Investing in the stock market at any time can be a daunting task. It is really tough to know when to go for it and buy shares in the companies stocks that you have researched. None of us has a crystal ball and it is easier to kick ourselves when a stock goes up 5% that we had on our watch list. It is also hard to avoid the tendency to check back on stocks we once owned and then beat ourselves up over lost opportunities.

Mistakes that we all have a tendency to make when finding stocks to buy now will hurt us in our abilities to make the most profit out of our investment trading system. It is important to have these mistakes identified so we can avoid them.

Not paying enough attention to the fundamentals of a company is a large mistake. An investor can choose to look at the technical analysis of a company and become a trader instead of an investor. Not having a strong feeling for the fundamentals of the company makes it more frightening to make the call. If you know the company has a strong balance sheet and is growing, then the long term investment opportunity is truly there especially if the stock is currently undervalued.

The second mistake then would be in not educating yourself enough. Just taking a look at how the stock has performed over the past year and making your decision from that historical data is not sufficient. Also not knowing how to research the different stocks available and what the different financial terms mean. All of these items are part of obtaining the correct amount of investing knowledge.

When we do not look for the right opportunities we hurt our chances to succeed. An investor may choose to look at only one or two asset classes or sectors. They do not broaden their horizon enough to really make the right decisions.

Diversification is a major item in stock market investing. Not creating enough of a diversified portfolio when determining the right shares to buy now will certainly create a recipe for disaster. If you put all your investments in the financial sector and the bottom falls out of it, then you have nothing to do but wait. Spread your investment over many diversified asset classes and sectors. Then you have a greater chance of success.

The last mistake I am going to list is the desire to go for the home run. We constantly hear and read about those who have had their investments go up 400% over night. Trying to actually find that company that is coming out with a revolutionary invention tomorrow is difficult to do. More likely, any booming tip is nothing but a disaster waiting to happen. Better to steadily work your investment upward than on a roller coaster.

All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not,and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.

The stock market tends to move in cycles. The hard thing to determine is when one cycle ends and another one begins. If you as an investor make the wrong determination as to whether to hold or to jump, you might end up being on the sidelines watching a rally or invested, watching your stocks move downward. Trying to read the fundamental and technical signs to determine which stocks to buy now is what it is all about. A farmer knows when to expect rain or sun, but the market is less predictable than nature.

A former hedge fund manager, Andy Kessler, wrote in the Wall Street Journal that “In the long run the market is always right. On any given day, your guess is as good as mine.” Another saying on Wall Street is that “being early is the same as being wrong.” The late economist Charles Kindleberger once said “there is nothing so corrosive to good judgment as watching your neighbor become rich, and, unless you have an iron will, the odds are good that you would have finally capitulated at precisely the wrong moment.”

It is my opinion that an investor can never go wrong with good solid company stocks. During the downturn of 2008 I had investments in stocks that paid dividends. Even though the principle of my stock was going down, I was still making money from the dividends. Investing in dividend paying stocks at any time can never be a bad idea. This is especially true if the dividend is significantly better than what you would get from investing in the money market. One piece of advice then would be to buy shares in solid dividend paying companies.

In the end, you can try and identify the waves that are forming on the horizon and try and ride them to the promised land or you can accept the notion that doing so profitably over the long term is a difficult choice at best, and instead focus on a trading system couched in solid asset allocation and making current choices that will maximize your returns over the long run

I was recently talking to a broker and indicated a stock I had recently identified was having a good run. He indicated that therein lies the danger of picking one good stock. You tend to think you are infallible and can always pick the winners. It just does not work that way. . In other words, quit trying to be a trader and trying to time the market. You should instead determine good strong investments for the long run and stick with them.

All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.

When deciding what road to take in your investment strategy, it is important to know what kind of an investor you really are. Can you handle being a little aggressive or are you a more conservative investor. Do you get nervous if your investment goes down 2% or can you deal with a downturn of over 10%. This will help determine what avenue you choose to go down with your investments. My premise in these postings has always been that you should find good strong investments and stick with them. However, you may be the type of person who prefers a little adventure and that is alright. You just need to know what you are getting yourself into. I thought I was the aggressive type until I pretty much lost my entire portfolio by trading on margin. My attitude has changed somewhat now.

There are two methods you can use to pick the stocks you are going to use in your trading system. The first is where you pick the sector you wish to invest in and then choose strong stocks within that sector. Another approach is to look for strong companies in the stock market regardless of the industries they are in and after analyzing their financial data, choosing some to invest in.

