them their money and they will pick the stocks for me….NOT HAPPENING!

John answers:

You can find a free list of such stocks here:
http://www.google.com/finance/stockscreener#c0=QuoteLast&min0=0&max0=0.97&region=us&sector=AllSectors&sort=QuoteLast&sortOrder=-1

But you will have to pay commission charges to buy them through a broker.

Mandy asks…

What are the best indicators that lets you know to buy a stock?

I am trying to day trade and have been picking pretty good stocks. I wanted to know if anyone can shed some light on what is the best way to identify a good stock for the day. Thanks for all thorough answers.

John answers:

If yr already picking winners then you prob don’t need that much help

but this is how i make a good living swing trading every week

– find a free stock info website that puts up certain stocks that are showing a rising trend detected (technical analysis)

– check the stocks they listed out

if it has good..

Numbers (profits) or last quartley report
p/e ratio
volume (over 1 million anything less usually moves slow)
good news on it (google shows all news updates next to stock)

if the stock has all that and if it looks like its actually on the trend the site says it is.. 10 times out of 10 its a rising stock and a winner

extra things to look for to make sure its a winner but not as important are…

Institional ownership (anything over 50% is good) shows big companies think the stock is worth owning too

52 week range (low is better than too high (could drop from there) – somewhere in middle is best)

good market cap

if the stock has all of the above PLUS gives out a dividend it’s almost perfect

perfect example of a stock like this is this one.. Even though the volume is a lil under 1 mil ( probably because of the price of it and not popularity – most people cant afford it)

http://www.google.com/finance?q=NYSE:PSA

this thing is not gonna do nothing but keep going up month after month year after year (as long as nothing bad happens with the company)

thats all i pretty much do and am making $5000 – $6000 a week just trading 4 stocks a month with 30,000 on each trade.. 4 out of the top main 4 PLUS the trend is a definite winner … 3 out of 4 works too

PSA is a $100 stock but i just do the same thing with stocks that look just like that under $10 and $20.. A lot more profitable with $30,000 on each trade

Lizzie asks…

What are the key factors to take into account when picking on stocks?

Im a beginner. Planning on buying some stocks tmrw. Is it possible to make money every month? if yes, what type of companies should i go for? growing companies or those major companies? just buy the shares today and sell them in a month and make money? does that work? i will appraciate some detailed information to get me started..
and please, what are good ways to follow up on the companies i buy the shares of?

John answers:

As a new investor let me caution you. When i first stated i made a little money and then decide to risk much more. I soon found that i lost several thousand dollars very quickly. I had read many books and thought i knew what i was doing. The first stock i bought i did much research on and put every thing i had into it about 4000.00 at the time. It went up and i cashed in the stock quickly. Putting all your eggs in one basket is not good unless you are trading and not investing. Trading is done usually much more often and can be daily or weekly or hourly depending on how you want to do it.

It ends up i should have stayed with that first stock. I bought it @ 40.00 and sold it @ 45.00 and it went from 40.00 a share to over 120.00 but now is 33.00 a share the stock was Garmin back when GPS was going crazy.

My point is this its hard to know when to sell and when to buy it takes time to learn this. I have learned much from watching web seminars and reading books. However the best advise i ever got was on capital preservation. Research your stock and when you chose one if its for long or short term decide what you think the stock will do in that term you are looking at and look for a entry point based on technicals and if you buy the stock and it quickly goes down or it doesn’t do what you think it was going to do get out and live to trade another day! Take a small loss and learn from it. Continue to watch the stock and find out what to do better next time. If you discipline yourself to loose little. Then you only need one time out of 4 or 5 to make money. This keeps the odds in your favor. Some long term strategies like CAN SLIM include limiting your losses to 8% setting a stop loss order at this point. In short term investing i take a lot less than this.

As you learn you will fall into what feels right or comfortable to you. There are several different kind of traders Long term investor, short term trader, day trader, swing trader, value investor, income investor, dividend investor, and many more.

As far as market analysis two basic camps here Fundamentals and Technicals, you don’t have to be one or the other here. The best investors i know use both methods together. I lean more towards the Technical side because i understand it more numbers have always been easy for me. But fundamentals will help you especially on a longer term basis. Investors for the most part use fundamentals as they are longer term, traders use technicals more generally. Some long term investors use Fundamentals to chose the stock and technicals to find the best entry point.

Fundamentals = balance sheets, earnings and income statements, Revenues, cash to book values, profits, cash on hand, P/E ratios, Yields, dividends etc. Etc.

Technicals = Charting of trend lines, Moving averages, Price, Volume, Monthly Weekly Daily Hourly and so on charting. Many more things make up Technicals as well.

I further suggest you go on your brokers websites and they will let you practice what we call paper trading, which is where they open a virtual account or not real account and pretend you are trading. They will start you with like 25,000.00 fake dollars and keep track of your trades and calculate the profits and losses it will give you a better understanding of how things work without risking real money.

Chris asks…

Looking for Stocks trading at a nice discount to their fair value?

Any great stocks I can buy today that can be bought with a margin of safety?

John answers:

I use cash flows as a stock measure based on a website that I frequently visit. As an accountant, I know that earnings can be distorted really badly but you can really mess with cash flows too much. Based on Cash flows, I like these stocks

AEO
50% Margin of safety, 15% discount rate, $52.89 buying price. Current Price, $22.28
SYMC, 50%, 15%, $41.37, $17.27 (no dividend though)
LEE, 75%, 15%, $18.51, $16.43 (4.30% dividend)

These are all my top 3 picks for long term

Michael asks…

What website has the best penny stock alert system?

I’m looking for a website that posts daily alerts as to what penny stocks are most active or are gaining in price. Some such alert systems seem to just pick random penny stocks, or give out one or two “can’t lose” “winners” (which turn out to be duds) per week–with much pseudo-excitement–and are therefore useless. Am looking for a site that actually keeps track of the activity of a large number of penny stocks and either shows charts for dozens of them or has some sort of alert for when one is becoming more active or its price is rising.

Any suggestions for specific sites?

John answers:

They are all pumping rags…check them out for yourself.

Pretend to buy based on their advice….also pretend to sell and see if you can make a profit….the buying part would be easy….selling is the most difficult part of the game. When buying pumps/dumps selling is the integral part of being successful…I doubt you have the tools to do that successfully based on your question.

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