Stock Buying Online

Once someone decides to start buying and selling stocks online it is very important to understand a few basic concepts of what you will need to know about stocks. Besides just reading this article, there are many other resources out there that we would recommend looking at such as other online resources, libraries, magazines and many more. Be sure that you are well informed in the stock market before you decide to invest your own money into buying stocks online.

The first thing that you need to know is where to actually buy stocks online. If you are looking to invest then you probably already know that you can do this with an online stock broker. There are many of these all over the internet but the real task here is choosing one that suits your needs the best. This means that you will need to go through and test out individual stock brokers to find out which one you prefer so that you can sign up and start buying.

Now even though choosing a stock broker is very important since you can do anything else without do that, there is still more you need to know before you should feel comfortable buying stocks online with your own money. You should learn about the different forms of investments that you might want to look into. Even though we are talking about "stocks" here, there are several other forms of investment that you will really want to learn about in order to fill out your investment portfolio. Some of these are mutual funds, bonds and indexes. So you will want to talk to your broker and figure out if you should only be buying and selling stocks or if you need to look into other investment forms as well.

Once you have chosen your stock broker and learned more about the different forms of investment you will then want to really start studying up on the different stock buying strategies. This is where it can get a little in-depth since there are so many different strategies that seem to work for people. You will need to take the time and try out several different strategies in order to figure out which ones work best for you and then stick with them. When you start using strategies that you don't fully understand you can start losing a lot of money in a short amount time.

One advantage of choosing the right stock broker is that they will often times have useful tools for helping new investors figure out what works best for them. You will have access to their support center where you will be able to ask them questions and even get good advice on what stocks might be good to buy and sell. Once you are set up with all of this you will then be able to buy stocks online with your own finances and feel confident that you will be able to improve your portfolio as well as make some solid income.

Collecting Sexy Dividends

Lots of people have thought about long-term dividend trading as boring, dull, and not sexy. This belief is probably because of solid dividend companies yielding under 10% of dividends yearly and frequently yielding under 5% yearly. The process organized in the following paragraphs will shake up some misconceptions and hopefully changes peoples' opinions of dividend trading from boring to completely sexy. This tactic may be used on most companies, even companies that have paid dividends for a lengthy, lengthy time period.

Presenting The Sexy Dividends Strategy

The Sexy Dividends strategy entails selecting companies in the S&P 500's High Yield Dividend Aristocrats report with various dividend payments throughout every season. By selecting companies in the S&P 500, you're thinning your total potential companies to 60 and only choosing from companies that are members of the S&P 1500 Composite Index. Additionally, you're diversifying your companies based on their dividends due dates. This enables you to definitely create monthly streams of earnings moving forward. If this is the first dividend company you are investing in, you can just decide to pare your possible companies to individuals that pay returns within the month of the month of January. The simplest way I've found is to use the S&P 500 High Yield Dividend Aristocrats list.

The next phase within the Sexy Dividends Strategy is to limit the industries you'd enjoy having companies in. By diversifying across industries, you're lowering your risk to some recession in almost any single industry. This tactic is about reducing risk within the long-term and diversifying across industries is among the ways to achieve that!

Once you've made the decision upon the month, your list ought to be simplified to a couple of options. From here we can turn to the 2nd portion of Aristocratic Dividends and browse the profile of all these companies. The Sexy Returns Strategy suggests the year-over-year dividend growth be examined carefully. Furthermore we would like companies which have been having to pay returns consistently on the lengthy time period, but additionally companies which have been continuously growing returns with time. Purchasing and reinvesting returns in firms that consistently raise their returns versus firms that only slightly improve their returns have a huge effect on our returns with time.

In summary this tactic to date:

1. Figure out what month you would like to get your dividend payment

2. Determine the industry for the potential company

3. Compare these businesses based on year-over-year dividend growth

Note: Steps 1 and 2 could be switched as desired.

At this point you're most likely thinking, "What makes this strategy stand out?" And you'd be justified in wondering that because there's nothing sexy relating to this strategy - yet.

How To Filter Stocks That Are Risky?

If you are used to sitting in front of your computer and trying to figure out the best stock picks in the market to entrust your investment, chances are that you have not used the efficient methods of stock filter yet. This tendency of yours is a sure sign of a confused investor who is grappling with a surfeit of stock market information and unable to decide about the stocks to invest his money in. It can be that the risk of losing your hard-earned money by investing in non-performing stocks is getting the better of the confidence in your decision making.

If this synopsis of a troubled investor is similar to what you find your state of investment in, it is nothing to be alarmed about as many stock traders have to go through the same turmoil. This continues till they are able to use stock filter and streaming filter to screen out thousands of stocks to a manageable list of a few. After you are able to do this, it would become easy for you to focus on your favorite stocks and that too, within seconds.

A confused stock trader needs to make his task easier with the help of stock filter software. You can tailor such a filter to suit your style of trading. There are some free and some paid versions of these stock charting software and scanning tools. There are stock filters which can filter by price, by volume and some others which let you define a set of criteria for filtering.

