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Most stock traders recognize that trading momentum stocks can be a very profitable activity. You can make big amounts of cash in a short period of time.

It’s not unsual to watch a hot stock rise more than 15% in less than 5 minutes on a good momentum day. The problem is, that if you don’t know what stocks to look for and how to approach them and simply leave everyting to luck, you could end up wasting money instead of making your profits grow.

That’s why the most important aspect of momentum trading is the knowledge FILTER you employ to make your buy and sell decisions. There are many “fantastic” stock systems and trading strategies outhere, but you need to test them in order to discover which ones help you the most. That’s part of your homework as a stocktrader. Test, test and test again.

Complicated stock trading strategies that rely on a “boat load” of technical analysis indicators can make you slow, and being slow when trading hot momentum stocks can be as dangerous as not knowing what to do in the first place.

The worst thing that can happen to a beginner momentum trader is to get information overload. It’s better to go step by step, and test a practical stock trading strategy that can show you how to focus on concrete ways to make money while picking SOLID hot stock trading opportunities once at a time.

Fortunatly there are great sites on the web today that can show you how to trade in a sharp and effective way. One of those sites is Chat Hot Stocks http://www.chathotstocks.com

In the end, momentum trading is all about buying and selling stocks according to your knowledge FILTER. Once you master and follow your proven filter parameters like a clock, you can expect to start making serious amounts of cash on a consistent basis.

Find out how to do it with ease and simplicity at Chat Hot Stocks.

http://www.chathotstocks.com

About the author: ChatHotStocks.com helps day traders worldwide how to pick momentum stocks to maximize profits.

Of all the aspects of stock trading, one of the most difficult is deciding what size position to open. Unless you are using a strictly mechanical system that explicitly defines your trade size, figuring out exactly how much of your hard earned cash to ‘put on the line’ can be extremely hard to decide. Rules of thumb such as ‘never risk more than 5% of your portfolio’ are fine, but may leave you in the dust on fast moving days. As we here at www.traders101.com would say, faint heart never won fair lady, yet look before you leap! Oftentimes, what looks like an average trade starts to run away as the stock market climbs, and you end up wishing that you had taken a large position. And conversely, if you get it wrong, you can end up banging your head against your computer screen and wishing forlornly that you had been a little more ‘prudent’ in your trading size.

Not to worry. There is, in fact, a fairly simple formula you can use to determine the correct position size for your stock trades, as long as you are looking for long term growth. Known as the ‘Kelly Formula’, this is a useful little equation that is simple to understand, and simpler to apply. You will need to have done some trades before, and have the stats at hand (the ratio of your winners to losers, and the size of those winners and losers). Lets say that ‘WP’ means ‘Winning Percentage’ and ‘WL’ means ‘Historical Average Win Size divided by Historical Average Loss Size’. The ‘Kelly Formula’ is then:-

Kelly Forumula = ((WP * WL) – (1 – WP)) / WL

Ouch! Scary maths! Not! To understand this formula, let’s take an example, based on a series of 15 trades. Lets say that you made money on 10 of these trades, at an average of $200 profit per trade, and lost money on 5 at $100 per trade (you cut your losses! Good man!). Substituting the figures into the formula, we have:-

An average win size of $200, an average loss size of $100, so the ‘WL’ number is 2. The Winning Percentage (or ‘WP’) is 10 / 15 or 0.67

Kelly = ((0.67 * 2) – (1 – 0.67)) / 2

The result is 0.505. In other words, if your win / loss ratio is consistent, you will maximize your returns by only risking about 50% of your equity on each trade. Now the problem you can see is that risking anything above 5% or 10% of your equity on a single trade would be regarded by most traders (and certainly everyone at www.traders101.com) as insanely brave. So the next step is to ask yourself ‘What is the absolute maximum I would be happy losing on a single trade’? You then multiply this absolute maximum drawdown by the Kelly number and voila – your position size. If your maximum acceptable drawdown while stock trading is (e.g.) $1000, then your optimum position size would be 1,000 * 0.505 = $505.

What about if your winners were only good for an average of $100, whereas your losers ate up an average of $120? Let’s have a look. The ‘WL’ number is 100/120 = 0.83. The ‘WP’ or winning percentage is still 0.67. The substitution then gives you:-

Kelly = ((0.67 * 0.83) – (1 – 0.67)) / 0.83

which is 0.274 or about 27.5%. Multiplied by your ‘maximum acceptable drawdown’ of $1000 this is $275. So as you can see, the formula adjusts as your ratio of winners to losers changes, and also as the size of your winners and loser changes. One final note – this topic ties in with ‘Expectancy’. Expectancy is defined as:-

(% of wins x Avg Win Size ) – (% of Losses x Avg Loss Size) = Expectancy

Just remember that you should NEVER trade with money you aren’t prepared to lose!

About the author: Trader Jack likes to write for www.traders101.com – the free stock trading site from traders Initiative helping traders get up to speed fast!

The first point to mastering money management is that you have to understand when you’re trading on the stock market is that you are playing the odds – but unlike many forms of gambling, you can make money. The key to making this money is to respect the risk that is part of the market, and manage it. Money management is a set of rules and guidelines that enables you to turn a profit. By being triumphant with your money management skills, you can keep your risk at a level at which you’re comfortable with, keep from making poor trading decisions, and ensure you don’t loose your trading capital. This is why it is so important to follow money management rules.

Why do these money management rules work? You know, it’s funny. I once thought I had a fool-proof way of making money on roulette. You see, I’d bet on red and black. I’d sit at the table. After the ball had landed on black or red five times in a row, I would start betting on the opposite color.

Let’s say I had five reds in a row. I would then start to bet on black. If I was wrong, I would go ahead and double down, so that if I started my bet at one dollar, the next time I would be able to bet two dollars, then four dollars, then eight, then 16. With this system, eventually I’d win and I’d come out one dollar ahead.

So, here I am at 23 and I’ve set up my computer program to test my theory. I made a ridiculous amount of money in the program. I really thought I had the Holy Grail here. But, if it’s so easy for an 23 year old to figure it out, why aren’t all the casinos out of business and why aren’t we’re all millionaires? Unfortunately, roulette doesn’t work this way.

You see, if we’re flipping a coin, heads has a 50 percent chance of turning up on each flip of the coin and so does tails. But, each flip is independent of the last. The last coin toss has nothing to do with the one before it, each flip is a random event. This means it’s possible to get a hundred heads in a row if you do it long enough, and believe it or not, that’s what happened to me. When I first played roulette in a casino, I saw a string of 23 blacks in a row. I went home defeated.

Trading is the same. A percentage of your trades will not work out. A certain percentage will not go in your favoured direction, and the next trade has nothing to do with the last one. Even if you have the world’s most accurate method, over time you will go broke if you don’t practice good money management. Money management rules include defining your trading float, setting your maximum loss, calculating your stop loss, and most importantly learning how to choose your position size. Once these rules are in place, it’s important to stay with them. They will keep you from making snap decisions, and playing the odds longer than you should. This is why money management rules are a critical part of any effective trading system.

About the author: Discover BIG profits from the market by downloading your FREE copy of David’s new Ultimate Stock Trading Systems course. http:// www.ultimate-trading-systems.com/stocks.htm

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Do you own shares? Have you ever purchased, or been tempted to create a share portfolio because you know there are people out there who make money with shares? Are you slightly afraid of the risks of investing in stocks? Or do you want to play the market, but are afraid because you have lost money in the past?

