Wednesday, December 23, 2009

Can I Buy Stocks On My Roth IRA Account

Many people wonder "can I buy stocks on my roth IRA account?" They are often confused between the account type and the funding method. The account type is like suitcase and the funding method is the investment. Account types are things like individual, joint and yes a Roth IRA. Investments are things like stocks, bonds, mutual funds and other things like real estate. It's easy to get the two confused when you are starting to learn how to buy stocks. Just keep in mind that the Roth IRA is a tax creation to give you preferential treatment and you can buy stock in it just like any other brokerage account for your stock market investing program.

Once you know the difference, you want to keep your account types separate. You don't want to mix your money in your IRA with your individual account because they are taxed differently. Mix them up and you make your taxes that much harder. After you understand that you can start looking for stocks to buy to put in it. Personally, I prefer stocks in an IRA because you are hoping they will appreciate in value more than say, your certificate of deposit in the bank. Why? Because hopefully, you'll will have more gains than interest income and the tax shelter of an IRA will benefit you more. That doesn't mean there might not be a time you'll consider having CD's in it, just not when you are younger.

The hard part will be finding the best stocks to buy to put in it. Just like any brokerage account. The hard part is finding winners to invest in. This means that you'll need to do the same sort of due diligence or investigation on every stock you buy no matter what kind of account you have. Spend the time learning how to invest on your own. Learn how to pick stocks and you'll are well on your way to making money in the stock market.

Stock Market

The stock market is where you want to explore if you want higher returns on your investments. With those higher returns come more risk as you could lose all of your principal so you have to be prudent and have a sound stock market investing plan. It also requires that you know more about the market than what the stock market averages closed at. You must do your homework, but it can be done by anyone as long as you work at it. With patience, you can become a pro.

The stock market today is worldwide. You can invest in a global market. However, when you are just starting, I would stick to the markets in the United States like the New York Stock Exchange and the NASDAQ. This broad market of stocks provides a strong enough base to make money in without the need to worry about different currency exchanges as well. Many of the companies you might invest in will have global exposure already, so you'll probably have a fair amount of currency risk the way it is. Plus, it will be easier for you to get the information you need on all stocks on those two exchanges.

If you are a beginner, you might be tempted to learn about investing in the stock market by getting your stock market news from the mainstream media. I want to caution you, that if that is all it took to get rich in the market, we'd all be millionaires. You will need to do two basic things. Get your news from a more informational source that gives you the facts on exactly what the market data actually is and not what some talking head on the news "opinion" of what the market data is. Once you have your source, then you've got to let the market data tell you what you need to know. Developing your own opinion based on the news of the day is essential and you'll need to be more able to tune out the noise.

A lot of this noise is what can contribute to a stock market crash, but more likely, it will keep you out of the market when you need to be invested and keep you in it when you need to have already sold your positions. Both of which will cost you a lot of money. It's human nature to be all doom and gloom when the economy is bad, but as was the case this past year, the market made some nice gains even though if you would have listened to the news, the temptation might have been to stay on the sidelines.

When you get started getting more into investing, you'll see that it's more than getting stock market quotes, it's about earnings and institutional sponsorship, two things that really drive the price of a stock. The stock markets full of opportunity, but only once you decide to work at mastering investing it.

Why Is Investing In The Stock Market Important?

Many people wonder why is investing in the stock market important? The main reason is inflation. You need to earn more on your investments than the rate of inflation. Let's say you earn two percent and inflation is three percent. Your real rate of return is a minus one percent. If you put your money in the bank, you can pretty much bet that while your money won't be as at risk, you will lose purchasing power -- your money won't buy as much as it used to.

If you learn how to invest in the stock market, you take more risk, but you increase the chances that over the long haul, you can earn more than the rate of inflation with your stock market investing program. The overall stock market has had an average return of around 12 percent long term. This means that your money that's invested will actually gain in purchasing power if you average that too. The hard part is averaging that. If you invest wisely and have a long term investment horizon, you have a better opportunity to outpace inflation.

Deciding to invest in the stock market is your first step to higher returns. But this decision alone will not earn you more money than other investments. The chance to earn higher returns comes with more risk though and in the stock market you could lose all of your money. Many people lost half their portfolios a year or so ago. A lot recovered most of it during this year's stock market rise. If you would have needed your money at the end of last year though, you would have taken a substantial loss. You have to remember that money you need now, shouldn't be fully invested.

It's because of this risk of loss, many people are not willing to invest and therefore, lose the battle with inflation. And, in my mind, the inflation number is too low. Although my milk may not cost a lot more from year to year, the stuff I have to buy like health insurance has doubled in the last five years. So, the inflation number that's reported is really not the "real world" number.

This makes it even more important to learn how to start investing in the stock market.

Tuesday, December 22, 2009

Step By Step Approach To Buying Stocks

I suggest that once you have decided on an investment strategy the next thing you should do is develop a step by step approach to buying stocks. What I mean by this is that you need to know your stock market investing strategy inside and out. You need to be the expert. One way in which you can do that is by breaking down each step of the process and create a checklist of each and every decision you make when you buy stocks. Your end goal should be that someone could sit down in your office, look at your checklist and make the same decisions you would following your instructions you put out for them.

Even though I have read several investing books that tell me how to buy stock this way or that way, not many I have seen break every single step down to the finest detail. A lot of them just lay out their strategy in general terms (the best sellers in particular) and then you have to break down the action steps. Developing your investment strategy to the smallest detail, while it might seem unimportant, will make finding stocks to buy a much easier task.

It also does a couple of other things. First, it helps you make decisions logically, not by the seat of your pants. If you have thought out every step ahead of time, you aren't put in a postion of trying to remember what step you need to take now. Many people also forget a step here or there and then get poor results and wonder why. When you follow an investing "system", that's exactly what it means -- a systematic approach where you do the same thing every time. If you leave out a step here or there, you really aren't doing following a system anymore.

If you want to learn how to buy stocks the right way, you'll take the time to master your strategy, no matter what type of investor you are. You'll take the time you need to write down your action steps and follow them religiously once you've decided on them. You'll have your step by step checklist out where you can see it at all times and not hidden out of sight.

Finally, once you've completed a complete cycle for a stock -- from purchase to sale of the stock -- review all of the steps from beginning to end to see what you could have done better and revise your checklist if needed. Once you find yourself learning from your mistakes, you'll be finding the best stocks to buy more and more often.

Thursday, December 17, 2009

Stock Software

There's a tendency to think that you need some fancy stock software to make money with stock market investing. The truth is though, that you don't need a whole lot of tools other than what IBD provides and an excel spreadsheet to keep track of your watch list. There are some programs that can make it easier, but you can get by without them. Now, what you do need is a good source of information that you can trust to be accurate an unbiased. My first tool of choice is the Investor's Business Daily and my second choice is their Daily Graphs service.

It's hard to duplicate what these tools do with the average run of the mill stock trading software. When you are first starting out, I'd probably hold off and see how you are going to set up your investment operation before you buy any. Do it by hand and then look for specific stock market software that will make the everyday steps you take to make investment decisions EASIER. You really won't know what you need until you have refined your approach.

The key here is not to confuse stock software with stock data. I use to get my data and then set up my process based on the data I get from them. Does a stock have earnings that meet my criteria? Then it can go into my excel spreadsheet and so on. Now, it could be that you might find a specific piece of stock analysis software that can help you screen stocks faster. If you can find something like that that can streamline your process so you can work quicker and more effectively at finding the stocks you want to find, then you will know that better once you start putting data into your system. The nuances of how you work, won't really be born out until you figure them out by actually working on each step of analyzing stocks that fit your criteria.

It could be that the data you put into excel, their might be some stock management software that fits nicely into YOUR system. Spend your time developing that system before you go out and buy a bunch of unnecessary software that might not fit your needs.

The other thing that this will help you to do is to really flush out your own personal investing style. Do each step by hand, then find a way to automate it.

Investment Property Loans

At some point you might want to supplement the stock market investing that you do today with other types of investments like rental property. The hard part those is finding a good source of money for your investment property loans. My first rental property was a house that I lived in. I originally bought it to live in a got an FHA loan. After a couple of years, I was able to move into another house and was unable to sell my house so what I did was advertise it for rent with an option to buy. I actually had more interest in it than when I listed it for sale. I think once you get into real estate investing, you'll figure out that a lot of people are in situations where they can't get a conventional mortgage loan and they need someone to "be the bank" on their behalf.

By doing what I did, I was able to get around the traditional investment property loan by getting a residential loan first. This enabled me to get a lower interest rate and put very little down. I had to live in the property a couple of years before I could do that which I did. You have to read your mortgage carefully because some lenders won't permit you to do this and can exercise their right to call the loan. Whether they would do that in today's economy, it's unclear, but they can. This would leave you and your tenant in a tough spot if so.

Using this strategy, you may be able to convert the homes you lived into your real estate empire by securing investment property loan rates that are lower than if you outright applied for the loan as an investment. Those rates are typically higher plus you usually have to put more down. Investment property mortgage loans also have tougher underwriting standards than residential property loans do.

Once you've got a tenant, I'd make sure that you do two things. One, make sure that they rent the place for one year with some option money. Make the option money contingent on "on-time payment". One late payment and the option money is forfeited. You can always allow a buy back of the option money to keep the tenant motivated to perform their part of the agreement. Or, in your head give them one mistake and do them a favor by not surrendering it unless their is a second violation of the terms of their deal. The second thing I would do is make sure that they cash with each payment and never take a check.

