Candlestick Trading Blog
July 24, 2009
Stock Buying
| Stock Buying Tips in a Troubled Economy With the economy in the condition that it is in, many investors are looking for stock buying tips from wise investors. In today's article we discuss some tips for every day stock investors. Investors must ensure that they do not overpay for stocks. You must do your homework to ensure that you purchase shares in promising companies that trade below their tangible book values. This ensures that something tangible can protect the downside during a slow in the economy. This is not very easy to do so you must do the research required. For those companies that have been reporting bad news and its stocks have been declining, it is risky to buy shares in that company. You don't know whether the worst is over and if the stock has bottomed out. Some things that you can look out for to tell if the worst has ended include the following: First, new research coverage has started. This can indicate that the company expansion and future growth can occur as long as the company can gather up the funds to do this. Second, press releases or earnings calls indicate that management is optimistic. Just be sure to do your own stock research to ensure it a reality. Third, the company of the "sell side" starts raising the earnings estimates. The last hint you can look out for when stock buying is that the company books large one time charges in the fourth quarter. This is done as a means to lumping all of the bad financial news into one time period, to then paint a nicer picture for the new year. Stock investors must also be sure to diversify their portfolios. Portfolio diversification before a slow in the economy is ideal, however, better late then never. You should diversify by industry and not just by spreading holding across a bunch of stocks. You must be sure to limit exposure to a particular security or group of securities rather than just picking a bottom in a given stock, industry, or market. Investors should consider mutual funds as well as other types of assets that suit their risk tolerance. Many investors choose to consult with an advisor for long term investing to ensure that their needs and risk tolerance are actually consistent with their investments. Additionally, some investors believe that when stock buying, true diversification can be obtained with about 10 to 20 stock holdings, while others think you should have even more and with a variety of asset types. Again, you should consult with an investment advisor to ensure you are making investment decisions that work for you. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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