Stocks to Buy
Stocks to Buy When Long – Term Investing
When trying to determine which stocks to buy when long term investing, there are certain criteria that you must look for. There is a lot of research involved as well so that you ensure you are investing in stock that will increase in value over time. This shouldn’t be a guessing game but instead you should base your decisions on research and real time information.
Stock investors look for those stocks that are undervalued and they look for those stocks in a specific market sector. You can attempt to research every stock if you would like, but there are about 3,000 listed on the New York Stock Exchange alone so that would take too much time. Stick to a market sector that you understand, instead of learning about one that you know nothing about and you will find this helpful in your research.
When looking for stocks to buy in the long term many investors use fundamental analysis. Fundamental analysis means that you buy stock based on the fundamentals such as price to earnings ratio, book value, cash flow ratios, return on assets, and many other items. Politics and the state of the economy will affect a stock’s value as well. Fundamental analysis is based on a stock’s intrinsic value. (Other investors who practice short term stock trading base their trades on technical analysis).
You will of course want to look for those companies with potential and that are not involved in any lawsuits. Legal issues can drag on for years, so you want to be sure that the company you invest in is not involved in any legal matters. Those companies that have potential will typically show past performance that is indicative of generating future returns. You should ensure that stock analysts for a company’s stock are predicting stable or growth in earnings per share. You will need to also be sure that you understand the concepts involved with earnings estimates. Know the difference between revenue and profitability and why profitability is more important than revenue.
When researching stocks to buy you want to find one that is not popular but that has the potential to become popular overtime. Many call these stocks sleeper stocks because they are currently ignored by the market, but have the potential to increase in value and stay high in value in the future. This is not easy to do when investing in the stock market and it requires a lot of research and a basic understanding of stock market terminology. Remember everyone else is trying to do the same thing so it is not an easy task.
Market Direction: What have the so-called experts been saying about this market? Does the phrase " a bounce in a downtrend" ring a bell? How often have you heard from the so-called experts are still sitting on the sidelines waiting for this market to test the bottom again? The candlestick signals allows investors to see what is occurring in investor sentiment. The markets showed a bottom signal in early March. While the experts have been sitting on the sidelines, we have been making returns in the magnitude of 20%, 40%, 80%, and greater. Ask 15 analytical experts which direction the market is going to go, and you will get 15 different answers. The one true indicator is the market itself. Candlestick analysis makes it easy to analyze what investor sentiment is doing.
Why does candlestick analysis dramatically improve investment results? The Japanese Rice traders discovered one simple fact about investment trends. Investor sentiment reacts predominantly the same way in certain market conditions over and over. Once this reaction is identified with chart graphics, the identification and the understanding of reversals becomes very easy. Obviously, having the correct analysis for a market or stock price trend dramatically improves the potential of profits. From that point, the investor has a variety of options on how to capture profits from that knowledge. They can be placing leveraged positions either with margin accounts or various options strategies to enhance the returns from anticipated price moves.
Should a stock be bought after it has moved from $3.00 a share to $11.00 a share? For most investors, that is a very tough decision. However, as a candlestick investor, the price patterns can illustrate when it is not time to buy at those levels and when it is time to buy. As illustrated in the APWR, buying in the stock at $11, around may 5th, after moving up from $3.00, would have been a very high risk trade. However, the information provided from candlestick patterns would have made the purchase of APWR at $11 a fairly low risk trade on May 26. The results of a pattern, the Jay hook pattern, provides much better insights as to what a price move will probably do. The gap up on May 27th produced a much higher profit probability.
It is this type of information that is provided by candlestick signals and patterns. Putting the probabilities in your favor should be one of the first elements of successful investing. This creates a discipline of consistently putting your investment funds into situations that have much better probabilities of producing profits. Because the signals and patterns have a definite history of producing expected results, you will be able to reduce the number of trades that do not work successfully. The simple logic behind the creation of candlestick signals and patterns provides a trading platform that greatly reduces the possibilities of losses. Bullish candlestick signals incorporate one simple facet. The Bulls are starting to buy the position. As a candlestick investor, having the ability to identify correctly a new price trend allows for the proper stock and option strategies
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