Stock Investment Guide Before You Start Trading

Although the decade began with a substantially down market, the leading stock market indexes have risen significantly. For investors, this is a good time to take stock of where we are and where we want to be, and plan how best to get there. What follows are a list of practical steps that can help all of us get our fiscal act together.

1. Assess

Periodically, it is a good idea to sit down and really figure out where you are with your finances. Pull out your banking and brokerage account statements, check your balances, and gather in one place all your fiscal information. Then take a good, hard look at what you see. If you have questions about the information presented on your brokerage or mutual fund statements, don’t ignore those questions. Speak up, ask questions, and get answers.

After learning where you are, figure out where you want to be. What are your savings goals? Are they long-term (retirement, college education for your babies) or short-term (down payment on a house, college education for your high-school age kids)? Your goals determine your own personal tolerance for risk. If you’ll need your money in the short term, more conservative investments are appropriate. If you’re saving for the long haul, you might decide to take more risks. Just remember – your risk tolerance is a very personal matter, based on your age and your personal savings goals. Your neighbor or your Uncle Fred may be much more conservative or aggressive than you are. But that doesn’t mean their investing strategy is right for you!

2. Invest for the long term

Before you invest, make sure you have enough money to eat and put a roof over your head. Pay yourself first – get rid of high-cost credit card debt. But the earlier you get a start on your savings goals, the less you’ll have to put away monthly to reach them. Historically, the investment that has provided the highest average rate of return over the long term has been stocks. But there are no guarantees of profits when you buy stock. Markets go up and markets go down in the short-term. That’s why it is best to think long-term when considering stock market investments.

3. Diversify.

There is no better way — over the long term — to distribute risk than to diversify your investments. It is true that in some years, single stocks or individual sectors will outperform a diversified investment strategy, at least in the short term. But don’t forget that investors who hope to gain fantastic returns by investing in a single stock or one sector have also assumed the higher risks of a more narrow investing strategy. While diversifying your investments won’t bring you sky-high returns in boom times, it also means that you won’t lose everything when the boom times bust.

One way to diversify is to consider growth stocks . And here is where a little work can pay off handsomely – be sure to pay attention to the company’s income and expenses. Over time, expenses and fees can really make a difference. On an investment held for 20 years, a 1 percent annual fee will reduce the ending account balance by 18 percent.

Another way to diversify is to make sure that your retirement funds aren’t all invested in your employer’s stock. Even if that stock is a good long-term prospect, it is risky to have your retirement security depend in whole or in large part upon the fate of any one company.

4. Know yourself

Be honest. Do you really have the time and energy to adequately research individual stock investments? Most of us don’t have the experience and expertise of Wall Street traders who read financial statements for a living. It is important to be realistic about your own time commitments. Talking to co-workers and watching TV is not good investment research! That’s why many Americans begin investing not with individual stock picks, but with a broad based, low cost index fund. That way you’re broadly diversified from the beginning. As you find more time and gain confidence, you’ll know whether you’ve got the desire or interest to select individual stocks.

5. Do your homework

You owe it to yourself to check out any investment and investment professional with whom you do business. A few simple steps can save a great deal of heartache.

Before doing business with any investment professional, take full advantage of the power of the internet to check computerized databases for disciplinary information. Then contact your state securities regulator to find out if they have any additional information.

Before buying any stock, check out the company’s financial statements on the SEC’s website. All but the smallest public companies have to file financial statements with us. If the company doesn’t file with us, you’ll have to do a great deal of work on your own to make sure the company is legitimate and the investment appropriate for you. That’s because the lack of reliable, readily available information about company finances can open the door to fraud.

Before purchasing any investment, make sure you read and understand all the disclosures you’re given. The federal securities laws require that you be given lots of helpful information, such as a prospectus for a mutual fund, but you’ll have to take the initiative to understand what you’re given.

It’s up to you to educate yourself to make sure that all of your investments match your goals and tolerance for risk. Don’t be afraid to ask questions – it is your money!

6. Protect yourself

Always remember that people who sell investment products make money by doing so. Which doesn’t mean that they’ll give you bad advice, but it does mean that you’ve got to take responsibility for evaluating any recommendations you get. We advise people to never rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, do your own research-such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC-to confirm whether a particular investment is appropriate for you in light of your individual financial circumstances. Don’t buy any investment product you don’t understand. And remember, any investment promising high returns necessarily carries a high risk that you’ll lose your money.

