Stock Investing Guide

Betting on information from people who supposedly have the inside story on a company is extremely dangerous!

Everyone has an opinion and chances are they do not have all the facts. In my experience, trading on tips from these "reliable" sources have always given me the same results:

I lose money!

There is also "Your Brother-In-Law" theory, not highly recommended by anyone ... but followed all too often by many investors!

Your brother-in-law, or "some guy at work," tells you about a stock that is "really going to make you a lot of money." You know nothing about the stock but you rush out and buy a hundred shares nevertheless.

I think the right word for this group is "losers."

Would you buy a stock because an "expert" on TV or a paper says it is a great investment?

Chances are, they or their company own too much of this stock and need to get rid of it.

It is called "Pump and Dump."

Pump up how great the stock is, then dump it when unwitting investors buy it because they think it is a great investment and it is really not.

I am not saying that every "great" stock that is mentioned on TV or in the papers is actually a dud; sometimes they really are high flyers, but I would not put money on them just because some "expert" recommended them!

Would you invest in a stock because of a friend's tip?

It depends ...

But before you decide, check out what he "really" knows about it, and do a thorough research of your own!

Would you place your trust and invest your hard earned money on rumors and street talk?

No!

While we do actually say "buy the rumor" and "sell the fact," on the other hand, how many times didn't the rumor just remained a worthless rumor?

Always try to get unbiased opinion. Ask yourself about the motive behind the "tip." This might save you from a lot of trouble. Besides, you don't need the "tip!"

All it takes to "beat the market" is commonsense thinking, plain good old time dealing and ...
Patience!

Stock research analysts study publicly traded companies and make buy and sell recommendations on the securities of those companies. In this way they can exert considerable influence in today's stock marketplaces.

Stock analyst' recommendations and reports can influence the price of a company's stock - especially when the recommendations are widely disseminated through public appearances.

The mere mention of a company by a "popular stock analyst" can temporarily cause its stock to rise or fall - even when nothing about the company"s prospects or fundamentals recently has changed!

While analysts provide an important source of information in today's markets, investors should try to understand the potential conflicts of interest analysts might face.

For example, some analysts work for firms that underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover!

The fact that a stock analyst - or the analyst's firm - may own stocks they analyze does not mean that their recommendations are flawed or unwise.

But it's a fact you should know and consider in assessing whether the recommendation is wise for you.

As a general matter, investors should not rely solely on an analyst's recommendation when deciding whether to buy, hold, or sell a stock.

We strongly suggest that a little more digging on your part, beyond what brokerage companies are recommending, will always be to your benefit!

It's up to you to educate yourself to make sure that any investments you choose match your goals and tolerance for risk.

Remember that stock analysts generally do not function as your financial adviser when they make recommendations - they're not providing individually tailored investment advice, and they're not taking your personal circumstances into consideration!

Above all, always remember that even the soundest recommendation from the most trust-worthy analyst may not be a good choice for you!

That's one major reason why you must never rely solely on an analyst's recommendation when buying or selling a stock.

Before you act, ask yourself whether the decision fits with your goals, your time horizon, and your tolerance for risk.

Know what you're buying, or selling and why!

Hoping to restore investor trust, many regulatory bodies are lately adopting new rules requiring stock analysts to disclose in written reports and in interviews any financial conflicts of interest they have with the companies they cover.

The rules are aimed at bolstering shareholder confidence after financial disasters that called into question the accuracy of company audits and stock analysts reports.

Amongst others, the disasters include the collapse of the dot-com bubbles and the scandals surrounding bankrupt energy traders.

Some analysts misled investors by issuing bullish research reports on poorly performing companies to generate or keep lucrative investment-banking business from those firms.

Many interested groups say that the new rules are better than nothing. But they also say that those rules are years overdue and surely fall short of what is really needed.

These rules take an important first step but do not go nearly far enough to limit the ties between analysts and their firms investment-banking departments.

They also may not be sufficient to resolve some deeply rooted conflicts of interest in the field.

Investment procedures apply equally to all investors because they are based on unchanging principles. In contrast, the selection process differs for each individual investor because it reflects the circle of competence, or circle of interest which becomes a circle of increasing competence with the accumulation of experience by the individual investor. The circle of competence is a specific application of the general principle of differential knowledge. The economist Friedrich A. Hayek (1899 - 1992) noted that "practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made." The circle of competence of each investor reflects his or her personal qualities including risk tolerance, temperament, interests, knowledge, intelligence, and judgmental ability. Therefore, each step in the selection process will uniquely conform to the particular individual investor. In addition, the circle of competence of each investor represents an arena where he or she has no competition from other market participants. This arena is a confidential monopoly created by the investor. This secret monopoly position is a proprietary interest in intellectual property. With confidentiality, there is no second guessing of an investor's judgments by others. The investor uses the tools and techniques of security analysis, but the investor's job is not the same as the security analyst's job. Where a security analyst must be prepared to appraise the value of every common stock or other security traded in the market, the investor only needs to appraise those stocks in his circle of competence.

"You gotta know when to hold "em and know when to fold "em!"
Selling a stock is one of the most difficult decision an investor faces, while purchasing it is sometimes much easier!
Like most investment decisions, selling is part science, part art. Unfortunately, for many investors, however, it amounts to sheer panic. They sell when their stock goes down. They sell when the entire market goes down.
In short, they sell for emotional reasons!
Most investors are motivated by things such as fear of loss and fear of regret rather than by rational decisions designed to grow their money. These emotional, and irrational, decisions are just what successful investors must avoid.
Besides, if you don't buy a stock prior to a major climb in prices, all you've lost is a hypothetical opportunity to make a good profit.
But if you hold a stock and make the wrong decision concerning when to sell, you can lose a substantial amount of your profits and sometimes even a part of your capital.
Think about selling before you buy.
Before you buy a stock, you should consider both your motive and your time frame. Monitor your investment and make your decision to sell based on your original goal.
If you reach your goal before your time frame, you can sell and feel good knowing you achieved your objective.
But if your time schedule pass and you're not even close to your goal, you may have to consider selling or readjust your schedule.
Figure out how much you can afford to lose.
Sometimes, the value of many stocks may go immediately down. Some will recover and go up, but others will not.
To avoid the second situation, you should determine well ahead of time how far you're willing to go before you're ready to sell and get out!
Depending on your personal situation, you may be able to absorb a certain percentage of loss, but the main thing is to establish a "stop loss" point for yourself and then stick to it.
Measure the performance of your stock against other similar ones.
Even if your stock's performance is not living up to your expectations, don't abandon your plans without first surveying the overall climate.
If you can find a better return somewhere else, perhaps you should seek that alternative. But if all similar investments are performing at about the same level, maybe you should hold on.
Don't be greedy!
When the value of a stock is going up, well beyond your initial goal, it's sometimes hard to sell it. Remember that selling too early is still preferable to selling too late.
If you insist on keeping it, limit yourself on how far down you will let it drop before you sell.
Strictly speaking, when you sell part or all of your stock holdings, you can't always possibly be 100% right!
If the stock continues to rise, you've sold too soon. If it falls, you should have sold the entire position. But partial sales do make sense within the context of an entire portfolio.
If a stock has done extremely well, so that it seems very expensive compared to the overall market, and yet there seems to be nothing troubling about the fundamentals of the company, it might be time to peel off a few shares to rebalance your portfolio.
It's the core strategy that's important, not your ability to time one stock or another.
Selling really means that you have found an alternative investment whose odds you like better than those of the one you're already in.
And the more alternatives you're researching and getting excited about, the less likely you are to feel ambivalent about a particular sale.
You don't owe your current holdings any more consideration than you do to any potential future holdings!
After all ...
New stocks are only a phone call away!