If you have answered yes to any of these questions, or if you just want to improve the performance of your portfolio, or if you just want to make some more money, then I have found the perfect solution for you.

Portfolio Crafter, which you can find at http://www.portfoliocrafter.com/?oceanfeather has a portfolio management system which will guarantee you 8% returns on you investments every month. When compounded, that works out to over 150% returns on your investment every year. This type of return will quickly take you to retirement.

This system is easy to follow to. The Portfolio Crafters do all the analysis, create the portfolio and immediately contact you to explain which trades you need to make. So you will not spend the rest of your life studying the stock market. Have a look how they do it.

http://www.portfoliocrafter.com/?oceanfeather

These guys are so confident that they will return you your 8% every month, that they will even let you try them for the first month for free. This means you can try them out, and if you are not happy with what they offer you, you can switch them off before you pay a cent. As I said, you don’t see many deals better or fairer than this. They are practically taking the risk out of share trading.

The only downside I can see with this service, is that to maintain the integrity of what they offer, they have limited their subscriber base to just 2000 people. If they have 2000 people already, you may have to go onto a waiting list before you are admitted into their ranks. So if you are interested in this one, its probably best to get moving as soon as you can. Here is the link again.

http://www.portfoliocrafter.com/?oceanfeather

One final word about cost, I have had a look at what they charge and have done my calculations.. Keeping in mind that if you make less than 8% in any month, your payment for that month is refunded, I did some quick sums to work out what you need to invest to make this service worthwhile. If you invest just $1,250 using this service, you will break even when you earn 8% per month, after you pay for the service. Once you account for brokerage you are probably looking at a $1,300 break even entry point. I suggest you only use this service if you have a minimum investment of $2,000

Good luck with it, and happy trading.

__________________________________________________ Finally, a dedicated and systematic approach to ensuring you’re earning an income forever. Find out how, in four logical steps, you will never have money problems again. http://www.EmployedForever.com Free newsletter subscription at mailto:employedforever@pushbuttonresponder.com

About the author: B.Ec. A.S.I.A 10 Years Senior Management In Various Fortune 500 Companies. Not completely satisfied with Corporate Life, so always on the hunt to find other income streams

The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market’s potential to help them in making quick money with a big M. While those who tread with care and caution, often shy away for fear of losing. However, the stock market is not all about speculative gains or black Tuesdays. It is a place where committed companies look for raising money to fund their activities. Serious investors can actually create wealth not only for themselves, but also for the companies and the nation. A wise way to invest in the stock market is to empower your self with information. You have to know and learn about the company you invest in, from past records and future plans.

Irrespective of what the Wall Street Gurus predict or what the economic indicators like Dow Jones Average say, a simple and foolproof way of knowing that a company is doing well is to keep a track of how much dividend income does it pay to its share holders every year. If the dividend rates have been rising steadily every year, you know you have a safe bet. To benefit from the future prospects of such companies, it is a good idea to rollback the returns into the company. Which means, instead of adding the dividends to your savings, you can invest them in the shares of the same company. That way, you can ensure that the dividends you receive are always higher than what you got last, with a larger number of shares getting added to your investment portfolio every time.

With this kind of an assured investment plan in place, investors with a gambling streak begin to think beyond making a quick gain. While those who were afraid to take risks get wiser.

Let us find out why companies that give ever-increasing cash dividend income are a good choice for investment:

Your Share Holding Goes Up And So does Your Dividend Income. Your income begins to escalate with your owning more shares every year and the dividend income rising correspondingly.

Your Dividend Income Increases Even If Stock Prices don’t. You are no more at the mercy of the market. Irrespective of what your shares are worth, you keep earning additional cash dividends. In fact, even if the market price dips, you are still at an advantage, as that allows you to reinvest to purchase more shares.

You are not hit by Inflation. With the dividend income rising every year, you offset the effects of a rising inflation. This particularly provides relief to people who have retired and depend on a regular cash inflow to help them meet their expenses. At this stage one need not rollback the investment into further shares, instead, the cash dividend can be used as a kind of regular pension money.

Start Young The ingenuity behind this investment strategy is that it protects you from the fluctuations that generally occur in the market. A lower stock market rate only means you buy more to increase your dividends more. It is advisable to start this strategy early in life while you are still working, so that your wealth builds up gradually and constantly over the years. And you are assured of a regular income, as you grow older.

Remember, the success of this proven investment plan depends significantly on the track record of the company you invest in. It should be one that declares a higher dividend at the end of each financial period. A simple way to find that out would be to calculate the dividend yield. You can do that by dividing the annual dividend per share by the price per share. Of course, no investment can be totally free of risks, neither is this one. Keep an eye on the dividend yield, and if that dips, it’s a signal for you to opt out of the investment.

About the author: James Marriott is a finance writer with more than 15 years of experience in writing financial content, including those related to credit cards, mortgages, stocks, investments, and funds. He is also a regular financial columnist with renowned business journals. For your comments on the article and further financial assistance, please contact our staff writer at info@rncos.com.

Do you own shares? Have you ever purchased, or been tempted to create a share portfolio because you know there are people out there who make money with shares? Are you slightly afraid of the risks of investing in stocks? Or do you want to play the market, but are afraid because you have lost money in the past?

If you have answered yes to any of these questions, or if you just want to improve the performance of your portfolio, or if you just want to make some more money, then I have found the perfect solution for you.

Portfolio Crafter, which you can find at http://www.portfoliocrafter.com/?oceanfeather has a portfolio management system which will guarantee you 8% returns on you investments every month. When compounded, that works out to over 150% returns on your investment every year. This type of return will quickly take you to retirement.

This system is easy to follow to. The Portfolio Crafters do all the analysis, create the portfolio and immediately contact you to explain which trades you need to make. So you will not spend the rest of your life studying the stock market. Have a look how they do it.

http://www.portfoliocrafter.com/?oceanfeather

These guys are so confident that they will return you your 8% every month, that they will even let you try them for the first month for free. This means you can try them out, and if you are not happy with what they offer you, you can switch them off before you pay a cent. As I said, you don’t see many deals better or fairer than this. They are practically taking the risk out of share trading.

The only downside I can see with this service, is that to maintain the integrity of what they offer, they have limited their subscriber base to just 2000 people. If they have 2000 people already, you may have to go onto a waiting list before you are admitted into their ranks. So if you are interested in this one, its probably best to get moving as soon as you can. Here is the link again.

http://www.portfoliocrafter.com/?oceanfeather

One final word about cost, I have had a look at what they charge and have done my calculations.. Keeping in mind that if you make less than 8% in any month, your payment for that month is refunded, I did some quick sums to work out what you need to invest to make this service worthwhile. If you invest just $1,250 using this service, you will break even when you earn 8% per month, after you pay for the service. Once you account for brokerage you are probably looking at a $1,300 break even entry point. I suggest you only use this service if you have a minimum investment of $2,000

Good luck with it, and happy trading.

You’e most likely learned about or even observed your impact the uggslambs skin trunk has produced in the world of fashion just lately. It’s another thing to the trunk to get trendy, nevertheless what about advantageous? When individuals consider boots, they just don’t always think of all of them the benefits that this footwear provide. Many people will need boots for the compacted snow, therefore any start that is certainly water resistant typically will be ideal. Yet footwear will have benefits, like the ugg sheepskin boots sheep skin boot , and the great things about this kind of trunk move far beyond his or her the way they look.