After you've got a few properties under your belt, getting loans for investment property will be a lot easier.

Stocks To Buy Now

I always look forward to the market closing and getting my eIBD edition for the night so I can look in for stocks to buy now. Lately, I've been getting a lot emails about the best stocks to buy now. I always view those "alerts" with a great deal of skepticism. You should too. Compile your own unique stock watch list. But the hard part is how to populate your watch list with the best potential stocks. Getting your stock market investing ideas from the media, your friends and the so called "stock alerts" isn't ideal. Now where do you start if you don't want to do that?

The first thing you should do is subscribe to the Investor's Business Daily and if you can afford it a subscription to the Daily Graphs service. After you've read and started implementing the steps outlined in How to Make Money in Stocks, these two services are the pillars to discovering the what stocks to buy now.

Now when you are looking at where to start, you've got to start with earnings. Earnings are the driving force that put a stock on the radar of institutional buyers. Once on the radar, the key factor in raising a stock's price is demand for that particular stock. So the task you have at hand is to identify those stocks and focus on the price and volume action for that stock each day.

Once you've put these candidates on your watch list, it's time to look at these charts each day. What you are going to want to watch for is certain chart patterns. The most important of these is the cup with handle pattern. Good stocks to buy now come out of stocks that this pattern appears. You are going to want to watch the stocks price and volume action on a daily basis. When volume is higher on higher prices, that's your signal to start watching that stock closer.

The art of reading charts is a skill that takes time to master. It may seem that you could never do that, but you can if you start looking at them on a daily basis, you'll find the shroud of mystery starts to disappear. Read and re-read O'Neils book. You'll learn more everyday. Think of yourself as a stock doctor. No doctor would ever treat a patient without looking at their medical charts and you should never buy a stock without looking at it's stock chart.

This it the key to identifying stock to buy now.

Tuesday, December 15, 2009

Stock Market Investing Today

When I set up Stock Market Investing Today, the market was pretty crazy. There were all sorts of stock market declines, bailouts and just overall turmoil in the market. Things have settled down a bit now and while nothing really has changed about investing in the stock market today, I hope that your investment philosophies have. 2008 should serve as a reminder that you cannot trust Wall Street to manage your money. They have proven during that time period that do not deserve to be our money manager. It's time we take control of our stock market investing accounts.

Step one is that you've got to decide for yourself that you can and will do what it takes to manage your own money. You've got to have a desire today to invest in the stock market on your own terms. That means in stocks that you pick, that you determine when to get into and when to sell. If you are going to buy individual stocks, you've got rid your self of the "buy and hold" crap you've been brainwashed to believe. That might be OK for individual mutual funds, but it's not the case when it comes to individual stocks.

Step two is that you have got to what the market tells you instead of what the media tells you. Today more than ever, stock market investing is driven by rumors and market manipulation. You have two choices. You can take advantage of it or you can be taken advantage of. How? By doing what they do and not what they say. You've got to pay attention to where the institutional money is flowing and follow it. The CANSLIM strategy is perfectly designed to do just do that. If you haven't already, go out and pick up a copy of William O'Neil's book How To Make Money In Stocks. Start studying his methods and break them down to a step by step investing system.

Step three is practice by investing in todays' stock market with real money. You cannot learn the true nature of the market by trading on paper. You have to start putting real money on the line. Only then will you know how to make investing decisions with the emotion the comes with it. Paper trading is easier than trading with real money. Once you factor in the decisions of trading with the emotion of losing money, you can then be confident that you can really learn when you apply CANSLIM.

Step four is to keep records of all of your buy and sell decisions to review. Review each trade upon completion to learn from your mistakes and improve your stock selection. Investing today in the stock market is a skill anyone can master. The only thing is that very few try and those who do, wing it. Don't let this be you. Vow to study the market and how to make money from it. Study your trades and make sure that you learn from your mistakes. It might take a year or two of devoted study, but you can do it if you set you mind to it.

Sunday, December 13, 2009

How The Stock Market Is Manipulated By Investors Today

I've been talking off and on about the appearance of the stock market manipulation by investors today. I'm a skeptical person at heart and when it comes to stock market investing today, I am a big believer that it is done day in and day out. The people that pay the price for this kind of manipulation are the small time investors like you and me. I am always surprised at the recommended buys that brokerage houses recommend for one and I think they do it because the big money needs buyers so they start promoting certain stocks. But if this is the case where is the evidence. It is extremely hard for the average investor to prove it.

I tracked down this video on youtube that has Jim Cramer talking about exactly what he would do to manipulate the market. It was nothing in this interview to talk about using millions of dollars of investors money to do just that. This is the main reason that I am a big advocate of doing your own investing today. If a guy like Cramer can come out and blatantly say that he did it, and how easy it was, can you imagine all of the other things that they are doing. And, then the Bernie Madoffs of the world can bilk millions out of investors. Who do they throw in jail? Martha Stewart. It doesn't make any sense. The reason they throw Martha in jail is to make an example of an individual to us small time investors to keep us in line. Meanwhile the corporations just get richer.

So how do you combat this outright manipulation. By doing what they do and not what they say. The tools to see when stocks are being manipulated are readily available. All you need is a stock chart and an Investor's Business Daily. What you have to do is start seeing the signs of buying into a stock. It shows when the value of a stock closes higher on higher volume. These are signs of institutional buying which you want to join in on. William O'Neil explains it completely in his CANSLIM strategy.

Spend some time studying the techniques found in How To Make Money in Stocks and stop paying attention to the media. They do not check their facts and only report what was said in the media not what is true. Spend your time research the market on your own and once you learn how it works, you are one step closer to being a successful investor in today's environment.

Saturday, December 12, 2009

Buying Stock

When you first begin your stock market investing program, you can choose to buy mutual funds or start buying stock. Personally, I think that you should have a portion of your money in mutual funds and then buy stock, or individual stocks, with the rest. Whether you use a broker or do it yourself, I think you stand a greater chance to increase your returns by choosing individual stocks. If you do that though, you have to learn how to sell your stocks, you can't buy and hold them. I was just talking today to someone about a family member who wouldn't part with their company stock and last year it dropped tremendously. This company is still here and still operating, but even though it's a good company, it's not insulated from dropping in value.

If you are looking for stocks to buy that never drop in value, you are living in a dreamland. But, everyday, brokers encourage investors to hold on to stocks and letting any gains they had in the stock vanish. Why do they do this? I don't know exactly, but I surmise that many of them do it because that's what they were taught to tell clients and also because they don't have time to figure out if it's the best time to sell a stock. The answer, never sell.

Learning how to buy stocks is easy. Learning how to sell them is a lot tougher. You see anyone can log in to their stock account and pick a stock, even the best stocks to buy sometimes get chosen that way. But once you are in, you kind of fall in love with the stock and ride the emotional roller coaster that comes with it -- especially if it's a company that you work for, it's even harder to part with. Ask any retiree holding company stock in their 401 k rollover. It's tough to get rid of it. But, in my experience, I've seen many get hurt holding on to it.

That's why when you are buying stocks, you've got to let the market tell you what stocks to buy now and not choose them with your heart. Stocks bought with your heart while they might go up, don't go up as often as stocks that are bought with a sound investment plan well thought out in advance.

Spend your time getting your strategy in place and then start putting it into action.

Friday, December 11, 2009

Stock Trading For Dummies

I don't know why, but publishers could write a book called Stock Trading For Dummies and it would probably sell like a million copies. I'm not sure why we like to be called dummies but when it comes to really complicated things like stock market investing, we do. While a book that talks about stock market trading for dummies I am sure is useful, you would be better off to buy a book called How To Make Money in Stocks by William O'Neil. In his book he walks you through his strategy called CANSLIM step by step. He bases his strategy on his research on greatest stock winners of all time. He's compiled a list of characteristics that each of those stocks showed signs and teaches you how to find them on your own.

If you wanted you could try and find all of your information online, (stock trade for dummies probably has some sort of website for all I know all ready to go), I think you'd be better off starting with one of the best investment strategies you can find available. If you combine his book with the Investor's Business Daily, you'll discover a bunch of information at your fingertips each day to help you become a successful investor. Don't be fooled into thinking that making money in the stock market is going to be easy. It will take hours of study and experience to perfect your investment plan. But if you take the time to do it, you'll find that even us dummies can do it as good as the pros.

After all, the people we trust with our money are sometimes pretty dumb considering the fact that they failed to tell tons of people to get out of the market when it was about ready to tank completely in 2008. That's all I need to know to figure out who has my best interest at heart and it's not Wall Street.

You also should feel the same because when it comes right down to it, the financial district is not concerned about whether we make money or not. They are only concerned that THEY make money. And as long as they do and we continue to be the dummies they want us to be, they'll continue to do it.

Maybe I should start my own book and call it Online Stock Trading For Dummies. But, even then, I'm guessing that some lawyer would call me and tell me you can't do that -- stupid. You might make money and that's not allowed. Lol.