After you have filtered the stocks by price or volume, the investor may need to filter them on the basis of certain criteria or setup event. This event or criteria could be detailed as well as simple but you do need to be specific about it. If you can do that, you open up all the chances of creating a filter for narrowing down your stocks. Some commonly used trade set ups include Candlestick Patterns, Moving Average crossovers, Price closing above or below a Chart Indicator.

Once you get used to setting up a stock filter of your choice, it would help you setting up multiple scans and filters in your charting software. Your ability to set up these filters and scans would cut across set ups, indicators and multiple time frames. After having become adept with stock filters, you would have the option of using a streaming filter too, which lets you scan based on your customized queries.

Bonus Shares Are Just a Market Gimmick

Bonus Issue is issue of free shares by the company to its existing shareholders. And since we love 'free' things, we love bonus issues. But beware - they are just a big hype. You gain NOTHING from it.

Financially speaking, bonus shares are issued by converting a part of the free reserves (i.e. the reserves & surplus accumulated by the company over the years, mainly out of the profits retained in the past) into share capital. The reserves are reduced and the share capital is increased equivalent to the same amount.

Suppose a company, having a share capital of Rs.1 billion and reserves of Rs.5 billion, issues bonus share in the ratio of 1:1. Then, its share capital will increase to Rs.2 billion and reserves will reduce to Rs.4 billion. So there is no change in the company's net worth, which remains the same at Rs.6 billion.

Say you are holding 100 shares in the company. And if the Current Market Price is say Rs.200, your investment value works out to Rs.20,000. After the bonus issue, your share-holding increases to 200. But does it mean that your investment value increases to Rs.40,000? No, that's not the case. Since the share-holding has doubled, the EPS will fall by 50%. And assuming that the PE ratio remains the same, mathematically the share price also falls by 50% to Rs.100. Thus, your investment remains the same at Rs.20,000. Hence, there is no change in your investment value.

Therefore, essentially speaking, the shareholder is not getting anything free. In fact he is not getting anything at all - free or otherwise.

The only gains from bonus issues could be increase in trading & liquidity.

Psychologically, a stock of Rs.100/share appears cheaper than a stock of Rs.200. Therefore, more people are willing to buy such a stock. Secondly, the number of shares has doubled, which increase the stock's liquidity. Because of this increased demand & liquidity, the stock may not fall exactly to Rs.100, but may trade at around Rs.110-120. Thus, because of the sentiment, your investment value may improve a bit to say around Rs.22,000-24,000.

But, there is risk too.

People are used to receiving certain dividend. Now, with doubled share-holding, company will have to shell out double the amount as dividend if it aims to maintain its dividend percentage record. The question arises - does the company generate enough profits to meet this increased dividend outflow? If not, the company will have to reduce its dividend percentage. This could have negative impact on the sentiment. Hence the whole purpose of improving the sentiment may be defeated.

The company and the investor must keep this point in mind, before considering the bonus issue.

The same holds true for stock splits too.

Stock split is merely splitting the par value of the share and increasing the number of shares. For example, say a company had issued 100,000 shares at Rs.10, 3 years ago. It now splits the share to a par value of Rs.5 and increases the number of shares to 200,000. Therefore, the company's capital i.e. Rs.1,000,000 does not change at all by the stock split. Again, since the number of shares has doubled, the EPS will fall by 50% and the share price would also mathematically drop by 50%. So again no benefit to the shareholder.

But again, because, the price reduces to affordable levels and number of shares increase, the liquidity and trading improves. As such, the price may quote somewhat higher than the exact half.

For example, some time back the price of a particular company's stock was quoting at Rs.10,000. Not many people would buy a share at that price. So the company split its shares and also issued bonus shares. This increased the number of shares and brought down its stock price to a more 'affordable' price of about Rs.2000.

Concluding, both the Bonus Issue and Stock Split do not do anything to add any 'real value' to the stock. It is only the improved liquidity (due to more number of shares) and trading (due to more affordable prices) that can give some kick to the stock.

Note: Warren Buffett, legendary investor and the world's 2nd richest man for many years now, does not believe in these gimmicks. He has, therefore, never gone for bonus or stock splits in his company Berkshire Hathaway; even though a single share of the company is today traded at around US$ 130,000 (and hence out of reach of an ordinary investor). His value investing methods are no secret. But they require lot of discipline and patience, which unfortunately most of us lack.

Tactics And Tricks On How To Invest In Stocks

Evidently, one of the most profitable and easiest ways of growing wealth over a long period of time is by owing stocks. In fact, every Forbes 400 list holder has been bagged by a large portion of shares in either a public or a private firm. However, not everyone is the master of this trade and knows the tactics and tricks of investing in stocks. If you are one of those, read below to discover how to invest in stocks:

• Invest only when you have: The most important asset you require for investing in stocks is "money." Thus, a person should not invest in stocks until he has a secure job and a decent amount in their bank balance to sustain his daily expenses for a period of about 6 months.