"Take a chance! All life is a chance. The man who goes the furthest is generally the one who is willing to do and dare. The "sure thing" boat never gets far from shore."Dale Carnegie (1888 - 1955)
In 1998 Economics Professor and Nobel Prize winner Paul Samuelson (1915 - ) noted that:
"Many people now believe that if they simply hold stocks long enough they will not, lose money for statistics have shown that since 1926 the U.S. equity market has not suffered a loss in any given 15 year."
He called it a fallacy, and conceded that it is truly likely that if you hold stocks over long periods of time that they would tend to produce returns higher than other assets. But to believe that it is a God given statement... Is simply not correct!
Investing and stock market risks do not go to zero over long periods, but there are many articles that reflect how risk goes down the longer the time period. What is seldom introduced is the fact that if there is a significant onetime loss, it can be monumentally overwhelming.
In any case, Samuelson noted that:
"The problem is that when stock prices do turn down (as inevitably happens even in the strongest of bull markets!) your optimistic equity exposure can overwhelm your gut level risk tolerance, leading to poor short-term judgments and even outright panic!"
Risk is a complex, multidimensional concept that manifests itself in various ways. Risk is omnipresent and includes stock market crashes, corporate bankruptcies, currency devaluations, changes in sentiment, in inflation and interest rates, and even major changes in the tax code.
Risk is generally defined as return volatility, or the degree of ups and downs of returns. But there's more to risk than volatility. Risk and long-term reward are generally related. Risk is the chance that your actual return will be less than you expected.
People sometimes think that a good return can be achieved with little or no risk. Unfortunately, that's impossible. To achieve your objectives, you need to assume certain risks and avoid others.
Your ability to handle risk is related closely to your individual circumstances, including your age, time horizon, liquidity needs, portfolio size, income, investment knowledge, and attitude toward price fluctuations.
What's highly risky to one individual may be no problem to another!
Short-term fluctuations are not that relevant for long-term investors who have the discipline, patience, and understanding to deal with them. Stock funds are actually less risky than money market funds for those with long time horizons.
Well-informed investors are far less likely to let risk get the best of them!
Those who understand the various elements of risk are better equipped to enjoy a profitable long-term investment journey.

Are you a truly expert investor as you really believe?
Do you consider yourself as a well-informed investor who is capable of anticipating and avoiding the majority of the risks that are usually associated with investing?
Chances are, you are making many common errors that are costing you a lot of money and may even harm your financial independence and security.
Below you can find the two most costly errors investors make with their investment portfolios:
1. Asset Classes and Subclasses
How you allocate your portfolio, rather than which investments you select or when you buy or sell them, determines the majority of your investment performance over time.
The solution is to allocate your portfolio to many asset classes and subclasses and be careful not to over or under weight any asset class.
Do not mistakenly believe that a properly diversified portfolio is a properly allocated portfolio. Properly allocate your portfolio among the different asset classes first and then diversify the investments within each asset class.
Diversification is the cornerstone of asset allocation and is key to reducing risk, namely company-specific risk. To properly diversify, you should hold sufficient quantities of not-too-similar securities with comparable risk and return trade-off profiles.
2. Inflation
Inflation can destroy the real value of your portfolio over time, thus placing your future financial security at risk.
As a general rule, the longer your investment time horizon, the more you should allocate to equity investments. For shorter investment time horizons, emphasize fixed-income and cash and equivalent investments.
By avoiding these two mistakes -- besides other investing mistakes -- you will be able to design an investment portfolio that will provide the best opportunity to achieve and protect your financial independence and security!

Developing Trading Strategies
Sometimes it takes several years to recognize the obvious.
The simpler it looks, the more problems it hides.
Buying Stocks
If anything can go wrong, it will.
If anything can't go wrong, it will.
If you know something can go wrong, and take due precautions against it, something else will go wrong.
You will never run out of things that can go wrong.
Failure is the opportunity to begin again more intelligently.
The less you do, the less can go wrong.
You can never tell which way the train will go by looking at the track.
Always assume that your assumption is invalid.
Selling Stocks
You never know how soon it is too late.
When things go wrong, don't go with them.
If you are in a hole, stop digging.
Following Trading Strategies
Being punctual means only that your mistake will be made on time.
A good place to start from is where you are.
To learn from you mistakes, you must realize that you are making mistakes.
Experience is what causes you to make new mistakes instead of old ones.
The best defense against logic is ignorance.
If you enjoy what you are doing; you are probably wrong.
About Diversification
Things go wrong all at once, but things go right gradually.
Customer Service of Financial Sites
If you don't know the answer, someone will ask the question.
You don't have to explain something you never said.
If you want to make enemies, try to change something.
Be kind to everyone you talk with. You never know who's going to be on the jury.
Never be too right too often.
The only changes that are easily adopted are changes for the worse.
The less you have to do, the slower you do it.
Always do exactly what your boss would do if he knew what he was talking about.
The e-mail never comes when you have nothing to do and finally, always remember that ...
The Less You Say ...
The Less You Have to Retract!