Good Stocks To Invest In

One of the best place to start your search for good stocks to invest in, is at On the home page of the site, there is always the IBD Research Tool that lists stocks on the move. I checked it today as I was writing this and found five stocks to add to my watch list. These stocks are considered on the move because they are up in price on heavy volume. Here are the stocks I found:
  • Kirkland's Inc (KIRK)
  • Edwards Lifesciences Cp (EW)
  • Green Mtn Coffee Roastrs (GMCR)
  • Wimm Bill Dann Foods Adr (WBD)
  • J Crew Group Inc (JCG)
Within these stocks, I see a couple I recognize as retail like Kirklands and J Crew. Green Mountain has been popping up a lot lately and seems pretty hot. While these may be good stocks to invest in now, it's a better bet that they need to be added to your watch list for further review. These are not necessarily stocks that meet CANSLIM criteria but that satisfy this stock screen. Keep in mind that whenever stocks appear in these screens to always research them thoroughly before you buy them.

What are good stocks to invest in? Stocks that have strong earnings and sales combined with institutional sponsorship. That's why these stocks could be potential buys for your portfolio because they are showing signs of big money flowing into them -- a key component needed to drive a stock price higher.

As always if you are looking for a list of good stocks to invest in right now, you can find a bunch of candidates every day in the Investor's Business Daily on the various screens in each daily edition. When you read the paper, you should have a notepad handy to record the stocks you see that show up on them. You could even label your list -- What Are Some Good Stocks To Invest In.

Once you have compiled your list of potential winning stocks, review them further by looking at each stock's daily and weekly chart. In addition, you'll want to review the overall market direction, because no matter how good a stock you find, the overall market direction will tend to pull it up if the market is in an uptrend and pull it down if the market is in a downtrend. There is no need to invest in the market if the likelihood of your stock fighting the market could affect your results. Good luck with your stock market investing plan!

Investing In Shares

When you approach the stock market, you have a choice of investment options like stocks or mutual funds. I believe that investing in shares of stock is the way to go if you want to make serious money. If you get good at stock market investing, you can make a fortune in the market. Most people though give up just when they start learning. Learning how to do it will take time and patience as well as practice trading real stocks. You won't really discover the rewards in the stock market until you learn how to invest in shares of stock. You should commit today to learning the steps you need to take to be successful.

The best advice I can give is to adopt the CANSLIM strategy as described by William O'Neil in How To Make Money in Stocks. This is probably one of the greatest stock market books ever written about investing in stocks and shares. His philosophy is simple -- you can find future stock market winners by studying the past all star stocks. What characteristics do they share? He's put together a whole set of steps to follow to weed out the stocks that don't act like winning stocks.

The first thing you'll need is a subscription to the IBD. I prefer the eIBD version as I get it when the market closes and I can have it on my computer no matter where in the world I am as long as I have an internet connection. Then, pick up his book and start reading. You'll find that if you start reviewing the materials until you know it like the back of your hand, you'll start figuring out that it's not as hard as Wall Street makes it seem. Now, this doesn't mean you'll lose money, but if you win once in three tries, you will make money in stocks. The only thing preventing you from taking action is you. It's time to stop letting other people manage your investments and take charge of it yourself.

Don't let the fear of failure in the market keep you from trying. Most everybody I know lost money in the market in 2008. The vast majority of people left their money where it was and they lost almost HALF of their money. You have the skill and ability to do that! Start working on it. An investment in shares of stock will pay huge dividends for your portfolio if you work at it.

Good Stocks

Investors are always asking themselves, where are the good stocks in the market. Uncovering these gems requires a strategy to uncover them. So, just how do you go about finding good stocks to invest in? My first step in the process is to sort through stocks based on earnings. The best way that I've found to do that is by using the IBD Daily Graphs service. It has the stock charts of each company and within those charts you can look at the earnings data along with all of the other things you'll need to whittle down your your stock market investing selections.

Finding a good stock for your portfolio also means you've got to pay attention each day to the stocks that pop up in the Investor's Business Daily. Each day, there are several screens in the paper and on When they appear, you've got to put them on your watch list for further review. You are going to find that your stock watch list will grow and you'll need a way to figure out how to remove them by filtering them out by each piece of the CANSLIM puzzle.

Eventually, you'll reduce your watch lists down to a small list of good stocks to buy now. And, for these, you'll need to start plotting buy points for each individual stocks and alerts to keep you informed as they approach your predetermined stock price. The key to implementing the CANSLIM strategy is buying stocks that are fundamentally strong PLUS buying them at the right time. This will take some practice as it's harder to do than it looks.

But getting good stock investments by slowly eliminated the losers in the process is worth the time. The only way to get good at it is by practicing with real money. I know that a lot of people believe in paper trading but it's like scrimmaging basketball against your friends. It's not the same as the real game. You've got to get to the real game as soon as possible. Game time experience is what you need to improve your game. At first, you'll start out as a rookie and then you'll get better if you learn from your mistakes.

Identifying a good stock to invest in is a rewarding experience. And the thing is you'll probably become a better stock picker than you're broker. There's a reason they call them a broker. They never tell you when to sell and you get broker every day you hold a stock that will eventually come down in value.

Thursday, December 10, 2009

What Is The Market?

I guess in terms of helping my beginning investors, I thought it might be helpful to discuss what the market is when we are talking about stock market investing. A market is a big network, of securities dealers, brokers, traders and investors, and speculators who are actively trading with each other. Today the markets are highly computerized and even though there are live brokers, the vast majority of investors are hooked into it via the internet.

The stock market in the United States, as the free market capital of the world, is probably the prototype for other financial markets and my guess is that it's also the largest. Today, investing in the stock market as far as market value is in the trillions of dollars. The amount of wealth that is gained in the market over time is almost unfathomable to the average investor. The numbers are mind boggling.

Being a successful investor in the market, is about staying abreast of market news. Anything that happens on Wall Street, the New York Stock Exchange, on the Dow Jones, Industrials or the NASDAQ is almost instantly known. By the time you read it, it's old news. For that reason and because of the internet, trading in the market is highly efficient. We know the market price of stocks at any given moment and can buy or sell in a second as trades are executed immediately.

I'm really excited about what the future holds, because we are increasingly finding ourselves in a global market. This dynamic includes other countries, other economies, other currencies and the cultures that they bring. As such, most investors are seeking the very best market intelligence they can find through the publications they use as their trusted sources of information. The China market holds a lot of potential as they increasingly make their market more efficient and more capitalistic. Who knows what is in store as these growing markets start to expand and improve the wealth of their populations.

But the simple fact of the matter is that even though the world markets are extremely complex, the basic law of the free market is still the law of supply and demand. Market price is still whatever the market will bear. That depends on the demand for a stock on the exchange it is listed. A stock in high demand will command a higher price and a stock in low demand will fall in price.

The concept of the market place is also simple because it's still where buyers and sellers meet to trade -- no matter whether it's in person or not.


I started this site because I was interested in investing. Back in 1985, I started working for a bank and that's when I got interested in trying to make money in the stock market. Because I have a long history in the financial services field, a lot of the concepts about stocks, bonds, mutual funds and options are familiar to me. But, I know that a lot of people need more information and need a good resource on stock market investing to do it. That's what this site is about.

My definition of investing is this: You give your money to another individual or company who puts it to work implementing their idea or growing their business. In return, you get your capital back plus earnings in the form of dividend or in capital gains. I think the primary reason to invest, is to build a nest egg for retirement. Retirement investing is a hot topic but particularly with people who are nearing retirement. They want to know if they are doing the right thing. Will they have enough? That's why it is critical that you start implementing an investment strategy as soon in life as you can. Compounding of interest and gains can help your savings and investment funds grow faster because the earnings is earning money -- not just your original principal amount. The magic of compounding is a key factor in your results.

Stock market investing provides one of the most lucrative options to put your money into because of it's long track record. It has a history of providing an average return higher than bonds and money market fund. That being said, just because you put your money into the stock market, doesn't mean you are guaranteed to make money. If you choose poorly, you will more often than not lose money. Therefore, it's incumbent on you to learn how the market works through study and practice.

If you have a lot of money, though, you could pay for investment management services to have someone handle your investments. I think that while this strategy can work, for the most part, the advice you get probably won't outperform what you could learn to do on your own and I strongly urge you to consider it. Why? Because I think it's been proven over and over that Wall Street doesn't have your best interest at heart. And many people, including people I know lost nearly half of their portfolios in 2008. Where were these advisors and why weren't they encouraging them to lock in any gains? Not earning their paycheck -- that's where.

If you decide to do it on your own, you'll need to become familiar with investment securities, the market, how to make trades, how to do stock market research. These are things that you can learn through reading and study and the help of most of your online brokers who provide webinars sometimes free, that can help you. You'll also need a source of stock market information for daily advice and a data you need to make decisions about the stock market today.

You can if you want also seek out your friends for investment advice as you may find a mentor who is already practiced at the fine are of investing. If so, spend time with them. I know personally, that one of my family members is into property investment and he has proven a strong resource with some rental property I have. The key is the resources are there if you look. I would, however, encourage you to stay leary of the media and the brokerage houses in general because I think they have their own interest at heart, not yours and mine.

Because of the sheer number of investment opportunities available to us, the first thing you are going to do is select an investment philosophy. I'd encourage you to start researching that first to get a feel for the type of investor you want to be.

How To Invest A Million Dollars In Today’s Market

I think for a lot of beginners starting in stock market investing, they are short on cash. But what if you had a bunch of money and you needed to learn how to invest a million dollars in today's market. I think the first thing I would do is pay off all of my debt and sock away one year's expenses in a money market account and probably take part of that one year's expenses and maybe ladder some certificates of deposit with different maturity dates so that they keep renewing. After that, I'd probably set up some form of annuity to guarantee me a certain amount of money for life.

