Your Questions About Money Making Stocks To Buy

Linda asks…

What do you look for when buying stocks? How or what do you research?

I want to start investing my money in stocks but I don’t know where or how to start…I am really interested in learning how to buy, what to look for when buying stocks and hopefully make money off of my investments.

John answers:

Go to the library and checkout some book on investing and the stock market and read and study. Then pick some companies and research theM on Yahoo finance, Google finance or MSN Money. Knowledge is power. I had to read, study and research. Be your own best financial guru with the knowledge you gain. I first learned the basics from and read about 15-20 books I have on my book shelf at least 10 that I own. When I’m asked about investing I hand the person a book and say read it and when your finished with that book I have more you can borrow.

You also have figure what kind of risk you want to take. What kind of investor you want to become, day trader, short term. Long term, life long. What kind of investing do you want to do? Value, Growth, High yield dividend, Drips. DSP. Always remember to diversify your portfolio in different industries and sectors. So when one dives you do not lose it all. The old adage of of do put all your eggs in one baskets holds true with stocks.

John asks…

With all the stocks out there, how do you know where one to buy to make money?

John answers:

You don’t. That is why we are not all rich.

Daniel asks…

Should I buy the stocks of the same banks the Gov. buys stock?

In which banks will the gov. buy stocks? How do I find out who they will be. What will happen to the value of those stocks?

Can I make money by following their purchases. Will some people make a killing from knowing which bank stocks to purchase?

John answers:

Many people are already doing this. Read the Wall Street Journal.
Buy the stocks..

Lisa asks…

How do I go about short/long selling stocks myself to start making some money? (please help/advise)?

I am 18 years old and I have been looking into various methods of trading stocks. I like the idea of both short selling & long selling;

Short selling is betting that the price of a stock will go down and with borrowed funds when you make your profit, buy back the stock and keep any profits for yourself after taxes and expenses have been paid.

Long selling is betting that the price of a stock will go up and with borrowed funds when you make your profit, sell the stock and buy back later and keep any profits for yourself after taxes and expenses have been paid.

What I would like to know is, I personally am with the bank of scotland halifax and am in the middle of setting up a share dealing account, but I don’t know if you can short or long sell stocks with them and I might need another service in order to do so. Could you recommend any UK based ones I could do this with just in case I should have to have another firm, and tell me what I have to do or need to do so? good answers would be much appreciated. Thanks!

John answers:

If you’re 18 and have no experience buying and selling stocks, you should stay away from short selling. It’s a very risky business. Even experts get burned using this technique. Get some experience with mutual funds and stocks first!

Studies have been done to show that people think they are smarter than they are when dealing with the stock market. They rationalize what was really luck, as having been their expertise. Some people make “killings” but most of it is being in the right place at the right time (like people who invested in money markets and Treasuries last year) rather than skill in stock picking. I myself bought GE, supposedly a “safe” stock for orphans and widows. It’s now worth 1/3 what I paid for it. The stock market is organized gambling. Don’t invest anything you can’t afford to lose.

I know you will do this anyway, but in 5 yrs, decide for yourself if the above was good advice or not!

Donald asks…

If Warren buffet never sells his stocks, then how does he make any money?

I noticed that warren buffet never sells his coke stocks, or his UPS stock, and if he never sells then how does he get more money to buy more stocks.

John answers:

The biggest part of the Berkshire business is now the variety of insurance companies they own. These insurance companies throw off a ton of cash in the form of insurance premiums. Even if there is a claim the premiums are invested for a significant time (generally longer than 1 year).

The publicly owned companies (e.g. Coke, Washington Post) pay dividends.

The privately owned companies (e.g. Shaw) generate cash that goes to Berkshire.

Read his annual letter to Shareholders which is available on the website.

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