Mom always told us there aren’t any quick and easy ways to get rich. But it is hard to remember Mom’s advice when your neighbor, cousin or friend passes along a great tip, especially when it involves a hot new company. So from all of us, just to you, here is a link to our best investment tip on an up-and-coming company. If you click to invest, we just know you’ll be enriched.

Pay Attention to The “High Yields” and Hot Air

We’ve all seen investment offers that promise to pay sky-high returns for what are at best extremely risky propositions — and at worst are pure frauds. Here’s a list of red flags that we often find in many of the frauds we see.

• If it sounds too good to be true, it is. Mom was right! Compare promised yields with current returns on well-known stock indexes. Any investment opportunity that claims you’ll get substantially more could be highly risky. And that means you might lose money.
   
• “Guaranteed returns” aren’t. Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you’ll most likely get a low return. High returns represent potential rewards for folks who are willing to take big risks. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.” Don’t believe it.
   
• Check out the company before you invest. If you’ve never heard of a company, broker, or adviser, spend some time checking them out before you invest. Most public companies make electronic filings with the SEC. There are computerized databases to check out brokers and advisers. Your state securities regulator may have additional information. And by the way — if a supposedly upright firm only lists a P.O. box, you’ll want to do a lot of work before sending your money!
   
• If it is that good, it will wait. Scam artists usually try to create a sense of urgency — implying that if you don’t act now, you’ll miss out on a fabulous opportunity. But savvy investors take time to do their homework before investing. If you’re being pressured to invest, especially if it is a once-in-a-lifetime, too-good-to-be-true opportunity that “just can’t miss,” just say “no.” Your wallet will thank you.
   
• Understand your investments. Fraudsters frequently use a lot of big words and technical-sounding phrases to impress you. But have faith in yourself! If you don’t understand an investment, don’t buy it. If a salesman isn’t able to explain a concept clearly enough for you to understand, it isn’t your fault. Don’t make it your problem by buying!
   
• Beauty isn’t everything. Don’t be fooled by a pretty website — they are remarkably easy to create.

Remember — an educated investor is our best defense against fraud! For more information on how to invest wisely and avoid fraud, please visit the Best Growth Stock Market Report .

Pick & Find Your Best Growth Stocks

For over a century growth stocks have been a part of the financial concept. The defining characteristics of the growth stocks have changed with time, like, the 70s were signified by the tough and bearish stocks while the 80s happened to be the bullish boom period. Apart from the basic logical analyzing, one can always refer to the financial history to obtain the formula of successful stock investing. 

Zeroing down on a company with strong fundamentals, which include rising sales and earnings and low debt. This apart, one needs to take notice of a few points. They are:

·      The company should belong to a growing industry.

·      As an investor, you should be completely investing in growth stocks both during the bullish period when there is massive price rise in the stock market and also in the general economy.

·      You should switch most of its funds out of the growth stocks, like the technology field and pour them into defensive stocks during the bear market.

·      You must regularly monitor your stocks. Immediately sell off those stocks that are declining and hold on to the stocks which continue to grow.  

Evaluate the management of the company

Management of the company is the fundamental criteria for its success. Before investing one need to ensure that the company management is functioning well. There is a certain way in which you can check this out. They are given below but the ultimate evidence on this aspect is the rising stock price.

1. Return on equity

A quick shot to gauge the company’s competence is to check the company’s return on equity (ROE). ROE is calculated by dividing the earning by equity. The resultant percentage will give you a clear idea as to whether it is utilizing its equity or net assets resourcefully and advantageously. More the percentage is higher, the better it is. The company’s earnings can be obtained from its ‘income statement’. This financial statement reveals the equation – sales less expenses equal net earnings (or net income or net profit). The company’s balance sheet will reveal its equity. It is the total assets minus total liabilities which is equal to the net equity.

1. Insider buying

It is also advisable to check out whether the company management too is buying the company stock. After all, it is the management who best knows whether the company is really balanced for growth. If they are found buying the company stock en masse then you can rest assure regarding the stock’s potential.

Best Growth Stock Market Report provides you with the best stock picks and market advices 

Factors for good investment

You need to identify the best stocks when you plan investment. The motto is to make certain greater profit and reduce the losses. You will find people getting bankrupt and still others making fortunes through investment in stock market. Well, contrary to a still popular belief, success in stock investment has nothing to do with luck and neither there is any magic formula for success. It is all about sound reasoning and calculation. In order to identify the best growth stocks for investment, you require information through research and are able to analyze that information so that you could use them.

 Here are a few factors which can prove instrumental in determining the potential of the company and its stock.

