Monday, May 11, 2009
Wednesday, October 29, 2008
A Discussion of Stock Picks
Stock Picks are a great way to find new investment ideas, hot stocks and hot industries. Some stock plays are penny stocks, some are stock trades that could have a huge amount of potential. Investors should never invest in a stock pick unless they can afford to lose their entire investment.
Stock investing isn’t without its fair share of risk and investors should consider their own risk tolerance level and always consult their financial advisor. When finding stock ideas its important to screen stocks and make a list of stocks to start watching. Some of the best stocks are found by completing your own due diligence and learning as much as you can on stocks through books and other media. Experience in the stock market is also very important. Experience comes with stock trading and stock research.
Stock news is important to pay attention to when you find a stock pick and want to follow the stock. Also, investment newsletters usually follow stock picks and stock ideas. Investing in stocks requires attention to detail and what industries are hot and which ones are not. As they say, a rising tide can lift all ships, this goes the same for stocks sometimes. Stocks in an industry that is hot become hot stocks as a group and many of them begin to move within that industry. This can be small cap stocks, cheap stocks, value stocks or others.
Penny Stock Picks require investment research and there is not as much stock information on them. Remember, to always complete your own stock analysis on penny stock picks. NASDAQ and AMEX stocks are also popular in the stock market.
It is important to look at a stocks balance sheet, income statement and cash flow statement. Usually a stock pick profile will cover one if not all of these financial statements. There are also key ratios that investors can use as tools to consider a stocks value when completing investment research.
A ratio that is one of the most well known is the P/E ratio, known as just the PE ratio or Price to Earnings ratio or even known as the “earnings multiple” / “multiple”. A higher P/E ratio means that investors are paying more for each unit of income. A P/E ratio of a stock is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share. The P/E ratio is calculated by dividing the stock price of a share by the annual earnings per share. Annual earnings per share is known as EPS. Generally, stocks with higher earnings growth will have a higher P/E and those with lower earnings growth will have a lower P/E.
Some investors like to do daytrading, also known as swing trading. There are a lot of good stocks that are free stock picks out there that give new stock ideas to those not finding as many new stocks as they’d like. Market timing can be very important as well.
Stock investing isn’t without its fair share of risk and investors should consider their own risk tolerance level and always consult their financial advisor. When finding stock ideas its important to screen stocks and make a list of stocks to start watching. Some of the best stocks are found by completing your own due diligence and learning as much as you can on stocks through books and other media. Experience in the stock market is also very important. Experience comes with stock trading and stock research.
Stock news is important to pay attention to when you find a stock pick and want to follow the stock. Also, investment newsletters usually follow stock picks and stock ideas. Investing in stocks requires attention to detail and what industries are hot and which ones are not. As they say, a rising tide can lift all ships, this goes the same for stocks sometimes. Stocks in an industry that is hot become hot stocks as a group and many of them begin to move within that industry. This can be small cap stocks, cheap stocks, value stocks or others.
Penny Stock Picks require investment research and there is not as much stock information on them. Remember, to always complete your own stock analysis on penny stock picks. NASDAQ and AMEX stocks are also popular in the stock market.
It is important to look at a stocks balance sheet, income statement and cash flow statement. Usually a stock pick profile will cover one if not all of these financial statements. There are also key ratios that investors can use as tools to consider a stocks value when completing investment research.
A ratio that is one of the most well known is the P/E ratio, known as just the PE ratio or Price to Earnings ratio or even known as the “earnings multiple” / “multiple”. A higher P/E ratio means that investors are paying more for each unit of income. A P/E ratio of a stock is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share. The P/E ratio is calculated by dividing the stock price of a share by the annual earnings per share. Annual earnings per share is known as EPS. Generally, stocks with higher earnings growth will have a higher P/E and those with lower earnings growth will have a lower P/E.
Some investors like to do daytrading, also known as swing trading. There are a lot of good stocks that are free stock picks out there that give new stock ideas to those not finding as many new stocks as they’d like. Market timing can be very important as well.
Your Stock Market Addiction is Costing You a Fortune
If you are stock day trading out of addiction, you are unintentionally flushing your money down the toilet. You might not realize it, rationalizing your "investment" options as you watch your wealth dwindle with each trade.
Regardless of your investment style, you must rein in emotion if you expect long-term profitability in investments.
In this article, I'm going to share with you the similarities between typical addictions and stock market addictions. Recognizing these characteristics is your first step to conquering the addiction, and will result in greater profitability, addiction or not.
Active trading has a higher degree of perceived control than passive trading, and this can be dangerous. It's one of the arguments traders make against using mutual funds. The argument is that by active trading, one can nimbly trade around market circumstances that funds cannot. Forget that the fund manager is more qualified than the trader 99 times out of 100.
This is similar to gambling where a gambler has control over each individual wager, rather than ownership in the casino.
Active trading is exciting. With great risk comes the potential for great reward, and this reward is usually met with the release of the chemical dopamine in the trader's brain. The presence of this chemical means that trading is more than just a psychological addiction—it can actually border on a physical one. These are the same characteristics of a gambler.
Another similar characteristic between trading and gambling is the potential for a quick buck, or easy return of money. Exacerbating this is the fact that it's possible to receive a disproportionate amount of return through the use of margin and leverage.
Another problem with addictions like trading and gambling is perpetuation, a form of passive enablement. With each passing trade, the addiction is reinforced, regardless of whether the trade was a failure or success. A successful trade brings about the desire for a repeat performance, while a failed trade brings about the need for redemption or to make back that lost amount.
Let's not lose sight of our goals. Trading is about making money, plain and simple. But to make money, you have to realize the difference between when you are trading and when you are gambling.
If you can successfully master that psychological stumbling block, you will most definitely become a better trader.
Regardless of your investment style, you must rein in emotion if you expect long-term profitability in investments.
In this article, I'm going to share with you the similarities between typical addictions and stock market addictions. Recognizing these characteristics is your first step to conquering the addiction, and will result in greater profitability, addiction or not.
Active trading has a higher degree of perceived control than passive trading, and this can be dangerous. It's one of the arguments traders make against using mutual funds. The argument is that by active trading, one can nimbly trade around market circumstances that funds cannot. Forget that the fund manager is more qualified than the trader 99 times out of 100.
This is similar to gambling where a gambler has control over each individual wager, rather than ownership in the casino.
Active trading is exciting. With great risk comes the potential for great reward, and this reward is usually met with the release of the chemical dopamine in the trader's brain. The presence of this chemical means that trading is more than just a psychological addiction—it can actually border on a physical one. These are the same characteristics of a gambler.
Another similar characteristic between trading and gambling is the potential for a quick buck, or easy return of money. Exacerbating this is the fact that it's possible to receive a disproportionate amount of return through the use of margin and leverage.
Another problem with addictions like trading and gambling is perpetuation, a form of passive enablement. With each passing trade, the addiction is reinforced, regardless of whether the trade was a failure or success. A successful trade brings about the desire for a repeat performance, while a failed trade brings about the need for redemption or to make back that lost amount.
Let's not lose sight of our goals. Trading is about making money, plain and simple. But to make money, you have to realize the difference between when you are trading and when you are gambling.
If you can successfully master that psychological stumbling block, you will most definitely become a better trader.
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