For the reason that are so cozy they can be donned continuously in all of the forms of temperature. When created from legitimate sheep epidermis, that they likely will last a very long time making his or her purchase a very good expenditure. Additionally, considering the variety of variations currently available, there is likely to always be the ugg lambs skin color shoe to fit everyone’s preferences and budget.

The actual ugg sheepskin boots lambs skin boot is often a practical boot. The sheep pores and skin assists in maintaining foot cozy during the cool winter season, and funky throughout the hot summer season. The cozy along with delicate sheep skin color matches being a baseball glove along with functions being a second epidermis, making an effort to keep up with the body’s temp. In fact, mainly because will keep feet hot during conditions as little as -30oF. Additionally, your wool offers organic wicking properties that really help draw dampness from the skin color, and also this is the thing that keeps your skin dry. Finally, any person’s toes ought not smell right after putting on mainly because. The particular made of wool fleece protector assists the air inside the start to circulate allowing your ft . for you to breathe. Obviously, there isn’t any ensure for this claim!

Your uggs lamb pores and skin boot, in case properly maintained, will last for many years, which makes it a great investment. The smooth skin is actually leather-based and thus, your trunk isn’t water-resistant. Any water-repellant merchandise does apply towards the shoe, but actually this can not result in the trunk waterproof. The actual shoe might be washed but not simply by placing it directly into drinking water. These boots should be cleansed manually, utilizing a cleanup creation that is ideal for use on lambs pores and skin along with dried out effortlessly.

An item in the ugg lamb skin color boot that means it is this type of well-known selection throughout shoes or boots also can result in the trunk being broken. That come with will be their delicate lamb epidermis. These kinds of delicate-skinned shoes or boots should never be put on everywhere you’re planning to encounter items that may damage or even pierce the actual boot’s soft epidermis, just like on a hiking trip. To make sure the boots live an extended existence, be sure you correctly take care of as well as care for them.

The ugg sheepskin boots lambs skin shoe is available in numerous designs and sizes creating this trunk an ideal selection for all style. For the reason that can be found in styles for the entire family, such as infants, kids, men and women. A few ugg boot lambs skin color footwear include high shoes or boots, as well as short boot styles, slipper-style, as well as boot styles with extra reinforcements, and far, considerably more. There are also the shades ‘C black, bronze, red, glowing blue, purple, reddish, mud plus much more coming to get each day. The very best quality boots are produced from genuine sheep pores and skin yet replica footwear abound.

Just remember, better the product quality, the higher the price. However, if looking at the particular Ugg boot lambs pores and skin trunk , understand that you’re obtaining a great deal more than just visual appearance; you’re setting up a seem expense.

Anybody that has a requirement for finance will realise that there are numerous possibilities available to them once they begin to search for a loan. They will not necessarily however, all be suited to your requirements. If you have ever applied for a loan before and found that you had to endure a laborious operation before the finance was approved, you will be delighted with payday advances. This kind of pay day loan is quick and easy to set up and can give you the means to access your money very quickly.

This sort of finance was created with the sole aim of being in a position to pay them out almost immediately. There are generally a number of issues related to more long term loans. Primarily because of the simple fact that there’s quite a bit of documentation involved and they can take so much time to pay out. All your paperwork will then have to be substantiated which can be quite a prolonged procedure. Prior to making a decision on your application the loan company will probably look very meticulously at every aspect of the application. This tends to go on for quite some time, which in turn stops them from being practical when money is necessary very quickly. All the time this is happening the debts are usually still mounting up and the amount you’ll need to pay them is growing.

The merits of online cash advance payday loans

You do not need to wait so long to get your decision once you apply for your loan on-line, this really is particularly true if you submit an application for cash advances. Your judgement is offered to you in no time while you are still sat at your computer with this kind of loan. Yet another advantage of this type of loan as opposed to standard long term loans is the fact that the need for the ridiculous amount of paperwork is usually eradicated. This means that you can receive your cash more or less immediately enabling you to repay what you owe or whatsoever it is you require the money for. In the event you don’t fully understand payday cash loans you should:

Browse the comparison websites so you can get a much better feel for how they work and what previous applicants have to say about them. Residents of the United states of america should be mindful that wage day lending isn’t available in all of the states, therefore it is sensible to check out whether your state will allow them before you make an application for one.

Once you have determined who you want to fill out an application with you should submit their online application form (for your safety make sure the internet site holds a current SSL certificate before you do). The details that the payday lenders demand is not too onerous and the first thing they will want to know will be the sum of money that you desire to receive. You will also be required to supply your name and address, your home telephone and mobile or portable number and possibly your employers number (although the lenders will not contact your employer). You’ll also need to offer your occupation details and also the amount you make, and lastly your banking particulars together with your cash card number.

Providing in depth and truthful info on your application form is of the greatest importance. If you provide fake or inaccurate details of any kind you’ll be making it impossible for the lenders to lend to you not just on this application but also any future loan application that you submit. They were actually developed to supply you fast and easy access to funds when you need it, and assuming that you meet their criteria there may be no other loan that might pay out as rapidly.

You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way. Please provide a courtesy e-mail to: charles@thestockopolyplan.com telling where the article was published. Thanks!

When to invest in the Stock Market!

Is really not as important as to how you invest in the stock market. And how you invest in the stock market should take into consideration what goals you are setting for that stock market investment. For example, are you investing for capital appreciation or for income through dividend paying stocks? Or is the investment in the stock market for the combination of both capital appreciation and dividend income? Are you investing through a Mutual fund(s) or selecting your own individual stocks? Do you invest with a lump-sum dollar amount or dollar-cost average into your stock or Mutual fund positions (buying the same stock or Mutual fund at different prices over the years)? Is your investment dollar spread too thin and are all of those dollars working for your ROI (return on investment)? Do you pay commission fees to purchase a stock? Do you pay load fees in your Mutual fund(s)? How much does your Mutual fund(s) charge you for management, operating and marketing fees (they are called ‘hidden fees’)? (One Mutual fund, just recently, was fined 450 million for ‘hidden fees’ practices.) ‘How’ you invest in the stock market is more important than ‘when’ you invest in the stock market and ‘how’ you invest will determine your ROI.

When you invest in the stock market is after you devise a how-to plan that takes into consideration all of the factors above. Quite frankly, every cent of your investor dollar should benefit you and your family and no one else.

There is an enormous amount of investor dollars supporting some whopper salaries on Wall Street. Just recently (the summer of 2003), Richard Grasso, the once former head (CEO) of the New York stock exchange was forced to resign, after his salary for the past 2 years were made public. His salary – 12 million a year for the past 2 years, a check for 48 million, which his advisor suggested he return (which he did) and a pay-package of 139.5 million dollars (which he hasn’t returned, as of this writing-mid-2004). Now, that is just one man’s salary on Wall Street and it is certainly good work if you can get it! Where did all this money for his salary come from? If the money didn’t come from investor’s dollars, why were Pension fund managers so outraged by Grasso’s salary that they threatened to pull billions of Pension fund dollars from the New York stock exchange? I really don’t know where the money came from to pay his salary. What I do know is the one place where the money for his salary didn’t come from and that is from the Stockopoly investor. Not one cent!

