Posts Tagged ‘stocks’
How To Look Into Shares
Written by admin on December 22, 2009 – 11:21 am -Brought to you by trend trading.
As with gamblers in Las Vegas so it is with stock investments, ‘everybody’s got a system’. The goal of research, however, is to make the activity a lot less like gambling and a lot more like investment.
For those without the time or temperament to carry out research themselves, there are full time research services available - for a fee, of course. Full-Service brokerages, such as Merrill Lynch and other large, well-established firms offer research as part of their value to clients.
But there are firms, both traditional and the newer online variety, that offer research without the advice available from the broker. Whether the research (and the advice) are worth what it costs is an ongoing debate.
For those who see research not as a necessary evil or time-consuming burden, but as part of the process or even an adventure, there are now more sources than could be used in a lifetime.
Starting with the source of data is always a safe bet, since it’s the most unbiased, thoroughly audited information around. That source is the legally required filings of individual publicly traded companies.
In the U.S. those are 10-K’s - more or less equivalent to lengthy annual reports - which can be viewed or downloaded from the SEC’s website (www.sec.gov). (10-Q’s are filed quarterly, 8-K’s for significant financial changes in between.) Other countries have their equivalents, such as the Hong Kong Securities Regulatory Commission (HKSRC).
In those reports you’ll find recent (as of the filing date) financial data about income, expectations, competition and lines of business, current senior management listings and other information useful to those inclined toward Fundamental Analysis.
Quarterly reports and annual reports are sent automatically to share holders, even those with only one share (though they’re usually traded in lots of 100 or more.) But, they’re often available free by calling or emailing the Investment Relations department; after all, companies want you to buy their share. They contain the same factual data as 10-K’s and 10-Q’s but occasionally wording differs, for those interested in subtle details.
For a modest annual or one-time fee, a blizzard of chart data is available that matches any produced by the in-house research departments of the large brokerages. (Sometimes they’re produced by the same people.)
Newsletters are another potentially good source of information, though opinions about the market vary so widely that researching whom to believe takes as much time and care as researching individual stocks. Sometimes they’re a few dollars per year, sometimes many hundreds - and price is no indicator of quality here.
One direct source of one kind of information are the in-person, on TV, or on the Internet interviews of company senior managers, usually by one or a panel of analysts.
CEOs, CFOs, and others often talk to the financial press and brokerage stock analysts to give their views on where their company stands, what challenges they face, and where they expect to be in the near to long-term future. Often they’re asked about specific pending lawsuits or legislation and to assess its potential impact.
Of course, executives have an interest in painting a rosy picture, but analysts have often heard it all and are very adept at keeping the ’spin factor’ to a minimum. If nothing else, it tells you what the executives want you to believe, which in itself is useful.
Even armed with nothing more than an inexpensive online trading account, the average investor has access to charts of historical and current data, future expectations, and a wide variety of statistical information which would keep even the most technically inclined busy for quite some time.
Be sure to use it all, or as much as you can absorb in the time available, when formulating a trading strategy. And remember, opinions ‘on the street’ are a dime a dozen - including mine.
For more please see What Are ETF Trends? and What Are ETF Trends.
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What Are Stock Splits?
Written by admin on December 10, 2009 – 12:38 am -Brought to you by free etf trends.
One of the alluring myths that surrounds the stock market is the prospect that a certain stock may split, giving stock holders twice as many shares as before. What is poorly understood by the outsider, though, is that although the investor has more stock after a split, the value of each share is reduced. For example, if a corporation decides to split its stock 2-for-1, it issues one new share for each outstanding one. At the same time, the value of each share is cut in half. So the share holders now hold twice as many shares but the total value is the same as before the split. A stock split is like receiving 2 five-dollar bills for a single ten-dollar bill. Same value - twice as much paper.
Why would a company do this?
A lot of it has to do with investor psychology. The price-per-share of a share may be so high that the average investor feels it is out of his reach. A stock split reduces the price so that it may be more affordable to smaller investors. In reality, the small investor could have bought a smaller number of pre-split shares for the same price, but the appeal of buying a $20 stock as opposed to a $60 may be strong for some investors.