Once I've done those things, I'd probably next set up an index fund to track the overall market and the remaining amount, I'd put in an investment fund to invest in the market today in individual stocks. I'd do this with this portion of money because my guaranteed income stream will erode some with inflation. The index fund and the individual stocks I buy in the market today, I'd invest those to hedge against inflation and provide me a higher return over the long haul.

Wouldn't it be nice to win the lottery and have to decide instantly where to put a million dollars and figure out how to invest it in the market today? I'd like that problem. I'm sure that you could also hire professional money management if you wanted, but as we have talked before, I am almost convinced they would have you fully invested at all times and in today's market, you can't invest that way when you are buying individual stocks. You absolutely have to lock in gains and limit losses.

Anyway for most of us, getting a million dollars today seems farfetched although it's within reason to see our investment portfolios grow to over a million. But only if we get started now!

Should I Invest In The Stock Market In This Economy

I hear a lot of people ask should I invest in the stock market in this economy? I know that this might seem crazy, but it's not the economy that you watch. It's the market. Let me give you an example. I have a friend of mine that always seems to be short on money. No matter the economic conditions, you are always going to find someone you know in that situation. I always say that a person like that is in a recession all the time. I have another friend of mine who had some trouble with his bills for awhile but he was in a recession for that period of time but then came out of it. He is on the road to recovery. I have yet another friend who seems to never have money problems. He does excellent at managing his money and is never in a recession it seems. If you asked all three of these people about investing in the stock market in the economy we are in, you'd get three different answers. One would tell you no, one would say later and one would say most definitely, I'm already big on stock market investing.

The point of the story is this. If you want to learn how to invest in the stock market, you need to let the market tell you when it's a good time. Don't rely on your opinion, your friends opinion or the media's. Have a rule that states that I will always invest in the stock market when it's in an uptrend regardless of the economy.

Trading Stocks In Your IRA

For some reason, I've been having a lot of questions from my readers about trading stocks in your IRA. Trading stocks in your IRA is no different than stock market investing in general. An individual retirement account is a creation of the tax code and acts as an umbrella for a brokerage account. While you can trade in stocks within your IRA, the IRA itself governs the tax treatment of the contributions, the gains and the distributions. The actually underlying brokerage account allows you to trade stocks like you would in a normal individual stock account. The only difference is that you have to designate what type of account you want when you open an account with your broker. After that it works. the same.

Taxation and inflation are two of an investors worst enemies. By trading stocks in an IRA, you can conquer the first enemy by avoiding taxes on your gains and by trading stocks in your retirement account, you can give yourself a hedge against inflation. That's because stocks over the long haul have outperfomed inflation.

Besides trading stocks in IRA's, you can also invest in bonds, real estate, options and more. The way you fund your account is up to you. I know that when I first started becoming familiar with IRA's alot of people at the bank put their funds in certificates of deposit. I wouldn't do that at my age now, but maybe if I was retired and couldn't afford to risk my money in stocks, I might feel differently.

What Happened To Stock Market Today

So, I opened up my eIBD to see what happened to stock market today. The good news was that the stock market was up today on lower volume which means it wasn't a distribution day. The market does remain under pressure so you want to be cautious with new buys and watch your stock portfolio for signs of institutional selling. At the first sign of weakness, you should sell those stocks to keep any gains you might have.

The indexes have rack up a number of distribution days according to the IBD Big Picture Column. You can take advantage of slow days in the stock market like today by analyzing your past buys and reviewing your trading operations. By doing this, you can streamline and improve your stock picking ability. Clean up your watch lists and organize them in a fashion that when the market makes a turn upward that you are in a position to move on to the stocks that show strength and sponsorship.

Just because the market is under pressure today doesn't mean you shouldn't be doing anything about your stock market investing program. You should always working on looking at stock charts, reading the Investor's Business Daily for additional ideas. I know that one of things that I do is re-read How To Make Money In Stocks because there is always something that I can glean from it as I re-read it every time to make sure that I understand completely every step O'Neil recommends.

Wednesday, December 9, 2009

Can I Buy Stocks In My IRA

I am guessing by the questions my readers keep asking that there is still some confusion as they keep asking "can I buy stocks in my IRA". I know that it's easy to get confused about account types and what they can do. An IRA is an account type like an individual account, a joint account, a corporate account, etc. An IRA is just a special type of account that the government created that has special tax benefits. Those benefits are that the contributions are tax deductible and the growth inside of an IRA is tax deferred making it ideal for long term investments such as stocks.

The great thing about IRA's too is that you can buy stocks, mutual funds and other types of stock market investing and it works just like a regular stock account. You place orders the same, you get statements the same way and you basically operate the account the same as any other. It's the tax treatment of the account that matters. For that reason, you want to make sure that you don't mix different type of accounts money for fear of complicating your tax return.

Keep in mind too that withdraws from an IRA are subject to a 10% early withdraw penalty by the IRS if you take it out before age 59 1/2. Therefore, you don't want to put money in an IRA that you might need before then.

Can you buy stocks in your IRA? You most definitely can and should do that.

IBD Stocks To Watch

Each day after the market closes, I start reading the Investor's Business Daily for IBD stocks to watch. The IBD is geared to bring high quality stocks to surface for you to put on your watch list. The first thing I do when looking for stocks to add to my watch list is reviewing each page of the paper for potential stocks that show up in various stock screens. One of my favorite places to find potential stock winners is "Stock on the Move". These are stocks that have showed huge increases in volume on stocks closing higher in price. This helps you easily identify stocks that are seeing institutional sponsorship and could indicate a breakout. The problem I've seen with these stocks is that they may have already extended past the pivot point where you are expected to buy the stock.

Because of this, you've also got to identify these stocks sooner so you can be reviewing their stock charts and identifying pivot points before they happen. IBD is set up in such a way that you can put together what might seem to be an endless watch list to wade through. There are numerous sections in the paper and also on that at one point or another are going to pop up the stock market winners. The ones making these screens numerous times are the ones you really want to watch.

Later, when I get a chance, we'll talk more about how to set up your stock market investing watch list and whittle the list down so that you can manage it.

Can I Put My Retirement In Stocks

I had one of my readers ask "can I put my retirement in stocks?" The answer is that it depends on how old you are. My mom for example is 73 and still has almost all of her retirement money in stocks. I'll have to say that 2008 hurt her retirement fund badly. So, I think if your time frame is short or you are already retired, you are going to want to sit down and evaluate how much risk you are willing to take. However, if you have a longer time frame, say over 5 years, you've got to be invested in the stock market because over the long term, you'll have a greater opportunity to earn a higher return. The longer the time frame the more risk you can tolerate. The thing you want to avoid is for the market to be tanked when you need the money.

As you inch closer to retirement, you've got to reduce your risk tolerance for your investments. How much depends on how much money you have saved up. The more money you have accumulated, the more money you can put at risk in the stock market. Ideally, you want as large a retirement as possible so that you can have a portion of your money stock market investing portfolio in equities as a hedge to inflation.

Inflation is the biggest enemy to your retirement account because higher inflation erodes your purchasing power. If you are in a position where you have to keep all of your money in certificates of deposit or money market funds, you won't keep pace with inflation. The ideal scenario is to save as much money as you can now so you can continue investing in stocks when you are older.

Techniques To Follow When Investing In The Stock Market

As a new investor, you'll find many techniques to follow when investing in the stock market. The hard part will be settling on one specific strategy. I know that when I first started, the quick money making options strategies were cool. Then when I got into the financial industry, I became a value investor and when I discovered growth investing and the CANSLIM strategy. The flip flopping around did nothing to help me hone any specific strategy. It did however turn me on to the stock market investing "strategy of the day". Do not fall into this trap.

What you want to do is identify with a specific strategy and stick to it. It could be that Warren Buffett might speak to you. In my case it was Willaim O'Neil. This will be step one when you start to invest in the stock market. Read all you can about stock market techniques and investing strategies. Scour the bookstore and the library. Check out the internet. When it is all said and done, adopt the strategy you are most comfortable with and run with it.

After you have decided that you will be a certain type of investor, it's time to implement the techniques and become a master in them. Focus completely on the instructions and steps to the letter until you determine you know the investment strategy inside and out. Only then should move on to the next step and that is to make it your own.

With every investing technique, their are nuances that you can tweak to improve upon it or make it work better for you. What you are going to do once you see that a specific set of investing decisions is required and see the results from them, you will see how to make it work better for you. This happens because of the focus and attention you give it. Making money in the stock market requires this kind of effort and study. Commit yourself to the task!

How To Buy Stocks With Your IRA Money

A common question I get is how to buy stocks with your IRA money. I can tell from a lot of my readers that are still questions about how IRA's work when it comes to stock market investing. Remember, that the first important point is that an IRA is a type of trading account that the government has set up that has preferential tax treatment. The other point is that stocks are a type of investment that you can fund your IRA with. You can fund an IRA with basically any type of investment like a stock, bond, mutual fund, real estate and annuities to name a few.

In order to buy stocks in your IRA, you must open an IRA account with your broker. Remember that an IRA is only different in tax treatment and not in the mechanics of how it works. So, if you are familiar with a standard brokerage account, you know all you need to know to also buy stocks to fund our IRA.

The last point I think that is important is that you don't want to mix IRA money, also known as qualified money, with money that has already been taxed -- non qualified money. Do not commingle these funds together or you will complicate your tax situation.