Sales Revenue – The sales revenue is an important stricture which will aid you to judge the financial condition of the respective company. It refers to the amount of money that the company makes in that fiscal year. Sales revenue also includes scraps of information regarding the cost and the loss of the company as well.

Earnings – This also refers to the net income of the company. It reveals the business condition that whether the company is garnering profit or running losses. The earning of the company not only describes its current fiscal condition but also is of great help to ascertain the future prospect of the company. If the company is found to harbor profits year after year, it becomes naturally obvious that it has a promising future ahead.

Debt – This value refers to the financial liability of the company. When in debt, the major share of the company’s earnings slips away in repaying those debts. And the natural result happens to be a substantial decrease in the net profit margins. Therefore, for good investment, you need to look for stocks that have a negligible or no debt.

Liquidity – The cash holding position of the company is revealed by the liquidity amount. It is a natural inference that a company which has a better or higher liquidity will automatically grow in the near future and promote expansion in business. Thus, liquidity happens to be an important determinant in ensuring a positive investment option.

Valuation – Valuation determines the worth of the company. The most popular and the easiest method to calculate the valuation of the company is the Profit – Earning ratio. Financial experts suggests that investment in growth stocks which have a P/E Ratio between 5 and 50 will always offer positive returns.

All the above points will enable a stock investor to make good investment decision based on the growth stock market report . There are other important factors that are worth considering, they are: the direction of the stock market, the average stock market trend, the prevailing trend in the concerned industry sector and so on.  

Information To Seek When Investing In Hedge Funds

• Read a fund’s prospectus or offering memorandum and related materials. Make sure you understand the level of risk involved in the fund’s investment strategies and ensure that they are suitable to your personal investing goals, time horizons, and risk tolerance. As with any investment, the higher the potential returns, the higher the risks you must assume.
   
• Understand how a fund’s assets are valued. Funds of hedge funds and hedge funds may invest in highly illiquid securities that may be difficult to value. Moreover, many hedge funds give themselves significant discretion in valuing securities. You should understand a fund’s valuation process and know the extent to which a fund’s securities are valued by independent sources.
   
• Ask questions about fees. Fees impact your return on investment. Hedge funds typically charge an asset management fee of 1-2% of assets, plus a “performance fee” of 20% of a hedge fund’s profits. A performance fee could motivate a hedge fund manager to take greater risks in the hope of generating a larger return. Funds of hedge funds typically charge a fee for managing your assets, and some may also include a performance fee based on profits. These fees are charged in addition to any fees paid to the underlying hedge funds.

Tip: If you invest in hedge funds through a fund of hedge funds, you will pay two layers of fees: the fees of the fund of hedge funds and the fees charged by the underlying hedge funds.

• Understand any limitations on your right to redeem your shares. Hedge funds typically limit opportunities to redeem, or cash in, your shares (e.g., to four times a year), and often impose a “lock-up” period of one year or more, during which you cannot cash in your shares.
   
• Research the backgrounds of hedge fund managers. Know with whom you are investing. Make sure hedge fund managers are qualified to manage your money, and find out whether they have a disciplinary history within the securities industry. 

• Don’t be afraid to ask questions. You are entrusting your money to someone else. You should know where your money is going, who is managing it, how it is being invested, how you can get it back, what protections are placed on your investment and what your rights are as an investor.

Mutual Funds Breakpoints

Some mutual funds that charge front-end sales loads will charge lower sales loads for larger investments. For example, a fund might charge a 5% front-end sales load for investments up to $25,000, but charge a load of 4% for investments between $25,000 and $50,000 and 3% for investments exceeding $50,000. The investment levels required to obtain a reduced sales load are commonly referred to as “breakpoints.” In this example, the breakpoints were $25,000 and $50,000. Funds that offer breakpoints can set them at their discretion.

The SEC does not require a fund to offer breakpoints in the fund’s sales load. If breakpoints exist, the fund must disclose them. In addition, a brokerage firm that is a member of FINRA should not sell you shares of a fund in an amount that is “just below” the fund’s sales load breakpoint simply to earn a higher commission.

Each fund company establishes its own formula for how they will calculate whether an investor is entitled to receive a breakpoint. For that reason, it is important to seek out breakpoint information from your financial advisor or fund. You’ll need to ask how a particular fund establishes eligibility for breakpoint discounts, as well as what the fund’s breakpoint amounts are.

