How to Make Big Money Safely in Stock Market
(1) Stock Market is Tough Place to Make Any Money Consistently
NASDAQ or SP&500 averaged about -6% per year for 5 years between 1999 and 2003. Many individual investors who made killing in the internet bubble period got wiped out during those 5 years. Many who trusted Wall Street experts by investing their life savings into mutual fund had rude awakening after the huge loss and scandals in many of the famous fund names.
Numerous academic studies have shown that more than 90% of mutual funds failed to beat market over the long run and that more than 90% of individual investors lost money in the stock market....
How to Pay Less and Get More: Discount Broker vs Professional
How do you invest? What do you really pay? At the end of the day, what are your real results? These are questions smart investors should be asking themselves (but usually don't). In this era of more fees, misc. charges, holding periods and back end redemptions, even at discount brokers, how are you really making out?
Working with a new client brought this all to my attention. I know what I found may not apply to everyone; however it will apply to many and very likely apply to you.
I need to preface this by saying that, unlike the majority of registered investment advisors, I have built my practice over the past 15 years by dealing with "...
The Importance of Using Stop Loss Orders When Spread Trading the Financial Markets
A Guide to Using Stop Loss Orders
Stop losses are market orders designed to allow you to limit your losses.
When you place a stop loss you are instructing the spread betting company or stock broker to cut your position when it reaches a certain loss level (or in some cases, profit level - more later).
Therefore, a stop loss will automatically close your trade if the market reaches a certain point.
For example: You have bought Ј1 a point of the German DAX at 4200. The most you are willing to risk is Ј150 on this trade so you place your stop at 4050....
As an investor you will want to check out any equity before you buy it. Many investors go to Morningstar that is one of the largest providers of mutual fund information in the world. It is assumed that their information is correct. After all that is what you are paying for.
Recently the SEC (Securities and Exchange Commission) called them on the carpet for not correcting an error within a reasonable time (whatever that is according to the SEC). Everyone makes errors and this was no big deal.
It seems that when you went to their site and drew up a chart or asked for statistics on Rock Canyon Top Flight mutual fund it failed to notify the potential buyer that the fund had issued a very large dividend of approximately 25% and the NAV (Net Asset Value) dropped from $15 to $11 to reflect the $4....
Its A Bull, Its A Bear, Its Suptertrader!
The higher the market goes the more confusing are the "experts". In the September 14 issue of Investor's Business Daily newspaper we find the great prognosticators such as:
Sheldon Jacobs, editor of No-Load Fund Investor newsletter quoted that he is recommending having more cash in your portfolio.
Louis Navallier, manager of three aggressive mutual funds, remains very bullish. He says now is the time to load up on tech stocks.
John Wallace, another mutual fund maven now has become positive toward small-cap stocks for his mutual fund....
Dont Buy Stocks based on P/E Ratio alone
I use the P/E ratio as a secondary indicator for buying and selling stocks but I don't use the ratio in the same a manner as many value investors teach. I will explain the difference in my methodology for using the P/E ratio to your advantage.
Many value investors will pass on a growth stock that has a P/E ratio higher than a predetermined level. For example, they may discard all stocks that have a ratio of 15 or higher, no matter what industry group they come from. Some investors will discard any stocks that have P/E ratios above the industry group averages, concluding that they are grossly overvalued....
Using Sector Funds to Construct Diversified Mutual Fund Portfolios
'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.' If all of this sounds confusing, you are not alone. Sector funds are among the more misused and misunderstood investments. So, how should you use sector funds?
Before looking at one of the uses of sector funds in detail, let's review what sector funds really are: Sector funds confine their investments to a particular sector of the economy. Fidelity Select Healthcare (NDQ: FSPHX) is an example of a sector fund....
Investing in Dividend Paying Stocks
I was recently interviewed for a press release through a financial question and answer format. One of the questions asked of me in the interview was:
Where do you think the stock market is headed over the next five years?
Charles M. O'Melia: No one knows! There is an old Chinese proverb that goes something like this: "He, who could foresee events 3 days in advance, would be rich for thousands of years." On a long-term basis I have only witnessed expansion and progress. I believe that to be the nature of our American economy and our American way of life....
Low Expense Ratio
One of the big advertising kicks today from mutual funds is to tell how low their expense ratio is and that you will make a great deal more money if you buy and hold with them. Partly true, but that is not the whole story.
What is the expense ratio? It is all their overhead including but not limited to all the managers and other employees salaries, rent, computers, utilities, travel (the fund manager says he has to visit a company in Florida in the winter to see how it is doing), advisory services, telephone, etc....
Stock Trading Diversification
This is the continuing story of our two imaginary traders, Peter and Paul.
Peter is a professional trader, Paul is not. Peter has a tested, proven, written trading plan that he follows each time he enters a trade, Paul does not.
Peter and Paul have had vastly different Stock trading experiences - Peter has just made another substantial profit - this time from the Bear market, Paul has lost heavily.
A chance meeting with Peter's group of friends one day at lunch launches Paul on a learning curve that will see him become a good trader, but not without some hard lessons along the way....
What the Hell is a Stock option?
A 'stock option' is a contract between two parties giving the buyer (also known as the 'taker') the right, but not the obligation, to either buy or sell a specific quantity of shares at a pre-agreed price (known as the 'strike price' or 'exercise price') by a certain future 'expiry' date. There are two different types of options that can be traded, known as 'call options' and 'put options'.
For an option contract to be traded there must be both a 'buyer' and a 'seller' involved in the transaction....
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