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Stock Trade Tipps - Anyone?  RSS feed

 
Paul McKenna
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Anyone got some valuable tips on stocks / mutual funds?

I'm planning to begin with a humble portfolio and am wondering which stocks others consider to be valuable. Eugene, I know you dabble a lot with stocks and I have even seen your charting tool on the internet. Would you mind posting a brief explanation on how to use the damn thing.
 
John Smith
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I'm planning to begin with a humble portfolio and am wondering which stocks others consider to be valuable.

I am the first one to advocate the use of the "Consumer Reports" magazine when you are considering a purchase of a consumer good (I am a long time loyal subscriber), but it is really different with stocks. If 90% of the people tell you that they like stock XYZ and that it is expected to make a killing, it doesn't mean anything, except that the price of that stock fully reflects the prevailing public opinion (that is, XYZ is overpriced). In fact, there exists a "contrarian" approach to investing, which amounts to buying the stocks that are universally hated.

The best thing you can do is to do your own research and act with discipline. The good news is that there are a lot of research tools available online. I like Stock Evaluator, for example, but your options are certainly not limited to it. Whatever you do, make this your foremost important goal: do not lose money. This may not sound very profound, but it is. There is a whole science of risk management in investing, and it is believed that this particular component amounts to the greatest successes and the greatest failures in investing.

Eugene, I know you dabble a lot with stocks and I have even seen your charting tool on the internet. Would you mind posting a brief explanation on how to use the damn thing.

I am not sure which charting tool you are refering to. Maybe some punk is using my good name in vain on the web?
[ May 19, 2004: Message edited by: Eugene Kononov ]
 
Stan James
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Delivery boy: How about a tip?

Fred Sanford: Buy low, sell high.
 
Paul McKenna
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Eugene, isnt this tool yours?
 
JiaPei Jen
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http://www.morningstar.com
provides independent rating of mutual funds. You may also download pdf files from that web site regarding financial planning.

I completely agree with Eugene on

If 90% of the people tell you that they like stock XYZ and that it is expected to make a killing, it doesn't mean anything, except that the price of that stock fully reflects the prevailing public opinion (that is, XYZ is overpriced)

If a stock performs so well that a magazine writes an article to praise that stock, it is the time to "sell" (not to buy) that stock. You may find many this kind of examples on the eve before the high tech bubble burst in year 2000.

I also completely agree with Stan on "buy low and sell high" - golden rule.

The Microsoft is a good stock to own. However, you do not want to put all eggs in one basket. Besides, it is difficult for an individual to keep tracking the performance of a number of stocks. Therefore, mutual fund is usually the choice of lots of people. And your money in mutual fund is insured (similar to FDIC) up to $500,000.

Currently, it is very difficult to make an investment choice because

1. instability in the stock market

a. uncertainty in crude oil supply
b. uncertainty in Iraq - terrorists are trying everything to undermine rebuilding that country
c. China wants to cool off its overheated economy
d. some uncertainty in India but thanks that Sonia is not the PM (I have no personal or political opinion about her. I am simply talking about the way that the stock market in India reacted. I am not speculating the new PM's economic policies either.)
e. upcoming interest rate hikes in the U.S. - a large sell off of stocks occurred in 1994 when the Fed made interest rate hikes in response to economic rebound. This time, the Fed has indicated that the pace of interest rate hike will be "measured". Nonetheless, we still see jitter in the market.

2. bad time to buy bond fund

a. the value of bond fund goes in the opposite direction to the interest rate movement.
b. you can still purchase individual bond, which is not going to be affected by the interest rate movement. However, you have to hold the bond till maturity. There are bonds with different maturity though.

3. housing maket is already at its peak - mortgage rate is rising


Stocks, bonds, real estate are part of the financial planning, you also need tax planning (you want to save tax payments), college education planning (if you have children), retirement planning, etc. You may also purchase life insurance, disability insurance, etc. to supplement your overall asset allocation.

I am simply writing some thoughts on top of my head. It is impossible to go in details.

p.s. Paul, personal message to follow.

[ May 19, 2004: Message edited by: JiaPei Jen ]

[ May 19, 2004: Message edited by: JiaPei Jen ]

[ May 19, 2004: Message edited by: JiaPei Jen ]
[ May 19, 2004: Message edited by: JiaPei Jen ]
 
John Smith
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Eugene, isnt this tool yours?

Ah, yes, but that's not really intended for stock prices forecasting. It works well for predicting a sine wave, though.

