Friday, January 18, 2019

Why Stock Market Investing For Dummies Is A Scam

Recently, phrases like stock market investing for dummieshave been very popular. But personally, I think these are basically scams to get us to buy books. The idea being that some one can write a book about stock market investing specifically for us dumb investors who have no clue what to do. The bottom line is that these books are so basic that they teach us nothing about how to invest in the stock market and actually make money. The only people who make money are the book publishers themselves. And for what — selling lowsy stock market advice as how to guides.
I’m not saying that the whole Dummies series doesn’t have a place and that there aren’t any good bits of information at all. I suppose that if you read Stock Market For Dummies and Investing For Dummies that you will no doubt find a tip or two. What you won’t find though is a comprehensive guide that gives you step-by-step instructions for investing in the stock market today.
The people who publish the Dummies books are not the only ones. You can check about any of the “best-sellers” and find basic generic information on the stock market and finance and find the same lame self help guides. What you’ll have a tough time finding is specific real world application of strategies that you can use to invest.
There are exceptions of course. I’d strongly recommend How to Make Money in Stocks by William O’Neil as my top choice. If you need a beginners book, I’d suggest The Neatest Little Guide to Stock Market Investing (2010 edition as of this writing). I’d even suggest How a Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn. At least in that book, they offer a specific and measurable strategy that in the end will probably help you make money in the market.
Read O’Neil’s book along with The Successful Investor.If you ask me what I would do personally if I was a beginning investor, I would take the following steps:
  1. Subscribe to the Investor’s Business Daily.
  2. Start focusing on determining the overall direction of the market. The market indexes I would focus on would be S&P 500, the Dow Jones Industrial Average, the NYSE Composite and the NASDAQ.
  3. Only invest when the market is in a confirmed up trend.
  4. Start watching the screens in the IBD every day.
  5. Develop your own watch list of stocks.
  6. Start reviewing charts on your watch list and figuring out the best entry points.
  7. Set up a stock simulator to practice your CASNLIM investment strategy.
  8. Learn to sell stocks quickly if they don’t go up and sell them when they have gains of 20 percent or more.
  9. Keep a journal of all of your trades so that you can review them.
  10. When you are right one in three times, start using real cash.
In the end, actual experience is the best teacher. Learn by doing and put the stock market investing for dummies books back on the shelf where you found them.

Tuesday, January 15, 2019

Foreign direct investment as a component of structural change and economic growth

A striking indicator of success in reforming the economy and creating a competitive environment is the volume of foreign direct investment. Successful transformations in the post-socialist countries contributed to the appearance of foreign investors in the domestic markets of these countries, which, in turn, had a number of structural macroeconomic consequences:

the level of capitalization of national savings and the accumulation of fixed capital increased;
changed the structure of production and exports by type of economic activity;
there was a technological update of production, as well as an increase in the overall dynamics of economic growth.
The change in ownership structure in favor of expanding the non-state part and the ownership of non-residents also worked as a catalyst for market transformations.

The effect of foreign investment largely depends on the form of investment. Foreign direct investment (FDI), which comes to transformational economies, can be conventionally divided into two main streams: investments for privatization and so-called green field investments, or investments built from scratch. In addition, in the economic literature allocate export investment, sent to a particular country in order to use cheap labor. The latter may first be in the form of privatization, but later will require additional injections into the technological re-equipment of already privatized objects in order to set up export-oriented production in order to gain from the difference in prices in the domestic and foreign markets.

The most important macro-structural effects of increased investment activity of foreign capital in the domestic markets of countries with transformational economies are:

an increase in the level of fixed capital accumulation, which is accompanied by the emergence of an investment wave and the formation of a development model in the recipient country of FDI and at the same time is an investment and innovation one;
expansion of the development base;
qualitative changes in foreign trade in favor of investment imports and expansion of the export part of the highly developed countries of the world;
increasing the technological level of production and changes in the structure of production;
increase the export share of high-tech and medium-tech goods;
growth in economic productivity;
strengthening the upward dynamics of GDP.
Thus, among the positive results of attracting FDI, the main ones are:
gaining access to new production and business technologies;
expansion of cooperation with foreign companies;
information exchange;
increasing the level of education and qualification of human resources;
increase employment;
expansion and deepening of the domestic market, combined with its diversification;
growth of the general factor of labor productivity;
the expansion of foreign trade and the like.