The techniques and the characteristics of the most successful investors are diverse, and there's not a guaranteed formula of success.
Nonetheless, by looking at the mindsets of certain successful investors, we can learn by following 8 of their key traits:
1. Reason:
Arguably the most important characteristic. You need to justify why you hold each company in your portfolio. You must seek out high-quality stocks that are undervalued by the market, and therefore cheap.
2. Commitment:
To exploit your strategy you have to do the research - and keep doing it - including surveying all financial data, online investment resources and company reports. Don't forget that "numbers have no prejudices."
3. Discipline:
The research process doesn't finish once you've bought a stock.You have to obsessively follow your purchases, to make sure they were sensible.
You'll need discipline, because successful investing is about running your profits and cutting your losses. The stockmarket is a rollercoaster, so you have to ride out the peaks and bottoms.
4. Flexibility:
If you're going to have rules you need to be able to break them!" The same stocks won't perform well in all markets.
5. Guts:
The best time to buy stocks is the time of "maximum pessimism" - when everyone is selling and fleeing the markets. To do this takes bravery.
6. Open Mind:
Seeking out opportunities ignored by other investors prevents prejudices coming between you and an opportunity.
7. Patience:
"Unfashionable stocks" are unlikely to turn around overnight, so you need to know when to hold on.
8. Know Your Limits:
This means accepting you won't be the next Warren Buffett. Professional investors spend their whole day researching companies, have analysts to help them, and can visit companies. That doesn't mean you can't stock-pick successfully as an amateur ...

The trick is to keep it simple and stick with what you know.

South Asia	National Stock Exchange of India	$1.46	$0.564
Asia-Pacific	Shanghai Stock Exchange	$3.02	$3.56
Asia-Pacific	Shenzhen Stock Exchange	$0.741	$1.86
Asia-Pacific	Tokyo Stock Exchange	$4.63	$5.45
Europe	Frankfurt Stock Exchange (Deutsche Börse)	$2.12	$3.64
Europe	London Stock Exchange	$4.21	$9.14
Europe	Madrid Stock Exchange (Bolsas y Mercados Españoles)	$1.83	$2.49
Europe	Milan Stock Exchange (Borsa Italiana)	$1.13	$1.98
Europe	Moscow Interbank Currency Exchange (MICEX)	$0.9652	$0.4882
Europe	Nordic Stock Exchange Group OMX1	$1.38	$1.60
Europe	Swiss Exchange

its stock. Financials do not need to be disclosed.

This scares off 99% of potential investors. The truth is many solid companies are covered in the Pink Sheets. It just takes a little extra research.

The OTCBB is just like the Pink Sheets, except it has a few more requirements.

You see, before 1990, the over-the-counter securities market was a Wild West show. Not complete lawlessness, but close to it. So that year, the SEC started the Over-the-Counter Bulletin Board as part of the Penny Stock Reform Act. The OTCBB’s main purpose was to bring more quotation and last-sale information.

By 1999, the OTCBB had evolved to the point at which every company had to report regular financial information. This sets it apart from other markets, specifically the Pink Sheets.

Bull market

A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of future price increases and future capital gains. In describing financial market behavior, the largest group of market participants is often referred to, metaphorically, as a herd. This is especially relevant to participants in bull markets since bulls are herding animals. A bull market is also sometimes described as a bull run. Dow Theory attempts to describe the character of these market movements.

India's BSE Index SENSEX was in a bull run for almost one year from January 2007 to January 2008 as it increased from 14,000 points to 21,000 points. Another notable and recent bull market was in the 1990s when the U.S. and many other global financial markets rose rapidly.^[4] The United States was described as being in a secular (long term) bull market from about 1983 to late 2007, with brief upsets including the Panic of 1987 and the NASDAQ crash of 2000-2002.

[edit] Bear market

A bear market is described as being accompanied by widespread pessimism. Investors anticipating further losses are often motivated to sell, with negative sentiment feeding on itself in a vicious circle. The most famous bear market in history was preceded by the Wall Street Crash of 1929 and lasted from 1930 to 1932, marking the start of the Great Depression.^[5] A milder, low-level, long-term bear market occurred from about 1973 to 1982, encompassing the stagflation of U.S. economy, the 1970's energy crisis, and the high unemployment of the early 1980s.

Prices fluctuate constantly on the open market; a bear market is not a simple decline, but a substantial drop in the prices of the majority of stocks in a given market over a defined period of time. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period."^[6]

Investors frequently confuse bear markets with corrections. Market corrections are shorter than a bear market and have a total measured decline of less than 20%^{[citation needed]}. Bear markets on the other hand occur over a longer period with typically greater magnitudes of decline in prices from top to bottom. The distinction between the two is not absolutly clearly when there is a price decline between 15% and 20%.

[edit] Secondary market trends

A secondary trend is a temporary change in price within a primary trend. A secondary trend usually last between a few weeks and a few months. Two examples of a secondary trend are: 1) a market correction 2) a bear market rally. A midterm decrease during a bull market (primary trend) is called a market correction; a midterm increase during a bear market (primary trend) is called a bear market rally.

Whether a change of direction is an intermediate correction or rally, or the beginning of a new trend, is generally recognized in hindsight after the change has occured. When new trends begin to appear, market analysts often debate whether they are a correction or a rally (secondary trends) or the beginning of a new bull/bear market (primary trends)because a correction can sometimes foreshadow a new primary bear market. Efficient market theoreticians, on the other hand, consider all trends to be random market movements over varying periods of time.

[edit] Correction

A market correction is sometimes defined as a drop of 10% to 20% over a short period of time. It differs from a bear market mostly in that it has a smaller magnitude and duration. Because of depressed prices and valuations, market corrections (assuming they can be reliably identified as they are occurring) could be good opportunities for value-strategy investors and traders.

[edit] Bear market rally

A bear market rally is sometimes defined as an increase of 10% to 20%. Notable bear market rallies occurred in the Dow Jones index after the 1929 stock market crash leading down to the market bottom in 1932, and throughout the late 1960s and early 1970s. The Japanese Nikkei stock average has been typified by a number of bear market rallies since the late 1980s while experiencing an overall long-term downward trend. Bear market rallies typically begin suddenly and are often short-lived because it occurs within a primarily downtrending bear market.

