Your Questions About Money Making Stocks

David asks…

How easy was it to make money in the stock market?

how many , what percentage of people made a lot of money??
how do you know?

how did they know how to invest in what/

was it really that hard?

why so?

Thanks for your answers!

John answers:

You don’t have to know everything about the market to make money. What you need is a diversified portfolio which will make you money. People call it a gamble because they put all their money in one stock, usually a risky one, and often times that one stock fails. If you have a very diverse portfolio than if one stock goes down, you have others to balance it out. Many people made money on the market, you have to trust your gut a bit, and do a bit of research on the company. For instance, right now it would be a good idea to invest in green energy technology. Research the different companies a bit and put your money there, it will pay off in a few years. I made money in the market, and it was not that hard. The key is to realize that a 10-12% gain is good, people looking for a lot more usually invest in the risky stocks thus loosing tons of money.

Sharon asks…

Which stock will make the most money?

I think for Christmas I’m going to ask my mom for stock in a company. During the month of December, what company will be the best to invest my money in and yield the highest return?

John answers:

Your question reveals the fact that you are a complete newbie with very weak basic, fundamental knowledge in the stock markets and is about to do something you might regret for a very long time.

Frankly, if you are asking people for favourite stocks, then I think it is time you take a step back and improve on your financial literacy and investment education before you attempt to invest in anything.

Listening to free, off the street advice is an expressway to disaster. Read more good books and articles on investments to expand your vision and horizon before you decide to go deeper into the subject. For some of the best investment books that I have ever read, please visit http://www.bestoptiontradingbooks.com.

Investing or trading the stock markets never start from asking how to buy a certain stock … It starts from adequate investment and trading knowledge. There are quite a number of things you need to learn before you can even start thinking of the stock markets …

1. You need to understand how the stock market works and what it is exactly about.

2. You need to know what are the different styles of trading in stocks and shares.

3. You need to read about why so many people lose their shirts in the stock markets so that you can avoid their mistakes and also decide if this is a risk you want to take.

For all these issues and more, you can read about them from some of the articles that I wrote at http://www.mastersoequity.com/articles.htm

After you are adequately armed with the basic concepts and ideas, you need to know how to find profitable stocks to trade or invest in. You can do that the easy way by subscribing to stock pick services (example http://www.stockpickmaster.com ) or you can learn to use charting tools and softwares to find stocks with parameters that you can pre-define. (example http://www.worden.com )

All in all, investment and trading is a lifelong education and non stop learning. No one is ever done learning and catching up with changes in the markets.

If you care to read about how I went from completely broke to retired millionaire trading stocks and options by 28 years old, you can go to http://www.mastersoequity.com/

Remember, the slogan “Just Do It”, Just won’t do for the stock markets. If profiting in the stock markets is as simple as buying a single stock , then why are so many people still poor?

After you have all the above mentioned knowledge, you need to ask the following golden questions before you can decide whether a stock is worth buying or not :

1. Why are you of the opinion that this stock will rise?

2. Is your opinion valid in the first place?

3. When are you expecting it to rise? Can you hold on for that period of time or longer?

4. What is your expected entry price? After what price would your expected profit margin be too thin to enter upon?

5. Where is your expected stop loss point? What is your stop loss point based on? Where will you tell yourself that it is time to take a loss and get out?

6. Where is your expected profit taking point? What is your profit taking point based on?

7. Does the way you are buying the stock allow you to hold on until your expected profit taking point?

8. How much of your money should you dedicate to this one trade?

9. What is the level of primary, secondary and idiosyncratic risk you are undertaking when deciding how much of your fund to use?

10. What is your cashflow need? Does your cashflow needs allow you to hold the full lifetime of the stock?

After you are able to answer all these questions confidently, THEN you are ready to… PAPER TRADE your stock strategy. Yes, even at this point, you are NOT READY to trade for real. You should trade on PAPER for at least 6 months and become consistently successful BEFORE you take your stock strategy into real life.

Then.. You are ready to start… But there is still no guarantee of success as paper trading is very different from real trading. You will need another maybe 1 year or 2 trading very little money and be consistently successful BEFORE you are ready to increase your stakes.

