How to Choose Stocks
1. When you want to see more growth from your funds, it is time to take them out of the bank, and invest in stocks. When you know nothing about investing, it is a bit scary because you fear losing all your money.
2. Learn first, how to understand how stocks work, and how to choose the correct ones for you.
3. Read as much as you can about publicly traded companies, the stock market, accounting, finance, financial statements, etc. There are tons of free websites devoted to these topics
2. Learn first, how to understand how stocks work, and how to choose the correct ones for you.
3. Read as much as you can about publicly traded companies, the stock market, accounting, finance, financial statements, etc. There are tons of free websites devoted to these topics
- Start with industries with which you are familiar.
- No matter if you are a student, a teacher, whatever, you are familiar with at least some publicly traded companies.
- Think of products you like or companies that provide services you think are good or popular.
- Look up the company or parent company that makes the product or service you like by going to finance.
- Look at the company's financial statements. It takes lots of time to learn how to analyze these properly, but you should definitely have looked at them before investing in a company.
- Especially look at the "5-Yr Restated" financial page--this page can identify the consistency of revenue growth, earnings growth, dividend record, stable number of shares, free cash flow, and the balance sheet.
- Decide how much money you are willing to risk. Imagine you were to lose all the money you invested, how much would you put in?Enter an order for a certain number of shares after you have followed the stock for a couple weeks to see where it is.
- Learn how to identify stocks with criteria that may indicate potential for future price appreciation.
- Think logically about the stocks that you buy.Consider the fundamental profit-producing factors of the company; a stock that is cheap could be undervalued, or it could be nearly worthless and overvalued by some betting on a miracle and some hoping to sell to those people before the company collapses meaning that it has more going down than going up to do.
- Think also about trends and decide which the best is. For instance, if you know that a mass group of immigrants are about to come to the United States it is logical for you to think that they would talk to their relatives; it would make sense to get stock in the company that provides international telephone service.
Which shares to Buy and sell?
Buying and selling shares involve a fair amount of research. These involve assessing how well the company is managed, how the company is performing compared to others in the industry, how the industry itself is doing, the financial performance of the company, the interest of the lay public in the company, etc. It is best that you consult an expert in such analysis, before you decided to buy or sell a particular share. Such investment advice is also provided by your share brokers.
How long to hold on the shares?
Historically, it has been demonstrated that investments in equities offer the best long term returns and hence the highest opportunity to enhance your capital. Thus, the longer you stay invested in the equity markets, the better will be your returns.However, this holds true for the equity market as a whole, and not necessarily for shares of individual companies.The value of shares of specific companies are subject to various pulls and pressures which could cause a share that is highly valued one day, to drop its value overnight, as a result of unpredictable factors ranging from Government policy to acts of omission and commission by the management of the company.It is advisable that you periodically, at least once in a year, evaluate your holdings and decide whether to continue with them or change them. However, one very important thumb rule which the professionals offer is, never to get emotional about a share. In other words, do not hold on to the share of a company whose value is declining, just because its history has been very good!
Are investments in shares safe?
Any investment is prone to a certain degree of risk. Shares, as a class of investment have the highest element of risk. The only services riskier than shares are lotteries and other games of chance.These risks arise as a result of factors described earlier. However, today there is strong legislation, procedures and a regulatory authority - Securities Exchange Board of India (SEBI), which to a large extent prevents risk as a result of misleading the investing public.
*Do not buy shares by others advice:-
Always buy shares of that company which you are tracking. Before investing track a particular good stocks attest six month. In the period of six month you will see the price apprehension in the price of that stock. Buy the stock at lowest price. Do not buy the shares of any company due to rumors in the market that shares will go up or down.
No comments:
Post a Comment