STOCK MARKET FOR DUMMIES / STOCK MARKET FOR BEGINNERS

THE BEST STOCK MARKET GAME - FREE ONLINE

2012-01-12T07:46:00.000-08:00

The stock market is way down and this has prompted a lot of people who know nothing about stocks to want to learn about the market and get involved. They are thinking this might end up being an investment opportunity of a lifetime but they don't know where to go to learn about stocks.

Now there is a fantasy stock trading game for all those who want to get involved and learn the ropes and terminology without the risk. Wall Street Survivor is the best stock trading simulation game out there and the good news is that it is absolutely FREE! This game and site is meant for beginners and people who want to learn about the stock market and how to trade online.

I signed up (takes less than a minute) to see what it was all about and let me tell you , there is a lot going on at this stock simulator game including weekly and monthly contests where you can win prizes. First of all, you make buy and sell stock trades just like you would on any other real stock site platform. So, when you learn how to make the trades at Wall Street Survivor, you have learned how you would do it at a real online broker for real money.

The amount of material that is available for FREE is amazing. They have training videos, tutorials, a massive forum, contests which everybody is automatically entered in, a research section, and much more. Once you sign up you will quickly realize there is no shortage of things to do on Wall Street Survivor and things to learn.

Initially, you are given $100,000 to start out in virtual cash which you use to build up your very own stock portfolio. You can buy and sell stock (with your fantasy dollars) at the real prices of the stocks as they go up and down during the day. Just like in real life, you can learn how to short sell, set stop limit orders, put in orders after hours and just about anything you can do at a real online broker you can do here. You will be managing your very own stock portfolio through simulated trades that are executed on a real-time stock trading platform. As you can see below I am up a little from my starting amount of $100,000.

Wall Street Survivor is a very cool FREE site where you can learn how to invest and manage your own stock portfolio without any of the risk. So, once you feel comfortable with how the market works and how to do some research, you can sign up with a real online broker and jump right in. If you want to know what the market is like and what it would be like to have your very own portfolio of stocks that you can trade, this free stock simulation game is a no brainer. Sign up for Wall Street Survivor today and give it a spin.

STOCKS FOR DUMMIES: GREEN BAY PACKERS STOCK

2012-01-12T07:45:00.000-08:00

It is not the easiest thing to make money in stocks but it is especially hard if you bought some Green Bay Packers stock last month. That stock is truly stocks for dummies as a $250 "share" of the company is 100% worthless.

The Green Bay Packers are a US football team that has some of the most loyal fans of any sports franchise. That is why the team was able to sell those worthless shares to raise money for a future new stadium. The fans were willing to plop down that kind of money per share just so they could proudly own part of the team. The thing is though, that they don't really own anything more than a piece of paper. Anyone who thought they were investing in the team is/was sadly mistaken.

It is a great way for a team to make money and the Packers are probably one of the only teams with such a loyal fan base that they could do this. It was reported that they earned more than 62 MILLION from the sale of stock which should be more than enough for a new stadium. I'm sure 99% of the people buying the stock new it wasn't worth anything but were willing anyway just to be able to display their certificate (see below) and say that they helped the team.

I'm sure the taxpayers of Wisconsin were happy with this money raising tactic as well so that they didn't have to foot the bill. Most professional sports teams are able to milk the taxpayers whenever they need new stadiums and in this awful economy, any new taxes are a heavy burden. By successfully issuing this stock in the team, the Packers were able to get what they want/need without angering any of the taxpayers and potential fans.

BEWARE OF 2550% PENNY STOCK GAINS ADS

2011-12-19T15:23:00.000-08:00

Have you seen stock advertisements like this online that make fantastic claims?

I see them all too frequently and while I don't know whether they are scams, I do know that penny stocks are very dangerous. For the ad above, I clicked through to the site and immediately went down to the bottom of the page looking for a disclaimer or terms & conditions section.

I found a Disclaimer link and was taken to a page of solid legal writing but I didn't have to go far to find something very interesting and very scary. The VERY FIRST sentence on the disclaimer page was this:

Clearly this is NOT something you want to read before you pull out your wallet to pay for some penny stock picking system or sign up to their newsletter. You can lose YOUR ENTIRE INVESTMENT!

That, in a nutshell is why penny stock are so risky. They shouldn't ever be bought by beginners and yet so often they attract a beginner's attention because they are cheap. Ads like these are good at getting the attention of novice investors and those are the very people that should stay as far away from penny stocks as possible.