It is my opinion that all stock purchases should be made without commission charges (which is possible). The investment in all stocks should be a long-term investment, and that every stock purchased should have a history of raising their dividend every year. And all dividends should be reinvested back into the company’s shares (also commission free), until retirement. Every cent you invest should work for your ROI. By purchasing those companies that have a long-term history of raising their dividend each year (for example, Comerica ‘ 34 years, Proctor and Gamble ‘ 47 years, BB&T ‘ 31 years, GE ‘ 28 years, Atmos Energy – 16 years (they also provide a 3% discount on all shares purchased through dividend reinvestments), the ‘HOW’ you invest becomes automatic- you dollar-cost average into your holdings through the dividends provided by the companies every quarter.

The dividend is the one factor a company cannot ‘fudge’. The money has to be there to pay the shareholder. If a company can raise their dividend every year, the company MUST be doing something right! When a company has a long history of raising their dividend every year you in a sense eliminate risk, since a lower stock price for that company just means a higher dividend yield. If, for example, a stock purchased at $50.00 a share drops to $36.00 a share, the income provided by the dividend income accelerates, and your dividend reinvestment provides you a better dividend ‘bang for your buck’. There have been many up and downs in the stock market these past 47 years (I know, I’ve been in almost 40 of them) ‘ yet Proctor and Gamble has never failed to raise their dividend during those past 47 years. Below is an example of two types of investors that have $10,000 to invest in the stock market. One is a lump-sum investor, the other a dollar-cost averaging investor. One investor doesn’t care about dividends, the dollar-cost averaging investor does. Each investor took a different ‘HOW’ to invest and both investors had the same ‘WHEN’ when they invested. Let’s say they invested at the same time, each stock purchased at $50 dollars a share and every quarter the stock dropped $2.00 a share, till the stocks hit a bottom of $36.00, and then recovers back to $50.00. The lump-sum investor bought the fictitious company ABC, which does not pay a dividend, and the dollar-cost averaging investor purchased the fictitious company XYZ, which pays a quarterly dividend of 50 cents a share (a 4.0% yearly dividend yield), and the company had a history of raising their dividend every March for the past 41 consecutive years. Both purchases were made in January.

The lump sum investor bought 200 shares of ABC at $50.00 a share, watched the stock drop to $36.00, then recover back to $50.00 and when all was said and done ended up right where he started with 200 shares of ABC worth $10,000.

The dollar-cost averaging investor purchased 100 shares of XYZ in January for $5,000.00, (the stock paying a quarterly 50 cent a share dividend for a 4.0 percent yearly dividend yield), and purchased $1,000.00 worth of more shares every quarter for the next 5 quarters. Each quarter the dividend from the company was also reinvested into more shares of stock. Each March the company raised its dividend 2 cents a share, marking 45 consecutive years of rising dividends. All purchases were commission free. January, 100 shares of XYZ @ 50.00 a share = $5,000 $1,000.00 Stock price Div.Pur. Share Purchases March $48.00 .52/sh.=1.083 20.83 shares June $46.00 .52/sh.=1.378 21.74 shares Sept. $44.00 .52/sh.=1.714 22.72 shares Dec. $42.00 .52/sh.=2.098 23.81 shares March $40.00 .54/sh. 2.637 25.00 shs. June $38.00 .54/sh. 3.169 – 0 – Sept. $36.00 .54/sh. 3.393 – 0 – Dec. $38.00 .54/sh. 3.262 – 0 – March $40.00 .56/sh. 3.260 – 0 – June $42.00 .56/sh. 3.149 – 0 – Sept. $44.00 .56/sh. 3.045 – 0 – Dec. $48.00 .56/sh. 2.827 – 0 – March $50.00 .58/sh. 2.843 – 0 ‘

The dollar-cost averaging investor now owns 247.953 shares of XYZ. The value at $50.00 a share = $12,397.65. So, the lump-sum investor ends up right where he started, 200 shares of ABC worth $10,000, and the dollar-cost averaging invested ends up owning 247.953 shares of XYZ worth $12,397.65, along with the dividend income generated from owning those shares. Both had the same ‘when’ when they invested. The dividend yield at 58 cents a quarter (.58 divided by $50.00 x 4 x 100 =), a 4.64% yearly dividend yield. Every quarter every dividend received from the company was higher than the previous dividend, no matter what the stock price was at the end of the quarter. The dollar-cost averaging investor is receiving a dividend for the next quarter from XYZ (no matter what the stock price happens to be) of .58 X 247.953 shares = $143.81, and the next quarter (and every quarter thereafter) the dividend would be even higher if the company, at least, maintained their dividend. If XYZ repeated the same performance history ($50.00 down to $36.00, back up to $50.00) for the next 3 years, and ABC did the same- the HOW you invest in the stock market makes all the difference in the world. In the Stockopoly plan there are no commission charges, all stocks are purchased commission free. There is no need for a stockbroker (the tools needed for doing your own research are easily available and the where and how-to’s are included in the book); there are no hidden fees, load fees, operating, and management or advertising fees. There are no illegal trading practices, costing investors tens of million of dollars. (And the Wall Street Christmas bonuses will not be coming out of your pocket.) Every cent works for you in the form of increasing cash dividends every week, month and year. You’ll never pay too much for a stock, even if that stock is at a 52 week high. The WHEN you invest in the stock market is of little importance compared to knowing HOW to invest in the stock market, simply because the how over rules the when. In the Stockopoly plan you will discover HOW to use all the tools necessary to develop a concrete, definite plan of investing that will profit you and your family for the rest of your lives.

For more information and excerpts from The Stockopoly Plan, please visit www.thestockopolyplan.com

About the author: Charles M. O’Melia is an individual investor with almost 40 years of experience and passion for the stock market. Author of the book ‘The Stockopoly Plan’, soon to be released by American Book Publishing.

At this point everyone has weighed in with theories on how to turn the stock market around. Even president Bush has come through with his three reasons the market is in reverse. As I’ve said before his insistence that the market is down in part to the treat of terrorism is a big mistake. It actually gives the Osamas of the world more power and the ability to achieve their goals without implementing actual transgressions.

I’m going to outline a series of events listed in order that they have to occur that may have to happen before the market can sustain a rally. They are trust, accountability, economy, new thinking and earnings.

Trust: A Matter of Mea Culpa, Hara-kiri, and Open Kimonos

Mea Culpa

I think the biggest problem with the misdeeds of corporate titans that have been caught in the cookie jar is that none have come clean. It would be very refreshing if one would step forward and say he/she just let it get out of hand. However, the mea culpa isn’t just the necessary from those facing criminal conviction. To a certain degree we all played a role in the market’s demise. The individual investor will have to come to grips with the fact they threw caution, common sense and discipline to the wind. Most investors are blaming their brokers, but at the end of the day free will plays a role.

Then I’d love the media to admit they played a role. CNBC in particular has spent the last year and half acting like they weren’t part of the hype. They don’t want to admit they were the carnival barker, not just reporting on the events inside the tent.

Next there are the brokerage firms themselves that already were working in a Catch-22, as they had to answer to two masters; the individual client and the corporate client. Now they had to fend off the threat of the Internet, which became a Borg-like creature that changed the rules of Wall Street. In effect, it became the great California Gold Rush.

It isn’t about getting preachy, but we all say we messed up, I think we’ll all be back on track mentally. The dream of quick riches has been wiped out, but the dream of making money in the stock market is still intact.

Hara-kiri

In addition to coming clean some folks are going to have to go an extra step. I would say that not all of the CEOs that have failed shareholders did so with selfish greed and malicious intent.

