Author: Stock Trader Guru

Stock Investing Basics

The two largest enemies of the stock investor are greed and fear. Fear can paralyze the investor from taking chances. They over-analyze, get neurotic and never take a chance on buying a stock. If you do your research and the stock looks favorable, do not let fear creep in and stop you from taking action. On the opposite end of spectrum is greed. The investor might try to squeeze out a little more profit and put themselves at risk. It's always important to set your exit points before you invest. This should not be done as dollar amounts. Always operate off percentages. With my day-trading I set my percentage at 2-3%. When my investment hits 3% above my purchase price I sell. If I lose money I hold on, but also set an acceptable loss percentage of 2-3% … You should factor losses into your over-stock stock investing plan. They're a part of doing business. You will lose and you will win. If you see your stock dip a percentage point, do not panic, let fear creep in and sell. Give it some time. It could be a temporary blip on the radar and go up 5% the next day. If you see your profits soar to 10-20% you're getting greedy. You should have sold a long time ago. In fact, I would be weary of any profit percentage...

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Beta – A Useful Tool in Our Stock and Option Investing

When we defined the Greeks in a previous article, it included a discussion of the price sensitivity of the option premium as it relates to the underlying equity, time and other factors. One of the rules was that (all other factors being equal) an increase in share volatility will increase an option premium. An equity with greater volatility will be associated with an option premium which generates greater profit but is also associated with higher risk. One way to measure the volatility or systemic risk (market risk) of a security is to compare it to the market as a whole; the S&P 500 being the most commonly used benchmark. This is known as beta. This number is calculated using a process known as regression analysis wherein the “market” is assigned a number of “1″. Beta is the tendency of a stock’s returns to respond to changes in the market. The Numbers: – Beta of 1- the equity price will move in conjunction with the market. If the market is up 2%, so will the stock (be expected to). – Beta of less than 1- the stock will be less volatile than the market. An example would be utility stocks – Beta greater than 1- the security price will be more volatile than the market. An example would be tech stocks. An example: If a stock has a beta of 1.5, it is...

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Value Investing India – The Economics of a Tip

Interestingly, the only person who is absolutely sure to gain from a tip is the "tip giver". Take a look at this – Day 1 You wake up and go through your yet extensive phone book. There are exactly 1000 mobile numbers. After neatly dividing the stock in two equal parts, you start the rather laborious exercise of sending a message to the first 500 people – "Reliance will go up today" and to the other 500 people – "Reliance will go down today". Your cost = 1000 rupees (Re.1 being the charge of an SMS) Day 2 Another wonderful morning. You pick up the morning paper to find the Reliance stock to have shot up. You look to the skies, say a small pray for the people who got your prediction wrong and get about your work for the day. You divide the stock of 500 people who got the right tip into two parts. To one part (250) you sms – "Infosys is definitely up today" and to the remaining 250 – "Infosys is certainly down today". Your cost = 500 rupees (total cost = 1500) Day 3 Infosys seems to have gone down today .. these cut in spends in the US are creating some havoc, you say and get down to business. 250 correct tips (for two days) get cut in 125 and 125. To...

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If I Had Only $ 5000 To Invest, I Would Not Invest In The Stock Market!

When people find out that I invest regularly in the market, they often ask for my advice. They will ask for a good stock pick in which to invest their hard earned money. If they are just starting out the answer I give them may be somewhat surprising. If they are beginning with a small amount of money such as $ 5000, I try to steer them away from the stock market. If I had only $ 5000 to invest I would not be investing in the stock market. I would be investing in myself. For the purposes of this article let us assume that you are in your twenties, work from 40 to 60 hour per week, and only have $ 5000 to currently invest. Let's say that you are willing to put this money at risk and you really want to get as high a return as possible. You are willing to put in a little time and effort to grow this money at the end of the day. You could make some money by investing in stocks but you could also lose some money. Anyways, it is not likely that this would be your optimal growth path. Investing in safer investments such as bonds or treasuries would only yield slow growth. The path I would suggest you look into is to start your own business in...

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Parachute Investing

Ever jumped out of an airplane? It’s OK if you have on a parachute. Pretty dumb if you don’t. Every buy any stocks, mutual funds or Exchange Traded Funds? It’s OK if you know how much you are willing to risk. Pretty dumb if you don’t. Parachute investing is buying an equity with a parachute so you won’t risk all your money or, better yet, give back the profit you have made as the stock or fund went up and then goes down. If you bought that hummer at $12 per share and during the past couple of years seen it go up to $52 you don’t want to give back that nice profit, do you? With a parachute you can save most of it. How? When you invest in any stock of fund you must know how much you will risk before you buy it and how much of the profit you are willing to give back when it turns down. Take that beauty at $12. Instead of going up it went down. Are you willing to agonize as it drops to $5? If you had a parachute you would have jumped out of the plane before it crashed. If you had an exit strategy for your stock you would have sold it before you lost a big chunk of your cash. The secret of a safe investment...

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Are there any REIT stocks based around specific cities?

Are there any REIT stocks based around specific cities or regions? Like if I wanted to buy shares of a REIT that focused on tier two cities like Philadelphia, Nashville, Austin, etc or even better could pick a REIT with ***just*** Philadelphia or ***just*** Austin, does something like that exist? If not, what are the challenges of bringing a REIT like that to market? View Reddit by JamieOvechkin – View...

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The Basics Of Stock Market Investing For Beginners

Stock market investing is one of those investment areas where beginners think they can just jump right in, start buying stock and be wealthier in just a few days. However, there are rules and strategies involved in buying stocks, and those that end up losing a considerable amount of money are beginners who didn’t plan a strategy before investing. Beginners need to start small, especially if stock investing is the first type of investing ever done. While something new is always exciting, it’s the overeager investors that may need to find a way to bounce back from losing money on bad stocks. Understanding The Value Of A Stock When you purchase stock in a company, you own a small piece of that company. This means that you also get a small share of the company’s profits. If the company thrives, your stock will thrive. If the company fails, your stock will suffer. That’s why people are constantly buying and selling different stocks. As a company starts to go downhill, the stock certificate has less value. To avoid losing money on stock market investing, many try to unload their stocks before a company goes bankrupt or out of business. The same is true for a business that has what is known as hot stocks. This means that stocks in this company are in high demand because the return of investment...

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Bubble-Like Stock Valuations Miss $3.4 Trillion in Hidden Assets

[]( On paper, [Autodesk Inc.]( is a bit of a mess. It’s been losing money for almost three years, and its book value — what’s left if you sell off the assets and repay debt — is negative. Yet over the past year, the stock has gained 23 percent, almost double the S&P 500. With its sky-high [valuation](, the software maker would appear to be a poster child for froth amid a nine-year bull run. But to some, it should be seen in a very different light — as a company whose fundamentals are made to look a lot...

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Does Macy’s Still Have Room to Run? Pressing 52-week Highs

Macy’s shares are up at 52-week highs this morning around $40. It is interesting to see because a lot of investors were losing faith in the retail space. The most recent quarter just showed people not to give up on retail just yet. At this moment, seeing $M at $40 a share, I am kicking myself. Back when it was around $19 a share a few months ago I began looking at it. It was one of those moments when the price slaps you in the face and screams value. It sucks not being involved but it is nice looking back and knowing my gut was right at the time. What do you guys think about this? Is retail still dead? Will Macy’s go back down from here or do you think it still has room to run? View Reddit by sisumoney – View...

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