Some funds base eligibility for a breakpoint discount upon the investments of all of the individuals within a household and, in some instances, may include multiple accounts of an individual within the household. Others look only at the total amount you personally have invested. Keep in mind that you may be entitled to aggregate investments made in all of your accounts to calculate whether you may receive a breakpoint. These might include brokerage accounts you or other members of your household have at different firms, college savings accounts (so-called “529 plans”) and retirement accounts. You might be able to aggregate purchases in different funds within a fund family or aggregate different classes of shares of the same fund.

You may be entitled to combine your previous fund purchase amounts to obtain a breakpoint discount upon a purchase you make today. Or, you might be able to obtain a breakpoint discount for an investment today if you agree to make additional purchases in the future. In such case, you would sign a “letter of intent” to make additional purchases in the future. Be aware, though, that if you don’t carry through with your promised future purchases, the firm may retroactively collect a higher fee.

Always check to make sure that you have been credited the breakpoint discounts to which you are entitled. If you think you should have gotten the benefit of a breakpoint but did not, first contact your broker (or the fund if you did not use a broker) and ask that you be given the discount. If you aren’t happy with the answer, or if you don’t understand what you’re told, write a letter to your broker or mutual fund and ask for a written reply.

Growth Stocks: Tips for proper investment

The term ‘growth stock’ has been a victim of occasional misunderstandings. Some apprehends growth stock as a name stock that has a lot of demand. There are others who think growth stocks are those stocks which sell at high earning multiples. But belonging to a popular company or having a name does not form a necessary synonym for true growth. More often than not it can be a stock which has gone past its period of growth. It is a natural tendency for investors to go too far with their preference for popular stocks. During the period of market excesses, there happens to be a popular misconception that growth stocks are always beyond the reasonable or acceptable price-earning ratio. This P/E ratio is considered to be the basic criteria to evaluate the stock prices.

Growth stocks and the ‘emerging growth stocks’ are actually well-managed companies which operate in industries whose earnings and dividends grow at a faster rate than the expected estimates. It does not get buoyed down by the inflation and the shaky condition of the over-all economy. Their extraordinary and positive growth momentum ought to be equally maintained both during economic affluence and economic poverty. Contrary to popular belief, growth stocks are not to be found in the traditional popular sectors. They rather belong to newer upcoming sectors like the telecommunications, health care, computers and bio-technology.

Major characteristic features of growth stocks include:

·      They have a higher price/earning ratio compared to the market average

·      They possess a substantial potential for long term price appreciation and its ability to remain above-average.

·      Their price levels are volatile

·      They conserve their capital for future growth. So, there is no dividend payout.

How do you ascertain that it is an emerging growth stock? For this:

·      You need to shun those companies which are two down in the earning years during the past five years

·      The company should have a minimum average of 20% revenue and a constant earning growth

·      You are required to stay clear of those firms which have a return of average equity that is below 13%.

·      Those companies whose debt is more than 30% of its total capital should be avoided.

An expert growth stock hunter will naturally know that he will not gain any excess return from investment truly and will try ‘blue chip’ stock representative of a main stream stock market index like, the Dow Jones Industrial Average and the S & P 500. He will rather explore the market to get hold of the next growth stock, that which may well become the next Google. 

Investment in Growth Stocks

Before a potential investment there are several points which the growth investor must take into account. Does the company which he has zeroed on in, possess a stable management and whether its finance credibility is positioned for sustained growth. Then he must check whether the present economic environment will benefit the particular industry of which the company is a part? And above all, the value of the stock is very important.

To determine a sound entry price for a strong growth stock can be a difficult task. But to determine the success of an investment, it is the most important factor. An investor would ideally be inclined to buy into a growth company very early, because he would naturally like to garner enough profit from its persistent growth. But at the same time it is very important for the investor not to place a huge chunk of his premium on his apprehension of the company’s growth potential. For, doing so might limit his future profits from another possible sector.

At the starting point the investor needs to decide about his own investment preference. He can either be a ‘value’ or a ‘growth’ investor or he can be both. But it is always advisable to choose a primary focus. It’s important to note that growth and value investment are not contradictory options but are rather two different approaches to an identical situation.

An investor can decide his own inclination regarding which strategy appears the most appealing. Given below are the basic characteristics of growth stock investment : 

• The average growth rates in revenue and earning of these companies are higher in comparison to the other companies.
• These companies cater to such industrial sectors which are continuously expanding. They are smoothly sailing through the current demographic and economic cycle.
• These companies do not pay dividends.
• These companies are characterized by such high growths that they often end up beyond the earning estimates.
• The continued growth of the company determines the holding period.  

