Monday, August 31, 2009

Where To Start With Stock Market Technical Analysis

I'm going to start today's article about where to start with stock market technical analysis. I think if you have never looked at stock market charts before and even if you have, like I have, you might not know exactly what to do with the data that's presented. I know that when I look at charts, it's easy to see what happened in the past, but not exactly easy to see what might happen in the future. I've talked in previous posts about CANSLIM and using the IBD. It's William O'Neil's suggestion in a book called The Successful Investor, that the very first thing you want to do is figure out what the general market conditions are. Is the market going up or down?

The reason he says this is so important is because in a market that's going down will pull 3 out 4 stock down. That means that there is a 75% chance you'll pick the wrong stock right off that bat if the market is in a downward trend. How do you tell? He says that what you need to do is look at three market indexes. Those are: 
  1. The Standard & Poors 500 otherwise know as the S&P 500 
  2. The Nasdaq Composite Index 
  3. The Dow Jones Industrial Average 
In fact, he devotes a whole column to the technical analysis of stock market investing called the Big Picture and places it prominently on the front page of the Investor's Business Daily and a whole page to the general market. Getting a handle on overall market direction is key because you want to be investing in a market that is going up.

OK. So we know what indexes to look at, how can we tell whats going on.
Stock Market Volume

The first place is with each indexes overall volume. You want to ask yourself two questions about the indexes volume. 
  1. Has the daily volume increased or decreased from the day before. 
  2. You also want to know if the above or below the average daily volume. 
In analyzing the overall trading volume for the day, you can't look at it alone. You have to compare it to the previous levels of volume. In addition, it took me a while to figure out exactly which "volume" to look at. I also experimented with BigCharts, Yahoo Finance and IBD to try and figure out where I should look for this data every day.

As it turns out volume is reported differently every where and it wasn't until I really got to looking at it that I noticed this:
  • For the Dow Jones Industrial Average, look at NYSE Composite Volume . 
  • For the S&P 500, look at NYSE Composite Volume. 
  • For the Nasdaq Composite look at the Nasdaq Composite Volume. 
And trying to track down the right volume and putting it on a chart seemed difficult because I had a tough time getting it on a chart together. I am a subscriber to the IBD and I was trying to put together a way for you to look at it even if you were not a subscriber. Fortunately, for everyone involved the general market data charts are free.

Stock Market Index Values

After that you want to look at what the actual index value did. Did it go up or down? If the index went up on higher volume, then this is what is called accumulation. If the index went down on higher volume, this is distribution. Right now, we are not concerned with technical analysis and stock market profits, just how the indexes compare to volume. And, because of that I'm not going to get into how to figure the trend either up or down. But just figure out what that particular day told us.

You can see in the free chart from IBD to the left that the S&P 500 is above a volume chart for the NYSE.

You'll notice to that the index decreased today on volume that was higher than the previous day and higher than the average daily volume. Both of these indicate this was a possible distribution day.

So what you want to do is get a feel for how the market is doing using this technique first and then we will get into the accumulation/distribution and whether or not it constitutes and up or down market. An additional tool that's free is the IBDtv's market wrap which I suggest that you watch every day. So, for this type of analysis, you don't need any stock market technical analysis software or anything. Just those charts. Until next time, I hope to see you again at Stock Market Investing Today.

Thursday, August 27, 2009

How To Make Money In Stocks

Here's the deal. If you lost a ton of money during the 2008 bear market, you've got a lot of company. And that, leads me to ask one simple question. Where were all the people advising us on how to make money in stocks? How come nobody said, "Hey, a crash is coming, you better sell your all your positions and get into cash." I'll tell you why, because the people that really move the market have billions of dollars at stake. Now compare that to what you have for your stock market investing program. My belief is that the little investor, even if you have a few million at stake, probably receives subpar investment advice. While they are telling us to buy and hold, they're selling what they know is going to sink in value and are out by the time you know what hit you. And even when you recognize what's going on, we're told to hang in there for the long term. Finally, when we can't take it anymore and finally sell, that's the bottom and you just screwed yourself and that's when the big money starts buying stocks again.

Which leads me to my first conclusion as far as how to make money in the stock market, don't buy and hold unless long term means over 10-15 years. Let's face it, I can lose half (or more) of my money on my own without any help, so why pay someone else to do it for me. And it takes a long time to make back half of your money.

