Your Questions About How To Pick Stocks To Buy

Linda asks…

How to know which stocks to invest in?

I am a beginner in stocks, and am planning to invest in the next 3-6 months. There are 10,000 stocks in the market, now how do you know which ones to invest in. Do you research each and every one of them? Is there also a listing of all of the stocks? if yes, where? Please no rude comments, everyone is a beginner at some point or another. Thanks a ton for the help! Thx..

John answers:

To Start Investing
It takes a long time to learn the stock market and for someone that wants to start investing in the market needs to decide what risk level he wants 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. Usually the more risk you take, the more return you will have, but not always. To see the Risk vs Return go to:
http://i1142.photobucket.com/albums/n620/Chief-1/RiskvsReturn.jpg
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 Growth & Income Fund.

1- Mutual Funds: I like mutual funds because they 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 me. There are lots of different kinds of mutual 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 5% of your investment. But what I don’t like is the fact that most funds has trading restricting 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. Mutual funds are meant for long term investors.
2- Stocks: Stocks is more volatile than funds unless you spread you money in about ten different sectors and know witch sector will do best. And stock trading restricting is only a few days and that’s something that I like. If you own stocks, you need to keep up with all the company’s business so you don’t get stuck with a bad stock.
3- ETFs (Exchange Traded Funds): ETFs are like a mutual fund but trades like a stock and that is my main reason why I like ETFs. 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. Some have 1x leverage, some have 2x leverage, and some has 3x leverage. There are some that represent almost every kind of sector.

You can find several good brokers that charge $8.00 and under, per stock trade and no fee on Noload Funds. Most broker websites have good research tools. Some popular broker websites are Fidelity, TD Ameritrade, E-trade, Scottrade and others. I think you need a min. Of $500 (some sites $2,000) to open a broker account.

I have finally found a way to help me choose the right stock at the right time. If you want to follow and learn from a retired individual that has 24 years of stock market experience, click my picture and click “About Me”.

Mandy asks…

Is it possible to double my money in stocks in a month or less?

Like buy cheap stocks for $1 or $2 and they double in 30 days or less? Would you advise me to try it?

John answers:

I would advise you to only invest the money that you’re willing to lose. The only way to have a chance of doubling your money is to pick very volatile stocks. They have a chance of going up and a chance of going down, so only invest money that you’re willing to lose because you do stand a very good chance of walking away with less than you started.

If you can’t afford to lose that money, stick so a guaranteed investment of some sort. If you’re looking to make serious money, invest long term.

Mary asks…

Is there anything wrong with waiting a long time to sell stocks?

Suppose i buy 100 stocks for 20 dollars each. Then the prices drop to 10 dollars each. Would it be better to just sell them now or wait a very long time until they rise above 20 dollars. What would be the risks of waiting a long time to sell them? Or are there not any?

John answers:

Why did you buy them and what do you think they are worth? Presumably you thought they were worth over $20 when you bought them, but what about now?

If the price dropped just due to the fluctuations of the market, or of that industry, and you have reason to believe that they are still worth over $20, then you should hold them. If something happened in the meantime that caused you to re-evaluate your estimate of their intrinsic worth, then base your decision on your new estimate.

In either case, there’s nothing wrong with waiting years or decades (Warren Buffett has some stocks he bought more than 20 years ago). Long-term investing is actually less risky, not more risky, than short term speculating, if you base your decisions on fundamentals.

If you think it’s just too much trouble to figure out what the intrinsic value of the stock is, then you’re probably not suited to picking individual stocks and should invest via broad-based mutual funds, such as index funds.

George asks…

What kind of job can I get with these interests?

I’m interested in Investing, stocks, real estate, buy low sell high for profits, ways to make money. Please tell me what job I can get with those interests, thank you for your time.

John answers:

With just interest i doubt you could get a job in these fields..i would pick one or two interests and blend them into a doable job…of course, you will need to learn these fields by going to school. I would pick the real estate, go to a real estate school and then work at a realtor’s office. You would be a licensed real estate agent in your state, that will bring you income to not only for personal bills, etc….start saving the money that is extra from your living expenses, then as a real estate agent you will know what rental properties are for sale, or in distressed property available.. That would be the”buy low and sell high for profits………then look for investments that you will be able to handle…on the side you could study the stocks and then buy and sell as needed…..

Sandy asks…

How/Where do I get started with blue chip stocks?

I am interested in getting into the world of the stock market and am interested in blue chip stocks. I am not set on getting rich, but rather would like to earn a few extra bucks with some safe companies. I am thinking of pepsi, but would like some other options. And my question is, where and how do I begin? I want to manage them myself, preferably online, know how much I am earning, etc etc. Thanks!

John answers:

Hello,

First you need to figure out what your financial goals are and if your looking for income, growth, or preservation of capital.If you Looking for Income and preservation of capital blue chips will be the place for you. As for Growth you might get a few percentage points on a blue chip per year but they hype for them is the safety and the yield.

2nd Research Brokers (Discount) Like Etrade, Tdameritrade, Schwab, Fidelity ect. You can save yourself a lot of time by going to elitetrader.com and go to their broker review page. They list just about all the registered Broker/Dealers out there with real life reviews from current clients who trade with them. Once you decided on the broker call them up and ask questions regarding their execution methods, pricing, and account information.

Now on to the research to picking the stocks…

There are 1000’s of websites out their that are either free or paid services that give you access to research, reccommendations, trade rooms ect the best thing you should do is research yourself for the price of Free. Here are a couple websites that are great for free research on both fundamental and Technical research.

Finviz.com (shows you the breakdown of the companies fundamentals from balance sheet, to short interest. This website is the greatest resource for a fundamental numbers guy or someone wanting to learn about the blue chips data.

I Usually use my platform to perform technical analysis buy you can go to bigcharts.com or stockcharts.com

Your much better if you use your own brokerage platform for TA though.

PS Make sure before you choose your broker they allow you a tour or free paper trading account so you may test their platform to see if you like the features and analytic capabilities.

Best of luck on Investing and wish you all the best.

Powered by Yahoo! Answers

This entry was posted in Uncategorized. Bookmark the permalink.