Investing in the Stock Market Research Guide

Stock Market Investing - the Right Way If you are new to investing, you might have the idea that a rational person can buy stock in some promising companies, for the long term, and be happy with their investment. More Stock Marketing Investing This greed-fear cycle that can come from investing is for real, and has drained bank accounts, delayed retirements, and caused many divorces. How to Pick Winning Stocks You'll learn the basics of reading and analyzing a company's financial statements. This is part of what is called "fundamental analysis". The Golden Rule of Investing If there is a golden rule of investing, it should be the discipline to cut your losses when a stock drops 7-10%. Avoid Psychological Traps to Have Successful Investing From time to time, even the most successful investors will hit a losing streak. When this happens, people have a tendency to fall into these psychological traps. Changes in Stock Values Can Be Big Numbers If you only look at where the price of a stock was and where it is now, you may be misled about the return on investment. This example should be an eye-opener. How to Invest Smart These suggestions are presented with the assumption that you intend to remain a casual investor. Stock Advice - Important Selling Rules Sell if your stock drops 8-10% from the price you paid. I can't repeat this often enough. If the price begins dropping on high volume, don't wait for an 8% haircut - sell it now. Poor Stock Buying Decisions Basic "what not to do" investment traps. Don't a victim of these poor investing decisions. Market Indicators Stock market indicators, the simplest being bull and bear markets, are numbers that investors use to support various investing theories. When certain numbers are rising or falling or high or low, these people believe that there is a clear meaning attached. Stock Market Cycles Are there market cycles that an investor can take advantage of? You bet! When a bear stock market may not be a bear market The big losses of the biggest companies can swing the market indexes to look like the whole market is in trouble when actually the true story is quite different. Stock Index Futures A “future” is a contract that requires an investor to purchase a commodity at a certain price on a given date – in the future. These contracts can be bought and sold up until that specified date. Four Things that Affect Stock Valuation Learn about the four main aspects that influence a stocks valuation. What is a P/E ratio? In the simplest terms, the price-to-earnings ratio is the dollars that you pay for each one-dollar of earnings. Value Investing Value style investors don’t worry about the market trend or the direction of the economy, or interest rates. They don’t study stock charts. Cheap Stocks One way of categorizing stocks is by their market capitalization, the total number of shares multiplied by the price per share. When their market cap is less than $500 million, the company is relatively small and maybe getting smaller. What is a Financial Statement? There are 3 statements that the SEC requires corporations to file on a quarterly basis: balence sheet, income statement, and a statement of cash flow. Analyzing Financial Statements A company’s financial statements tell you what a company has (its assets), what it owes (its liabilities), its sales (revenue), and how much it made in the accounting period being reported (its profit or net earnings). Red Flags to Look For When Investing? Watch out for sales growing slower than accounts receivable or inventory. Look at the balance sheet to see if there are falling reserves for bad debt, or an increase in deferred revenue. How to Read an Annual Report A recent study has found that women are twice as likely as men to study a company’s annual report before investing in a company. Why don’t most men bother looking at it before they jump into a stock? Maybe for the same reason they hate to stop and ask for directions. Stock Market Analysts There are currently about 4,100 stock market analysts working for 250 brokerages and investment banks. These experts do their homework and get the inside scoop on the prospects of the companies that they follow.