So, as you can see, success in the stock markets is not easy at all the the less knowledge you have, the more risk you undertake. I lost hundreds of thousands in the stock markets before I become successful.

Take heed and good luck.

Http://www.mastersoequity.com

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Joseph asks…

How to make money in the Stock Market?

My Husband tries to make money in the stockmarket but it always seems like it doesnt work out…how do you win?

John answers:

I can give you information that will help you skip over the 12 years learning curve where you would be losing your money over and over again. The stock market is set up on a 90/10 scale. 10% of the people out there make the money and everyone else (90%) donates to them so they can build their houses and buy their cars and property.
I started out in the stock market in the mid 90s and made a lot of mistakes and then I suddenly found out what works and what doesn’t. I have learned how to make money in the stock market. He res a synopsis of what doesn’t work:
1. Dint try to play the news. The pros on the floor get the news before you do at your laptop online. They have services such as First Call, and other immediate news services. Also the guys on the floor hear the rumors before you do. Basically what this does is the stock already moved before you even got the news, too late.
2. Penny Stocks. You might have heard about someone who made a mint in penny stocks. He bought 10,000 shares at .03 apiece and suddenly the stock jumped to 3 dollars a share and he bought a new car or a house. This is ultra rare. Usually you will buy a penny stock for .07 a share and then it will go down to .03 a share and stay there for a year.
3. You try to do momentum plays. If the stock suddenly shows up on the ‘most up’ lists for the day you think that you can join up with the momentum and make money too. But by the point YOU see it on the lists, the pros are already starting to sell it. You buy it and the stock starts to drop.
4. Rolling penny stocks? No. Everybody wants to buy at the bottom of the roll, no body wants to sell at the top of the roll.
5. You try to daytrade, fighting the market makers and screw them out of thier bid and ask spread. Not going to happen. You are up against a professional who makes his living doing this.
6. You learn technical analysis. But this takes about 6 years to master.
7.You try giving your money to a pro…most money managers dont make money during down years. As a matter of fact they can lose quite easily.
8. You can follow stock pics from the Wall Street Journal or IBD but then everyone sees those pics. You would be one of the 90%. Those pics, unless they are forcasts, show stocks that are currently hot. As you see them pros are dumping them.
9. You try to catch a ‘falling knife’. A stock drops big because of news so you buy it because you think its cheap. Yeah but there was a reason the stock went down, a fault in the stock itself. So it keeps bleeding after you buy it and then it keeps dropping. Then it gets downgraded and drops more.
10. You tried options. Most people dont know how to do them right and most people lose at options. Heres why. A) you buy an option that expires at a certain time (they all do) and the stock goes down, your option goes down. B) you buy an option and the stock remains at the same price and is flat. The option time erodes and you are left with nothing. C) You buy the option and the stock price soars. You are estatic because the stock price made your option triple. Sell the option? Hell no, it could go up more! So you hold it. The problem with that is they all expire worthless if given enough time. So you hold hoping for even more money then the price goes down. You lose.
12) You move your money around in one big pile. Investing 100% of your money all at one time is a big mistake because that one time when you have a catasrophic loss from one trading mistake is the time you are done. Always have different piles for trading down or up.

Well that is my two bits and I suggest that you follow this if you want to learn and make money. Site I have this from is below.

Lisa asks…

Is Facebook making money?

Is Mark Zuckerberg cashing in despite the fact that facebook has yet to issue its stocks to the public? How is facebook making money at this moment? If any?

John answers:

Ya.. They make money by having the advertisement in their pages which runs at side..
Another thing i heard that they make money by selling our data..that is social networking giant Facebook has new plans to make money by offering its 150 million user database as a market research tool to corporations. Hope this is also one way of making money by facebook..

Helen asks…

how can i make money in short period in stock?

In stock business how can i make money plz give me answer serious way that is the matter of carrier

John answers:

It is impossible to make money in stock in short period. If anyone had this technique, they will be richer than Mr. Gates and won’t even have the time to respond to this question. The best is to learn about stocks over few years. Until then, better to invest in good mutual funds like dodge and cox, bill miller’s legg mason, muhlenkamp fund, etc.. If you are really itching to make money in short period in stock – then just allocate 5% of your “play” money that you don’t mind losing. Take this money and invest with people who “CAN” make money in stocks in short period.

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