How to choose the desired dilling center

DC is a company that provides access to Forex for ordinary traders. Sometimes dealing centers call themselves brokers, but brokers have a range of activities already. In this article we will use these two terms as synonymous, since the difference between them is not so great. In order to choose a reliable broker correctly, you need to know what you need to pay attention to and what should be avoided when choosing. View Dealing Center. How is currency trading. There are three options for which the operations take place. The first is that the broker creates his own foreign exchange market, that is, it is a trade within the company. We do not recommend you to work with such DCs, as there will be problems associated with a small liquidity of instruments and, moreover, the broker can interfere in the process of your trading, and this is completely useless. operations and lack of control of the broker. The last option - trading takes place through a representative on Forex, this is a common system of DC operation. If there is a high-speed channel for operations, then this method is not inferior to the second.

The reliability of the broker. Reliable are the largest DC in the foreign exchange market. The reliability of a broker is affected by: the number of offices of the company; number of clients; turnover of the company. Do not risk to cooperate with small and new companies, you can lose your money. Trading conditions. When you choose a company with which you are going to cooperate in the future, focus on those moments that are important for you. Trading conditions for different companies differ, for example, leverage or spreads may vary depending on the broker. Determine without haste. So, the main selection criteria are: the spread established by the broker; swaps; minimum invoice amount; scope of leverage; the level at which positions are closed automatically; order execution options; lot volume.

Bonuses - they help in trading, increasing your deposit by 60-100 percent, many firms give a chance to get bonus money with each deposit of funds. But this indicator, when choosing a DC, should not be the main one. The bonus is given to you not just so that in order to turn it into real money, you must work out the necessary number of transactions. Take the dealing center's choice as seriously as possible; you need to know where you are investing your money. To do this, check with which banks the broker cooperates. Find out what bodies it is regulated (for example, KROUFR). Test the conditions of the DC on a demo account and only then open a real one. The right choice will be the key to your successful and profitable trading in the future.

Friday, January 11, 2019

We create a portfolio - experience of the stock market

As a rule, the stock market is very different from the forex market in terms of the nature of the work and the instruments, strategies and indicators used. But sometimes the strategies that are widely used by capitalists to work in their market + are also salutary for the currency markets. One of these mutually beneficial strategies is the formation of a portfolio of currencies.

The portfolio of currencies is formed approximately according to the same principles as the securities portfolio. Currency pairs are selected in such a way that in the aggregate in the “basket” of acquired currencies there remains approximately an equal number of currencies with which operations are being conducted at the moment (there are open orders). Why such a strategy? It leads to the fact that in any movement of the market for a currency pair involved in the “currency portfolio”, there will not be any noticeable bias or a large floating loss - if a larger loss is incurred for one currency, a corresponding income will be generated for counterbalancing pairs. Thus, the overall structure of the portfolio remains unchanged, those transactions that turn out to be profitable are closed, those that accumulate unprofitableness are repaid by profitable pairs of correspondents.

Some awkwardness of such trade lies in the fact that it is quite difficult for a trader himself to implement such an algorithm. To do this, as a rule, they use trading robots, which they are charged with forming the portfolio and keeping track of its content, while the trader leaves the flow control over the trade. It is also very important that the portfolio type of trading is more reliable in terms of risk control, but at the same time it is quite problematic if the task is to obtain a maximized return. It is almost impossible to get the highest return with the help of this portfolio: the lower the risks, the lower the profit is the general rule of the market.

In addition, there are special tools and additional mathematical settings that allow you to sufficiently increase the profitability of algorithms that are based on the portfolio. There is a lot of open research into the mathematical analysis of this algorithm and its variants and improvements — so a good programmer will always find something to add to the standard scheme. The trader himself can also trade in such an algorithm without relying on a trading robot, but for this it is necessary both to use the built-in balance control tools in the trading terminal, and to actively maintain its own trading records.

Investment coins: make a profit from the money.

You can write a whole book about how to invest money to save them and get a stable income. However, we have only a small article at our disposal, and therefore we will focus on one of the quite promising types of investment - investing in investment coins.

Investment coin is a topical means of investing capital for almost 20 years: during this time it has been included in the turnover of most large banks. This investment instrument is a coin of a certain nominal value issued by the Central Bank (1,5,10,50 or 100 rubles). However, its real price and value are related to the content of precious metals in it: gold and silver. The cost of such a coin on the market changes according to the exchange rate of these metals, which, importantly, continues to grow even in times of crisis. Another advantage is the possibility of sale !! without intermediation of financial institutions, except for the bank. It is worth noting the availability of this type of investment: for example, as of February-March 2015, the cost of the silver coin "George the Victorious" is 1,200 rubles, which is quite affordable for the majority of Russian citizens.