The other thing that hurts us is we buy these mutual funds that are fully invested all of the time, no matter what the market conditions are. Why don't the managers look at the market and make the astute observation that maybe, just maybe they should have the fund in cash.

In search of a better way, I came across a book called "How To Make Money In Stocks" and decided to start implementing the stock market strategies he outlines. What I like about his approach is that he studied the greatest stock market winners of all time to come up with a set of rules of investing in the stock market that are more commonly know as CANSLIM. The guy's name is William J. O'Neil and he is also the founder of the Investor's Business Daily or IBD. I subscribe to this paper and I have to tell you that it is built to help you pick the right stocks.

I've been a casual reader of his paper and his work for many years now and after last year watching just about every type of investment decrease substantially in value decided to rededicate myself to one investment strategy. To me, his makes the most sense. He doesn't advocate buying and holding but in buying the right stocks at the right time.

In his book, "The Successful Investor" he outlines five steps to how to make money in stock. The first step is to know the general market's direction by following the major stock indexes to get the Big Picture. Is the market going up or going down? He goes on to say that even good strong stocks, you know the ones we're not supposed to ever sell, go down in value when they are pulled down in the market. So, step one is sounds pretty simple, only invest in stocks when the market is going up. It makes a lot of sense as well if you think about it. Kind of like a presidential election when people ride the candidates coat tails.

So, how do we determine that. By watching the three major stock market indexes, the S&P 500, the NASDAQ composite and the Dow Jones Industrial Average and making sure that these indexes are closing up in values on higher volumes. This is where a subscription to really pays off because they have IBDTv that goes over these three indexes in their Market Wrap each day. That combined with Big Picture column, and reviewing his rules of what constitutes and uptrend in the market will help you with that.

One of the things you'll notice about his techniques for how to make money in the stock market is that he is a big advocate for using charts to analyze the market. Otherwise known as technical analysis, or being a chart reader, can be intimidating to the new and beginning investor. Don't let that put you off. Take the time to do the work. He uses charts the same way that a doctor my use an xray and also a subjective tool to what the market is doing today and how individual stocks are performing. He says that these stock charts don't lie and to let the market tell you what to do rather than the so called "gurus" you see, your friends or even your broker. Emotion in investing clouds your decision making but black and white statistics are the best stock picking tips you can get. They provide the clues you need to make money in the stock market.

The second step that he recommends is to use a simple three to one profit and loss percentage plan. He compares it to the a baseball player batting .333. That if you only one in three stocks makes you money, you can do well. Keep losses small at 7 to 8 percent and let your gains go up. Once you've practiced, your stock picking average can go up so I'm putting that on my list of things to keep track of, my success ratio. How many times was I right.

I don't want to mislead you as he is direct in the book about one thing. If you want to make money in the stock market, it requires study and practice. You probably won't an expert investor right away. If you study though, and review your mistakes, you can be successful if you know when to buy and know when to sell your stocks.

The third step in make money stock market investing, is to buy the right stocks at the right time. He details very specific things that we should look for. I'll list some of the most important ones here: 
  • Earnings per share in the last quarter should be up at least 25 percent over the prior year. 
  • Earnings growth should be accelerating. 
  • Annual earnings for the last three years should be increasing at a rate of 25 percent per year of more. 
  • Sales should be up 25 percent or more and accelerating. 
  • The after tax profit margin should be at all time highs or near their highs and tops in their industry group. 
  • Return on equity should be over 15-17 percent. 
After you find stocks that meet these criteria, then you have to look at their charts to see exactly when to buy them. One of the great things about O'Neil's research is the study of the past stock market winners has shown that these stocks exhibit price and volume behavior in the same patterns. The most common of these chart patterns is the cup with handle. By following his instructions, you can pinpoint specific buy points and also tell you when to sell.

This is where experience comes in. And you can only learn by doing and by reviewing your stock purchases. If you want to learn how to make the stock market make money for you, you have to study your craft. It won't be handed to you without any effort. But with a system, you can pinpoint these stocks a lot easier than you thought.

After that, the fourth step is knowing when to nail down your profits and contain your losses. He says to sell any stock that goes down 7-8% and to increase your positions when stocks go up and never when they go down. In general this means that you should lock in your gains when they reach twenty to twenty-five percent. Using the charts as your guide, you'll need to recognize when institutional buyers are getting into a stock (closing higher on higher volume) or getting out of a stock (closing lower on higher volume.)

