Investing In The Stock Market
by
Gregory Grant
When to Buy Stocks
Knowing when to buy a stock is nearly as important as knowing when to sell. There are those investors who grin and bear it during the market's dips and valleys and use those downturns as the time to buy. But is that a good rule of thumb? When do most investors buy?
Experts say investors, especially new ones, should pay less attention to when they should buy and more to what's being bought.
"There's an old adage that says it's not the timing of the market, it's the time on the market," says Robert Steck of Merrill Lynch. "We believe that and it's more important to think of long term and to have the proper asset allocation."
Most analysts warn investors away from buying a stock based strictly on price. "There are many different red flags investors use to determine when to buy or not buy a stock," says Steck. "An example may be and earnings disappointment on a sell side and earnings increase on the up side. Analysts are lowering their estimates on individual equities."
Buying a stock should be the result of careful research, a look at its 12 month price history & the PE ratio and how it fits into a well-balanced investment portfolio.
How to Evaluate Stock Potential
Successfully investing in the stock market has always been a combination of market savvy, economic conditions, and the luck of the draw. But on the street, what are the most common ways to decide what to buy? In fact, there are things to know about a company that can help investors make more informed investing decisions.
"Number one, good earnings," says Jennifer Madrid of Merrill Lynch. "Number two, good sales, Number three, in-depth management, and number four, I prefer companies where there's frequent news or activity so as an investor you can follow what's going on. In the stock that there's a good business plan and you as the investor can follow what the company is doing."
Of course, this information can be found on the Internet, as well as in the traditional way, ink and paper publications. Financial experts also say it's important to look at a stock's twelve month performance.
"The most important reason for an investor to understand at what point they're buying into a stock to understand what the high and the low is so that they can calculate how well they're doing," says Madrid. "Every stock has a high and a low and it's important to know whether or not you're buying at the high or selling at the low. This way you'll have a reasonable expectation for how long you're holding on to the stock."
The investor that goes beyond just looking at the financial pages will find that this kind of in-depth research will pay off in helping to make wiser investment choices.
When To Sell Stocks
It seems like an easy decision. When a stock spikes high, unload it and take the money. To most investors, the time to sell is when a stock is performing at its best. The trouble with this strategy is that the best stocks get sold off, leaving the portfolio with sub par earners. "Investors shouldn't be buying and selling all the time. That's what traders try to do," said David Savitz of Merrill Lynch. "Investors should set up long-term portfolios that match their goals, risk tolerance and objectives, and manage the portfolio over time. They shouldn't let the day-to-day fluctuations impact their long-term time frame."
When to sell a stock is as important as when to buy a stock. According to experts, most people sell the ones that are going up without thinking about its sustainable growth, and keep the ones that are going down, hoping they will improve. It should be the opposite.
"Investors should consider selling stocks in general or pairing down on certain stocks if they'll need the money with a 12-24 month period, their life situations have changed which would cause them to move their money to things that are a little more conservative or the percentage allocation to stocks in general has got to a point where they are uncomfortable with the overall portfolio," Savitz said.
Many investors choose to sell their best performing stocks to make a short term profit, but by doing so, they run the risk of undermining the long term growth potential of their investment portfolio.
JoAnne Altsman, 57, of Beaver Falls, Pittsburgh, began having a heart attack in her holiday trailer on Presque Isle in Erie, Pennsylvania, on 4 August 1998. Her American Eskimo dog, Bear, did nothing but bark and break a bedroom window; but LuLu, her Vietnamese pot-bellied pig, rose to the occasion.
Mopsy The Rabbit, a two-year-old Orange Rex doe, landed a burglar in court after raising the alarm by frantically thumping with her foot during a break-in at her owners' house in Fetcham, Surrey, on 30 June.
Viewers watching the last 12 minutes of a televised Castle Premiership football match between the Moroka Swallows and Jomo Cosmos in the George Gogh Stadium, Johannesburg, saw a group of players collapse suddenly after being struck by lightning.
An unnamed pensioner called the Meteorological Office at Bracknell on 4 March to inform them that an early-morning shower over her house in Shirley, Croydon, south London, had been accompanied by a large number of dead frogs, which were scattered over her garden, her neighbour's house, and nearby streets.
Whatever devastated the terrestrial environments 65 million years ago and exterminated the dinosaurs, it failed to force into extinction the ultimate survivors, the Crocodiles.
The first sharks appeared on earth about 400 million years ago. Today there are more than 360 known species of sharks.