One of the varieties of investment coins are collectible coins. Their purchase and sale began to be viewed as an investment instrument relatively recently: until 2011, operations with them were subject to VAT, which minimized possible profits. However, now the same rules apply to them as to investment coins, and it is impossible not to note certain advantages of this type of investment: first, the value of such a coin is not tied to the precious metals rate, but is determined by the circulation, composition, subject, preservation and prevalence that brings it closer to antiques, so stock prices do not affect its value. Moreover, interest in these coins can be caused not only from a financial point of view: some collectors are ready to pay an inflated price to complete their collections with the missing copy.

But it is also worth understanding that only experienced coin collectors will be able to extract real profit from collectible coins, and asking for professional help for one of them can cost a considerable amount and negate even the profit from a successful transaction.

There are pitfalls in the turnover of ordinary investment coins: first of all, the difference in the buying / selling rate. Therefore, it is not profitable to play on the difference in rates, selling and buying investment coins. This makes the coin a long-term investment. But in this case it is necessary to resolve the issue of storing coins: if the money can be deposited in the bank as a deposit, the coins are a physically expressed object and the bank will charge a certain fee for storing them in a dedicated bank cell, while storing them in an apartment may be risky, especially if it becomes known to your friends, and from them - to third parties. Moreover, freedom from paying VAT does not mean that the proceeds from a competent investment of funds are not subject to taxation.

In conclusion, we would like to note that any kind of investment is inevitably associated with risk, and investment coins are no exception. However, in the long run, they have been showing growth for more than a year than people who are prone to long-term planning. And if in a crisis period you do not wish to stop the movement of your capital, then investing in investment coins is a completely relevant way.

Tuesday, January 8, 2019

Investments aimed at acquiring large companies

What is absorption?
Absorption implies an economic process, as a result of which, an increase in business occurs, that is, one large company appears instead of several less significant ones. The main goal of any takeover is to reduce costs and increase profits. As a result of this process, productivity increases, efficiency increases, which in turn gives the company a huge advantage over its competitors. As a rule, during absorption, one stronger and large company absorbs the weaker one. As a result, a weak company ceases to exist, and all its property and assets pass into the possession of the scavenger company, which becomes even larger.
There are only two types of absorption: friendly and aggressive. With an aggressive one, the company buys back the main stake in the other and simply leaves her no choice to be absorbed. An example of such a takeover is the company GOOGLE, which absorbed more than 100 (hundreds) of companies, including YouTube, AOL, Begun, etc.

If the companies themselves make an informed takeover decision on the basis of mutual (and eligible, as well) agreement, this is called a friendly takeover. But there are situations when it is difficult to find out whether the absorption was reciprocal or aggressive, because the absorbers themselves often pretend that everything happened on a friendly note.

Benefits of absorption
The main goal of any takeover is to get a significant advantage from the joint venture. These benefits include reducing the number (it may be partial) of the entire staff (management cuts, marketing cuts, financiers). The company begins to save on wholesale conditions, due to the increase in purchases. The company increases its market share by increasing brand awareness, providing loans on the best terms, as a large company trusts more.

Classification of investments aimed at acquiring companies
Depending on the degree of risk, investments aimed at acquiring companies can be classified into several types. This is a low-risk, medium-risk investment. Accordingly, the degree of risk will also determine the profit, the lowest for investments with a low (or medium) level of risk, and the greatest for investments with an increased risk. But investments with an average degree of risk can bring a stable long-term income.

Also, investments aimed at acquiring companies can be classified depending on the degree of liquidity. These are highly liquid when investments quickly turn into revenues. For example, the purchase of shares of large companies (securities), which are listed on the world famous exchanges.

Medium-liquid investments, such investments do not require a long time to generate income, but they will not be able to sell them quickly. As an example (fairly simple), we can cite the assignment of claims for reimbursable receivables (DZ) to a company and its resale. And low-liquid investments, such investments will require a lot of time for their implementation and profit. An example is an investment in a company's fixed assets.

Another investment is classified by the time of their placement. These are short-term, medium-term and long-term investments. But it is worth emphasizing that investments that are aimed at acquisitions cannot be short-term. In the market one can still meet foreign and domestic investments. Domestic means investments in those companies that are located on the territory of one country, but, outside, on the territory of several states.

Monday, January 7, 2019

The path to passive income is investing!