The bottom line is that they probably have to be replaced. Not because they can’t learn from their mistakes, but because the underlying share prices will never recover, as question marks and doubt will always haunt them.

This brings up another dilemma, the thin talent pool. As the public rightfully screams for the beheading of CEOs and dismantling of too friendly boards few are considering their replacements. If you think baseball has been yielding too many homers in part to a thin talent pool, just imagine trying to field a thousand of so publicly traded companies? Developing a big-time CEO is harder than finding a person that can pitch a 100-miles an hour, plus steroids really don’t do much for the decision-making process of a corporate executive.

Open Kimonos

Obviously transparency is necessary going forward. Still this can be yet another tricky situation. From a broad perspective the greater the transparency of corporate America the better the quality of all things associated with the economic system. Not just the honesty of reporting but also of the end products. Consumers have been demanding such quality for a long time and they have been answered. Now shareholders will demand the same transparency that a car buyer wants to avoid buying lemons.

Accountability

Someone has to pay. America has always had a strange relationship with its would-be criminals. They love Bonnie and Clyde, Machine Gun Kelly and more recently John Gotti. Yet seem to loathe Ivan Bosky, Michael Milken and Gordon Gecko. This really goes back to a Robin Hood mentality that it’s okay for the underdog to take from the rich but not okay for the rich to take from the people. This is a lesson that Martha Stewart is learning the hard way (not to say she’s guilty of anything, but if she is’) with her current stock sale imbroglio. At the end of the day it really only becomes an inconvenience for those staying at Club Fed. The key is that the average person on the street needs to feel like there is some fairness in this world. Before getting back into the stock market those whose lives are marked with rules, regulations and spending time in traffic court to fight a ticket must see an equal distribution of justice.

Economy

The economy has to continue to grow. It is unreasonable to think that a transition from a recession to a would-be expansion could happen without a few bumps in the road. Of course with so many things going against the economy that have nothing to do with fundamentals it is hard to figure when the coast will be clear. A company like WorldCom says it may have fibbed to the tune of $4 billion dollars and the confidence in America suffers. That puts additional pressure on the dollar, a greater focus on the rating agencies to be even more aggressive in their downgrading binge. It causes net outflows in funds. It lowers the wealth effect and hampers the economy. Yet the American economy has an iron will. It will be dinked a few more times, but that is what will make the move into expansion that much impressive.

New Thinking

The mindset of the quick payoff has to be eliminated. I don’t think one can be a passive investor anymore. In fact, the same decisiveness that investors are demanding from the system, ratings agencies, brokerage firms, governing bodies and corporations themselves they should apply to their approach at the stock market. In a recent Business Week article it was noted that the turnover in NYSE issue in 1960 was just 12%, last year it was 94%. That means there isn’t always a lot of time to peruse or hesitate. In some ways it is unfortunate that companies aren’t allowed to evolve or reach their goals over a longer period of time. Yet this is the world we now live in and investors have to adjust.

Earnings

Much is made about the market still being over valued based on historic price to earnings ratios. This is because companies have no pricing power and are afraid to force the issue. Moreover there is still the inventory overhang and the fact that some industries are too crowed ‘back to the modern day baseball theory. Creative destruction and an improving economy are the only things that can make this situation improve. There are other ways to measure the worth of a company beyond the P/E ratio. However, in order to feed into the economy earnings have to be a tributary allow for job creation, research and development spending and an improvement in the wealth effect. The most compelling aspect of better earnings is that investors have to believe in the sincerity of the numbers.

About the author: Since 1991, Charles Paynes’ Wall Street Strategies has successfully provided timely and effective equity advice to institutional money managers, retail brokers and individual investors of all types, and has thousands of subscribers from hundreds of brokerage firms. http://www.wstreet.com Wall Street Strategies provides research online, including enhanced services and communication tailored to today’s fast-moving markets.

Robert Rodriguez likes to buy stocks at their lows. When there are not enough stocks hitting new lows, he closes his fund and piles up cash. This is what he has been doing lately. His moves deserve attention for good reasons, his $1.7 billion FPA Capital Fund has averaged an annual total return of more than 17% over the last 20 years, net of sales charge, handily beating all the benchmarks by wide margins.

As Robert Rodriguez finds slim pickings in the stock market, his goal has changed to capital preservation. The cash position in his fund has been in steady increase. On March 31, 2005 , it is at 34%. As a reference, between 1984 and 1997, his cash level was rarely above 5% and most of the time it was less than 2%. Now he is sitting on this big trunk of cash, awaiting opportunities. “You never know the value of liquidity until you need it and don’t have it.” He said, ‘This is one of those times when it takes a great deal of patience, discipline, and conviction to maintain such a contrarian position, because of the potential business and investment risk that it entails.’

Robert Rodriguez’ contrarian position in investment goes beyond adjusting the level of cash. He also reduces his fund’s weighting in the sectors or industries that he thinks are overpriced. He has done this before. The years of 1979 ’1981 was the time of the second oil crisis, oil and gas prices were soaring. Many “experts” were forecasting oil prices of $100 per barrel within ten years. Energy stocks were being valued as growth stocks and represented nearly 31% of the S&P 500′s market capitalization. Robert Rodriguez went to the contrary; he liquidated all his energy stocks and bought bonds. The oil mania resulted in large-scale capital destruction with virtually every bank in the state of Texas going bankrupt by 1987.

Robert Rodriguez’s contrarian investment style was tested again during the peak of the tech bubble. In March 2000, he analyzed the operating and stock market performances of Microsoft and Cisco Systems, made growth assumptions for them and the U.S. economy. He biased down the expected growth and valuation assumptions for each of these companies. The result was that Microsoft’s market valuation would increase to 36% of nominal GDP. Cisco’s expected market valuation would rise to 48% of nominal GDP. The combination of these two estimates would equal 84% of GDP by 2010. Apparently (now) the odds of this happening were not great. In light of these trends, he reduced his Fund’s exposure to technology stocks. We all know how that bubble ended.

So what sectors does he like or dislike right now? He has energy stocks at 19.3% of the Fund, it is between three and four times the weighting of the various indexes. This is the highest energy allocation that he has had since 1979, when he began selling this sector. Financial service stocks total 2.1%; the lowest allocation he has had in 35 years. His reason: financial sector is at or near-record representation in all the major indexes. Financial service companies represent nearly 21% of the S&P 500′s market capitalization — a 33-year high. They are among the largest components in other stock indexes as well. In terms of operating profits, they comprise almost 28% of the S&P 500.

In summarizing his contrarian investment style, Robert Rodriguez listed these key attributes:

Focus on market leadership or niche companies that are in industries that are perceived to be out of favor and unloved ‘ a bottom-up strategy. Select companies that have strong balance sheets ‘ typically with total debt to total capital of less than 40%. They must be at a significant valuation discount to the market and its historical valuation parameters. Acquire them at modest premiums to book value and at less than 1x revenues. They should be on or close to being on the new low list. Have a long-term investment time frame ‘ typically three to five years.

About the author: Dr. Charlie Tian, Director of Research of http://gurufocus.com, the website that tracks the stock picks of Warren Buffett, George Soros and other guru investors like Bill Nygren, Mason Hawkins, Ken Fisher, David Dreman, Martin Whitman, James Gipson, Robert Rodriguez, Ronald Muhlenkamp, Wallace Weitz, William, Ruane, Edward Lampert, Edward Owens, Richard Aster, Jr, Robert Olstein, John Keeley, Brian Rogers and Tweedy, Browne.