One method of selecting companies to invest in is to track what the different company’s director’s are doing. If they are buying stocks in their own companies, the company may be worth looking into. The University of Exeter School of Business did a study of stock purchases by directors from 1986 – 2003 and found a pretty impressive track record of successful investing.

The best returns came from investing in value stocks, i.e. stocks which are undervalued. Returns were 20 percent higher in companies in small, undervalued companies when directors bought their own shares. Director’s trades in larger companies showed a 6% outperformance return. Of course, this strategy may not always work. For example, new directors often feel the need to purchase shares in the company they just became a director of. Even though there is no guarantee, this strategy is certainly one to look into.

After purchasing your stocks, be patient. Stocks will often double-peak. That is, they may dip down a little then surge upward. If you exit too soon, you may miss out on the best part of the ride.

Another tip is to avoid penny stocks. They simply are not worth the time. They are extremely volatile and you have to buy a large amount of shares to make it worth it. Also there is not the volume available in the stock to provide a safe return. I was involved with a company who bought a large amount of a penny stock. The price of the stock went up 300% but the trading volumes were so low, they could never sell. If they sold any kind of quantity, the price would tank. It was a tough position to be in. Here they were sitting on a potentially valuable stock and they could not get their money out of it.

Another strategy is to let your gains compound. If a stock is doing well, sell off some of it and get your initial investment out of it. That way, the remainder is all profit. You should also be willing to admit when you were wrong. Take your losses early if you have made a bad decision. You can then put that money in a winner and get the losses back.

In summary then, choose your strategy carefully. Decide what methods you will use to invest and then do it. As my grandmother told me once, nothing ventured, nothing gained. She wasn’t talking about stocks but it may fit.

All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.

Beating the stock market has been the goal for investors for over an hundred years. There have been numerous books and articles written with the various pros and cons concerning the possibility of beating the market. Many websites tout their wares and provide great amounts of evidence showing that only they have the ultimate secret to your successful investing experience. Then there is the Wall Street guru’s who pour forth their own evidences to show that investing in the index funds is the only sure and safe way to invest your money. The question is, who is right?

In one study as reported by Mark Hulbert on March 9, 2008 in the New York Times, it was reported that investors spend over 100 billion dollars to try and beat the market. The study was in a academic working paper authored by Kenneth R French, a finance professor at Dartmouth. He looked at the costs involved in being active in the stock market. He analyzed all of the trades completed, the costs involved and the rate of return achieved. His determination was as stated above that 100 billion dollars was spent uselessly.

What are the implications of his market research? One is that the typical investor can increase his annual return by just shifting to an index fund and eliminate the expenses involved in trying to beat the market. He concludes that the best course for the average investor is to buy and hold an index fund for the long-term.

I really think that he is right in his assumptions. If you are a beginning investor who is trying to get the best possible return over a long-term investment, the safest course for you is to invest in a growing index fund. This will allow you to watch your money grow and not have to sweat over the details. Outsourcing is a big deal in today’s economy and by investing in an index fund you have done just that. You have outsourced your investment and allowed yourself the time to do other things that are more important to you.

On the other hand, some people just are not made for outsourcing. They want to have a hand in each investment decision and feel they have the knowledge and stomach to make the proper entry and exit decisions. They feel they can do better than the market and they may be right. Taking the time to research each potential stock or mutual fund and buy shares when the time is right is a possible method to use to beat the market.

Growth minded investors can continue to wait for the dips in the prices of high P/E companies while value minded investors can pore over companies trading near their 52 week lows. Establishing a proven trading system and being willing to watch over your stock investment as a mother might watch over her children just may provide the way for higher investment returns.

Thus both arguments are correct for different sorts of people. The active investor does need to watch his trades and reduce his trading costs to make it worth it to him. Using a discount broker or trading online will be the way to go for him. To win, he does need to take his emotions out of the scenario and always have an exit plan available for each entry point. The careful investor who has a risk aversion but realizes the need to do better than the returns available with CD’s or Bonds can do reasonably well for themselves with an index fund. They do not need to worry themselves about their investments. So decide what type of investor you are and go for it.

All of the content published on this website is to be used for informational purposes only and without warranty of any kind. The materials and information in this website are not, and should not be construed as an offer to buy or sell any of the securities named in these materials. Trading of securities may not be suitable for all users of this information.