Most people work day by day at work and at the end of the month they give out the money they earn or transfer it to a card. Others have several types of income or several part-time jobs. Their income depends on the ability to work and the amount of work done. The smartest earn money without doing anything physically. This type of income is called passive income.

Interest from such income may accrue from deposits, dividends from stocks, deductions for business partnerships or fees from books and other products. For all people, the chances are almost equal to only some of them love security in the form of a monthly payment, while others have a freedom in which they can do whatever they want, and the money will still be credited to their account.

The first steps to passive income are investing. At the initial stage, it will be difficult because, not knowing all the basics of investing, you can make a mistake and lose your money. This often happens with newbies who trust emotions and trust their money to scammers, who in turn are looking for naive and inexperienced investors.

You can start investing from a small amount and invest at least 10% of your income every month. After a few months, you will have developed a habit and it will not be so difficult for you to invest money as at the beginning. It is also important to learn and learn about new ways of investing. Over time, you will learn to invest in assets such as stocks, business, commodities, or gold.

After a few years of intensive investment, your passive income will only grow, and you will work less and less or you may stop working at all. While others were spending money in bars and watching television, you invested and trained. Now the other person works further, and you get income, and spend your free time as you wish.

Several investment rules

Before you start investing your money, read through a few rules. Such investments as in trust management companies and Forex in PAMM accounts, of course, bring much more than a deposit in a bank, but if you make a wrong choice, you can not only win, but also lose a large amount, get upset and forget about this venture. and forever. To avoid this, you need to follow the rules of investing.

Before you invest your money. You must be clear about where exactly your capital is invested and what risk you might expect. Do not make a decision under pressure, thoughtlessly. Examine all the information, read the reviews, delve into the subtleties of work, selected projects.

Never invest your last cash or take a loan to invest. Imagine a picture of what will happen if you lose all investments, what kind of life you will have then, and you have to pay the loan or interest will start to grow. Start investing only on deferred free funds, without prejudice to yourself and your family. Only when you become a professional investor, you can count on credit funds for a more rapid increase in investments.

Do not believe the screaming slogans about maximum profit. It is better to have a small but stable profit than to lose everything. Forex profits can be up to 10 percent per month. In certain trust management companies, in some cases, it reaches up to 20 percent. Now on the Internet a huge number of scammers who promise higher incomes. Treats them with need. Trust your investments only to trusted exchanges and companies.

It is better to make investments in several directions. Because even the most professional traders make mistakes and suffer heavy losses. Such a distribution of investments, in case of failure in one project, is compensated by the profit of another. We recommend at least 10 investment tools, proven and reliable, and not random.

By following these rules of investing, almost everyone will be able to have passive income with minor risks. For this you need to try how this mechanism works. Try to spend less than you get. Monthly save at least a tenth of all your income on investments. Look for monthly and invest in reliable companies. And you yourself will notice how your capital will increase.

Equity investment


Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations.


Table of contents
1 Direct holdings and Pooled funds
1.1 The Pros and Cons of holding shares directly or via pooled vehicles

2 Fundamental Analysis and Technical Analysis
3 How share prices are determined
4 Related Material
5 Further Reading

Direct holdings and Pooled funds
The equities held by private individuals are often held via mutual funds or other forms of pooled investment vehicle, many of which have quoted prices that are listed in financial newpapers or magazines; the mutual funds are typically managed by prominent fund management firms (e.g. Fidelity or Vanguard). Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative usually employed by large private investors and institutions (e.g. large pension funds) is to hold shares directly;in the institutional environment many clients that own portfolios have what are called segregated funds as opposed to, or in addition to, the pooled e.g. mutual fund alternative.


The Pros and Cons of holding shares directly or via pooled vehicles
The major advantages of investing in pooled funds are access to professional investor skills and obtaining the diversification of the holdings within the fund. The investor also receives the services associated with the fund e.g. regular written reports and dividend payments (where applicable). The major disadvantages of investing in pooled funds are the fees payable to the managers of the fund (usually payable on entry and annually and sometimes on exit) and the diversification of the fund that may or may not be appropriate given the investors circumstances.

It is possible to over-diversify. If an investor holds several funds, then the risks and structure of his overall position is an amalgam of the holdings in all the different funds and arguably the investors holdings successively approximate to an index or market risk.

The costs or fees paid to the professional fund management organisation need to be monitored carefully. In the worst cases the costs (e.g. fees and other costs that may be less obvious hidden fees within the workings of the investing organisation) are large relative to the dividend income payable on the stock market and to the total post-tax return that the investor can anticipate in an average year.


