Investing 101?

Question

What are the first things one needs to know when starting to invest in stocks?

Answer 1

wow I love this question.

Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 71,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 2

When starting to invest one needs to understand the general guidelines: why things are priced the way they are, what the market sees, how to value a company. The "why" and "how" portion are similar...as stated previously the principle way a stock is valued is using the P/E ratio, however certain companies deserve certain P/E ratios. I will address two previous comments in reference to P/Es under 20/low P/Es and Google's P/E. First, a low P/E is generally a sign of reduced growth in earnings; the slower a company grows the less someone is going to pay for it. Second, Google may have a high P/E ratio but that doesn't make it a bad investment (I am not suggesting it is a good one, do your homework). Unlike tech stocks of the late 90's Google has real earnings, a strategy for growth and real hyper-growth. If you review google's YoY EPS you will notice a tremendous increase and it is expected to continue, hense the high P/E ratio. Like a previous answerer noted a dividend is important to look for but the real question is why? This is a two part answer...1.) A company that pays a dividend, and has paid a dividend for a long time, is more likely to be a stable company...safer investment. 2.) The higher the dividend yield (Dividend relative to the price of the stock) the more favorable the investment is to certain investors (think about Opportunity Cost). An example of this is ExxonMobil, Citigroup, Bank of America...all of these stocks have dividend yields in the 4% range....if the next best investment (high-yield savings account/bond, etc) will pay the investor 5% it seems clear that the combination of stock price growth and the dividend make the stock a better investment. Moreover, stocks that pay dividends are less likely to have a significant decline in price because value investors will prop the price up.

The harder question to answer is "what" portion. There are a few important statistics to consider...among them are the previously discussed P/E ratio and dividend yield but others include earnings growth, uniqueness of product, management effectiveness (measured by Return on Assets and Return on Equity), margins and margin expansion, and evaluation of the financial statements and the business' future growth strategy. All of these factors need to be compared with direct competitors. When you see two different companies have P/E ratios that are very close and one company has move favorable statistics it is important to find out why; does the market already know something you don't? If you can't find any major information buy the stock with more favorable statistics and let it ride baby.

The bottom line is doing your homework is key. Evaluate financial information and earnings reports, listen to conference calls, watch the market before buying and balance your risks. Yahoo! and Google Finance are great tools as wells as "Understanding Wall Street" if you're looking for a good book.

Answer 3

In addition to the above, make sure you do two things :

1) Buy stocks that pay dividends. Otherwise, you're a speculator, going only on the hope that someone will pay you more for a stock than you got it for. Dividends can either be taken as cash money or reinvested at your discretion.

2) Buy low P/E stocks. The P/E ration is the price of the stock divided by the Earnings per Share or EPS. The lower the number, the better. I generally counsel people to look at P/E under 20

The combination of these two factors makes you an investor, not a speculator. Sure, stocks like google sound good, but look at them: no dividends, and you're paying around 55 times earnings. Not a good bargain or a good place to start.

Hope this helps!

Answer 4

Fundamental and technical analysis. Try to understand the business of each company you would want to invest in. Start by studying the large companies. Look at the financial statements and study the charts of the stock price.

Answer 5

Join an investing group. You'll learn a lot and have fun doing it. There are some books out like "Investing for Dummies" that are not all that great, but might be a good start for you to get your feet wet.

Answer 6

the first thing u need to know while investing in stock is what is u r investment objective.how does stock market works and why does the prices of the stock fluctuate and in which securities do u want to invest u r money

Answer 7

you will get a e book as mentioned formerly. As has additionally been mentioned, do no longer purchase on line, confirm you flick via the e book to confirm if that is at your point. I surely have offered books on line and that i've got been given fortunate with a mixture of beginner books and then a greater matured e book for once I examine the others. From my own adventure you won't be able to truly comprehend each and every thing there is to comprehend with making an investment. You learn from adventure, of direction you are able to no longer leap into something. confirm you already know what you're getting into. As a speedy word, you will locate different human beings might recommend that a low MER ( administration rate Ratio ) Mutual Fund that tracks the overall performance of the S&P 500 Index is the thank you to circulate. some human beings recommend which you do no longer go bigger than .40 4% for an MER, inspite of the undeniable fact that i do no longer think of it extremely is a rule inspite of the undeniable fact that that is something else to contemplate. additionally, do no longer "commerce shares" swing paying for and merchandising gets you nowhere except you're extremely fortunate on your guesses. purchase-and-carry innovations is what the S&P 500 index employs, as properly as different different index money, mutual money and ETFs ( substitute Traded money ).

Answer 8

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Answer 9

Read some useful and effective investing tips on this site

Answer 10

Read Investors Business Daily newspaper. The paper was established to be educational and help you make moneyl. You can buy it wherever they sell the Wall Street Journal. You will enjoy reading it, and you will learn a lot.