What's fascinating is that supply and demand is what raises or lowers the price of an individual stock. The more people who want something, the more someone can charge for it. That's one of the reasons real estate prices have fell, the pool of buyers dried up because they couldn't get financing. It's the same with stocks only when the big money (the institutions like mutual funds) decide to buy a stock, it raises the price and when they get out it makes it fall. A trained chart reader like you can become, can see this buying and selling.

An additional service that his company provides, for a fee, is called Daily Graphs. These graphs are great and contain all of the information that you need like earnings, institutional sponsorship and the price and volume information you need. It might not be for the beginner stock market investor though because it costs about $1,000 a year.

The final fifth step he outlines is how to manage your portfolio. He suggests that diversification is really not protection from risk the market would fall. You need to look no farther than the mutual funds many of us were invested in that fell in value. He says that it is better to focus on a handful of stocks, no more than 5 or 10 that you can really watch.

The goal in money making stocks is not to always be right, but that when you are right, to be right in a major way. I highly recommend "How to Make Money in Stocks" and it's the focal point of our content here at Stock Market Investing Today.

Tuesday, August 25, 2009

Stock Trading Strategies Part 2

Hey guys, I'm back with another post to talk about the decision I've made regarding some of the stock trading strategies out there. I've decided that like anything else, you have to pick a focus stay the course. That's why I've decided to settle on one specific stock trading strategy for our experiment here at Stock Market Investing Today and that strategy is called CANSLIM. Of all the research I've done so far, the book called How To Make Money In Stocks A Winning System In Good Times Or Bad by William J O'Neil outlines his system for us and if you haven't read it, I highly recommend it.

On the back cover, the headline says that "ANYONE CAN LEARN TO INVEST WISELY with this bestselling investment system!"

But the question is, can they? Well, we are about to find out if that is true.

In the updated 4th edition of his book on page 5 of the introduction, he even states that people can start with as little as $500 to $1,000. He also states that he started his investment empire with just 5 shares of Proctor & Gamble stock. Now, I've had his book for quite sometime and have been a subscriber to his newspaper the Investor's Business Daily for a few years. But one thing that I have failed to do is actually apply what he teaches. I mean it all sounds good. It looks good finding buy points, reading stock charts and in the past, now that I think about it, I actually did purchase to stocks but I wasn't really sure what I was supposed to be doing.

In re-reading his updated book, I did learn that you can only learn by doing. That learning from our investing mistakes is the key. To keep our losses small and our wins big. Elsewhere I read that he even advocates being right one out of three times is enough to make you a winning stock market investor. Almost like a baseball player.

In order to apply his strategy, it is necessary to read the IBD. I think it's and excellent paper, much better than the Wall Street Journal that I subscribed to for awhile. It used to be a problem to get his paper but now with the web, I can have a version of the eIBD in pdf format available a few months after the market closes even though delivery would be spotty in my area. The subscription is worth it, because it does keep you focused and is more geared toward helping the small investor with it's stock market data.

I will say from the outset here that this stock market trading strategy will take some time to hone my skills. So, I have decided to work on perfecting and implementing what he recommends over the course of a two year time period before giving it the thumbs up. One of the things I noticed is that while the book is good, the strategy seems sound, it could be broken down a little bit better for the beginning investor. I even got a little lost on the steps to take. I know what I am supposed to be looking for but how do I keep track of it and identify a winning stock as it's happening. It's easy to look at a stock price and volume chart and declare it a winner AFTER it has already proven itself. How can I put together what he says into the best set of stock market trading strategies for me? And, how do I stay focused and get side tracked when I go to the bookstore and see a book on the newest stock option trading strategy. How do I resist the urge to be a daytrader or a value investor who wants to buy stocks cheap or "on sale" as they say it.

The key I think is a system of specific steps that I follow each day as I read the stock market investing news from the previous day. How do I use the IBD and to it's fullest and how do I organize the stocks I find? These steps will be the foundation. Fortunately, the paper lays out my beginning steps.

Here are the first two steps:
  1. Consider buying stocks with each of the last three years' earnings up 25% or more and Return on Equity (ROE) of 17% or more and recent earnings and sales accelerating. 
  2. Recent quarterly earnings and sales should be up over 25% or more. 
So my first task to implement his stock trading strategies is to figure out where and how to locate these companies.