[edit] Secular market trends

A secular market trend is a long-term trend that usually lasts 5 to 25 years (but whose distribution is more or less bell shaped around 17 years, in the stock market), and consists of sequential 'primary' trends. In a secular bull market the 'primary' bear markets have in the past almost always been shorter and less punishing than the 'primary' bull markets were rewarding. Each bear market has rarely (if ever) wiped out the real (inflation adjusted) gains of the previous bull markets, and the succeeding bull markets have usually made up for the real losses of any previous bear markets. This is one of the reasons why a secular market trend may be said to encompass the primary trends within it. In a secular bear market, the 'primary' bull markets are sometimes shorter than the 'primary' bear markets and rarely compensate for the real losses of the 'primary' bear markets occuring during this extended cycle.

For example, in the 1966 - 82 secular bear market in stocks, there was hardly any nominal loss. real terms the loss was devastating. (In the past most 'housing recessions' were of a slow nature, thereby allowing inflation to keep housing prices steady.) Another example of a secular bear market was seen in gold during the period between January 1980 to June 1999. During this period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g),^[7] and became part of the Great Commodities Depression. The S&P 500 experienced a secular bull market over a similar time pe

Value investing claims that the stock market sometimes undervalues a stock's true worth, as revealed by financial information.
The theory claims that the market is slow to react, but in time it will eventually assign a value that accurately prices a security.
A value investor (see Value Averaging) looks for a stock that is trading at or below what it really is worth.
Why it's important to know about this?
There are two distinct ways to determine if a stock is trading too cheaply:
1. One way is to compare the stock with other stocks.
Usually the markets run in cycles. If everyone is currently buying technology stocks, perhaps they are selling bank stocks.
Bank stocks might be sold off more than what they should have, which could result in giving the savvy investor an opportunity to find a good value in a stock (within a sector) that is currently unloved.
Look at the ratios: If a technology stock and a bank stock both grow earnings 15% a year, but the technology stock is trading at a P/E ratio of 30 and the bank stock's P/E is 20, it looks as if the bank stock is cheaper.
2. The other way an investor might spot value is to know something about the company that he doesn't believe is factored into the price.
AAA company coming out with a new "Miracle Product."
ABB company owns real estate worth several billions that is not reflected properly on the balance sheet.
XYZ industry being deregulated promising more mergers and acquisitions.
The advantage to this strategy is usually less volatility and less downside risk if the markets start to fall. The biggest criticism of value investing is that it often times doesn't provide instant gratification.
Many investors want to see their stock double within weeks of buying it. On the other hand ...
Value investors often have to wait for a lot longer than that!

People have been acting the same for hundreds of years. Not much has changed since Isaac Newton lost a fortune in the South Sea Trading Company's fiasco of 1720.
This trading company had all the characteristics of a contemporary "hot stock," with investors creating a mania over the company's prospects for success.
Investors dreams that the company would gain trade monopolies in the South Seas sent the company's price into the stratosphere!
And, as we've seen in the more recent past, the story ended the way it had to ... Badly!
The majority of the investors were wiped out!
Much of economic and financial theory is based on the notion that individuals act rationally and consider all available information in the decision-making process.
However, researchers have uncovered a surprisingly large amount of evidence that this is frequently not the case!
Dozens of examples of irrational behavior and repeated errors in judgement have been documented in academic studies.
Peter Leonard Bernstein in his 1996 book "Against The Gods" states that the evidence "reveals repeated patterns of irrationality, inconsistency, and incompetence in the ways human beings arrive at decisions and choices when faced with uncertainty."
A field known as "behavioral finance" has evolved that attempts to better understand and explain how emotions and cognitive errors influence investors and the decision-making process.
Many researchers believe that the study of psychology and other social sciences can shed considerable light on the efficiency of financial markets as well as explain many stock market anomalies, market bubbles, and crashes.
Investing can be an emotional process unless you understand what you are investing in, what you're trying to accomplish and understand a few basic facts and statistics!
To make educated decisions and to avoid the emotional ones always try to pursue the rational and logical side of investing.
Remember, facts and statistics are the basis for good and profitable investing.
The stock market is not gambling ...
Gambling is never included in companies' annual reports.

"As a general rule the most successful man in lifeis the man who has the best information!"Benjamin Disraeli (1804 -1881)

As the markets keep on calling into question every single portion of your investments, even well-informed investors never stop doubting themselves!
You wonder ...
Did I make the right decisions when I bought these stocks?
To answer yourself in any rational fashion, you need to be able to judge whether circumstances, not just psychology, have changed for your holdings.
In times like these, strong fundamental analysis becomes the most important key to your convictions!
Maybe you've read about a company that intrigues you, or one of your friends is excited about a particular stock.
Perhaps you keep seeing a stock on various "buy" lists and wonder what makes it so appealing.
Before you decide to buy a stock, you face two key research tasks:
1. Fundamental Analysis:
Examining the company issuing the stock.
2. Technical Analysis:
Evaluating the stock itself.
Both forms of analysis are sometimes needed. You don't want to buy a stock that looks attractively priced, only to find out that the company is on the skids.
Likewise, you may not want to sink a lot of money into a company that is so popular among investors that its stock has become overpriced.
To further clarify the difference between fundamental analysis and technical analysis, think of the market as an open-air bazaar with stocks as items for sale.
A technical analyst would get into the shopping frenzy with eyes seeking the crowd. He would ignore the goods on sale altogether!
When the technical analyst notices a group gathering in front of the booth selling, say, shirts, he'd scramble over to buy as much inventory as possible, betting that the ensuing demand would push prices higher.
He doesn't even care what a silk shirt is as long as some greater fool at the back of the line is willing to buy it for more than the technical analyst paid!
The fundamentalist, on the other hand, takes a more sedate approach. The fundamentalist's eyes would be solely on the products before him.
He would dismiss the other shoppers as an emotional herd of fools who couldn't tell a good deal if one slapped them in the face. Once the crowd dissipated from the shirt booth, he might casually wander over to examine the merchandise.
Researching a Company!
Fundamental analysis simply means conducting basic research on a company. When analyzing a company, you may want to choose companies that have the following qualities:
A competitive advantage (such as key patents, a dominant share of the market or the fastest growth of new customers in a growing industry).
A record of consistent earnings growth or a strong indication of future growth.
A healthy balance sheet (low debt, strong cash flow).
Substantial ownership by management and, perhaps, recent insider buying.
Strong minority stakes by outside investors.
Conversely, you may want to be wary of companies with:
Substantial and growing competition and low barriers to entry.
A shortfall in earnings, or a possible future impediment to growth, such as new regulations or tax changes.
A weak balance sheet (high debt, declining cash flow)
Low ownership by management and/or insider selling.
Recent resignations of key officers.
Fundamental analysis is a lot more work ...
But therein lies its appeal!
Crowd psychology can be a powerful yet fickle force in the markets. You, yes you, as a smart investor, you've got to stay constantly alert for when the herd reverses direction!
Fundamental analysis definitely takes time, effort and hard work ...
But properly done ...
It will most certainly allow you to identify strong companies!