Growth investment is all about estimating and predicting the future. It is constantly in the investor’s thought that whether the respective company would maintain the same steady pace in the stock market . He must be extremely concerned about the company plans and policies like revenue, earnings, and sales and so on. He needs to keep an eye on the industry and the level of participation of the company in that growth. Some attentive reading done online and the financial press can immensely help the growth stock investor. Another notable feature of the growth stock is that it belongs to growth industries. A growth industry is usually related to some kind of technology. Next, the growth stocks belong to companies that are small to mid-sized. In fact a wide range of factors keep the large companies away from maintaining a steady growth rate.

Five Things You Need In A Stock Trading Software

Stock trading software is one of the more common ways for investors to make trades.  If you did a search on any of the search engines, you would find hundreds of options to choose from.  Stock trading software helps an investor to make investment analysis decisions without having manually to do the technical analysis.  Nearly all data is provided to you, as well as analysis of it, so you can make decisions faster and easier.  It is especially helpful to those that are looking to make more decisions on investments themselves.  It works well for just about all traders including short and long-term investors, day traders or those who are just starting out.

How to do you select the right type of software? There are several things to keep in mind when doing so, including:

1.    Choosing stock software that you are comfortable with using.  Some programs give you free trials while others provide you with ample training tutorials.  Gather this information and use the software program.  Being comfortable in using the software means, you will be more confident in your decisions.

2.    Looking for more established software trading software companies instead of going with the newest product launched.  Those that have stuck around long term have had to keep up with the trends, and at the same time, they are often more proven machines.

3.    Avoiding the hype.  Any software program that promises to make you rich overnight or to do all the work for you is one that you really cannot trust in.  Rather, you want to find a company that can provide you with quality and respectable use.  If a program’s promises like this were true, wouldn’t all programs be offering it?

4.    Multifunctional software programs which are better equipped to provide you with more use.  Look for these programs instead of using those that are one dimensional.  For example, many offer real time stock quotes. That is fine, but others will provide you with a more all in one package.

5.    Do not be afraid to move.  If you simply do not like what you have, move to another program.  You are not tied down.

Stock trading software is an excellent tool to have, but remember that you are still responsible for every facet of your trading skill and strategy.  These will not make the decisions for you, but they will give you the investment tools to make those decisions.

HOW ARE GROWTH STOCKS IDENTIFIED

In the financial stock market growth stocks are defined as those stocks which grow in value and capitulate a high return on equity (ROE). ROE is calculated by dividing the company’s net income by the company’s equity. For the stock to be categorized as a growth stock, there must at least be 15% return on equity. This means that their earnings should grow at an above average rate in comparison to the stock market.

Growth stocks are also known as glamour stocks. The reason behind this is, growth stocks do not generally yield a dividend. The respective company rather prefers to reinvest its retained earnings in other capital projects. This income is preferred to be used to finance further expansion. In todays finance stock market, majority of the technology companies are growth stocks. One point must be noted here. A growth company’s stock is not necessarily a growth stock. It is often found that this growth company’s stock is over valued. 

Some common characteristics of Growth Stocks are:

• They have a strong growth rate – the growth rate should be both predictable and historic. Well, you would normally like to find the smaller companies with a 10% growth rate and the larger companies with 5 to 7% for a period of the last five years. Then you would like the same rate to continue or have projected growth rate.
• It should have a strong REO – the company’s return on equity (REO) must have a healthy comparison with the industry and the five tear average as well.
• It must have good earnings per share (EPS) – take a look at the pre-tax profit margin. The company must be able to translate sales to earnings. The management must control costs. And the pre-tax margin must exceed the latest five-year average along with the industry average.
• The projected stock price must be positive. The projections of the stock analysts are important here. They make these projections based on the business model and stock market report  position of the company.

The most important attribute has got to be its consistency of maintaining its average growth in revenue and earnings.

Investors also look for reward stock growth. This means that the growth stock should have a mounting price over time. In a day-to-day market the position of the stocks are highly volatile. But the long term investors are not concerned with this volatility but consistent movement is closely studied through.

The trade ahead of averages – The stock must trade ahead of its 50-day price moving average. Though this gauge may not be the most reliable but it certainly gives a clear idea of the stock’s performance.

The Short Term Growth – For those investors whose expectations are for more short term growth, the 50-day moving average is quite helpful. The moving average is one consideration and a consistent trading at or above the 50-day moving average is a different consideration.