Shares can be split by a number of ratios but the most common are 2-for-1, 3-for-2, and 3-for-1. stocks can also be reverse-split - the company reduces the number of outstanding shares so that each stock holder has fewer shares than before. Reverse stock splits are less common, but can be used for several reasons: the price per share may be so low that it appears as a poor investment; the company may be attempting to stave off possible de-listment on the stock exchange; to push out minority stockholders; or as a way to go private.
Advantages
Lower prices per share can result in greater liquidity - stocks are easier to sell at lower prices and there is less of a bid/ask spread. This is especially true for stocks that are priced in the hundreds of dollars - small investors view them as out of their budget and the high bid/ask spreads (the difference between buying and selling prices) can put off bigger investors.
Other advantages have to do with investor psychology. A split is usually seen as a bullish indicator - share prices are increasing and the company is doing well financially. There is usually a short-term rally around a stock which splits, but the market tends to normalize after a short period.
On the downside, a split may cause investors to expect more about how the company performs. If these expectations are not met investor confidence may be shaken and the result could be a drop in share prices.
The bottom line is a stock split does nothing to affect the worth or performance of a company. It may be nice to own more shares, but in the end your 2 five-dollar bills are still worth the same as your ten-dollar bill.
For more please see trend trading and How To Get Your Free 3 in 1 Credit Reports.
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Finding A Reputable Stock Broker
Written by admin on November 14, 2009 – 11:06 am -Brought to you by best trend trading system reviews.
Brokers handle most of the buying and selling on the stock market, and the average investor will use a brokerage service to handle his trades. There is a broad range of brokerage services available. There are brokers who offer many services for aiding their clients meet their investment goals. These ‘full-service brokers’ can give advice about which stocks to buy and sell and often have full research facilities for analyzing market trends and predicting movements.
These perks are not free - full service brokers charge the highest commission rates in the industry. Whether or not you decide to use a full-service broker depends on your level of self-confidence, your knowledge of the stock market and the number of trades you regularly make.
Investors who wish to save on commission fees can use a ‘discount broker’. These brokers charge much lower commissions but don’t offer advice or analysis. Investors who like to make their own trading decisions and those who make many trades often use discount brokers for their transactions. Some traders may use both types - there is no reason why you can’t have two brokers.
The least expensive way to trade shares is usually with an online brokerage. Both full-service and discount brokers usually offer discounts for orders placed online. Some brokers operate exclusively online and offer even better rates.
No matter what type of broker you choose, you must first open an account. Each broker sets their own requirements for maintaining an account balance but it is usually between $500 and $1000. When choosing a broker look at the fine print and find out about the fees involved. Some brokers charge an annual maintenance fee while other charge fees whenever your account balance falls below the minimum.
There are two basic types of brokerage accounts. A ‘cash account’ offers no credit - when you buy you pay the full amount of the share price. A ‘margin’ account, on the other hand, allows you to buy stock ‘on margin’ - the brokerage will carry some of the cost of the share. The amount of margin varies from broker to broker but the margin must be protected by the value of the client’s portfolio. If the portfolio falls below a specified amount the investor will have to add more funds or sell some stock. Margin accounts allow investors to buy more share with less cash thereby realizing greater gains (and losses). Because they involve more risk than cash accounts, margin accounts are not recommended for inexperienced traders.
Before choosing a particular broker the investor should carefully consider his needs. Does he wish to receive advice about which stocks to buy? Is he uncomfortable making trades on the Internet? If so, he should go with a full-service broker. Technology savvy investors who have the knowledge and confidence to make their own trading decisions are better off with a discount broker.
After deciding which type, compare a few competitors. There can often be significant differences in costs when all the annual fees and brokerage rates are factored in. Try to gauge how many trades you expect to make in a year, how much cash you can deposit into your account, whether you wish to use margin accounts and which services you need. This information will allow you to compare the actual costs of various brokers.
For more help please see best trend trading and What Are ETF Trends?.
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