Your Questions About Money Making Stocks To Buy

Susan asks…

buying stocks that smart money recommends?

so i subsribe to smart money and in ther issue they have some companies that they say buy into one of them is ual i do not know anything about stocks do you think if i follow what this magazine says i can make the right choices on what stocks to buy for a beginner?

John answers:

Two problems with doing that. The first knock I heard about Smart Money is that they print opinions from many different people and sources. There is no consistent investing philosophy or plan. So it is difficult to use them as an investing guide.

They are a good source of information and ideas but you have to filter the recommendations for your own use and decide if the people they interview are right or wrong. They may have some columnists that provide a recommended portfolio and track it, change it, adjust it, all during the year. Such advice is probably okay for a beginner. But not the simple buy recommendations.

The second problem is follow up. I thought the same as you and tracked buy recommendations from a number of sources. For instance they say buy WXYZ at say $15 and yes it goes up for a while. Then checking back 6 months later it is at $10? What?

Then if somebody checks back with them about it they say “OH, it went to $20 and we sold it months ago”. I found that response was real common. Problem was that nobody told you to sell. Nobody is tracking that recommendation over time.

So I learned, and I suggest for you, that anytime you hear recommendations to buy a stock even from pros that if they don’t give you sell advice (like sell if it goes to $20) then consider it only an idea and nothing to follow blindly. It is still up to you to decide if it is still a good stock or if to sell a month or months later.

There is no such thing as a free lunch. Caveat Emptor.

Good Luck.

Mary asks…

stocks = money “cash”?

i recently bought some shares of apple. i was told that in order to make any money i would have to sell my shares. it would just have increased or decreased value. so is it safe to say that stocks are just in value while mutual funds give back cash diviend? plse advise… thank you for your time, for i am a newbie to the stockmarket!

John answers:

For stock if you buy the Apple stock then you are expect the stock to move up in order for you to make money.

Helen asks…

Making money on the stock market?

This is a general question, but I was wondering, how easy is it to make money on the start market if you invest in the right stock? Let’s say I have $1,000, and there’s a company that’s selling shares for $5 each. Then let’s say a month later it jumps up to $10 a share, after I’ve bought them. Does that mean that I’ve just made an extra grand? Does that ever happen? And if so can a person just trade that stock for another stock (if they think it’s going to go up later on) and just keep doing that over and over again until they make a ton of money? I have no idea if that’s possible or not so I thought I’d ask.

John answers:

Hi YES u could double your money in theory less broker fees but u would have to know which stocks and it’s very rare to double ur money in a month these volatile days…

Research and knowledge of the company and particular Industry is the key but if I knew which company will double I ain’t going to tell LOL ?

Chris asks…

If Im making money on the stock market, then whose losing money?

When I make trades on zecco makes money because I am charged a fee for every trade. When my stock goes up I sell it and make money and zecco makes money again as well because selling the stock is a trade. If me and zecco are making money whose losing money? If the company is losing money then doesnt it hurt the company by having their stock price go up?

John answers:

You get your money from some guy like yourself who buys your shares from you. But whether he gains or looses from this transaction depends on whether the stock price goes up or down after he buys your shares.

As long as the stock market is going up. Then everyone makes money. But if the stock market goes up and down a lot. Then only those who buy low and sell high make money. While the rest either don’t make any money. Or they loose their money to the guys who buy low and sell high.

Donald asks…

Never bought stock?

I am 20 years old and I would like to start buying stock to make money and for my money to grow! Where should I start and where should I go

John answers:

What companies do you like? What would like to be a part of? If your favorite stores are parts of chains, it is likely that they have publicly listed stock, you can buy into them and let their business growth grow your money.

Generally, for folks new to stocks, you need to realize the difference between what you are wanting to do, along with what you know how to do (which you admit isn’t much), and what everyone else is talking about doing. A lot of stock talk is about trading, about speculating. Speculations are not making money grow. Speculations are short term and very risky, so you won’t make money doing that if you don’t know what you are doing. Investing is a longer term project.

Investing is putting your money up to buy a stock and then just leaving it alone. You will hear an expression “buy low and sell high”, but if you are investing, when the price is lower than when you first bought into that company, then that is the low for you to buy more (it averages down the cost-basis, what you will be taxed on when you do decide to sell it is what your sale proceeds after the cost is subtracted, assuming it is more than what you paid in for it).

May I suggest that you start with something big and obvious. You can buy into all of the stocks of the Dow Jones Industrial averages, the stuff that often is reported first when talking about the American stock experiences that business day. The symbol DIA is stock in an Exchange Traded Fund (ETF) that just buys those stocks for people who buy that ETF stock from their brokers. Another one is SPY, an ETF that buys into the Standard & Poors 500. These two, commonly referred to as Diamonds and Spyders, cover the two biggest American stock benchmarks, the next most important is QQQQ (I keep forgetting if it is 3 Qs or 4 Qs), this buys into all the stocks on the NASDAQ stock exchange, mostly technical companies, so if you hear someone saying “the tech stocks” were up or down, they usually mean these. Another ETF that is worth considering, well maybe two, is NY, the largest (by market capitalization, the number of shares times the most recent price of the stock) 100 stocks on the New York Stock Exchange, and maybe look at PXN, an ETF by a company called powershares (which along with a company called ishares, which did NY, and these do a lot of ETFs). PXN buys into the major companies doing nanotechnology (they are making or inventing some really wild products that will change a lot of things in our future), so in the long run, these companies will essentially be the next technological revolution, so it is worth a good look at some time.

Take it easy. Remember, most of the advise you will get is things like Lockheed (LMT) is about to announce its earnings and if it is big then the stock will go up–this is trading, this is speculation, because you will be expected to sell it after the news grows old and the stock drops a bit. But if you hear that Lockheed builds missiles and both Japan and South Korea are buying a bunch of missiles for several years to match the estimated 10,000 that North Korea has–buying into that for the long-run of its business growth is investing.

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