Learn How to Make Money With a Little Used Stock Market Tip!

One of the most exciting investments are penny stocks.  Because some individuals consider these shares to be risky, I see many people stay away from them altogether  Don’t let yourself be frightened of these shares though – there’s so much cash to be made when you know what to search for.

Usually I see any share under two bucks to be a penny share and focus on start-up companies rather than established organizations.  Some shares of established businesses are cheap based on difficulties that the business has experienced.  Instead of investing in these businesses, I search for newer businesses that are growing.  This provides me with me a shot to make some huge money in the future.

So how do you pick the companies to invest in?  This, of course, is the key question! 

Looking at the industry that the business is involved with is a critical first stage.  Consider whether a new company into the industry has a shot of success considering the competition that exists.   You need to look over the industry in general to verify that the organization is producing a product or service that is actually going to be wanted.

Of course you want to analyze the actual organization.  Are you happy with the management?  It’s also essential to look at what the business offers its customers and see if their product or service is different from what other companies in the industry are producing.  You should try to find businesses that either offer a unique product or differentiate themselves by having some different aspect such as their prices.  If the company provides something that is not just like what the competitors have then it is much more likely to get additional sales.

Make sure to take a look at the financial situation of the company, but don’t be scared if you discover that they have no net income.  Very frequently this is the situation with up and coming businesses.  Still I do want to make sure that the organization has access to money or credit so that the business can continue to push forward.

Also, search for a business that maintains sound communications with the public.  I love being able to visit a internet site where the company issues company news in order for me to have a means to stay up to date on company updates.

Penny stocks can provide you with huge gains if the business starts to enjoy some success.  There’s terrific money to be earned once you know what to look for.

Time-Tested Strategies For Your Stock Market Investments

Savvy stock market investors utilize a number of buying and selling techniques to increase the return they see on their investments. These strategies help them figure the “right” time to buy and sell stock.

There are hundreds of ways that have been proven effective in helping to increase your earnings while minimizing investment risks. Let’s consider a few below.

Hedging

You can use the “hedging” technique to protect the money you invest by purchasing a “put” option. By hedging, you sell your stock at a given price as long as you do so within a specified time period, giving you more control over the timing of your investment decisions.

Another way to hedge your investments against risks is to sell “financial futures,” while the most expensive hedging method is to purchase put options for individual stocks.

If you are an investor with a significant portfolio of stocks, you may want to look into a put option to protect you from abrupt declines in the stock market.

Buy Cheap Dow Stocks

One strategy many investors use is to purchase the best valued stocks of the Dow Jones Industrial Average (DJIA). The tops stocks are the ones holding the lowest P-to-E ratios (i.e. Price-to-Earnings) with the highest dividend yields.

These companies have a high potential for growth and an established track record to monitor its investment history.

Buy the Worst Performing Dow Stocks

Another intriguing alternative that many investors use is to pick some of the stocks with the worst performance records on the Dow index. You can tell which stocks have the worst performance by looking at their price decline from past years.

Those this strategy seems counter-intuitive, the hope with such stocks is that they have been performing so poorly that there is nowhere to go except for up in value.

Purchase Stocks from a Broker by Buying on Margin

One option for buying shares of stock involves buying them using the money of a stockbroker. Doing so provides more shares of stock for the amount you spend on your investment because you do not pay as much to buy the stocks.

If these stocks, however, lose their value, the margin loss is much higher. Thus many investors have a stop-loss order for stocks that are purchased on margin, which is typically in the neighborhood of 10% of the total.

Dollar Cost Averaging vs. Value Averaging

Dollar cost averaging involves investing a set amount of money at set intervals of time. If prices drop, the investors receive more shares given the amount of money they spend. But, alternatively, an increase in the stock price means you then get back fewer shares for your money.

Value averaging, on the other hand, is the opposite of dollar cost averaging. Here you have investments that are assigned a regular value.

When the prices of these stocks go up, the investor allocates higher amounts of money to cover the increase. The investment is the average cost of the fund.

Value averaging is considered by many savvy investors to be a much better strategy than dollar cost advertising.

Be Careful Listening to the Stock Market Experts

With the stock market performing so poorly this year, many people who have no experience are getting interested in learning about stocks. They have probably heard that is good to buy stocks when they are low and sell them when they are high. With all the bad news of the stock market going down seemingly day after day, these beginners are now becoming interested in getting involved.

Once a beginner learns how to buy a stock, the next step is to try to figure out what stocks to buy. Where does one get that kind of information or opinion? You can get stock pics almost everywhere including magazines, TV shows, radio shows, The Internet and probably many other places as well. One thing is for sure, there is no shortage of opinions.

If you watch the financial TV shows, you will often see segments with the top analysts or “experts” where they give their stock tips. These experts might be asked to analyze certain stocks or to give their own stock pics. It seems to me that most of the time these so called stock market gurus are positive about most stocks. There are exceptions but rarely do you find an analyst come on and say that he would not be buying any stock and that now is not the time to invest.

These stock analysts are often the representatives for their company that the public sees and so they don’t want to be negative. It is so much harder to drum up business with a negative outlook than it is if you have a positive rosy outlook. It seems to me that these analysts are told to go out their and paint the most positive picture you can about the market. For example, the market might be bad right now but it will turn around and these are the stocks you want to own when it does.

If you are a beginner looking to buy stocks and learn, it is wise advice to proceed slowly and not believe everything you hear. These stock analysts are professional salesman and can make the worst stock in the world look like a screaming buy. It is your money and not theirs so be careful with it.