Thursday, August 13, 2009

Best Online Stock Broker

I guess before we can start investing, we have to spend some time finding out where to trade and it begs the question: who is the best online stock broker? I've been with Datek which turned into TDAmeritrade and my friend has tried Etrade and he wasn't too happy, but nothing pleases him so I'm not sure he's the best judge of the best online stock brokers or any stock market brokerage.

For the most part, you are probably going to be OK with whoever you go with for your stock market investing. I've noticed that Scottrade does a lot of online advertising and Charles Schwab was a name that I have always known. You could go with the one who has the best offer. Many offer a bunch of free trades which is great if you are a daytrader which I am not (and I don't recommend). So I wouldn't base it on that. I've usually left them unused.

For our purposes here, I opted for Optionsxpress. Whether they are the best online stock brokerage, I am not sure but I am initially pleased. There customer service support has been very good whenever I have called although it's not 24 hours. They do have a special promotion going with a $100 referral fee. I used it for a custodial account for my son. There are some stipulations. From what I can tell, you have to do the following: 
  • Go to the referral screen and enter their email address 
  • They have to use the email address you used to open their account. 
  • They have to fund it with an average balance of over $500 for the first six months 
  • They have to make one trade. 
  • Then you both get $100 forty five days later. 
  • You can collect referrals like this five times I think. 
One of the other reasons I chose Optionsxpress is because there are no maintenance fees. I know that alot of firms let you do a 401k rollover to IRA for free but would charge you for regular accounts. There is no minimum needed so it makes it one of the best online stock broker for beginners because you can start small. If you have any questions about how to choose the best online broker for rollover, feel free to leave a comment below.

The actual account opening process was fairly easy process. The only hassle is the identification process. I know that I had to answer some questions about a guy whose mail got screwed up with mine and now the service that provides this verification process always asks me questions about him. Fortunately, I've got enough info on it to answer the questions but it seems stupid verifying I'm me when it's really some else I am verifying.

To fund my account, I'm too lazy to write a check and to cheap to pay a wire fee. I chose the ACH transfer option. It takes a few days because you have to verify you own the bank account by making a couple small deposits.

Optionsxpress also has a detailed education center and a stock market simulation you can use to practice with. For me here at Stock Market Investing Today it's the best online stock broker but your mileage may vary.

Tuesday, August 11, 2009

Buying Penny Stocks

A lot of people try to make a quick buck buying penny stocks. Occasionally I'll even get a spam email trying to get me to buy one of these stocks. The idea is that a low priced stock can double a lot easier than a high priced stock. The likelihood though is that the low priced stock is just as likely if not more likely to drop in value or become worthless. What's the best penny stocks to buy right now? None as far as I'm concerned. Don't get burned by penny stocks. Instead of looking on the best stocks for a quick buck, focus on more expensive stocks (those over $15 a share) with strong fundamentals for your stock market investing program.

I know that watching the bank stocks and the auto stocks fall to unseen values in 2008 and the beginning of 2009 bore that out. Who would have thought that GM would have filed bankruptcy. You are much better off buying higher priced stocks with high earnings as those stocks are more likely to reach new price highs.

The next thing thing to consider is that when you buy penny stocks is that institutional investors will not invest in them. Without this driving force, the only thing that can drive the price of a penny stock up is the buying of it by individual investors. This type of stock is one that is used to scam people into thinking that they have found a real winner. When, in fact, the price of the stock will fall probably almost right after you buy it. I have a friend who tried it and he did get burned thinking that it would be easy money.

Because it is so easy to buy penny stock online, sometimes you don't really feel like you are investing a whole lot but it's still a waste of money. It's more like gambling your money away. What you want to look for are stocks that are priced above $15 per share. Stocks above these price ranges have sufficient volume and institutional support. So, when you are researching the best penny stocks to buy, remember to search for stronger stocks with good fundamentals. Don't spend your time looking for a penny stock systems review because they aren't worth it.

The next step in my process here at Stock Market Investing Today is to start going through the stocks on my watch list which I added some new ones today. They are:
  • McCaffee Inc (MFE) 
  • Cubic Corp (CUB) 
  • National Presto Ind (NPK) 
  • PHH Corp (PHH) 
  • Quest Software Inc (QSFT) 
  • Equinix Inc (EQIX) 
  • Tech Data (TECD) 
  • AEP Industries (AEPI) 
I gathered these today from my IBD research. Right now, I've just been collecting stocks that are showing up on my radar. This is what you should be doing to instead of wasting time trying to buy penny stock.

