Your Questions About How To Pick Stocks To Trade

Ruth asks…

Are these great stocks to invest in?

Are these great stocks to invest in?

Hi! I’m new the Stock market world I want to invest $10,000 in stocks I have studied several different options to invest in. I want someone who has the experience or know how to answer this question. Only serious answers are welcomed. Do you think my stocks picks will have good financial return in 6 months to a year?

Terry

Berkshire Hathaway Inc. New Com (NYSE: BRK-B) Last Trade 79.48

Dell Inc. (NASDAG: DELL) Last Trade 16.90

DirecTV (NASDAG: DTV) Last Trade 36.16

eBay Inc (NASDAgGS: EBAY) Last Trade 26.32

Microsoft Corporation (NASDAgGS: MSFT) Last Trade 31.04

John answers:

These are great companies, each with a good prospect to increase their stock value, over time.

But for an amateur to buy stocks with a time horizon of one year, or less…….. That’s gambling.

You ask nothing about where to put your stops. You have no idea what your targets are.
50% of the key to successful investing is money management.

And finally…. You’re asking strangers, whose qualifications and motives can never be known…. If you’ve picked good stocks….. What value is that?

Steven asks…

How do i find what stocks are worth buying!?

Hi everyone. I am 18 years old and just graduating from high school. I have around 2k in my E-Trade account that i plan on buying stock with. I am looking to start as soon as possible but am having trouble choosing companies to invest into.

At first i though it would be “easy money” but boy was i wrong. There seems to be no rhyme or reason to chart fluctuations. All attempts to predict price gains results in utter failure. I even went to the extent to try simulators such as Investopedia. I invested in companies such as lvs, fuqi, riv, and len. i would buy at lower then average market prices but would watch as all plummeted by 10% or more. It just seems hopeless. All stock picking strategies i have read just give intangible information and horrible analogy’s pertaining to the stock market. It seems no one actually knows what they are talking about.

So i am asking all you successful, knowledgeable, and competent investors to help guide me. You must understand that i have absolutely no market education or individual help. Every thing i have learned (which is very little) was attained though observations and some online reading. I would love to know what you look for in a company. also tell me how you would find that information. tell me what to look for including volume increases or decreases, price changes, market caps, ect.

ALL POSTERS BE ADVISED:
.be detailed
.simplify confusing terms
.provide useful information.
.give success stories
.give failures
.give examples

Put time into your posts and my the best man win. thank you for your time! I am extremely grateful!

e-mail- eyanku@yahoo.com

John answers:

First,
Never invest in something you do not understand – ever.
Two, learn how to research the companies – forget charts, patterns.
Third, realize the market is truly a random place.
Fourth, go purchase one up on wall street by peter lynch – great book for a guy like you.
Fifth, don’t be a trader, invest long term.

My source, well, i’m 45 retired, held a series 7 license, spent time as a registered investment adviser for a company, have a reasonable amount of money in the market. Go buy the book and read it or get it at the library. You can blow this off, and read what some 15 year thinks and lose your 2k, or not. Good luck

also, remember for every person who is positive the stock they are buying is going to the moon, there is the seller of that stock, who knows it is not worth holding onto anymore

Charles asks…

stocks/stock brokers question?

okay im trying to pick a stock broker to do stock investing with…and the four main ones that I can see are:

etrade
scottrade
fidelity
ameritrade

now with ameritrade and etrade the commission they charge is $9.99 with scottrade its $7 and fidelity $7.95

my question is, if i am looking to invest mostly into penny stocks, are there any other fees associated with this? i know they charge like .5% plus the commission rate with one of these guys, but are there other things i should be worried about? secondly, i do not mind paying $2 extra per trade if the $2 can get me something much better…how are the reports at each? how user friendly are they? what is your recommendation and list how you got to that recommendation as well…

now stocks in general, im a newb obviously but i had a question about stocks and tax…if lets say you make a $1000 net profit and re-invest that $1000…do you still have to pay taxes on that $1000? or is it only when you cash in?

also, any beginners tips about stocks in general would be great!

thanks Y! Answers community, you guys rock!

John answers:

Out of the group you mention I use TDAmeritrade and they are my favorite broker. (I also have accounts with TradeKing and Zecco and TDA far surpasses both of them for how I like to trade and use my account.)

TDAmeritrade’s commission fee of $9.99 is set with no additional fees. I personally don’t like the additional penny stock fees that other brokerages charge. I’ve enjoyed TDA’s educational webinars, services and research capabilities. I don’t know what the other brokerages are like, but if you have enough money, a suggestion would be to open more than one account and see which you like best.

At the end of the year you will have to pay taxes on the total gain from sold stocks. (Losses offset the gains.) So you’re trading all year long with the cash you have and settling up with the IRS at the end of the year whether you “cash out” or not as the brokerage reports your activity to the IRS.

TDA also has Gainskeeper (buy/sell tracking software) which you can hand over to your accountant at the end of the year and not do too much personal brain damage around gains/losses.

Lots of beginner/intermediate trader tips at the website below.

Sandy asks…

How do I get started on stock options?

Pro/cons stock options
what stocks to pick
What program do I work with?
What fees are involved when trading?
I work full time- I’m looking for something that only needs about once a week for checkup? any recommendations?

John answers:

I use a Brokerage account at Scottrade.

I ONLY buy covered calls, and sell to close.

The fees are a little more complex, I have not done one for a while, but I think it is $10.50 plus $1.50 per contract.

An option contract is usually for the option to buy or sell stocks in blocks of 100 shares, but that might change if, after the contract was executed, the stock splits.

What I do, is buy 100 shares of a stock (or more, but always in blocks of 100 shares). I pick a really good stock, that I am sure will go up in the long term. I wait, however, for a dip. I usually put in a limit order to buy at about 5% below the average for the day.

Then, after it buys, I wait, until the stock price increase by about 25%. This might be a month or a quarter, or more.

If/When it goes up 25%, I then put in a sell order for a covered call, for, with the following specifications:

The price is for at least 25% of the current value of the stocks.

The strike price is at least 25% higher than the current price.

The expiration date is at least 1 year from the date I bought the stocks ( for tax reasons).

At this point, I have a 25% capital gain.
I sell the covered call for 25% of the current price.

If the stock fails go up 25% by the expiration date, I get to keep the price of the covered call, and the call expires as worthless, and I may sell another covered call on it.

If the stock is up over 25% on the expiration date, the call automatically buys my stock, at the strike price. I have made about 75%. If the stock goes up way over 25%, I don’t make that extra gain. I might feel bad about it, but I still made 75%.

If the stock drops by 50%, I have not lost anything. It would have to drop by over 50% for me to actually lose anything.

If the stock price drops dramatically, and I think it will go back up, the price of the covered call drops as well, and I might consider buying it back for 5% of what I sold it for.

The reason I only use covered calls, is they are relatively risk free. They actually reduce your risk if done right, whereas an uncovered call can increase your risk of loss without limit.

Maria asks…

What is the best and user friendly free online virtual stock market game for a total beginner?

I am totally ignorant when it comes to the stock market, So I need a game to teach me how to trade and how to pick the right companies.

John answers:

There a best stock market simulation http://www.1ka10.com Get registered into http://www.1ka10.com online virtual stock market game on real market feeds and now there is some new feature add for investors that is comment feature of any stock by which you can get or leave comment at any stock so one can watch which kind of views from people for particular stock. Example :- http://www.1ka10.com/wipro.NS/stock-details.htm and live chat with heroes in markets
Also one can watch out to anybody’s portfolio by one click and can view which stocks are in their portfolio and how they tread for profits.

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