Many investors react to market conditions like lemmings:
Stampeding up the high mountain when markets are rising and down into the cold deep sea when markets are falling!
This "herd" mentality can be extremely dangerous to your pocketbook.
Why?
Because investors often get into the market too late and get out too early!
You should never let emotions cloud your trading judgment. But you can turn the crowd's fear and greed to your advantage! To exploit market psychology, you must act in a contrarian fashion, taking the contrary course when the crowd falls prey to its emotions.
Extreme optimism can coincide with market tops. People think the sky's the limit and send stock prices flying. Savvier investors sell into this frenzy and run to cash. The market tanks soon afterward!
Extreme pessimism can be bullish. Toward the end of a big decline, the last bulls throw in the towel and sell with a vengeance. Cooler heads smell a fire sale. They dive into the market and buy equities with both hands to launch the next rally!
Studies by economists and psychologists have found that investors are most influenced by recent events --market news, political events, earnings, and so on-- and ignore long-term investment and economic fundamentals.
Furthermore, if a movement starts in one direction, it tends to pick up more and more investors with time and momentum.
The impact of this lemming-like behavior has been made worse in recent years because financial, economic, and other news affecting investor psychology travel faster than ever before.
Capital can also flow now between nations with surprising ease, so that international markets respond more quickly to sudden changes with a domino effect in the direction of investor buying and selling.
So how do you avoid joining the lemmings?

How do you stay calm during market drops and restrained during market updrafts?Here are a few guidelines:
1. Have a plan.
2. Know why you're investing and what you want to accomplish.
3. Pick a strategy and investments that best help you reach your goals.
4. Minimize risks.
5. Don't fall prey to the temptations of greed or fear.
6. Know your investment personality.
7. Pick investment strategies and risks you feel comfortable with.
8. Stick to your investment approach. If you follow a certain type of investing strategy or a particular investment newsletter, stick with it unless there are sound reasons to change.
Different strategies often can end up with similar results over the course of a market cycle.
It's the switching back and forth between strategies that can cause problems because jittery investors often abandon a strategy that's temporarily out of favor -- just before it makes a strong recovery.
9. Sort out the good from the bad. Learn to recognize the difference between a poor investment and a solid investment that is having an off period.
10. Diversify.
11. Invest regularly according to your long-term plan and
12. Don't read the daily stock pages!
It's the daily following of the inevitable ups and downs of the market that send the average investors reaching for the phone! Instead, check every two to three months.

When we talk about bull and bear stock markets reminds me that it's a zoo out there. And, like any zoo, there are quite a few wild (?) species to be found!
The first two are the bulls and the bears. We do know that a bull market is when stock prices are climbing strongly and a bear market is when they're languishing.
One common myth is that the terms "bull market" and "bear market" are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward.
This is a useful mnemonic, but is not the true origin of the terms.
Long ago, "bear skin jobbers" were known for selling bear skins that they did not own; i.e., the bears had not yet been caught. This was the original source of the term "bear."
This term eventually was used to describe short sellers, speculators who sold shares that they did not own, bought after a price drop, and then delivered the shares.
Because bull and bear baiting were once popular sports, "bulls" was understood as the opposite of "bears." I.e., the bulls were those people who bought in the expectation that a stock price would rise, not fall.
Both bull and bear markets are inevitable!
Smart investors try to anticipate both events to profit from their eventuality.
Bear markets are generally shorter in duration than bull markets. To avoid being hurt by bear markets you must recognize the signs early and move part of your assets into cash equivalent investments.
We do recommend that you invest for the long term. Don't let the bears get you down!
Abraham Lincoln (1809 - 1865) once said: "When you have got an elephant by the hind legs and he is trying to run away, it is best to let him run!"
The same thing is true of bears - don't panic and sell low. Let the bear market run its course, which history tells us is likely to be short.
On the other hand, a bull market can leave many investors feeling pretty good about their ability to prosper.
Their confidence bolstered by the good times ...
Some even find themselves swept up in "Bull Market Myopia" and forget the basic tenets of smart investing, like asset allocation and portfolio diversification.
Holding good stocks through bull and bear markets is a prudent strategy. However, many investors feel that they do not want to be in the market during a bear market. It is difficult to predict when to move in and out of the market.
When a bear market ends, a strong upward move can occur in a short time. If you are not in the market you will miss the move. The probability that your timing will be wrong is very high.
Unlike slow-starting bull markets, bear markets may start with a mini-crash - a major drop within a few days when investors least expect it.
Many investors are afraid to get out of a bull market for fear of missing "big profits" at the top of the market.
This is a recipe for disaster!
It is also known as greed!
As a bull market continues to increase, investors should start to decrease their stock holdings and move them into cash or money markets accounts.
Now, besides bulls and bears there are two other animals in our zoo to keep watch for!
Ostriches:
Are investors who stick to their old strategies, oblivious to changes in the world around them.
And then there are the Hogs:
Bulls can make money ...
Bears can make money ...
But hogs are investors who are too greedy and usually get slaughtered!





























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Markets are notoriously hard to read and people see only what they themselves want to see.
Bulls will find reasons why certain stocks will go higher, while at the same time, Bears will find many reasons for the same stocks to go lower.
The seldom-admitted truth is that most of the time, markets exist in some indeterminate state!
The main thing is that you cannot trust consensus and you cannot rely on the "Establishment."
You can't find refuge in the herd and you must resist the urge to join the crowd.
Your passion of the moment will most certainly create a disaster over the years!
On the other hand, if you do stick with the following five essential truths, you do stand a better than average chance to invest profitably:
1. Markets are unpredictable and ill-suited to forecasts.
2. Long-term fundamentals are key.
3. Investor emotion leads to volatility.
4. Valuation discipline should guide investment selection.
5. Perspective and patience are always well rewarded.

magine living a life in which your suit is one for swimming, your only appointment is walking the dog and the most important report of the day is on the Weather Channel.
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Actually, this life isn't that hard to picture because this is how many American's view their retirement.