These stocks I've added are higher priced stocks that have a greater potential to hit new highs. If you want to make money in the market, you are going to want to do this too instead of buying penny stocks.

Stock Trading Strategies

Hey everyone. When you start developing your own stock trading strategies in the stock market, you are going to have to do your own research. Personally, of all the strategies I have read so far, I believe William J. O'Neil's CANSLIM approach to be the best. His book How to Make Money in Stocks is one of the best books I've read on the subject.

Many people believe that the technical analysis required for the IBD trading strategy CANSLIM approach is beyond the reach of beginners starting a stock market investing program, but it is really just like most skills. With practice and review, you'll improve your abilities. Any stock market trading strategy you employ will have a learning curve. Why not learn the best stock strategies? And what better way to learn than by doing.

You see, you can sit on the sidelines or you can get active and learn from your own experience. It's that knowledge that will propel you into stock market investing success. You can read all that you want, but it really comes down to applying what you learn and learning from it.

So the first thing I decided to for this site was to start with $5,000 in my investment trading funds and let you follow along as we implement:

Choosing the right stock trading strategies are important when you first start. I'm choosing Optionsxpress, O'Neil's Canslim Trading Strategy and IBD as my tools.

Typically, it takes a few days to get your account up and running. They have to verify your identity and I know that a friend of mine had some difficulty doing that because he was living outside the country at the time. He had already chose a stock and put money in his account. Once the stock rose, it was only then that he realized his trade wasn't executed. So make sure that you get your account active and ready for trade before you launch your program.

After that, I scanned my Investors Business Daily and started making a watch list of potential stocks to watch and added 19 stocks to my watch list. These are not stocks that I am prepared to invest in yet. But they are stocks that I identified that needed further research. I will list them here:
  • Aeropostale Inc (ARO) 
  • Credit Acceptance Corporation (CACC) 
  • Chipotle Mexican Grill Inc (CMG) 
  • Core Mark Holding Co Inc (CORE) 
  • Discovery Communications Inc (DISCA) 
  • Discovery Communications Inc (DISCK) 
  • FUQI International (FUQI) 
  • Global Partners LP (GLP) 
  • Hormel Foods Corporation (HRL) 
  • World Fuel Services Corporation Inc (INT) 
  • JINPAN International Limited (JST) 
  • Netease Com Inc Ads (NTES) 
  • NVE Corp New (NVEC) 
  • Banco Santander (SAN) 
  • Starbucks Corp (SBUX) 
  • STEC Inc (STEC) 
  • URS Corp (URS) 
  • Vanguard Natural Resources (VNR) 
  • Valeant Pharmac (VRX) 
With any stock market trading strategies you might choose, making a list of potential stocks to buy now is always the first step. You've got to separate the market down into a smaller list of potential money makers. Keep in mind that this list will grow and shrink over time. The next step is to see if they are fundamentally strong companies. Right now, I really know nothing about any of them except for the fact that the market indicated they are worth a look.

Each day at Stock Market Investing Today, I'll scan the IBD for the next big winner and as stocks pop up, I'll add them to the list and then let the stock trading strategies be my guide.

Monday, August 10, 2009

Buying Stocks

Today I wanted to talk a little bit about buying stocks. Most people have heard of the stock market, but very few are investors that buy stocks on an individual basis. Most buy through their 401k plan in the form of mutual funds. Making the leap to buy stock on your own though can be scary and most people don't have a clue where to begin their search.

Over the years, I've found the best source of daily information for stocks is the Investors Business Daily. Also known as the IBD for short, I find it a better source for ideas on the best performing stocks because of it's specialized stock screens based on the technical analysis of a stocks price and volume history. I find the black and white of reading a stocks chart to be a much better way to predict a future stock price than what the pundits on tv want you to buy. You can base your decisions on hard numbers like earnings, return on equity and sales. While stocks can go up on emotion, the biggest driver to an increase in a stocks price is supply and demand. Quite simply, the more people who want a stock, it drives up the price just like an auction on ebay drives up the price of a rare item. The only difference is that institutional buying drives up the price of stocks because of the size of the purchases. How do you know when a stock is being purchased by institutions? By watching it's volume. How can you see what institutions are buying in a stock? It doesn't really matter because as long as they are buying is all you care about.