Fundamental Analysis and Technical Analysis
To try to identify good shares to invest in, two main schools of thought exist: technical analysis and fundamental analysis. The former involves the study of the price history of a share(s) and the price history of the stock market as a whole; technical analysts have developed an array of indicators, some very complex, that seek to tease useful information from the price and volume series. Fundamental analysis involves study of all pertinent information relevant to the share and market in question in an attempt to forecast future business and financial developments including the likely trajectory of the share price(s) itself. The fundamental information studied will include the annual report and accounts, industry data (such as sales and order trends) and study of the financial and economic environment (e.g. the trend of interest rates).


How share prices are determined
One theory about equity price determination in professional investment circles continues is the Efficient Markets Hypothesis (EFM), although this theory is being widely discredited in the academic and professional markets. Briefly, this theory suggests that the share prices of equities are priced efficiently and will tend to follow a random walk determined by the emergence of news (randomly) over time. Professional equity investors therefore tend to spend their time immersed in the flow of fundamental information seeking to gain an advantage over their competitors (mainly other professional investors) by more intelligently interpreting the emerging flow of information (news).

The EFM theory does not seem to give a complete description of the process of equity price determination, for example because share markets are more volatile than a theory that assumes that prices are the result of discounting expected future cash flows would imply. In recent years it has come to be accepted that the share markets are not perfectly efficient, perhaps especially in emerging markets or other markets where the degree of professional (very well informed) activity is lacking.

Another theory of share price determination comes from the field of Behavioral Finance. In Behavioral Finance, it is believed that humans often make irrational decisions, particularly related to the buying and selling of securities based upon fears and misperceptions of outcomes. The irrational trading of securities can often create securities prices which vary from rational, fundamental prices valuations. For instance, during the technology bubble of the late 90's and subsequent 'burst' in 2000-2002, technology companies were often bid beyond any rational fundamental value because of what is commonly known as the 'greater fool theory'. The Greater Fool Theory holds that because the predominant method of realizing returns in equity is from the sale to another investor, one should select securities that they believe that someone else will value at a higher level at some point in the future.

Sunday, January 6, 2019

Diversification is the main rule of the investor

By definition, any investment of money carries a certain degree of risk, and in order for the investment process to be reliable and justifiable over a long period of time, the investment must be diversified - distributed among different instruments. Similarly to the saying from the IT world: investors are divided into those who use diversification and those who already use (as in my case).

The first reason to use diversification is to reduce the likely loss of the investment portfolio. The more investment instruments it includes, the greater the chance that the profitability of the other instruments will cover the potential loss of one of them. Of course, this does not negate the need to rationally pick up assets in the portfolio, because if it is all cracking at the seams, then there will be nothing to compensate for the losses.

Of course, the profitability of the wide-diversified portfolio will be very average, which can be observed by analyzing the reports of experienced investors, but taking into account the substantial amounts that can be lost with a more risky strategy, we will find such a reasonable price for reliability.

In the event that we want to actively manage our portfolio to generate increased profits, diversification will give us the right to take risks. At the same time, investment instruments are distributed in certain proportions, where most of them are "conservative" with moderate risk and profitability, providing us with a safety cushion, we distribute the remaining 20-40% among "aggressive" instruments (young PAMM accounts, HYIPs, etc. .) in anticipation of super-profits. It is important to reallocate funds in a timely manner according to the initial strategy so that the ratio of reliable and risky instruments always remains constant.

When creating a diversified portfolio, it is important to take into account all possible investment risks and remember that the distribution of funds within the same market (different PAMM accounts of one broker) at best will protect us only from trading risks, but in case of problems of the market itself (broker's bankruptcy, legal restrictions) we will lose everything. The growth of investment inevitably encourages the development of new markets and financial instruments, because even when limited to investing in one state (especially such as ours), we are not insured against crises, devaluation, and negative economic and political changes.