Scottrade Blocks Buying Of Penny Stocks

I had a reader write in and ask me if it was true that Scottrade blocks buying of penny stocks. Rather than just do my research on the web, I decided to call Scottrade directly and ask them. I called the contact us number on their website and because it was after hours, I was transferred to their national call center. I spoke with customer service there and was told that you can definitely buy penny stocks at Scottrade. There are however, certain penny stocks that do have restrictions on them where Scottrade cannot complete settlement of your purchase either because of a decision by their risk management department or the Depository Trust and Clearing Corporation, aka the DTC.

In any case, I was told that this is not a very large list. It could also be that you might be able to complete your trade at another broker as it seems that different risk management departments may have different stock market investing policies that wouldn't prohibit you from buying that penny stock through them.

The best thing you can do if you have trouble buying a stock through Scottrade or any other broker is call them directly and ask them if it is true.

Best Stocks To Buy Right Now

One of the hardest stock market investing decisions you face is figuring out what the best stocks to buy right now are. But finding the best stocks to buy will be one of the most challenging skill you'll need to master. More importantly, though not only do you want to find the best stock to buy, you also want to figure out the exact best time to buy it. William O'Neil calls it the pivot point. The pivot point or buy point represents the optimal time to buy the stocks you uncover that meet the rest of the CANSLIM characteristics.

I think it's almost harder to figure out the pivot point than to actually pick the best stocks to buy now. One of the reasons for this is because it's easy to look in to the past and see that the best buy point was a certain price. It quite another to determine it as it is occurring. And, to figure out if it is an actual break out on heavy volume is also hard to do. You have to time your buy with the market. Fortunately, most stocks with the cup with handle chart pattern do have a pullback that gives you a second chance to buy. You want to make sure that buy as close to this buy point as possible because if you buy too soon, you'll get stopped out on the pullback and if you buy too late, the same thing will happen as the stock's price goes through it's natural correction.

To find these stocks, start learning about CANSLIM and reading the Investor's Business Daily and also learn what is the best stock to buy right now.

Good Stock To Invest In Today

When you are looking for a good stock to invest in today, one of the best things that you can do is review the Investor's Business Daily. Each and every day there are several stock screens you can review. One of the first things I do each day is review the Big Picture column. In addition to reviewing the overall market direction and whether today was a distribution day or not, the editor's also pick a couple of stocks to focus on as well. You can also see stocks reviewed on IBDTv.

If you read the paper every day as part of your stock market investing program, and then also watch the videos, you are going to start seeing that they present some of the best stocks to invest in today in several different places. You've got the IBD 100, the Stocks in the News, the Weekly review. Each and every one of these sections of the paper highlight stocks that are passing CANSLIM tests and making them worth a look.

Now, just because they show up on these screens, they are not buy recommendations. You've got to do your due diligence. Do your own research. Let the market indexes tell you when to buy into the market and let the individual stocks tell you when to review them. If you rely on your friends or your broker, remember that we are almost always the last to know. When you are the last to know, you can bet the big money is already mostly out. And without, there purchasing power, a stock has one direction to go and that is DOWN.

Keep an eye on the IBD. It's designed in such a way to tell you the best stocks to review and invest in today.

Is It Safe To Invest In A Roth IRA In Today’s Economy

I was meeting with some friends the other day and one of them asked me is it safe to invest in a roth ira in today's economy. I can see how it can seem like a valid question considering the state of the economy today. However, the question is a really misguided because a Roth IRA is only a special account allowed by the tax code that is given special tax treatment. You could open Roth IRA and never lose money if you invested it in CD's. A Roth IRA, like a regular IRA, are just types of accounts we can open.

So, what I think they were really wanting to know was is it safe to invest in today's economy. While it also might seem a little riskier now to invest in the market, stock market investing is always risky. Investing today is no different than investing at any other time. In any market, you always want to make sure that you are investing "with" the market and not against it. You can judge what market direction the market is headed by how you feel, how your friends feel or even by how the media feels. You have to look at the one thing that can tell you whether it's a good time to invest today and that is the market itself.

Determining market direction is the first step to figuring out if it is safe to invest. After you do that and are confident that the market direction is trending upwards, you need to then only pick the best stocks with the best earnings and with the strongest institutional support. And even, when you do all of that, you need to make sure that you always realize that you can always be wrong and that the price of the stock can go down no matter how good it is. The best way to learn about the market is by studying it yourself. Get started today.

IRA Rules And Penny Stocks

Stock market investing can be pretty complicated and if you factor in taxes and different tax vehicles, it can cause you to ask questions like are IRA rules and penny stocks different from anything else. It's easy to get confused. But don't confuse a penny stock investment with an account type. An IRA is nothing more than an account type set up by the government to give us a tax break. You can fund an IRA with stocks, including penny stocks. The difference in investing in penny stocks in your IRA and an individual brokerage account is the tax treatment of you gains and losses.

All money in a brokerage account is subject to taxes while the gains in an IRA are tax deferred. It also means you can't claim stock market losses either. Because of an IRA's tax favored status, there are limits to how much money you can contribute and rules on when you have to start withdrawing the money. There are no such rules for a regular brokerage account.

Stocks in general make a good investment for an IRA because they are long term in nature. It makes sense to put long term investments in a long term type of account. The real question here is should you invest in penny stocks. I would urge you to consider only buying stocks that are over $15 per share and to shy away from penny stocks. They are speculative and you risk losing money in the stock market no matter which stock you choose but more so with penny stocks whether you use an IRA or not to buy them in.

Good Stocks To Buy Right This Second Now That You Know What To Look For

Today I wanted to talk about some good stocks to buy right this second now that you know what to look for. You should already know from previous posts that you should be looking for stocks with strong earnings and buy them when they break out of a solid base. One place to start looking for stocks that are breaking out are on Investor's Business Daily in their where the big money is flowing. A handful of stocks are on that screen right now as I write this. They are Hi Tech Pharmacal (HITK), Steven Madden Limited (SHOO), Schweitzer Mauduit Intl (SWM), American Superconductor (AMSC), Tri-Tech Holding Inc (TRIT).

While these stocks may not be the best stocks to buy right now, they are showing a breakout in higher volume which is what you want to look for. What you would have to do is once they show up here, you need to put them through the rest of the stock screens like earnings and sales for example. While other stock market investing strategies might work, strategies based on companies actually making money makes the most sense to me.

Many times, rightly or wrongly, good stocks to buy today might break out on higher volume but have poor fundamentals. That's why the stocks in that screen are not buy recommendations. They are however a place to start reviewing stocks. Other places are the Big Picture column, the Stocks in the News column and the Weekly Review.

Resist the urge to buy a stock right away because it shows up on a screen. Review it for the proper buy point and remember to always sell any stock once you buy it if it drops 7-8% below your purchase price.

Tuesday, December 8, 2009

Can Penny Stock Websites Manipulate The Market

With all the buzz on the internet about penny stocks, the real question is can penny stock websites manipulate the market? Well, yes and no. Penny stock websites can be used to help manipulate the market but can't actually do it themselves. Here is how I think it works. Someone with enough cash decided they want to make some money in the market. They then decide to pick a penny stock and pump that cash into it and this in turn inflates the price of the stock because of the artificial demand. This is where the penny stock websites come in. They then advertise the stock on a list called "hot penny stocks" to encourage would be investors like you and me to purchase it. They do this by telling us that their is some great news that no one knows about it. Maybe it's a special patent. A cure for cancer. Something so incredible that it makes sense that this particular stock is going to be the big winner.

So the next time you are looking at a penny stocks to watch list, remember to be cautious. It could be that you are being manipulated into buying it from people trying to unload it. If they have no buyers, they get stuck in the stock and will lose money if they can't find buyers for it. My advise is do not fall in the trap of buying the best penny stocks according to some "guru". The best penny stock picks you can make are the ones you find on your own. Don't rely on others to plot your stock market investing strategy, craft your own.

Monday, December 7, 2009

Review Of What Happened In The Stock Market In 2009

If you are a mutual fund investor, you might want a review of what happened in the stock market in 2009. As a mutual fund investor, this seems to me to be the only strategy that you would want to buy and hold with. I don't really believe in it for individual stocks because individual stocks are to easy to manipulate once the big money starts flowing into them. It can't happen that way with a mutual fund.

But, if you look back at 2008, the market had tanked and in 2009, the market rebounded in a major way for the most part. Because in a mutual fund, you own shares in the mutual fund and not the individual stock, there is a good chance that in the stock market today the value of your fund might be as high as 40%. Whatever it is, it is most likely up.

I have a family member that liquidated their mutual fund at the lowest point. If they would have held onto it, they would have recovered most of it in 2009. But, they were scared by the stock market investing news of the day and cashed in, locking in their loss. If they had been in any individual stock, I think that I would have recommended they cash out. Because we know that any one security could go to zero. The likelyhood of the net asset value (NAV) of a mutual fund going to zero is highly unlikely and the manager is going to work to improve the NAV. He can trade into better performing shares of stock even if there is a stock market crash. While he might have to stay fully invested, he can adapt.

You need to learn about what happened in the stock market in 2008 and 2009, because it illustrates when you should buy and hold and when you should not. Buy and hold a mutual fund, buy and sell individual stocks to lock in gains or sell them immediately if they drop by 7-8% of your purchase price.