THE ALCHEMIST by AL THOMAS THE GREAT STOCK MARKET SECRET When the stock market is going up and all your stocks and mutual funds are making money you feel like a genius. It is too bad that some folks don’t remember what happened in 2000. Of course, right now we are in one of those genius phases. Your broker and financial planner are encouraging you to buy, buy, buy. And I can’t fault that at this time. You remember back in 2000 how many times they told you to buy, buy, buy while the market was going down, down, down. Are we in another of those periods now that are leading up to a humongous crash? Hey, I don’t predict, but I do listen to the voice of the market. The great Wall Street mantra is ‘buy a good stock and put it away’. Did you keep WorldCom and Global Crossing? Even if these were exceptions because of fraud a smart investor would not have lost any money. In fact he could have made a nice profit.But Al, they went under! Yes, I know, but the smart money still made out because they sold near the top. As a former exchange member and floor trader I was not right every time I bought something and I especially did not like giving back nice profits that had accumulated. You don’t have to be psychic to know when to sell and don’t think you are going to be able to pick the top. A really smart trader waits for a stock or fund to start up and then jumps on it with both feet. When it starts down he jumps off looking for another equity that is going up. The wise trader knows he can’t buy the bottom and sell the top. What he wants is a big bite out of the middle. When you make a sandwich most of the meat is in the center and a professional trader does the same with his trading. He wants to take a bite out of the middle of the move. You can do this too by looking for stocks, mutual funds or Exchange Traded Funds that have a nice upward pattern. As I said before buying is not the secret. Then what is? You must learn to sell – for two reasons.First to protect your equity after your initial purchase and second to keep from giving back profits you have made as the equity advances. The great Wall Street secret is an exit strategy: knowing when to sell. Unless you learn to sell will not be successful in the market. Brokerage companies do not want you to sell and rarely issue sell signals. You must decide how much you are willing to risk before you buy. The simplest way is with a percentage stop loss order of 5%, 7%, 10%, 12%, whatever you can live with. Instruct your broker to place a trialing stop or you can change it yourself every week. Do not lower a stop. Selling is the great secret you will never hear from your broker.

About the author: F*R*E*E investment letter www.mutualfundmagic.com Author of best seller “IF IT DOESN’T GO UP,DON’T BUY IT!” Never lose money in the market.Copyright 2004 Albert W. Thomas All rights reserved.Former 17-year exchange member,floor trader and brokerage company owner.

There are several factors an investor in the stock market should consider: 1. All stock purchases should be commission-free. 2. All stocks purchased should be from a company that has a history of raising their dividends every year. 3. The company should not only have a history of raising their dividends every year, but should also show price appreciation in the market place. 4. All dividends from these companies should be rolled-over into more shares of their company, until you retire. This should all be done by the companies, automatically, for the stockholder, commission-free. 5. The companies purchased should have staggered pay-out dividend dates, so dividend income by 12 companies will provide the shareholder a cash dividend income every week of the year. 6. A systematic approach of dollar-cost averageing into each stock (your dividends from each company will be doing this automatically)should be done on a quarterly basis. A savings plan should be adopted to add to your holdings every quarter, along with the the dividend reinvestment. 7. Stocks purchased should pay a dividend yield of at least 2.0% or better. A low 2.0% dividend yield isn’t necessarily bad because it means the company in question is using most of their profits to expand. In other words,it’s a growth stock with business, profits and earnings growing. A growth stock makes up for the lower dividend yield because their stock prices will more than likely rise faster. 8. The company should have been in business at least eight years, showing dividend increases each year. This will eliminate the risk involved in putting money into a risky new start up company (the type of company that is going to change the world- they are just too hard to find). 9. The company must have a stock dividend reinvestment plan (DRIP). If the dividend paid by the company is $2.63 for the quarter, all of that money will purchase a further percentage of shares(partial shares) and this is done automatically for you by the company or their transfer agent. 10. The companies you purchase should be purchased with the intent of realizing increasing cash dividends for you and your family for the rest of your lives.

Below is an ‘excerpt’ from my book ‘The Stockopoly Plan’ soon to be released by American-Book Publishing, and I would like to share it with you.

Have you ever noticed how some words in the English language are so perfectly named for what they describe? And how some words seem to be, I guess you could say, backwards? For instance, the word ‘sunflower’! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun fron sunrise to sunset. And then there are those words in the English language where their meaning appears to be backward, so to speak – like parkway and driveway. When my car is parked at home, I would think it would be parked on, well, a parkway -and when I’m driving on the road somewhere, I would think I’d be driving on a – a driveway. In the stock market world, I think the word analyst is a perfect word in the English language and stockbroker sounds right to me ,too. And this leads me to what I call the brainwashing mantras of Wall Street. The brainwashing mantras of Wall Street may take the form of a number, such as a stock rating of 1, 2, 3 etc. Or the mantras may be a star, 1 star, 2 stars, 3 stars etc. The mantras may be a word or a group of words – attractive, unattractive, neutral, market perform, market out-perform, market-underweight, market equal-weight, market over-weight, sector perform, stong buy, buy, sell, strong sell. These mantras are so ingrained in Wall Street and investor’s minds that they have created multi-billion dollar industries. There are other types of mantras, such as RSI (relative strength index-a trading volume indicator), Bollinger Bands (named after its creator John Bollinger(he use to be a regular on CNBC)and the bands deal with the channel a stock trades in,in relation to its ‘moving average’- another mantra). Stochastics (used to tell if a stock is 75% over-bought – too many people have been buying) or 25% over-sold (too many people have been selling), Momentum, MACD (Moving Average Convergence/Divergence-price of the stock in relation, up or down, to its moving average, 50-day, 200-day moving averages, triple bottoms and tops, pendants, flags, bear and bull markets, head and shoulders formations, double bottoms, PE ratios etc,etc,etc. All these mantras serve a purpose -(and, I admit, if you are going to trade the market they are useful)- they create commissions! And in my opinion, have no meaning what-so-ever for the long-term, dollar-cost averaging, buying investor of company’s shares, free of commission charges, whose companies raise their dividend every year, with the investor’s idea or purpose being to provide an 85% tax-free income, through ever-increasing dividends for the rest of their lives, no matter what the price of the stock at any given time in the market place be. (Whew! What a sentence!)

Thomas Edison and the Stock Market Thomas Edison gave his definition of insanity: ‘Endless repeating of the same process, hoping for a different result.’ We are now seeing the stock market head down again as it did in 2000. Brokers, mutual fund managers and financial planners hopefully will not be repeating their same errors that cost investors seven (7) trillion (with a T) dollars. Unfortunately they will be working with the same deficient knowledge as before. The financial brethren have been taught to invest by the Wall Street tribe that has proven to allow huge losses for the small investor. Small is considered less than a 7-figure account. Any customer with less than $100,000 does not show on the radar screen. The old saw that brokers tell their clients that they will watch their account is pure horse hockey. The average broker has 300 accounts and only those in the seven figure range get their attention. Wall Street tells brokers to buy and hold. This obvious prevarication has been told so many times that is has become conventional wisdom. Just about every broker and financial planner believes it. If you are to make money in the stock market you must learn a new way to invest. Tom said you can’t keep doing the same thing. And I’m sure you don’t want to go thru those terrible declines that happened five years ago. Did you have a stock or mutual fund that dropped from its high 40, 50, 60% or more? I hope not. The top 50 mutual funds crashed 42%. Each $10,000 in your portfolio became worth $5,800. You could have saved most of the $4,200 if your broker had recommended a trailing stop loss order. When you bought your stock or fund did you have an exit strategy? Most folks don’t. Edison was always trying different approaches and when they did not work he quit them and tried something new. That is what you must do when investing in the stock market. If your equity goes down it is not working for you so you sell it to find one that does work for you. There are times when nothing is going up and that is when you will have sold everything and stand aside with your funds in a money market account. It may not make much, but at least you won’t let the market steal your equity. You don’t need to be as brilliant as Tom Edison to find a good stock during a bull market, but during a bear market it takes a super genius. During a bear market even the best stocks go down and many do not recover, Bernard Baruch, one of the greatest traders of all times, said the secret to his success was that he got out too soon. That may seem very simple, but he had the greatest gift of all traders. He had an exit strategy. Don’t join the other inmates in the Wall Street sanatorium by continuing to hold your equities as the market goes down. Learn to do something different to protect your investments.