• Get to Know what "Stock" is: Before getting your hands on investing in stocks, it is very important that you have a basic idea about the terms associated with stocks. Thus, read different books related to stock investment before actually plunging into the real market.

• Think before you invest: One of the most successful executives of the world remarked once, "Always think again after thinking once." Only if you can pen down enough reasons for buying a stock, you should buy it, or else you should not.

• Practice makes a man perfect: When asked about how to invest in stocks, one of the most viable answers that emerge is "through practice." Always practice trading stocks on paper, before using real money. Begin with recording the stock trades, the trade dates, the share number, prices, profit rate, loss rate, etc. Only when you are comfortable with trading on paper should you start trading with real money.

• Find a good broker and open a stock brokerage account: This rule runs completely on a trial and error basis. Figure out a good broker based on his commission charges, total involved fees, the online reviews, etc.

• Create a small portfolio of about 30 stocks: Carefully analyze the stocks of various companies and select the top companies, which have come up with at least a little earning in the past ten years and have paid some dividends in the past 20 years approximately. Once you have sorted out the list, you can head towards making the investment.

• Stay updated: Most importantly, stay updated on the various investing websites like Fallen Angel Stocks or Motley Fool for getting information about the latest deals in the stock market.

If You Like QE3 But The Stock Market Makes You Nervous - Buy Gold!

QE2 in 2010 and 'Operation Twist' in 2011 recovered the stock market from double-digit corrections that were underway at the time, and rescued investors from their extreme bearish sentiment each time.

QE3 is underway and many are convinced that's all that matters, that a repeat of stock market gains is a sure thing.

You need to realize that conditions are much different this time.

For instance, rather than being down double-digits this time with fears high that it is heading down further into a bear market, the stock market was already near four-year highs, and investor sentiment was at high levels of bullishness and confidence when the surprise of QE3 was announced last week.

Perhaps more significant, in 2010 and 2011 corporate earnings were growing impressively. Profit margins were benefiting from the improved productivity brought about by large employee lay-offs, plant closings, and tax loss carry-forwards from the recession, while corporations with global operations benefited even more from their ties to Brazil, China, India, etc., where economies remained strong and the main concerns were rising inflation.

But this time, those normal driving forces for stocks are completely reversed. The economies of important U.S. trading partners like China, India, Japan, Brazil, and the entire 17-nation euro-zone, have slowed dramatically this year, the euro-zone already in a recession.

And corporate earnings are nose-diving. In the U.S. S&P 500 earnings grew at a huge 45% pace in 2010 as they recovered from the losses suffered in the Great Recession. That unsustainable pace slowed to a still robust 15% earnings growth in 2011.

But this year earnings grew only 0.8% in the 2nd quarter, and the consensus forecast is for negative growth in the current quarter, a decline in earnings growth for the first time since the recession ended. Adding to the deteriorating situation, corporations are warning of even slower sales and earnings going forward, citing slowdowns globally that are beyond the ability of the U.S. Fed to fix.

Global bellwethers Intel, FedEx, and UPS, joined the warnings parade in recent days.

Warnings from major transportation companies, like FedEx (FDX), UPS (UPS), and Norfolk Southern Railroad (NSC), are particularly worrisome, since the DJ Transportation Avg has been in a negative divergence with the rest of the market all year, even before these warnings. In spite of the stock market rally since the June low that has the S&P 500 now up 16% for the year, the Transportation Avg has been hitting lower highs on its attempts to rally and is down 8% from its January high. The Transports often lead the economy and the rest of the market since they see early warnings when shipments of raw materials to manufacturers, and of finished goods to end users, decline sharply.

I seriously doubt that the laws of business cycles have gone away, and I still believe that fundamentals matter.

So with previous global economic strength crumbling, a sharp downside reversal in corporate earnings underway all year, the negative divergence of the bellwether Transports, and the stock market already excitedly rallied to four-year highs, there are reasons to question further bullish expectations for the stock market from QE3 this time.

However, since the Fed's goal for QE3 is also to devalue the dollar again (in an effort to boost U.S. exports, and to create inflation) if it is to at least succeed with those goals QE3 should light a fire under gold. And it has been doing that.

We are on a buy signal on gold, and holding a 20% position in the SPDR Gold Trust etf, symbol GLD. But while gold has already rallied 15% from its June low, equaling the rally in the S&P 500, at least gold is rallying from an oversold condition after declining 18.5% from its 2011 record high to its June low. And its rally does not yet have it back to its high of last year, let alone to four-year highs like the S&P 500.

So if you expect continuing positive reactions in markets to QE3, gold might be a wiser choice than the stock market.

The world's largest gold bullion etf is the SPDR Gold Trust, symbol GLD. Canadian investors can choose from six gold bullion etf's that trade in Canadian dollars on the Toronto Stock Exchange. The largest and most active is the iShares Canada Gold Bullion Fund, symbol CGL-T.