Free Stock Market Tips - Investing Stock Market

This article discusses free stock market tips - investing stock market.

Investment brokers' lore: They can tell whether a new client will be a winner or a loser within the first few minutes. Investors' mistake: Forgetting that the broker is essentially a salesperson working for a commission. (Often a loser makes more money for the broker.) Don't rely on a broker for financial and money-management advice. See stock market for more information.

Classic losing syndrome: An investor loses money in the stock market and swears never to get involved again. Then, after resisting the early publicity about the latest investment fad, the investor moves back into the market just before prices collapse. Worse: Investors who buy a glamour issue on margin after a substantial and fast advance. They get hit the hardest during the inevitable correction.

Investment advisory services and systems and inside information don't help much either. Facts:
Advisory services establish a reputation after making a few good investment predictions or good calls on a specific kind of stock. But they have to keep making predictions, and soon end up with losses.
Technical analysis is as subject to chance as is dart throwing.
Only 65 % to 70 % of insider trades work out for insiders. Investors usually overestimate the impact of the "insider news" on the stock's price. Or they miscalculate the effect.

Wall Street analysts are too slow. By the time their buy/sell recommendations make the rounds, all the action has been taken.
The sound way to become a winner:
Keep your neuroses under control. While you will never escape fears and doubts, don't allow your emotions to override your judgment.
Initiate your own investment decisions.
Don't let someone talk you into buying or selling.

The average investor doesn't need to talk to his broker more than once a month.
Do your homework before entering the stock market. Most winners educate themselves and manage their own money. Read books and financial papers. Take basic investment courses. Learn investment jargon so that you can't be intimidated.
Break away from the fear-greed-guilt cycle that produces losers with the belief that gains are made by magic and fantasy. Learn to deal with reality.
Think about taxes as well as investment. Tax consequences are an important part of success.

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Picking stocks: If the fundamentals of the company sound good and are high quality, and if the price/earnings ratio is under 10, buy at the low end of the stock's trading range for the past two years.

Divide savings into four investment categories: (1) Ready cash to meet emergencies. (2) Income to help maintain your standard of living. (3) Growth to make capital grow and, at the least, keep pace with inflation. (4) Mad money to speculate on the long shot.

Distribute investments appropriately, if there's enough capital.

Easy profit for small stockholders: Some companies are willing to pay a premium of 10% to buy back small holdings (under 100 shares). It helps them cut the cost of servicing minor shareholders. There's no broker's fee for selling holdings directly to the company.

When investment bankers, stock analysts or portfolio managers want to know what's happening inside a corporation, they have direct access to the corporate treasurer or the investor relations (IRS) officer. When you are curious about an issue affecting your investment, you, too, can direct questions to the firm's IRS officer. (Don't ask for information that is readily available elsewhere. Have before you a well-prepared, written list of specific questions.)

The following are some of the questions I might ask the IRS officer:
If I read that a competitor won a large contract, I ask what the implications are for his company. I also try to find out why his company didn't win the contract and whether or not it even competed.
I might ask for an interpretation of something mentioned in the prospectus. But ... when companies are in registration, the officers cannot talk to the public until the registration period is up and the securities are issued.
If I notice that there is labor trouble in the company's industry, I ask how the company stands with its unions.
I ask, what is the key to the company's future plans? Where does it see its future? Where does it see the growth?
How much of its business is dependent on the health of the economy in general? What happens to the company in a recession?
Who are its competitors? How does it differentiate itself? How does it plan to compete against larger companies?
If you prepared your questions carefully, you'll be pleasantly surprised. The IRS officer will be helpful-provided you don't approach him/her in a hostile manner.
Smaller, emerging companies are usually more open. Obviously, they are more in need of recognition.

Before talking with the company representative, however, look at the annual report. It's an important document. In addition to giving you the financial background, most good reports reveal the type of thinking going on in the company. They also reveal the differences between a company that just happens to be in the right place at the right time and a company that is making its own breaks. Look for a specific description of future plans-not just "We hope 1990 will be a good year."
There is no law that says that public companies must answer all your questions. In fact, there's much that they can't tell you. They can't divulge anything that is not already in the public domain. They can't answer questions about mergers, acquisitions or divestitures. And most companies, although they are allowed to estimate earnings, won't do so.

An IRS officer can only tell you what the company's plans are or give you the financial figures that have already been released. He can also discuss news announcements interpretively-for example, the possible impact on the bottom line for Union Carbide after the Bhopal tragedy.

Source: Consumer Information Center

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