Now imagine living this life before turning 50.

It may sound fantastical, but there are ways to retire young without winning the lottery or having valuable options to cash out. Savvy investing, smart spending and very strict saving can pave the road for the average American to find a way to live out the dream of early retirement.

When planning for early retirement, you must first understand just how much money you are going to need. If you retire at age 50, you could very well have another 35 years or more left to live. Americans in their 20s probably won't have Social Security or pension plans to lean on.

"Your portfolio will have to finance everything," emphasizes Alyce Zollman, a financial adviser with Charles Schwab (nasdaq: SCHW - news - people ).



To understand how much money you'll need after you say good bye to your nine-to-five, take your pre-retirement income and multiple it by 35 (assuming you'll live to age 85). For example, if you are living off $100,000 now, you'll need about $2,450,000 when you retire. Not a small sum.

Saving is essential for most people who want to retire early. Max out your 401(k) and consider an IRA. Put money into safe, long-term investments, and don't gamble on the stock market.

Special Offer: Even in a bear market, you can profit handsomely. Click here for a check of the market's health and recommended stocks to buy now with a free trial of Dow Theory Forecasts.

To retire in your younger years, you'll have to work for it in your much younger years. In order to retire young without an income of hundreds of thousands of dollars, you'll have to live below your means, not within your means--and it's not going to be fun.

Don't buy a new car--or even own a car--or designer brands. Skip eating out, smoking cigarettes and traveling. Even consider lifestyle decisions like not having children or only marrying someone with your same financial goals.

If being painfully frugal isn't your ideal way of life during your youth, you could start your own business, which is one way to manage early retirement. Hire someone else to run the company while you kick back and relax--still bringing in cash. Even if it's a small sum, if you're able to continue "earning" your spending money even after you're done working, your savings will stretch farther. However, there are never any guarantees in business. It may be difficult to predict how successful your idea will be and, if it is, how long that success will last.

Not everyone has entrepreneurial instincts. Instead, live out that childhood dream of becoming a firefighter. Many government jobs still offer pensions that usually continue to pay a percent of your wages after retirement and, in many cases, kick in after just 10 to 20 years of service.

Unfortunately, as you grow older, your body does too, which greatly increases your chances of incurring health expenses. If you're not working, it's up to you to pay for poor health. Zollman explains that a couple looking to retire at age 65 would need to spend about $200,000 during their retirement on health care costs. Even this estimate is considered conservative. "It's vital to make sure you understand all of the potential challenges that could occur over a 40 or 50 year retirement," she says.

Your chances of pulling a Mark Zuckerberg, the 24-year-old who created the networking Web site Facebook and is now worth $1.5 billion, are slim. And many of us are not ready to join the police force for a pension plan.

So, if you want security after the checks stop coming, emulate oilman John D. Rockefeller and start being prudent. Albeit a billionaire, Rockefeller carried around a little red book and wrote down every single thing he spent his money on. You may have a lot to save before you can say good bye to the working world, but at least it's a start.

After finding the price of a particular stock, usually the next number everyone looks at is the P/E ratio.

P/E is the ratio of a company's share price to its per-share earnings.

A P/E ratio of 10 means that the company has 1 of annual, per-share earnings for every 10 in share price. (Earnings by definition are after all taxes and etc.)

A company's P/E ratio is computed by dividing the current market price of one share of a company's stock by that company's per-share earnings.

A company's per-share earnings are simply the company's after-tax profit divided by number of outstanding shares.

A company that earned 5M last year, with a million shares outstanding, had earnings per share of 5. If that company's stock currently sells for 50/share, it has a P/E of 10. At this price, investors are willing to pay 10 for every 1 of last year's earnings.

P/E is traditionally computed with trailing earnings (earnings from the past 12 months), which is called trailing P/E.

Sometimes 82YTTMXit is computed with leading earnings (earnings projected for the upcoming 12-month period), which is called a leading P/E.

For the most part, a high P/E means high projected earnings in the future. But actually the P/E ratio doesn't tell a whole lot, but it's useful to compare the P/E ratios of other companies in the same industry, or to the market in general, or against the company's own historical P/E ratios.

Some analysts will exclude one-time gains or losses from a quarterly earnings report when computing this figure, others will include it.

Adding to the confusion is the possibility of a late earnings report from a company; computation of a trailing P/E based on incomplete data is rather tricky. (It's misleading, but that doesn't stop the brokerage houses from reporting something.)

Even worse, some methods use so-called negative earnings (i.e., losses) to compute a negative P/E, while other methods define the P/E of a loss-making company to be zero.

Worst of all, it's usually next to impossible to discover the method used to generate a particular P/E figure, chart, or report.

Like other indicators, P/E is best viewed over time, looking for a trend. A company with a steadily increasing P/E is being viewed by the investors as becoming more speculative. And of course a company's P/E ratio changes every day as the stock price fluctuates.

The P/E ratio is commonly used as a tool for determining the value of a stock. A lot can be said about this little number, but in short, companies expected to grow and have higher earnings in the future should have a higher P/E than companies in decline.

For example, if a company has a lot of products in the pipeline, I wouldn't mind paying a large multiple of its current earnings to buy the stock. It will have a large P/E. I am expecting it to grow quickly. A rule of thumb is that a company's P/E ratio should be approximately equal to that company's growth rate.

PE is a much better comparison of the value of a stock than the price. A 10 stock with a PE of 40 is much more "expensive" than a 100 stock with a PE of 6.

You are paying more for the 10 stock's future earnings stream. The 10 stock is probably a small company with an exciting product with few competitors. The 100 stock is probably pretty staid - maybe a buggy whip manufacturer.

It's difficult to say whether a particular P/E is high or low, but there are a number of factors you should consider:

First:

It's useful to look at the forward and historical earnings growth rate.

If a company has been growing at 10% per year over the past five years but has a P/E ratio of 75, then conventional wisdom would say that the shares are expensive.

Second:

It's important to consider the P/E ratio for the industry sector. Food products companies will probably have very different P/E ratios than high-tech ones.

Finally:

A stock could have a high trailing-year P/E ratio, but if the earnings rise, at the end of the year it will have a low P/E after the new earnings report is released.

