Stock Market College
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Investment planning is almost impossible without a thorough understanding of risk. There is a risk/return trade-off. That is, the greater risk accepted, the greater must be the potential return as reward for committing one’s funds to an uncertain outcome. Generally, as the level of risk rises, the rate of return should also rise, and vice versa.
If you have more than one investment, you likely want to monitor and compare their performances to the market and to similar investments. Here are a few examples of the information and the software you need to accomplish this objective:
Deciding on the proper time to purchase a security that you would like to add to your holdings can be a daunting task. If the price drops immediately after you buy, it may seem as if you missed out on a better buying opportunity. If the price jumps right before you make your move, you may feel as if you paid too much. As it turns out, you should not let these small fluctuations influence your decision too much. As long as the fundamentals that led you to decide on the purchase have not changed, a few points in either direction should not have a large impact on the long-term value of your investment.
The process of analyzing investment prospects includes examining groups of investments or individual securities. For this task, you need information to forecast the timing and amount of future cash flows of investment candidates. That is, the price you pay today is based on the future income of the asset.
Before investing, you need to clearly state your financial goals and objectives, and know your risk-tolerance level. This information can help you determine your required rate of return. By doing this type of homework, you can determine which categories of financial assets you may want to consider investing in.
Investments provide opportunities to make money in both a bull market (up market) and a bear (down) market (read more about bulls vs bears). No one ever knows for certain whether the market will go up or down, but investors can develop an information system to watch indicators for potential price changes and investment opportunities. This exclusive Qwoter College series introduces the elements you can use for building your very own online investment information system that meets your specific needs.
Can You Turn Bad News Into a Lucrative Opportunity for Your Portfolio?
Even the best companies, industries, and sectors fall out of favor from time to time. A fully-informed investor, with a pocket full of cash and a firm understanding of the situation, can calmly stride into a turbulent market and buy up shares of these underdogs at a fraction of their intrinsic value.
Market timing is the most important expertise you must master to become a successful trader. This is where the majority of stock market traders fall by the wayside. Buy too early and you are squeezed out on any temporary falls. Sell short too early and you are squeezed out on any up moves, even if, after a few days or so, you are proved correct in your analysis. Understanding what the volume is telling you; recognising testing, stopping volume, up-thrusts, or no demand, will get your timing surprisingly accurate.
Wealth Warning: It has been determined that listening to the news may be bad for your wealth!
From a very early age we are bombarded with news from television, radio and newspapers. We live in the ‘Information Age’ and are presented with a mass of information any time of the day or night. Most of the news appears to be correct and entertaining, and usually you see no reason to challenge it. It may be biased, or not even correct, but usually you see no reason why you should be bothered to challenge it.
Terminology used by stock brokers and Wall Street insiders tends to be rather complicated what with jargon such as margins, small cap, and indices, it can be difficult to tell what the devil these people are talking about. Still, the most basic of stock market terms, “bull” and “bear,” date back to the 19th century and are not tied to any complicated mathematical analysis.
Why the world’s greatest stock picker stopped picking stocks, and why you should, too.
The most dangerous investment advice is often that which seems most sensible, which is why the worst investing counsel you will likely ever receive is that you should try to pick “good” stocks and sell “bad” ones. You will get this advice in one form or another from innumerable sources, including (some) investment advisers, friends, colleagues, Wall Street, and the investment media. You should ignore it.
If you feel like your inbox is suddenly overrun with spam again, you are right.
Not long ago, there seemed hope that spam had passed its prime. Just last December, the Federal Trade Commission published an optimistic state-of-spam report, citing research indicating spam had leveled off or even dropped during the previous year.
Short Selling. Is It Unpatriotic?
Short selling is the opposite of normal (long) stock positions. If you buy a stock hoping it will go up, you are ‘long’ of the stock. But if you think the stock will go down, you can sell it first, and buy it anytime you please. This ‘short selling’ is a simple borrowing-of-stock process that is handled by your broker with no need for you to understand how.
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