Finance Tips

No matter what your reason is for picking a stock; a trend, technical analysis of charts, or company fundamentals, there are some fundamental online stock trading questions you must answer before making a trade. Answering these questions should be an integral part of your decision making process, and should occur on every trade you ever make. The question that I am going to discuss in this article is almost self-explanatory. As a trader, you have to ask yourself, is there a compelling reason to believe this trade will work?

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Before buying any stock, you must be able to articulate a solid reason why you believe the stock`s value will rise in the immediate future. If you`re shorting, you must have a good reason to believe its value will drop. Some traders get into positions for reasons that have no logical basis. I`ve actually heard people say they bought stocks because they `wanted to see what the stock would do,` they `like` the company, they think the stock is `due for a breakout,` or they think that it would be `a fun stock to own.`

`Wanting to see what a stock will do,` sounds a lot like gambling. Throw some money at it and see if you win or lose. There is no place in online stock trading for a gambling mentality. As for `liking` a company, that`s a bit naive. The company doesn`t like you, and its management and board of directors don`t like you. They have no idea that you even exist. Emotions should never be the basis for making a trade. It makes no sense to `like` a company. Companies exist to make money for their shareholders; your goal is to identify trades that you can make money from.

Finally, some traders buy beaten-down stocks that they think are `due for a breakout.` There is no rule that says that a company which has performed poorly in the past will rebound. Companies go out of business every day – nothing says a company has to return to profitability or its stock price has to rise. You should keep this fact in mind. Continue reading ‘Online Stock Trading Questions’ »

These days there can be a lot of ways to make extra money. Buying and selling real estate, getting a second job or opening up a brick and mortar business operation are among the most popular options.

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But many of those traditional business options might require a heavy upfront investment or start up capital on your part, as well as paying an increasingly high interest rate on any loans.

Day trading stocks online on the other hand can offer you freedom and easy liquidation of your funds. You don’t have to tie up your initial seed capital for months or years. You can buy and sell stocks on the same day and put your potential profits back into your cash account with out making a trip to the bank and waiting in a long line.

Another good possibility of day trading is that You don’t need a lot of money to start making money, unlike the majority of conventional businesses. Continue reading ‘How to Day Trade Stocks Online – Learn to Trade Stocks’ »

Commodities and stocks have been on fire the past two weeks and I think it just may be time for things to take a breather. While I continue to stay long, taking some money off the table to lock in profits is a safe play.

If you look at the charts we can tell the odds are pointing to some type of pause or pullback in the coming days. I figure any day now we could see some profit taking.

Gold ETF Trading – GLD

The Gold ETF is one of my favorite trading vehicles. Using simple trend lines and looking at the recent price action you can see that the price of gold is looking ready for a pullback. Buying at this level is chasing and that generally means you buy at the high and panic out at the low. Continue reading ‘Mid-Week Commodity ETF Update!’ »

If you have heard fund managers talk about the way they invest, you know a great many employ a top down approach. First, they decide how much of their portfolio to allocate to stocks and how much to allocate to bonds. At this point, they may also decide upon the relative mix of foreign and domestic securities. Next, they decide upon the industries to invest in. It is not until all these decisions have been made that they actually get down to analyzing any particular securities. If you think logically about this approach for a moment, you will recognize how truly foolish it is.

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A stock’s earnings yield is the inverse of its P/E ratio. So, a stock with a P/E ratio of 25 has an earnings yield of 4%, while a stock with a P/E ratio of 8 has an earnings yield of 12.5%. In this way, a low P/E stock is comparable to a high – yield bond.

Now, if these low P/E stocks had very unstable earnings or carried a great deal of debt, the spread between the long bond yield and the earnings yield of these stocks might be justified. However, many low P/E stocks actually have more stable earnings than their high multiple kin. Some do employ a great deal of debt. Still, within recent memory, one could find a stock with an earnings yield of 8 – 12%, a dividend yield of 3- 5%, and literally no debt, despite some of the lowest bond yields in half a century. This situation could only come about if investors shopped for their bonds without also considering stocks. This makes about as much sense as shopping for a van without also considering a car or truck.

All investments are ultimately cash to cash operations. As such, they should be judged by a single measure: the discounted value of their future cash flows. For this reason, a top down approach to investing is nonsensical. Starting your search by first deciding upon the form of security or the industry is like a general manager deciding upon a left handed or right handed pitcher before evaluating each individual player. In both cases, the choice is not merely hasty; it’s false. Even if pitching left handed is inherently more effective, the general manager is not comparing apples and oranges; he’s comparing pitchers. Whatever inherent advantage or disadvantage exists in a pitcher’s handedness can be reduced to an ultimate value (e.g., run value). For this reason, a pitcher’s handedness is merely one factor (among many) to be considered, not a binding choice to be made. Continue reading ‘Against Top Down Approach to Stock Picking’ »

Are you getting consistent 10-15% or more yields from your CD’s, Stocks, Savings Accounts, IRA’s and other investments? If not, read on…

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Did you know that there is a very safe investment that produces consistently high yields while at the same time provides security and liquidity? I’m referring to an investment secret that banks and financial institutions use. Smart people have been utilizing this investment for years. This secret is very common in real estate circles and has been going on right under your nose in every city in America. It’s called mortgage lending. So how is that a big secret you might ask? The secret part of this is that you can make this same type of investment and make far more than a regular bank does!

If you have funds to invest but are afraid to try your hand at the stock market because of the massive losses experienced in recent years, private mortgage lending might be the perfect investment tool for you. As a private lender you can make a high rate of return on your investment. How high? How about 10, 12, 15% … and sometimes even higher!

So how does this work? Real estate investors often come across great deals and they need to get them funded quickly in order to close the deal. We are referring to investors who buy run down properties at a deep discount, fix them up and then sell them for a great profit. These “rehabbers” need access to money quickly and can’t wait months for a traditional bank to wade through all the paperwork. Continue reading ‘Alternatives to Stock Market Investing’ »

I am in the process of putting together a beginners guide to the stock market for a new website I am working on and I thought I might let you have a look too. I hope that the few articles I write (I’m planning three) won’t be too insulting to you, dear reader, but hopefully they may contain a nugget of use too.

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Before I start, I ought to point out that these won’t be like any other pages ‘for beginners’ that you have ever seen. Here’s why …

I have been fascinated by investments since I was in my teens. Most teenagers read the sports pages, I read the financial pages. I bought my first shares aged 18. Into adulthood and I became a financial adviser at the grand old age of 24. I have sat and passed numerous financial exams and several investment specific professional qualifications.

I have read dozens of books about stock picking, economics, finance, politics, business, marketing, investment gurus and their autobiographies. In short, I am now past 30 and have spent the better part of my thinking life interested in investments. Continue reading ‘Stock Exchange For Beginners’ »