Thus a stock with a low P/E ratio can accurately be said to be cheap only if the future-earnings P/E is low.

If the trailing P/E is low, investors may be running from the stock and driving its price down, which only makes the stock look cheap.

I don't really know how cars actually work ...

Not really!

I know how to drive them, but if you asked me how they work, I would not really know how to definitely explain it.

That small technical limitation on my part doesn't stop me from knowing whether XYZ Autos is a quality company or not. I don't understand the cars they make, but I do understand XYZ Autos. Moreover, that understanding is critical to making a decision about the value of their stock.

There are many good and objective ways to value stocks and improve your finances. These involve looking at various financial .

However, one of my simplest rules for investing is that you always must understand what you are buying!

This is by no means original with me. It is a basic part of fundamental analysis!

How deeply you must research in order to understand a company before you invest in it is a rather personal decision!

Some investors feel fine with just a general understanding, while others want to know everything there is to know about the company. I think that somewhere in between is perfect.

But you must know what makes a company different from others and whether that difference adds any real value or not.

Sometimes being different is not good ...

Buy what you definately understand for a reasonable price and ...

You will be well on your way towards successful investing!

Market Risk:
Corrections and bear markets inflict harm on countless individuals who throw in the towel and lock in their losses.
In a classic correction, the broad market averages lose 10% to 20% of their value, whereas they plunge 20% to 35%, or more, in a real bear market. Some equity funds get hit worse than others in a bear rout.
In addition to short-term risk, there's always a small chance that stocks can do poorly for about a decade introducing a long-term danger.
Interest-Rate Risk:
This peril confronts investors directly, especially those in longer-term portfolios. Simply put prices fall when interest rates rise.
If interest rates rise significantly, fixed-income securities become relatively more attractive, so money is shuttled from the stock market into higher-yielding bond and money market funds.
Currency Risk:
If your country's currency grows stronger, you will experience a currency loss on your foreign securities. Conversely, if your currency weakens, you will enjoy a bonus.
Fluctuating exchange rates are of particular concern to single-country investors. It can be devastating for individuals who hold funds for short periods.
Some fund managers may try to hedge their portfolios against adverse currency moves with currency futures or forward contracts. However, hedgers are fallible and lose money when the currency goes opposite their predictions.
In addition, a hedge costs money. Currency risk is generally not too much of a problem for long-term investors in well-diversified international funds.
Asset-Class Risk:
Stocks, bonds, and cash are the three major asset classes. If you allocate a disproportionate amount to any of the three main categories, or totally ignore one or two of them, you are subject to asset-class risk.
It's prudent to diversify across all three major asset classes even though you want to give primary emphasis to, say, stocks.
Management Risk:
The majority of actively managed funds underperform the broad market benchmarks. Even though a fund has beaten the market in the past, there are no guarantees it will continue to do so. A star manager may leave or lose his touch.
Individuals who stick with poorly run funds risk substantial under performance, which can compound over time. Investors in index mutual funds avoid management risk.
Sector Risk:
Industry or sector risk faces those who invest in narrowly focused sector portfolios, such as those focusing on health care or even utility stocks.
It also affects individuals holding more diversified funds that make big sector bets.
Country Risk:
This danger, which includes economic and political instability, is associated with single-country investments, especially those targeting developing markets.
Credit Risk:
The risk of default can be a concern for high-yield bond fund investors. Junk bonds can experience staggering losses when setbacks occur in this sector.
Tax-Rate Risk:
Investors have to be cautious in changes in tax laws that could make their holdings less valuable.






























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This old advice rings true for modern-day investors!

Your temperament, your inner spirits should guide you in making investments. If you are a conservative, risk-averse person, then don't kid yourself. Face up to it, and invest accordingly, which means conservatively. No one can put a price tag on your ability to sleep soundly at night!
On the other hand, if you're more venturesome, more willing to accept higher risk in return for the potential of higher reward, you should be able to act more aggressively in the market.
Most people invest for different reasons at different times and use various methods. Whatever approach, or approaches, you take, the most important thing is to know why you bought a particular stock.
If you bought a stock on the recommendation of your neighbor or your broker, be happy about it and recognize that this is why you bought it!
Then you will be more likely to avoid the "investor imperative," namely the following behavior:
If your stock rises, claim it as your ability ...
If it falls, pass on the blame!
Friend Investor:
Your friend phones. He has the perfect story on a great stock but you will have to act quickly! If you are likely to buy in this situation, then you are a friend investor. Friend investors rely on the advice of other people to make their decisions.
Technical Investor:
Moving averages, candlestick patterns are the sort of things the technical investor deals with. Technical investors were once called "chartists" because their central activity was making and studying charts of stock prices.
Nowadays this is usually done on a computer where advanced mathematics combines with grunt power to unlock past patterns and correlations. The hope is that they will carry into the future.
Economist Investor:
This type of investor bases his decisions on forecasts of economic parameters. Typical statements are unemployment will decrease, interest rates will climb etc.
Random Walk Investor:
I have no idea whether stock XYZ will go up or down, but it has a high beta! Since I don't mind the risk, I'll buy it since I will, on the average, be compensated for this risk.
The current price of a stock is what you should buy, or sell, it for. This is the fair price and no amount of analysis will enable you to do any better.
Informal Information Investor:
This approach to investing consists of piecing together information on companies obtained informally through wide-ranging conversations, interviews, press-reports and, simply, gossip.
Value Investor:
This investor attempts to value a stock independently of its current market price. This independent value has many names such as intrinsic, investment, reasonable, fair, and appraised value.
An intrinsic value would be the value which is justified by the facts: assets, earnings, dividends, definite prospects, including the factor of management. Value investing is the method of deciding on individual investments on the basis of their intrinsic value as contrasted with their market price.
Growth Investor:
They are looking for stocks with high price to book value or a high price-earnings ratio. Growth is always a component in the calculation of value, constituting a variable of high importance and positive impact.
Conscious Investor:
This type of investor overlaps the types just mentioned. Increasingly investors are respecting their own beliefs and values when making investment decisions. Many others are following their own paths to clarify their investment values and act on them.
The process of bringing as much honesty as possible into investment decisions we call conscious investing.