About the author: Al Thomas’ best selling book, “If It Doesn’t Go Up, Don’t Buy It!” has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter and receive his market letter for 3 months at www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know. Copyright 2005

Financial markets provide their participants with the most favorable conditions for purchase/sale of financial instruments they have inside. Their major functions are: guaranteeing liquidity, forming assets prices within establishing proposition and demand and decreasing of operational expenses, incurred by the participants of the market.

Financial market comprises variety of instruments, hence its functioning totally depends on instruments held. Usually it can be classified according to the type of financial instruments and according to the terms of instruments’ paying-off.

From the point of different types of instruments held the market can be divided into the one of promissory notes and the one of securities (stock market). The first one contains promissory instruments with the right for its owners to get some fixed amount of money in future and is called the market of promissory notes, while the latter binds the issuer to pay a certain amount of money according to the return received after paying-off all the promissory notes and is called stock market. There are also types of securities referring to both categories as, e.g., preference shares and converted bonds. They are also called the instruments with fixed return.

Another classification is due to paying-off terms of instruments. These are: market of assets with high liquidity (money market) and market of capital. The first one refers to the market of short-term promissory notes with assets age up to 12 months. The second one refers to the market of long-term promissory notes with instruments age surpasses 12 months. This classification can be referred to the bond market only as its instruments have fixed expiry date, while the stock market’s not.

Now we are turning to the stock market.

Stock market As it was mentioned before, ordinary shares’ purchasers typically invest their funds into the company-issuer and become its owners. Their weight in the process of making decisions in the company depends on the number of shares he/she possesses. Due to the financial experience of the company, its part in the market and future potential shares can be divided into several groups.

1. Blue Chips Shares of large companies with a long record of profit growth, annual return over $4 billion, large capitalization and constancy in paying-off dividends are referred to as blue chips.

2. Growth Stocks Shares of such company grow faster; its managers typically pursue the policy of reinvestment of revenue into further development and modernization of the company. These companies rarely pay dividends and in case they do the dividends are minimal as compared with other companies.

3. Income Stocks Income stocks are the stocks of companies with high and stable earnings that pay high dividends to the shareholders. The shares of such companies usually use mutual funds in the plans for middle-aged and elderly people.

4. Defensive Stocks These are the stocks whose prices stay stable when the market declines, do well during recessions and are able to minimize risks. They perform perfect when the market turns sour and are in requisition during economic boom.

These categories are widely spread in mutual funds, thus for better understanding investment process it is useful to keep in mind this division.

Shares can be issued both within the country and abroad. In case a company wants to issue its shares abroad it can use American Depositary Receipts (ADRs). ADRs are usually issued by the American banks and point at shareholders’ right to possess the shares of a foreign company under the asset management of a bank. Each ADR signals of one or more shares possession.

When operating with shares, aside of purchase/sale ratio profits, you can also quarterly receive dividends. They depend on: type of share, financial state of the company, shares category etc.

Ordinary shares do not guarantee paying-off dividends. Dividends of a company depend on its profitability and spare cash. Dividends differ from each other as they are to be paid in a different period of time, with the possibility of being higher as well as lower. There are periods when companies do not pay dividends at all, mostly when a company is in a financial distress or in case executives decide to reinvest income into the development of the business. While calculating acceptable share price, dividends are the key factor.

Price of ordinary share is determined by three main factors: annual dividends rate, dividends growth rate and discount rate. The latter is also called a required income rate. The company with the high risks level is expected to have high required income rate. The higher cash flow the higher share prices and versus. This interdependence determines assets value. Below we will touch upon the division of share prices estimating in three possible cases with regard to dividends.

While purchasing shares, aside of risks and dividends analysis, it is absolutely important to examine company carefully as for its profit/loss accounting, balance, cash flows, distribution of profits between its shareholders, managers’ and executives’ wages etc. Only when you are sure of all the ins and outs of a company, you can easily buy or sell shares. If you are not confident of the information, it is more advisable not to hold shares for a long time (especially before financial accounting published).

About the author: Dr. Goldfinger www.financegates.com

This article can be reprinted for free. To reprint this article, please, include the following code: FinanceGates: financial advice. Educational articles, financial news and reviews on investing, personal finance, stocks, funds.

Stock picking is a very complicated process and investors have different approaches. However, it is wise to follow general steps to minimize the risk of the investments. This article will outline these basic steps for picking high performance stocks.

Step 1. Decide on the time frame and the general strategy of the investment. This step is very important because it will dictate the type of stocks you buy.

Suppose you decide to be a long term investor, you would want to find stocks that have sustainable competitive advantages along with stable growth. The key for finding these stocks is by looking at the historical performance of each stock over the past decades and do a simple business S.W.O.T. (Strength-weakness-opportunity-threat) analysis on the company.

If you decide to be a short term investor, you would like to adhere to one of the following strategies:

a. Momentum Trading. This strategy is to look for stocks that increase in both price and volume over the recent past. Most technical analyses support this trading strategy. My advice on this strategy is to look for stocks that have demonstrated stable and smooth rises in their prices. The idea is that when the stocks are not volatile, you can simply ride the up-trend until the trend breaks.

b. Contrarian Strategy. This strategy is to look for over-reactions in the stock market. Researches show that stock market is not always efficient, which means prices do not always accurately represent the values of the stocks. When a company announces a bad news, people panic and price often drops below the stock’s fair value. To decide whether a stock over-reacted to a news, you should look at the possibility of recovery from the impact of the bad news. For example, if the stock drops 20% after the company loses a legal case that has no permanent damage to the business’s brand and product, you can be confident that the market over-reacted. My advice on this strategy is to find a list of stocks that have recent drops in prices, analyze the potential for a reversal (through candlestick analysis). If the stocks demonstrate candlestick reversal patterns, I will go through the recent news to analyze the causes of the recent price drops to determine the existence of over-sold opportunities.

Step 2. Conduct researches that give you a selection of stocks that is consistent to your investment time frame and strategy. There are numerous stock screeners on the web that can help you find stocks according to your needs.

Step 3. Once you have a list of stocks to buy, you would need to diversify them in a way that gives the greatest reward/risk ratio. One way to do this is conduct a Markowitz analysis for your portfolio. The analysis will give you the proportions of money you should allocate to each stock. This step is crucial because diversification is one of the free-lunches in the investment world.

These three steps should get you started in your quest to consistently make money in the stock market. They will deepen your knowledge about the financial markets, and would provide a sense of confidence that helps you to make better trading decisions.