How To Start Investing In The Stock Market Without A Broker

Because of the stock market decline in 2008, many people are starting to wonder how to start investing in the stock market without a broker. I think that this is a great epiphany, because for the first time, people are starting to realize that your broker is really not working in your best interest. If they were, don't you think they would have called you and told you to sell at some point. If they didn't then it's time you start learning stock market investing on your own. I've been telling everyone I know that you and I are just as qualified to lose half our money. Why do we need professional advice to tell us how to do it. You would be better off investing in a stock index fund and leaving it alone if you are going to follow the market down.

What you need when you are learning how to invest money in the stock market is someone that will tell you when to lock in gains. And if they are not going to do it, then what are we paying them for? OK. So the answer is that they aren't earning their money, right. Are you perfectly capable of losing half of your money. I know I am. Heck, I can lose all my money if I put my mind to it and you can too.

If you want to invest in the stock market on your own without a broker, the first thing you must do is pick an investment strategy that you are going to follow. You've got to decide are you going to be a growth investor or a value investor. Are you going to invest in mutual funds or individual stocks? Once you pick a strategy, you must be determined to become an expert at it. You also must stick to your strategy and not flip flop and invest in penny stocks one day and options the next.

After you pick a strategy and are starting to learn how to start investing in the stock market, you might want to start paper trading or use some trading simulators available online to start learning the mechanics of how to place orders. I know that the broker I work with provides a stock market simulator with my account which is super. (FYI: I use optionsxpress)

As far as what online broker to use, if you go with one of the big names, you are probably going to be OK. Some have different trading tools than others but for the most part, you'll be able to place orders once you fund your account as good as any other. I'd mainly be concerned with fees, especially if you account has a smaller balance. Try and get with a broker that doesn't have any monthly maintenance fees that might erode your account.

Investing in the stock market for beginners can be a daunting task. But with patience and perseverance, you can learn what you need to know to do it without a broker and be succesful at it. The only thing that is stopping you is yourself.

Sunday, December 6, 2009

What Do You Think About The Stock Market Today

I was talking to a friend the other day and he asked me what do you think about the stock market today. I told him a lot of what I have said on this site and that is that stock market investing is one of the best ways to make money today. It's also easy to lose money as well. The stock market is controlled by a handful of institutions and we really have no impact on it as a small investor. Because of that, you have to realize that when there is money to be made, there are people plotting and scheming to make money off of others.

That's why I think you have to think a little differently about how to invest in the stock market today because otherwise, you'll see your gains diappear. Picture the money in the market like a big wave. It blows through a stock pumping it up like a tsunami and when it leaves your stock it leaves devastation in it's wake.

That's what happens when you don't lock in your gains and you buy and hold like the teach you. Remember that you have to do what they do and not what they say. Spend your time finding stocks that the big money is flowing into with strong earnings and sales. When they start getting out, you should exit too.

How can you tell when to get out? There are two ways. The first is the price and volume action of the stock. When the stock closes lower on higher volume that's a red flag. When the media starts talking about your stock like it's the greatest thing ever, that's probably a cue too because that means the promotion has started and they are now leaving.

Pay attention and you'll start to see this same pattern that I do.

Saturday, December 5, 2009

Internet Stock Market

I sometimes wonder if one day, all of the many stock markets in the world will become one giant internet stock market. In the short term, I don't expect it because of everyone's greatest fear of a one world government or a one world currency. Right now, I am also guessing that most of the biggest companies trade on the New York Stock Exchange. I would think that that is the closest that we will probably see in our lifetime but you never know. A global stock exchange completely computerized is not beyond the realm of possibility.

But we do live in an age where we can make all of our stock market investing trades via the internet. This is in and of itself is a revolution. The convenience to make all of your own trades without having to call a broker is awesome. I am continually amazed at the extremely amazing things we can do with a computer and an internet connection. You can run a complete trading operation right out of your home. It's as simple as opening a brokerage account at the many different online investing brokerages available to you. Once your funds clear, you are good to go and came make trades immediately.

The only hard thing is picking stock market winners. With the advent of the internet, we can get all of the stock research we can get an enormous amount of data. Add that to all of the opinions on the stock market on tv and the internet, and you have created a minefield of information making it almost more complex than ever.

The best thing you can do is adopt on specific strategy and rely on your own trading experience to be your guide. While the vast majority of publications mean well, most will not provide you with the direction you need.

Stocks To Buy With Excellent Upward Potential

When you are scouring the stock tables looking for stocks to buy with excellent upward potential, you'll start to figure out that you are looking for growth stocks. Growth stocks provide the best opportunity for price appreciation. To me, the best growth stocks can be uncovered using the CANSLIM stock market investing strategy. This will uncover stocks with the characteristics of some of the most prolific growth stocks in the history of the market.

Fueling that growth are institutional investors. The big money flows from these investors into stocks and almost force the price to rise on their buying alone. If you combine the upward pressure that they place on a stock with a stock with strong earnings. Buy the stock at the same time they do and you combined two of the most prolific factors that have driven many stocks prices through the roof.

Without this buying, you'll find that there aren't enough buyers to move the price up.

If you haven't figured out by now, I think that the market is somewhat manipulated. The mere fact that you can identify stocks the big money is buying and ride the stock up in price with them is enough to tell you that with enough money you can pump up the price of just about any stock. This strategy is most often found in the penny stock sector where people are manipulating the market by doing exactly that and then promoting the stock to individual investors as the next best stock.

You won't find the best stocks to buy in the penny stock price range. Stick with stocks that are over $15 dollars per share and start your research there.

The Checklist Investor

I've been learning how to use a new piece of software called the checklist investor. I picked it up from here the other day. Since that time, I've been spending time getting my checklists in it and working to get familiar with all of the features it comes with it. I discovered that you can add specific stock transactions to the list and work through your stock checklist as you are evaluating it. I also noticed that you can log into your TD Ameritrade account from within the software. Since I use, I wasn't able to take a look at how that worked.

Checklist Investor also has a built in mini-browser you can use as well as a way to attach to files to your stock research. But by far the best use of the software is in the ability to create a slew of checklist. I've already set up several. Here are some of the checklists I have set up so far.
Determining market direction
Analyzing stocks based on CANSLIM
Post stock sale evaluation checklist.

I am a big believer in breaking down each step of your strategy. This gets your process out of your head so there is more room in there to actually focus on the results of your research instead of the mechanics of your investing. Most of the research you do is the same for each stock you find, so why not streamline it into a system of specific action steps you already know you are going to take.

The other value in creating stock market investing checklists using this software or any other is in not forgetting important details. It's easy to slack on the finer points in investing. Don't let this be you. Play meticulous attention to every phase of your investing. Your results will improve dramatically.

Checklist Investor

The other day I wrote a post called Checklist Investor review. This piece of software provides a great way to make checklists for all of your stock market investing strategies. Taking note of all of the investment choices you make and writing them down and putting each step down as you make it is one way to clear your head and lay out a roadmap to your investing success. You've got to do this so that when the your money is on the line, you won't think emotionally but instead will think logically. By following the logic of your investing checklist, you'll eliminate one potential roadblock to making money in the stock market and that is acting irrationally. The other thing about breaking things down is it clears your head and you don't have to rethink everything all of the time.

The first thing I did after I got my checklist investor download was to start putting all of my checklist into it. Now, when I want to see for example, what the market's general direction is, I just open up the checklist investor and zip through the steps I decided to take. Because all of the steps are there and the rules I need to know are all in one place, I can quickly find out what the day's market activity means to me. In addition, I won't forget any steps. You know how easy it is to leave stuff out. With a checklist, you won't forget. You might not choose to exercise a step, but at the very least, you will see it. The only thing you need to do is make sure you review your checklist. That by the way is the hardest part.

There is alot more that you can do with Checklist Investor that I don't take advantage of. You can use it to be as detailed as you want it to be. Whether you use this software or a regular written checklist, either one will help you get more clarity in your investment process.

How To Invest In The Stock Market Step By Step

If you have been following my blog for a bit now, you'll know that I've been advocating a how to invest in the stock market step by step approach. I believe that you've got to break down every single step you take each time you decide what stock to buy, how much of it you decide to buy, when you decide to sell it and even goes as far as having a checklist to make sure you don't forget anything. You've got to be an expert on the strategy that you employ. Let's take the CANSLIM investing strategy. I think one of the first things you need to master is determining the overall market direction. I've broke down everything involved in figuring that out and put each step in the form of a checklist. Now that I have a handle on that, I will start taking the next aspect and breaking it down and doing the same thing.

The key to making money in stocks is perfecting a successful stock market investing strategy. There are plenty of people who have been extremely successful in making a ton of money investing in stocks. The key is to pick someone who was wildly successful and copying their methods. Even when you do that though, you need a roadmap to follow. That's where your investing checklist comes into play. It will tell you exactly what to do, when to do it and how.

Taking the emotion out of stock market investing is also an important aspect in locking in winning stock picks. If you are winging it, you can never be sure on exactly what is working. By having pre-thought out exactly what you will do at each step in the investing process, you'll have a steady hand in your investment decisions. And, when the market is telling you one thing and the media another, you can know what you need to use as your guide. Your non-emotional, boring little old checklist.

What The Big Money Is Buying

Stock market investing today and making money at it comes down to figuring out one thing for the small investor. That is by buying what the big money is buying. Even though our portfolios might seem large to us (or maybe not so large), our investments are a drop in the bucket compared to the big institutions and the amount of stock that they buy. The stock market operates on one fundamental law -- the law of supply and demand.

