Stocks: Buying, Selling & Researching

 

Basics

When you own a stock, you actually own a piece of a company Stock Types Common & Preferred.  How much of the company you own depends on how many shares you own, and the total number of shares outstanding.  When a company decides to raise funds from the public by issuing shares, the first offering is called Initial Public Offering (IPO) . When you purchase a stock or sell it, it is called Trading Stocks & Types Of Orders

Before you buy a stock you need to research the company.  Most of this information is available for free.  However, for a fee, there are services (Financial Planners & Other Places For Financial Advice and brokerage houses Stock Brokers & Brokerage Accounts that can provide you the tools you need to make your decision using extensive databases or comprehensive reports about companies with their recommendations.  There is no one secret key that unlocks financial success.  You have to not only research the company you are considering buying in to, but also its competitors and the industry to be able to see if it is going to be successful in the world it operates in. Stocks: Buying, Selling & Researching .

You really should understand the companies you invest in.  For example you should know what the company does or makes.  You should be able to explain how the products or services are used, and who the buyers are.  You should be able to explain what their competitive advantages are.  Make sure to keep a watchful eye for not only news about the company but also its industry and competitors.  Finally, keep tabs on what other people are saying about the company.  Remember it is your hard earned dollars that you are investing.

There are thousands of analysts who follow the performance of publicly traded companies.  Most analysts work for brokerage firms but there are also analysts that work for independent research firms.  An analyst specializes in a specific industry such as retail or technology.  They issue reports with their findings based on the existing fiscal health and projected performance of the company.  The research is the background for their conclusion which is a recommendation to buy, sell or hold a company's stock. If in between formal reports an analyst feels that the company's fiscal condition has changed, they might either upgrade or downgrade their previous ratings.  Some analysts have a better reputation than others, and various services rate their performance, such as the Wall Street Journal
http://online.wsj.com/public/page/best-on-the-street.html.  But the news services generally report on analysts findings especially when they change a recommendation.  These reports and coverage of the report can have a significant impact on a stock’s price.  A buy recommendation can cause the stock price to increase, while a sell recommendation generally forces prices down.  It is important to be aware of what these analysts are saying about a company whose shares you own or are considering owning.

There is no one single proven method for investing success.  Successful investors often adopt different investing strategies.  You have to decide which is best for you given your tolerance for risk, age and time frame for investing.  Remember markets go in both directions, up and down.  Anytime you invest you are taking a risk.  In most cases the higher the risk, the greater the reward.

One method many investors have found success in is identifying and investing in companies that offer both strong growth and high value and then holding on to the stock for the long term, which can vary from three to ten years, assuming the companies’ fundamentals and performance remains the same.

Most financial advisors also recommend that you have a diversified portfolio which produces better-than-average total return on your investment.

Once you decide to invest in a stock, you need to examine not only how Trading Stocks & Types Of Orders  but where Stock Brokers & Brokerage Accounts to place your trade.  Since timing the market is important, but is impossible to predict, some people use what is called Dollar-Cost Averaging when purchasing stocks (see below).  Dollar-Cost Averaging is an investing strategy, for long term investors, which spreads your purchase of a stock over time thus reducing your cost per share.  Finally, you also have to keep an eye on the company to look for signs that it is time to sell, even if the stock at the moment is profitable.