The Nature of Penny Stocks For anyone new to investing in penny stocks, you should first be made aware of the differences between these micro-cap stocks and the more conventional blue-chip and mid-cap investments. Unlike buying shares in a large, stable company like Ford or IBM, you are dealing with speculative investments.

Penny stocks literally trade for pennies per share, or for as much as a couple of dollars. The beauty of penny stocks, of course, is that sometimes they ‘grow up’ and become mid-cap stocks, multiplying in value hundreds of times over and making many people very wealthy.

With penny stocks, also called micro-caps or juniors, you will see much greater price volatility, and thus greater and quicker gains and losses in asset values. It is precisely this volatility which draws investors to the junior markets, as one good pick could make you hundreds of times what you could ever make on the larger markets.

Of course, there is more risk than buying bonds, blue chips or defensive stocks – but this added risk is tempered with the possibility of making the big gains. Most penny stocks, but not all, are resource or technology companies who initially sold shares in an effort to raise money for exploration or product development programs. Many of the companies have large debt loads and are not necessarily making more money than they are losing.

However, it is the potential of a major, or even minor success in their quest that often incites dramatic price climbs, and this is where their value lies.

Profit Potential Modern Strategies Inc. owner of  , has been in the business of researching penny stocks for many years, and has become effective at uncovering the best small cap investment opportunities and the most rewarding profit situations in the penny stock markets. There are several ways to profit from penny stock investments. Modern Strategies Inc. has uncovered the most highly rewarding investment situations.

Promotional Stocks – These issues may or may not have much actual value. Promoters generate interest in these types of stocks in an attempt to drive share prices higher. The promoters own great amounts of shares and so they make more money the higher the share price travels. Eventually, they sell their holdings into the promotion and generate great personal profit. Then they move on to the next project, leaving the original stock and all its investors behind. Without the work of the promoter, the promotional issue soon comes crashing down.

These are the type of stock investor hear horror stories about, because many people often lose a good deal of money when they are naive about promotional ploys. However, getting in on a promotional stock early in its life cycle, and keeping an eye on the actions of the promoter can be very, very rewarding. It’s like having a full time stock promoter doing everything in his power to get the share prices of the stocks you own to go through the roof, and investors who get in early can go along for the ride!

Technical Precursors – Often technical analysis can reveal patterns in the trading cycles of penny stocks. Sometimes these patterns illustrate excellent buying opportunities, where the underlying stock has a high probability of moving up strongly, and only a low probability of declining in value. In addition, there are sometimes situations where several positive technical indicators combine at once to reveal that an issue is very likely to increase strongly in price over a short time frame, indicating that the particular issue is has excellent investment potential.

Fundamental Strength – Fundamentals involve such criteria as earnings, debt load, assets, and many others. It was long thought that earnings were the major driving force behind share prices, but Modern Strategies Inc. has since disproved this theory as it applies to penny stock companies. Instead, uncovering the best medium to long term investment opportunities must be done through exhaustive analysis of company financial statements. Investors should get involved with the companies that are making the most money, have the most effective management, and have improving trends in all factors of their operations. As well, industry comparisons and the examination of key financial ratios present clues as to which companies are destined for higher share prices.

Proper fundamental analysis of penny stock companies will generally reveal that there are about 2 or 3 superior investment opportunities out of every 100 companies examined. These 2 or 3 excellent corporations often represent better investments than 90% of stocks on the large-cap markets like the NYSE.

Undervalued Situations – Sometimes companies see their share price slide dramatically. There are occasions where this decrease in price has very little to do with the underlying fundamentals, and more to do with factors such as overall market weakness, interest rate increases, or others.

Opportunity exists in such situations because the shares are often ‘unfairly valued’ and a return to more realistic prices is inevitable. There are often cases where companies have more cash on hand per share than their share price, or have price to earnings ratios as low as 5.0. Although there is much more to uncovering the best undervalued situations, this is the basis behind the concept.

Minimized Downside – Often the combination of technical analysis and undervalued situations can reveal penny stock companies that have tremendous upside potential, and have a very low probability of declining in value to any significant degree.

These type of investments are excellent choices for penny stock investors that are less risk adverse.

Special Notes About Penny Stock Companies Penny stock companies change their names more commonly than other publicly traded companies, and are also subject to more stock-swaps and consolidations. In any of these events, your shares in your account will be automatically replaced with the appropriate stock by your broker and notice will be delivered to you.

For example, if you owned 5000 shares of EXO and for every 5 shares you were to receive 2 shares of LOR, you would find your account holdings re-adjusted to reflect 2000 LOR which can be traded as normal. You will no longer have the 5000 EXO.

On rare occasions, a penny stock company can become delisted. This means that the shares will no longer trade on the exchange, and if the company does not get listed on another exchange or re-instated at a future date, you may be subject to a loss of capital equal to 100% of the total investment. However, this is a very rare occurrence, and there are simple ways to protect yourself against it which are periodically discussed in Modern Strategies Inc. publications. Delisting generally becomes a greater concern for investors who intend to use a long-term (several years) buy and hold strategy with penny stocks.

About the author: Peter Leeds, one of North America’s leading Investment Coaches, is a self-made millionaire who has created his fortunes on the stock markets. He has also empowered thousands of individuals to do the same. His personal success and incredible ability to consistently pick money-making stocks has earned him a loyal following of successful investors and has generated significant attention from the financial world.

The trading method you employ to trade the stock market can make a big difference in your results.

Stock trading is a very competitive field and in order to succeed you need to FOCUS on a set of simple strategies that you can implement without hesitation.

Regardless of the stock trading software or strategy you use, this game is all about buying and selling according to your trading set ups. So the clearer your set ups are, the faster you can make a profitable decision.

Complicated technical systems and information overload can make you slow and confuse you right from the start, potentially making you loose money instead of making your profits grow.

Hopefully some sites on the web do offer more effective and simple day trading advice. One of the sites that can show you how to trade using practical trading strategies is Momentum Stock Trading They focus mainly on hot stock trading tactics, that are easier to implement than many other technical systems and stock trading software outhere.

Stock trading doesn’t have to be complicated as many people perceive. But you do need to follow a well organized set of rules and tactics, that once you master them, you can aspire to replicate profitable trades with consistency.

Visit them today at Momentum Stock Trading

About the author: Nicole blake is day trader at Momentum Stock Trading. Visit them today and learn how to pick, where to find and how to trade momentum stocks every day at

Stock trading keeps getting competitive and the stock market doesn’t care if you are experienced or a newbie stock trader. The rules and the opportunities are the same every day, so either youre going to make money stock trading or you are going to lose it in favor of the more seasoned ones.

As a stock market trader your homework is all about studying and testing different trading strategies that can help you take advantage of stocks and at the same time protect your gains. Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.

There are some very good sites on the web where you can access practical trading strategies that are easy to implement. One of those sites is Smart Day Trading

They focus on short term momentum stock trading tactics that can help you identify and handle hot stocks while reducing your trading risk.

All in all, stock market trading is all about picking the best stock opportunities and following your buy and sell signals with ease and simplicity. Once you learn to master your trading decisions, you can aspire to produce consistent profitable results.

Learn how to do it the Smart way at Smartdaytrading

About the author: Thomas Blodget is a UK based momentum day trader focusing on US markets since 1984. He helps people become confident and practical momentum traders, showing them how to choose stocks with ease and simplicity every day at the place