The law of supply and demand states that the more demand for something like a stock moves the price up. The less demand for a stock, the lower the price must go to attract buyers. When we purchase a block of shares of stock, it would hardly move the demand for the stock. But when the big money flows into a stock, they have to do it in stages. This is because if they bought the stock all at one time, it would be hard for them to hide it and make their overall stock purchase prices higher than they would need to be. By spreading out their purchases, they hide their activity better and save money by spreading out the demand. The fact is that they have so much purchasing power sometimes, that they impact the demand in a big way that raises the price.

It's the exact opposite when it comes to when they decide to sell. Because they can flood the market with their shares and put downward pressure on a stock's price. They unload it slowly and because there is more supply than the demand, the price has to go down. One of the things that they do to counteract this in my opinion besides spreading out their purchases, is to then get the investment houses to promote the stock by upgrading it to a buy. This in turn creates some demand and before those investors know what happened, the stock has fallen because the big money has sold out and now there just aren't enough buyers (demand) to prop the price up.

You can use a stock chart to see big money buying or selling a stock. If you see the price of a stock move higher in price on volume higher than the day before you know there is strong institutional buying going on. And, it's the exact opposite when they are selling. The price moves lower on higher volume than the day before. By watching these signs you can ride the coat tails of the big money investors and do what they do and not what they say.

Good Stock Buys Today

Finding good stock buys today takes patience. The market has been under selling pressure and even when it's been in an upward trend recently, it's hasn't been that strong. You've got to learn to let the market tell you what to do. First, by making sure that the market is in a confirmed rally. Second, by making sure that the stocks you buy today are as good as you can find. You do that by screening stocks extra carefully and raising the bar as far as your minimum thresholds for earnings and sales for example. Instead of picking a company with 25% earnings growth, raise it to 100%. You'll find fewer stock market investing choices but those that you find will be stronger.

Finding good stock market buys today in this manner will help you really focus on quality and narrow the number of stocks you need to review. Managing your watch lists becomes less cumbersome. Setting up my watch list is something that I need to write about in a future post. I'll have to remember to do that as I still don't have a good way to do that yet. Although William O'Neil touches on it some in his book, I still am not happy with my system to uncover good buys in the stock market and I've got find a better way. I know the first thing I would want to do is to create a list of companies that satisfy the first CANSLIM requirement of strong earnings and then refine it from there. Keeping track of all the stocks you find and putting them through a set of screens to reduce them to the fewest number of quality stocks to choose from is the goal.

Once you've done that, finding good stock to buy right now becomes a lot easier. You basically have to whittle down the field. It's a game of eliminating the stocks that don't make the cut. You are kind of like a basketball coach choosing the final 12 players that make the cut.

The best way to find a lot of these stocks is by taking advantage of the screens in the Investor's Business Daily. Several times a week, they pick stocks using certain screens to help you. Columns like Stocks in the News and the Big Picture column and lists like the IBD 100 are a big help and you should make sure that you review them for good stock buys right now.

Friday, December 4, 2009

How Do I Buy A Stock Through My Retirement Account

My first experience with a brokerage account was just and individual account. When I started my own business then I started to wonder how do I buy stock through my retirement account? I didn't realize at the time that all I had to do was open a separate brokerage account. Only this type of account was IRA or individual retirement account. Once I opened my account, all I had to do was fund it with my first contributions and then wait for the funds to be available.

After that it was easy to buy stock inside the IRA. It worked just like my individual account. The only difference is not really seen at the brokerage firm you open the account with, it's in the tax treatment of the investment. Stocks bought inside your IRA that have realized gains (that you have sold at a profit), taxes on those gains are deferred until the funds are withdrawn. Same goes for any dividends received. Using an individual retirement account to buy stocks is actually ideal because most investments in the stock market are long term investments anyway. Since you are earmarking these funds for retirement, the fact that they are tax deferred only help your overall stock market investing returns since they are eroded by taxes.

So, remember that the mechanics of buying stocks in IRA's are the same as buying them in other account. The difference is the tax treatment of them by the IRS.

Also remember that any money that you put into an IRA can't be taken out without a 10% penalty unless you have reached the age of 59 1/2.

What Should You Look At When Investing In A Stock

When I first started stock market investing, I was a little overwhelmed. I mean what should you look at when investing in a stock. Experience has taught me that you should start by looking at a companies earnings. Earnings are the driving force behind some of the greatest stock market winners of all time according to William O'Neil. He developed the CANSLIM strategy. A stock with strong earnings is the foundation of a good growth stock and you need to identify stocks with earnings growth of at least 25% or more.

Once you've identified a stock with strong earnings, the next thing you want to look at are it sales. Sales should also be strong. If you see a company with strong earnings and poor sales, I'd think long and hard before I would start investing in a stock like that. That's a red flag that earnings are about to sink.

Once you have find stocks that have strong earnings and sales, the next thing you are going to want to do is start reviewing a chart of the stock's price and volume action. You want to start identifying specific chart patterns. The most famous of these patterns if the cup with handle. These chart patterns will help you figure out what he calls the "pivot point" or the best buy point. For me, this is the toughest part of the canslim strategy. And even if you are right on the buy point, you still want to see it do what is called "break out" in higher than average volume.

These are just a few of the things you want to see before you invest in a stock. Putting them into actual practice is the hard part. I know that for me personally, I find it easy to get stocks that are fundamentally good for CANSLIM, I still am working to perfect selecting pivot points. While I can identify when a stock is being accumulated by the big money funds, I still have a long way to go when it comes to using charts and identifying the specific patterns.

This has shown in my most recent investment results as I've been stopped out in the stocks I've purchased lately since I have mis-identified the exact buy point for the stock. When it has encountered a pullback, I've had to cut my losses at the 7-8% guideline because of it.

Making mistakes is a good thing though, because that's the only way you'll know if you are looking at the right things when investing in your stocks.

Investing Today 2009

Hey everyone, I wanted to talk about investing today 2009. The 2008 market made anyone who wanted to start investing today a little queasy -- with good reason. But it turned out that in 2009 the market did recover substantially gaining back alot of what it lost last year. Who knows what 2010 holds for the market. But, you can't let market downturns deter you from starting an investment portfolio. You've got to get started as soon as possible. Partly because the longer you invest the more opportunity you have. But mainly because you've also got to put in your training with actual trading experience to learn from your mistakes and hone your strategy.

Stock market investing today is no different than any other time. You just want to make sure that you are trading with the market and not against it. You can also use a market downturn to start finding stocks to put on your watchlist so that when the market starts to rally, you'll be prepared to take advantage of it. The stock market in general has weathered some seriously hard economic times in the past and will continue to do so. While at any given time the market may be lower, it has an overall market uptrend -- long term.

The best investment today is never an easy thing to target. It might be gold one day and the dollar the next. But, if you study the stock market and work to perfect one investment strategy (not several), you can be successful. It won't be handed to you though and you'll have to work to find the big winners. The media and your broker won't do it for you. Most mutual fund managers don't even beat the market. You can make money if you work at it. Investment today is even easier than ever before as far as the research you can do from the privacy of you own home (or beach house, if you are really good!).

Finding the correct investment strategy might be the most challenging task. When I first started, I was more interested in value investing. Today, though, I am definitely a growth investor. Whatever route you go, vow to be the best investor you can be at that particular approach. You can't flip flop from one kind of an investor to another. Stick with it.

You'll find that if you do, you'll put your mistakes you make in the beginning behind you, and start to succeed.

Thursday, December 3, 2009

Investing In Today’s Economy

I hear a lot of people ask about investing in today's economy. The stock market today has a long history of chugging through recessions, depressions and wars. Outside influences like the economy and others definitely do affect the market's value. However, some of the best stock market investing gains have happened over the past year. You can't let the media or your stock broker tell you when is a good time to invest. You have to let the market tell you.

I'm kind of a conspiracy theorist myself because I believe that the market is manipulated. The last people to know the news that affects the stocks we might have, is us. However, if we are keen to watching the market and reading what the overall market trend is, instead of listening to others tell us what they think, we have a much better chance to make money from it. You've got to learn to do what they do and not what they say.

You've got to develop a habit of tuning out the talking heads and start analyzing the data yourself. You've got to get into the habit at looking at the market averages daily. What did the Dow, the NASDAQ, the S&P 500 do today? Did they go up or down? What was the volume compared to the previous day. Only when you start looking at the numbers in black and white yourself, will you know whether today's economy has any effect on the market.

Because I can tell you for sure that, the media, your broker and the big money on Wall Street will tell you to get in when they are getting out.

Call me a skeptic. I know. But, I know from listening to Jim Cramer and just watching the news that the stocks they "advertise" to us are just that, promotions to help them find buyers.

Ride their coat tails, study the market. When the market tells you it's in an upturn, that's your cue to get in. When the market tells you to get out, that's what you got to do. Let the market be your guide and don't worry about the economy. Invest when it tells you to.

What Stocks Are People Buying Today

When I first started stock market investing, the first thing I wondered was what stocks are people buying today? Most of us have no clue what stocks to add to our portfolio. If you are looking for a place to start, you need to look for stocks that have strong earnings and sales. These two factors provide a strong fundamental basis to add them to your stock watch list. These are typically going to be growth stocks. Buying stocks in today's economy is a challenge, but there are still opportunities.