Friday, January 4, 2019

Why Is The Stock Market Down Today

When you look at the market indexes each day, at some point you will ask yourself why is the stock market down today? This question will lead you to look at the major news sources for an answer. Over time, they will give you numerous answers as to what caused the market to close lower. Today for example, the market is uneasy about the “debt-ceiling” in the United States and that Moody’s downgraded Greece’s credit rating. On other days, earnings reports might have come in lower than expected. The truth is that while there will be truth in what they say because that was the general news for the day, the real reasons are really probably unclear and to be honest with you don’t really matter to you as you try and ascertain the general market direction each day.
All you really care about is what the market indexes tell you happened — not what the “general opinion” is as to why it happened. You’ll first want to review each index every day. Those indexes are the S&P 500, the Dow Jones Industrial Average (DJIA), the New York Stock Exchange (NYSE) and the NASDAQ. You’ll want to look at each index and figure out whether it closed higher or lower than the previous day. After that, you’ll also want to see whether volume was higher or lower than the previous day. When you do this, you’ll discover one of the four following situations.
  • A higher close on higher volume – This means that there were more shares of stock bought than sold and it pushed the price higher. This is known as an accumulation day. This is what you really want to see.
  • A higher close on lower volume – This means that less shares of stock were sold and prices did increase but is more of a stalling action. While this will happen, it’s not really representative of a market under accumulation and not the ideal close you’d like to see.
  • A lower close on higher volume – This means that more shares of stock were sold than bought and it pushed prices lower. This is known as a distribution day. To much distribution isn’t a positive sign for the overall market direction.
  • A lower close on lower volume – This means that less shares of stock were sold than bought and prices fell. This is a neutral action and what you would expect to see when there is less than demand.
When you look at the market each day, you don’t really care “why” the market went down. You only care about whether the market was under accumulation or distribution. You are concerned about this because you want to only invest in a market under accumulation or an uptrend and not under distribution or downtrend.
As you learn to do this, you can just read the IBD Big Picture column and let them tell you what happened or you can do what I suggest and that is figure out what happened on your own and confirm it with what the IBD editors think. Over time, you’ll find that you can get a handle on what happened instead of why.
Let’s use today as an example:
  • S&P 500 – The index closed at lower at 1,337.43 or .56% lower than yesterday. Volume on the NYSE was 3.9 percent higher than the previous day. Since this is more than .2% decline on higher volume, this is a distribution day for the S%P 500.
  • DJIA – The index closed lower at 12,592.80 or .70 percent lower than yesterday. The NYSE volume was higher as we have already said and so this also represents a distribution day on the Dow as well.
  • NYSE – The index closed lower at 8,357,57 or .60 percent lower than yesterday. Volume was higher as discussed and so the NYSE also suffered a distribution day.
  • NASDAQ – The index closed lower at 2,482.80 or .56 percent lower than yesterday. Volume on the NASDAQ also closed even from the day before. Because it is neither higher or lower. It is not a distribution day.
We know from today’s market action that the S&P 500, the DJIA and NYSE all suffered distribution days while the NASDAQ did not. This information in and of itself doesn’t tell you specifically why the stock market was down today, but it does tell you a more critical piece of the puzzle and that is that it was under distribution. Enough distribution days and it will change the market outlook. Because three out of four stocks follow the trend, and because the IBD currently has several distribution days chocked up for the indexes already, I’m expecting the market outlook might change today to market uptrend under pressure.
This would mean that I wouldn’t want to make any new stock purchases and watch the stocks I am in closely. Knowing what action to take with my stock market investing program is much more important than knowing why the stock market today went up or down.

Why Good Stock Market Investing Strategies Go Bad

I wanted to spend today talking about why good stock market investing strategies go bad. I’ve got a friend who loves investing in the stock market. He spends hours reading about all this stock market investing strategy and that one. One day, he’s investing in options. The next he is selling an index short. The problem with this is that he never quite excels at any of his strategies because he’s too busy trying the next best thing and not working on one specific investment technique. I think this is a common problem and it’s also not helped by the things I talked about in my post about stock market investing for dummies. Rule number one of any investor should be this – become a master at one specific strategy. Taking this one particular step will drastically improve your results.
You see there are all kinds of ways to make money, as well as lose it, in stocks. There’s no shortage of ideas. You can be a value investor or a growth investor. You could focus on penny stocks or on options. There’s always exchange traded funds and indexes or mutual funds. The key for you is that you must pick one and then spend all of your time working on mastering it.
One of the reasons that flipping from strategy doesn’t work is because each requires a certain set of tools and experience. If you are new, then you can bet that you don’t no what tools you should use nor the experience to implement the strategy correctly. They all require a different learning curve. It’s this learning curve that could cost you a fortune over time both in losses or opportunity costs. Let’s face it, if a mutual fund manager can manage your money better than you, you should give it to him (or her).
So if you are going to bother to spend time buying stocks, then take the time to become a master of your craft. Learn one strategy, start practicing it and then throw real cash at it.
The problem with most individual investors is that they invest real cash, never practice and never really hone in on a winning strategy.
Which investment philosophy should you choose? It probably doesn’t matter just as long as it has proven to work. Study the masters like Benjamin Graham, Warren Buffett, William O’Neil or Peter Lynch. Follow their system and make it your own.