The ability to master your money is not something that just happens. It takes time, training, and temperament. Whatever praise or criticism you may direct at the American public school system, one thing must be acknowledged: The handling of personal financial affairs is not a subject to which much attention is devoted. Whatever the average citizen knows about saving and investing did not come from the classroom. This is understandable, of course, if only because the typical classroom teacher is equally mystified by the world of money. Nonetheless, there are those among us who have figured out how it all works, and what it takes to prosper.
Are you one of those persons that has managed somehow to get the hang of it? If you recognize yourself in most of the twenty-five following scenarios, then you can confidently answer "yes" to that question.
1. Your credit card bill is paid in full each month with never a penny in interest incurred.
2. You understand that the variable annuity in which your neighbor just invested will prove to be a sad mistake.
3. Despite orchestrated furor by the media, you recognize that the $30 it costs to fill your vehicle’s gas tank is cheaper in today’s dollar that the $15 it cost 20 years ago.
4. You enjoy financial talk shows for their entertainment value while knowing that 95% of what’s said is nonsense.
5. The only type of life insurance that you’d ever consider purchasing is a term policy.
6. You’re not tempted to invest in something because of a hot tip you get from a friend or relative.
7. You have serious doubts that the 3-unit course in basic English composition offered at Eleganté University for $900 is any better than a similar course conducted at Midtown Community College for $60.
8. You are sufficiently sophisticated in real estate to know that the worst house in the best neighborhood beats the best house in the worst neighborhood.
9. You owe nothing on the vehicle you drive.
10. You have a pretty good idea by mid-November how much your income tax obligation for the current year will be.
11. When hearing that the S&P 500 Index just hit an all-time high, you are not inclined to call your broker with a buy order.
12. It’s beyond your comprehension why anyone not certifiably insane would purchase a timeshare property.
13. Your checking account balance never drops below the minimum limit that triggers a monthly service charge.
14. You’re aware that an option to pay your auto insurance premium in two installments, with a "modest convenience fee" instead of a single payment, probably works out as a loan at about a 25% interest rate.
15. Although you thoroughly enjoy the home in which you live, it’s considerably less expensive than you can afford.
16. You know practically nothing about the option market—and intend to keep it that way.
17. You feel instinctively that every dollar you contribute in FICA taxes to the Social Security system is a dollar lost to you forever.
18. Whenever you’re negotiating a purchase and qualify to receive a discount, you do not hesitate to ask for it.
19. You entertain no illusions that a financial advisor will provide sound counsel merely because of the Certified Financial Planner (CFP) designation held.
20. You make the maximum possible contribution to your retirement funds.
21. Whether your choice of wristwatch is a top-of-the-line Rolex, a fashionable Cartier, a respectable Bulova, or an economy Timex, you recognize that all are battery-operated, with a similar quartz movement, and none fail to keep excellent time.
22. You find it baffling why anyone would buy a lottery ticket.
23. You cannot remember when you last borrowed money for an unexpected emergency.
24. The newspaper advertisement offering a half-pound silver commemorative medallion from The Perfidious Mint, at the "special advance price of only 139 dollars," forces you to suppress a laugh.
25. You have no confidence in the concept of "Investor Confidence."
If the sentiments expressed in most of those situations do not reflect your thinking, you’re not in control of your financial destiny. In that case, you can use a little guidance. A visit to the Newsletter Archives on my website at www.onthemoneytrail.com might be a good place to start.

Although I wouldn't call myself a professional stock market investor, I do spend a lot of time following the market and reading about the ups and downs of companies. I've never been interested in mutual funds or index funds very much as I would much rather invest in individual companies. My work allows me plenty of time to indulge in my stock market obsession though, so I understand that not everyone can put in the hours of research required to invest in individual stocks.Over the years I have made enough mistakes and have had enough successes to learn enough about investing in stocks to have developed my own set of rules. These are general investing tips that can easily be adapted to most styles of investors.

Don't pay any attention to HOT tips :As tempting as the hot stock market tips may sound, don't risk your hard earned dollars on them. Impulsive buys are no different to gambling, so unless you can afford to lose your money, buying just because a friend says they have made a lot of money from a company is no reason to race out and buy it. If the hot stock tip is really worth adding to your portfolio, it will still be worth adding after a couple weeks of research.

Learn as much as you can about the stock before investing in it:Each stock is actually a business, not just a stock ticker symbol that goes up or down each day. You wouldn't buy a business before doing a lot of research into what the company actually sells, what services they provide, what the earnings have been, what earnings are expected to be, and a whole lot more about the business. The famous stock market investor from Omaha, Warren Buffett always refused to invest in businesses that he never understood. He avoided technology stocks as he knew very little about the businesses behind the stocks, which allowed him to miss both the boom and bust of the tech bubble.Learning about the industry the stock is in can also be as important as learning about the company.

Don't pay too much for a stock:If a stock is getting a lot media attention and everyone from your local butcher to your taxi driver has been buying into it, there's a good chance that the price of the stock is inflated. Compare the company data with similar stocks in the same industry. If they don't compare, move with caution. It may be that the company is a quality stock in a strong, long term uptrend or it could be that a bunch of sheep are simply reacting to media hype. The challenge is to work out which stock is the quality company that demands a premium price and which is the stock that will halve in value.

Admit to your mistakes and don't be afraid to sell a losing stock:No one likes to admit they are wrong, but even the best investors make mistakes. Hoping for your stock to turn around while it keeps losing value month after month, year after year is a no win situation. Some companies will always underperform. Cut your losses and put it into something that has some hope of making you money.

Get Help from a Professional Advisor:Even if you have a lot of spare time to research the market and investing in stocks, it is advisable to see a professional before making any major financial decisions. The tax implications and financial obligations of individual investors may mean that it wiser to pay off debts or invest in other assets. If you are sure that stock market investing is the right thing for you, it is still good to seek professional advice. With the abundance in financial data online now and online brokers being so easy and affordable to use there has been a massive increase in individual investors entering the markets for the first time. Don't ever feel that you have to buy stocks in haste though. Impatience will burn more people than it will reward. Know the stock, the company, and the industry it is in before even thinking about logging into your internet broker account!

Article by Michael Dylan

"I think you have to learn that there's a company behind every stock, and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies." Peter Lynch Quote

I have been making some great money from the stock market over the last few weeks. In this article i will explain my strategy and disect how and why I have been making money despite global indices falling as the full effect of the credit crisis sinks in to the financial world.

To help you get started using the same strategy here is a link toy the stock short list i use. Good luck and happy investing.