The first step is to develop your strategy. I personally have adopted the CANSLIM methodology. I prefer this method to selecting stocks to buy over any other strategy because it makes sense. The market is based on supply and demand. The biggest buyers in the stock market today are not the small investors like you and I, they are the institutional investors that manage hundreds of millions of dollars. Once they start buying stocks with strong fundamentals, they can't hide they're buying. The stock price goes up because the make the demand increase for that stock.

When they do that, you want to be in a position to ride the stock up with them as they carry it higher. And, when they start to bail, you've got to get out right away. Why, because once demand dries up and they move onto another stock, that price is going to fall no matter how good a company you, the financial gurus, the media or your neighbors think it is. It's the law of supply and demand. Plain and simple.

What's the next step after you have identified a company with strong sales and earnings? You start analyzing it's price and volume action. When a stock's price goes up on higher volume than the previous day, that's an indication of buying. When it goes down in price on higher volume than the previous day, that indicates selling. When you start seeing strong selling, you've got to start considering locking in gains. Why buy and hold a stock that might never see institutional sponsorship again? Lock in your stock gains when you have them.

Identifying these buy and sell points is the hardest part of the process. Using stock charts will help and so will looking at past market winners that William O'Neil has laid out in his book How To Make Money In Stocks. Combine his strategy with actual market experience and you'll be identifying stocks to buy today like a pro.

Checklist Investor Review

In my stock market investing research, I came across a product I wanted to review called the Checklist Investor. This kind of product was just the type of software I was looking for because I believe in breaking down your investing step by step. You should reduce each step to a checklist that you adhere to religiously. The problem with a lot of our investment strategies is not so much the strategy sometimes, but the haphazard way that we implement them. Get in the habit of taking the same set of steps to analyze your stock buys AND sells. If you do this you will learn from your mistakes and become an expert growth investor, value investor, penny stock investor or options investor or whatever philosophy you go with.

When you first open Checklist Investor, you'll see a window pop up that gives you Checklist Investor tips on how to use the features. I found myself flipping through those to get some quick tips on what I could do with the software. After that, I got into the heart of what I wanted the software for and that was to create my investing checklists. You'll find some checklists already there from the strategies of Benjamin Graham, Peter Lynch and Warren Buffet. If you are like me, you'll want to create your own customized checklist.

Here is my Big Picture investing checklist.

Those are really easy to create in the Checklist Investor. The first one I created was what I call my Big Picture checklist. These are the steps I take to get an overall snapshot of the general market direction based on the CANSLIM strategy developed by William O'Neil.

Setting up this checklist was a breeze and the cool thing is that when I am ready to determine the overall market direction, I can pop open the software and go through the steps I've already thought out ahead of time. I can't stress enough the value of having pre-thought out all of your investment steps ahead of time. In so doing, you won't miss a single step of what you want to do.

This only touches on one aspect of the value this software can provide. Some other features include, keeping track of computer files related to your stock research as well as notes from conference calls you might listen to. In addition, you can log into your TDA Ameritrade account from right inside the software.

If you are interested in the Checklist Investor, you can go to there website by clicking here.

Wednesday, December 2, 2009

What Happened In The Stock Market Today

Once you've decided that you are going to take control of your own stock market investing, the first thing you need to do each and every day is ask yourself what happened in the stock market today. I usually do this at the end of the day after Investor's Business Daily comes out with their eIBD edition.

The first thing I do is check each of the market indexes to see what happened today. Here's a summary of today's market action.
  • The S&P 500 Index closed higher today on lower volume than the day before.
  • The New York Stock Exchange closed lower on lower volume than the day before.
  • The NASDAQ closed marginally higher on lower volume.
The action ended up mixed for the day.

In this kind of day, the market action showed no change in course from the current status of market uptrend under pressure. It didn't amount to a distribution day according to IBD.

This information on what happened today is easily found at at the top of their website and includes stock charts for each index and how it closed today.

In addition, you can watch IBDTv to get a more complete picture of today's market action. The key to understanding what's happening in the market each day is volume compared to the previous day. If it is lower than the previous day, then their isn't any buying or selling pressure on the market indexes. However, if the market index closes higher or lower on higher volume, these are clues as to whether the big investors are buying shares of stocks for their holding or selling them.

Each and every day, get a feel for what happened in the stock market today.

Poker Player Penny Stocks

There seems to be an influx of sites devoted to a hot category and I came across a site called Poker Player Penny Stocks. This was like another site I saw that talked about penny stocks just yesterday. It seems to be ran by the same people as it looks to be a similar type site. It's free, it captures your email. I gave them mine -- again. I haven't checked yet, but I imagine their will be an email to confirm my entry. This one has testimonials on it so maybe they are testing which one pulls the best, I am not really sure.

It follows a similar vein. The idea is that it will tell you about hot penny stocks you can make a fortune with. But as I have cautioned in earlier posts, you'll want to be leary of this whole best penny stocks hype. The prices of these stocks are too easy to manipulate by a big player in my opinion.

I would expect that if you want to give these types of stock market investing strategies a try, I would suggest that you limit it to a small portion of your overall stock portfolio. It's too easy to lose money. I also think that if you are looking for penny stocks to watch that you create your own watch list from your own rules you establish. While it's my own personal opinion that in creating your own list of penny stocks you might have greater success. Your first clue is that you are being advertised these stocks and it's too easy to get taken in by the lure of easy money. While this site might be legit for all I know, it seems to me that it's more likely area to be scammed in.

And I don't think that it's limited to penny stock investing. I think all investing is manipulated by the big money in the market. I think the difference though is that stocks of higher prices of $15 dollars a share or more are more liquid.

Exercise caution but feel free to check out Poker Player Penny Stocks and give me a report if you want.

Yesterday, I wrote a post about and wondered what it was all about. It was the first time I had seen the site so I went over to check it out. When I got there it was a page that talked briefly about getting killer returns in penny stock and lists four or five of what look like the best penny stocks to buy now. It says it was free and their was a place to put in my email address. In an effort to find out more for my readers to see what this is about -- I put in my email address. I expected to get an email confirming my name to the list. I did get an email informing me that I had been added to the list. I've yet to receive another email so I can't really say what these penny stock tips will be.

But in speaking about penny stocks in general, I know that there are many people who dabble in them who want to get started investing in them because they are so cheap and you can easily buy a round lot of 100 shares of them. I think this is OK if you know that the money you put into speculative investments, which is what these are, is less than ten percent of your portfolio. You should spend most of your stock market investing time in higher quality that are priced over $15 even if you can't buy a 100 shares. The reason is that stocks priced above this range are probably going to be more liquid and have more potential buyers should you need to exit.

Any time that you get a hot penny stocks email or fax, you are potentially a candidate to get scammed and I wanted to walk you through how I think it works. I also want to say that I don't have any evidence of this first hand, it's all theory on my part but I'm pretty sure that it works this way.

Let's say that I am the owner of a closely held company private company and I want to sell the stock I own it. I hear that you are interested in my stock and let's further say that you found out by willingness to sell my stock on some sort of list called "penny stocks to watch" along with some news blurb that talks about how great the company is, that it has some sort of new product in development, a new patent or something else that caught your interest.

You give me a call and tell me that you are interested in buying my "penny stock" (since it isn't traded on an exchange, you've got to do it directly with me) and I tell you that next week we are going to have a stock sale and everyone interested will need to be there to make their offers at auction and bid for the stock. You agree and say you'll attend.

The big day arrives and you take a seat. You notice that there is a lot of interest in the stock and that particular day you even saw a story in the local paper about how great the company is. Your mouth is watering because you know that you are going to make a killing in the stock. First, though you have got to buy the stock.

So, the auction starts, and you notice alot of bidding and before you know it you are bidding too and you decide that you are going to jump in and make your bid and low and behold you win the auction. You are so excited that you won and the stock's price was really a great deal still. It was extremely cheap to get those 100 shares and you know that it is going to be really easy to double your money because it doesn't take much for a stock to go from a $1.00 to $2.00. Afterall that is a 100% gain. Everybody's happy.

A few weeks go buy and all of the sudden you run into a jam where you need to have money. You need it right away and decide that well, you know what, you should be able to sell that killer penny stock you got a while back. That will take care of it and it must be worth alot more now. So, you decide that you'll decide to sell it, but discover that there are no buyers for the stock. All of the glowing reviews and not even your friends are interested. Eventually, you go back to the guy who sold it to you and he says that if you need cash, he'll make you a deal and give you half of what you paid for it. He didn't really want in the first place, remember, that's why he sold it! But, he'll make an exception and do you a favor and help you in your situation. You take it because you have to unload the stock.

Now, as the seller of the stock, I know something you don't and that is this. All of those people that were at my phony "stock exchange" bidding on the stock were my friends. They were there to provide the illusion that there was a lot of demand for the stock. And we fooled you into thinking that it was a great deal. All the while, we know we are setting you up.

It's the same with these low priced penny stocks. They take a bunch of money and start buying the stock which in turn bids the price up. Then, they start advertising the stock to find people like us to buy it. Once they've gotten out, the demand for the stock falls and when you are ready to sell because the price has been falling, you have to take a loss.

Now, I am not saying that is like this. It could be a legit opportunity for all I know. I am just saying be careful. If you can spot the activity as the price is being bid up and get out when they do, you'll probably be ok. But, if you are the last to know, which is usually the case, I'd caution you to not risk a significant portion of your investment portfolio on these types of stocks.