Here's a snapshot of today's front page on their website today that lists some potential stocks to buy based on their potential volume change.

Buying Stocks Based On Increasing Volume Is An Excellent Indicator To Upward Price Pressure

The very first stock on the list is Schweitzer Mauduit Intl (SWM) with a 413% change in volume and a 11.29% change upward in price. Why did the price go up? Because more people wanted it, plain and simple. Let's say I was watching this stock screen on a daily basis and this stock appeared for the first time it would definitely be placed on my watch lists.
How To Buy Stocks On Volume

If you are looking for the best stocks to buy, you'll want to concentrate your efforts on looking for stocks that the big guys are buying, go along for the ride and get out once they start doing that. How can you accomplish that?
  1. Identify companies that have increasing earnings and increasing sales. We're talking double digits here and it's best if it's over 20-25%.
  2. Buy stocks increasing in price with increased volume (a sign institutions are buying).
  3. Sell them when they start decreasing in price when volume is increasing (a sign institutions are selling).
While a lot more goes into buying stocks, this is it in a nutshell. As an investor it's your job to identify where the big money is flowing and follow it. That is the key to making money in stock market investing and that's what we'll focus on here at Stock Market Investing Today.

Sunday, August 9, 2009

401k Rollover

A 401k rollover is one of the largest sources of cash available to people to start stock market investing when they terminate from their employer. I know that one of my first jobs was at a bank where I had worked for around 8 years. At the time, I had all of my funds invested in the bank stock. Fortunately, when it came time to liquidate those shares, the bank stock's value was at a price where I had made money. This was way before the banks needed a bailout so I was lucky.

Like most people, I had the option to do a 401k rollover to IRA transfer. I can't remember for sure, but I think that back then you could actually take possession of the money and as long as you had it back in the account within 60 days, you didn't have to pay a penalty. I was still pretty young at the time and think that I cashed in my 401k and paid the penalty. Whatever you do, do everything you can to continue to save the money.

They've since changed the rules somewhat in that now 401k rollovers have to be done a certain way. This was the case when I left my second job. The 401k rollover rules require a direct transfer to the institution you are moving the money to. If it doesn't go that way, they will withhold 20% even if you put it into an IRA within 60 days. You'd then have to come up with the extra 20% to avoid the early withdrawal penalty. While many financial advisers make this transfer seem complicated to get you to do business with them, it's not really something you need an adviser for so I wouldn't pay for this service as most financial institutions provide it for free. Do banks offer 401k rollover IRA's? Yes, but I'd opt to do it on my own.

There are several 401k rollover options available to you. Each involves moving the money under the umbrella of an IRA. The only question is what underlying vehicle will you fund it with. You could fund your IRA with mutual funds, individual stocks, real estate, certificates of deposit (CD's), annuity contracts or many of several other investment options available.

Many insurance agents will advise that you put your money into an annuity contract inside your IRA, but stock brokers will argue that the expenses you pay for the death benefit are an unnecessary expense. The adage don't put fund your tax deferred account with a vehicle that is already tax deferred in that it is redundant is the argument they bring out. While I'm not 100% sure this is correct, it might depend on the annuity contract and your age. I know that one adviser that I know of used guaranteed annuities from Prudential that guaranteed the principal even if the market went down, a huge guarantee considering what we just experienced in 2008 in the market.

The 401k IRA rollover that I would prefer is one that you is funded by individual stocks. By using a stock brokerage account to put your funds in, you can avoid the expense of an annuity and give yourself more control over the stocks that they are invested in. As I've said in previous posts, why not take the time to direct your own investments. If you do not have sufficient investments on hand with your broker, you won't get the advice you need. You'll end up like most people in 2008 that lost almost half of their investment. Don't you think that you can do that on your own? It's not crazy to think that. I know that I could. And, I'm sure you can too.

With the creation of the Roth IRA, many people wonder whether a 401k rollover Roth IRA might be an option and I would not recommend it. Roth IRA contributions are after tax in nature where 401k contributions are before tax deductions from your paycheck. Because these are different types of contributions from an IRS standpoint, you do not want to mix them.

If you have been at your employer for a long period of time, your 401k rollover might be the largest part of your nest egg. Self directing your own IRA investments might be a scary task if you are a beginning investor. This is something we talk about more in later posts on Stock Market Investing Today.