Trading for a Living: Psychology, Trading Tactics, Money Management is among my favorite books on the subject.
 
Damien Howard
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buy when the price is low.
sell when the price is high

Make sure you maintain a diverse portfolio
 
Sameer Jamal
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Originally posted by Damien Howard:
buy when the price is low.
sell when the price is high

Make sure you maintain a diverse portfolio


I think it is not that simple, For the the new comer in the market the best time to buy stocks is when the market is crashing or when a company offers its IPO, beside before investing your money u should do some mock excerise virtually put some money in stocks and see how you are progressing, take your time and study the market then only invest.
 
Damien Howard
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Originally posted by Sameer Jamal:


I think it is not that simple, For the the new comer in the market the best time to buy stocks is when the market is crashing or when a company offers its IPO, beside before investing your money u should do some mock excerise virtually put some money in stocks and see how you are progressing, take your time and study the market then only invest.


yea, I was just being funny, well trying to be anyway.

There are a lot of web-sites that let you pretend to buy stocks. That way you can track them and see how your instincts are. It all boils down to luck in the end.
 
stara szkapa
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Originally posted by Damien Howard:
It all boils down to luck in the end.


A skillful trader who is right in his predictions 50% of the time will still make decent profit. People who use stock market to gamble need only one mistake to loose it all.
 
fred rosenberger
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I've always thought that index funds are the way to go. low fees/commissions, no hot-shot manager trying to "predict" what will be the next trend... just an inexpensive, relativly safe place to let your money sit for 20-40 years until you retire.

Other things i've heard - diversify. rebalance your portfolio every year. in other words, if you put 20% into retail, 20% into tech, and 60% into energy, wait a year. with market fluctuations, you might have 24% in retail, 14% in tech, and 62% in energy. sell the retail and energy, buy more tech, andget back to 20/20/60. if you're looking long term, the ones that have been doing well will (probably) fall back, and the ones that have been sagging will (probably) surge - it's like regression to the mean. This works best in retirement plans where you can move money at will with no fees.

be disiplined in your investing. it's better to invest $200 every month, without fail, than to put in $1000 today and then nothing for 5 years. sites like Sharebuilder are great for this. I'm pretty sure there are others, but this is the one i use.
 
Kishore Dandu
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I will cut and paste my approach:
(you can ignore the last 5-6 because of beginner nature)

Investing basics:

1) Consider buying stocks with each of following in last 3 years

Earnings up: 25%, Return on Equity: 17% and recent earnings and sales accelerating.

2) Recent quarterly earnings and sales should be up 25% or more

3) Avoid cheap stocks ( minimum of 15 bucks )

4) Learn how to use charts to spot sound bases and exact buy points ( very tough to do this and needs lots of time and energy)

5) Cut every loss when its 8% below your cost. ( never average down in price )

6) Have selling rules on when to sell and take profit on the way up.

7) Buy when market indexes are in a uptrend. Reduce investments and raise costs cash when general market indexes show five or more days of market distribution.

8) Buy stocks with relatively high price strength rating.(example 85)

9) Pick companies with management ownership of stock.

10) Buy mostly in top six broad industry sectors.

11) Select stocks with increasing institutional sponsorship in recent quarters.

12) Current quarter after tax profit margins should be improving and near their peak.

13) Don't buy because of dividends or P-E ratios. Buy the No. 1 company in a sector in earnings and sales growth, R.O.E, profit margins and product quality.

14) Pick companies with a new revolutionary product or service.

15) Check into companies buying back 5% to 10% of their stock and those with new management.

16) Don't try to bottow guess or buy on the way down. Never argue with the market. Forget your pride and ego.

17) Find out if the market currently favors the big-cap or small-cap stocks.

18) Do a post-analysis of all your buys and sells. Post on charts where you bought and sold. Evaluate and develop rules to correct your major mistakes.
[ May 20, 2004: Message edited by: Kishore Dandu ]
 
Paul McKenna
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My biggest blunder so far:

I wanted to buy Armor Holdings (Symbol:AH) in Jan 2004 when it was trading around $18. I procrastinated and let go of a golden opportunity. Today its trading around $35. The reason for the jump? They supply the armor for humvees and trucks in Iraq.
[ May 20, 2004: Message edited by: Paul McKenna ]
 
Paul McKenna
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Thanks for all your suggestions. Really appreciate it.
 
SJ Adnams
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buy a commodity based mutual fund.

e.g.

http://www.mlim.co.uk/uksite/fund-centre/fundfactsheet.asp?fundcode=5231203§ion=performance
 
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