Thursday, January 3, 2019

My Updated Stock Screening Criteria

After the new edition of the IBD comes out each night, I start my stock screening. I get my stocks almost exclusively from the Stocks on the Move column every night. I just copy down the ticker symbols from the stocks above the line on both the NYSE and the NASDAQ. This should also tell you that I don’t look at any over the counter stocks – only NYSE and NASDAQ. I then take those stock symbols and put them in the My Stocks List of investors.com.
I do this because I am looking for one particular type of stock — one that institutional investors are buying. This buying shows up in stocks that have large increases in price on heavy volume.
Once I put the stocks in my list, I then screen them further as follows:
  • Volume – I want to see at least 100,000 shares traded daily. You can find the volume number under the price and volume.
  • Earnings Per Share % Change (Latest Quarter) – I want stocks over 25%. You can find this under the fundamentals tab.
  • Earnings Per Share % Change (Prior Quarter) – I want stocks over 25%.
  • Sales % Change (Latest Quarter) – Again stocks over 25%.
  • Earnings Per Share Estimated % Change (Current quarter) – Over 25%
  • Earnings Per Share Estimated % Change (Current year) – Over 25%
  • Composite Rating – Over 70. Under the SmartSelect ratings
  • EPS Rating – Over 70
  • RS Rating – Over 70
  • SMR Rating – A, B, or C
  • Accumulation/Distribution Rating – A, B, or C
  • Group Relative Strength – A, B, or C
I have recently lowered my stock screening criteria in a couple of areas so that I could look at more stocks on a daily basis. The first is in the Composite, EPS and RS ratings. I will now go to as low as 70. With the other SmartSelect ratings, I also now include stocks with a “C” rating. I did this so that I could look at more stocks on a daily basis. My thinking is that I might be able to catch a stock a little sooner than I could before. I also am looking for stocks with stellar earnings and sales as opposed to stellar ratings.
Once I have the list compiled, I like to sort it by price percentage change to see the best stocks in the stock market today. I then move on to looking at particular buy points or set ups in my stock market investing strategy.
Usually, I then post my watch list on my twitter feed which can be found in the sidebar.

Wednesday, January 2, 2019

Secrets Of The Neatest Little Guide To Stock Market Investing

For a long time, I passed by The Neatest Little Guide To Stock Market Investing because I thought the title sounded hokey. So, as I would peruse the book store for new and exciting stock market investing strategies. You can’t find that in a hokey book like stock market investing for dummies type thing. No way. So for a long time, I overlooked Jason Kelly’s book in search of greater books. Finally, because I had pretty much checked every other stock market investing book out that was available at Borders and there was nothing else to do, I skimmed through it.
I was pleasantly surprised. And here is what I learned. The first secret of the of the book is that he does give you some specific and easy to understand investment strategies. While he does go into good detail about the options you have as far as investment philosophy, he also delves into what you can do right now to start investing in the stock market. While I didn’t look at the previous edition, the 2010 version also shared with me the biggest secret I thought that I picked up on from his book and that is how to use a watch list.
This is an area that I don’t find discussed much in many of the books. Sure they all give the topic of lip service, but nobody really walks you through the mechanics of how to set one up and how to use it. I only wish that he would have gone into greater detail about how to prune stocks from the list. He recommends that you keep a list of ten top notch stocks and when you find a better one, you get rid of the worst one on your list.
That’s great in theory but when you have 20 different criteria, how do you decide what is exactly better if all your stocks meet certain thresholds. I wondered that and emailed him. His book said to do that if you needed additional information. But alas he doesn’t respond so I was left to my own methods and that was to let your list grow for all the stocks that meet your minimum standards. If your list gets to big, raise your minimum standards for earnings and sales or for some other category until your list shrinks. As soon as a stock falls below your minimum requirements then let it go.
To me that was the biggest “secret” I learned but I guess I taught part of it to myself. Nonetheless, this stock market investing book might deserve a look for your library.

The Eight Basics Of Stock Market Investing

I’ve put together what I think are the eight basics of stock market investing. From my research if you follow these steps, you’ll increase your chances of being a successful stock market investor. Investing in the stock market does require daily study and if you are to get good at it, you’ll need to work at it. There is no free lunch. I have already talked about a few of these things so some won’t come as a surprise. First, if you are a beginner, I recommend that you get a foundation of investing by reading The Neatest Little Guide to Stock Market Investing. That should give you a good handle on the basic terms you’ll need to know as you go along.
  1. The first thing you need to do is to pick a strategy. You can find a few of the masters in the book above. After that, if you don’t have a strategy, I suggest that you adopt the CANSLIM strategy as your own. You can read more about it in my article called The Only Stock Market Investing Book You Should Ever Read. It’s important that you pick and master one specific strategy. What’s important is that it is one of the stock market investing strategies of the masters, you are good to go. Remember you won’t learn anything if you don’t read specific techniques. So stock market investing for dummies material is not the way to go.
  2. The next thing  you want to do is set up stock screens that bring the stocks you need to review to your attention. You do this by setting up stock screens to uncover stocks that might have strong earnings, strong price moves, surges in volume. It all depends on your strategy. I like to look for stocks that are up on higher volume. So I have a screen set up for that.
  3. Once you’ve done that, you need to move the stocks that appear on your screens over to your watch list. That way you can keep an eye on the performance of the stock. More importantly though, you want to make sure that you buy the stocks at the right time.
  4. That’s where picking entry points come in. Also called a “set up”, you’ll want to enter stocks at times that most likely predict they will go higher. For canslim, that’s when they break out of a base on strong volume. Whatever your strategy, learning to pick the proper buy point is key to a successful stock.
  5. Next you need to have an exit strategy. What will you do if the price goes down. What will you do if the stock goes up. Having price targets is important so you know when to take your gains. Having limits to how far you will ride a stock down in price will help you protect your investment capital. Setting stops is as important as setting profit targets.
  6. After that, you’ll want to use a stock simulator to work on your technique. The best professionals in the world practice in the gym or in simulators (think pilots). You should to.
  7. Review your practice trades and shoot for a specific batting average. Try and get 1 out of 3 right of your stock buys as winning stocks. Learn from your mistakes and keep shooting for a better batting average.
  8. Once you’ve reached your batting average, start using real cash and work on duplicating the results you had when you were practicing. The real stock market works different than a simulator. You’ll find out that emotion comes into play. You’ll need to get a handle on that.
So there you have it.  These are my eight stock market investing basics. Get to work and let me know how you do!

How To Master The Stock Market Investing Basics

Today I wanted to talk about how to master the stock market investing basics. In my last post I talked about the Eight Basics of Stock Market Investing. This is what I suggest to become successful at stock market investing. A lot of people who are investing in the stock market today are looking for a get rich quick scheme. If this is you, you are going to struggle. If you are new to the stock market, you have a unique advantage in that you can know from the beginning that it’s going to take study. It’s going to take daily work. It’s going to take dedication and it’s you are going to encounter your share of mistakes.
What I suggest that you do, is first review that you have indeed chosen a strategy. Many investors fly by the seat of their pants. They have no strategy. Without a road map for your stock market investing strategies to follow, you don’t really know what you are trying to master. If you haven’t chosen one yet or need a review of the basics, check out The Neatest Little Guide To Stock Market Investing. Inside, he review all of the masters from Benjamin Graham to William O’Neil. Get a guru and study his methods. As I’ve mentioned before, my guru is William O’Neil. I talked about his book, How to Make Money in Stocks in my post called The Only Stock Market Investing Book You Should Ever Read. Again avoid the stock market investing for dummies type books. They are too generic.

Go to investors.com After that, what you need to do is start breaking down all of the decisions that you need to make and writing them down. For example, the first thing I do is check each of the market indexes each day. I started a checklist that looks like this:
  • Check the price and volume action for the S&P 500
  • If the index closed higher on higher volume the market is under accumulation (more buyers than sellers)
  • If the index closed lower on higher volume the market is under distribution (more sellers than buyers)
  • If the market closed lower on lower volume, this is neutral
  • If the market closed higher on lower volume, the market could be stalling
  • Watch the IBD TV Market Wrap for analysis of today’s market action
  • Confirm my findings of the market action in the IBD Big Picture column
  • Review the current outlook
Doing this serves a couple of purposes. One, it forces you to think out each step you need to take. Two, it makes it so you don’t forget a step. As you go along, you’ll want to refine your checklist and have one for each component of your strategy. You’ll find that you’ll fine tune it by moving the actions you take to different spots on your list and adding things here or there.
For every set of decisions you need to make. Put them in order of how you do them. Master one set of checklists at a time. Learn from your mistakes and retool your steps. This is how you master the stock market investing basics.