My advice would be to resist the temptation of clicking on an ad like this and to NOT sign up for any newsletter. You will just get in trouble and probably lose money if you get involved later on. Instead, go out and buy a copy of The Stock Market For Dummies and learn the basics of stock investing so you can put your money in stocks that have a chance of going up and making you money!

STOCK MARKET: LOW VOLUME = HIGH VOLATILITY

2011-11-21T12:42:00.000-08:00

Is it a good time to buy stocks when the market shows low volume like we will see this week during Thanksgiving? A lot of people are busy with family events and others are out shopping which means little time will be devoted to thinking about stocks and planning their investments.

It is during low volume weeks like these that we often see a lot higher volatility. When fewer people are buying and selling during these slow days, the stock trades that do occur move the market up and down a lot more than they do during normal volume trading days. Low volume = increased volatility.

Day traders love the market to be volatile because they make their money quickly when the market moves one way or another. When the market is moving sideways, it is harder for them to pick a direction.

On Monday we have already seen the stock market go down over 300 points before making a little bit of a comeback towards the end of the day. More worries from Europe and an impasse from the 12 member Congress Super Committee debating the U.S. debt ceiling was responsible today for the down day. But because of the low trading volume, it was probably a worse day for the Dow than it would have been had it not been a big holiday week.

Buying stocks when volume is low means you have to be prepared to see the market go up or down more than it might during other weeks. If you are an investor buying stocks for the long haul, it probably won't matter if you pay a bit more or a bit less (depending on whether your stock goes up or down) for your stocks. Just be warned that the prices of the stock(s) you are interested in might be moving more than usual just because of the low volume.

BEST STOCK BROKER COMMERCIALS

2011-10-27T10:24:00.000-07:00

Online stock brokers usually have pretty dull commercials but there is one company that has chosen to make their pitch a bit more interesting - E*Trade.

I don't have any statistics to be able to tell you how well these ads work but E*Trade has gone exclusively with these baby commercials since their debut during the 2008 Super Bowl. To me that surely means they must be working and I'll tell you why I think they do:

1) First of, all they are lighthearted, funny, and cute. You can't go wrong with that.
2) They make saving and investing look fun as the E*Trade baby is always upbeat and totally into his portfolio.
3) These commercials take the fear out of investing. If that baby can do it then so can you.
4) That baby and his friends are cool, hip, or whatever current day term you want to use. That makes the commercials cool and also makes E*Trade cool.

In reality, investing is a boring subject but these advertisements make it sound fun. Fast Company writes that in response to that first Super Bowl ad, E*Trade had more sign ups the next day than in any day prior in their history. These TV spots are memorable and that is good for the brand as long as people remember what the ads are selling.

E*Trade was one of the pioneers of online stock trading and they also have the most recognizable commercials on television. They also have a great trading platform which I use. Here is a video showing many of the E*Trade baby commercials that have become so popular.

OCCUPY WALL STREET IS NOT ABOUT STOCKS

2011-10-05T10:18:00.001-07:00

Have you heard of the new social movement called Occupy Wall Street? Protests are spreading around the country and slowly making their way to many of the major cities. This movement is being fueled online through many of the social websites like Twitter and you probably will be hearing more and more about it in the news in the coming weeks.

You might be wondering what Occupy Wall Street is all about and what does it have to do with the stock market? Actually, it has little to do with stocks as it is a growing group of people who are disenfranchised, often out of work and in debt, and angry because they think corporate America is making millionaires of the few and leaving everyone else behind.

"Wall Street" is the business district of New York and for anyone who buys and sells stocks it also represents the stock market. While these protestors are angry at high corporate profits and injustices they think abound in the business world, their protests involve much more than the stock market. Like most protests, the majority of people marching are under 30 years old.

The Internet and sites like Facebook, Twitter, and others are becoming important ways people organize and we all saw how they played a big part in the protests in Egypt which were responsible for ousting Hosni Mubarak. Occupy Wall Street will probably fizzle out eventually but it shows how the bad economy, high education prices, low wages, corporate bailouts, corrupt politicians, and other perceived problems with today's society are affecting the minds of today's younger generations.

They are angry it is clear, but they aren't angry specifically at the stock market like the name might imply.

GET FREE REAL TIME STOCK QUOTES AT YAHOO FINANCE

2011-09-14T08:49:00.000-07:00

Finding online real time stock quotes that are truly free can be difficult. Many of the online discount stock brokers do offer real time quotes but they aren't free as you have to pay a monthly fee to get them. For people who trade only once in a while, it is hard to justify paying that fee for something that you would think should be included with your account.

Over at Yahoo Finance (free) though, you do get real time quotes, or at least as close to them as you can get. See the picture below with the small blue "real time" quote of -$2.85 which is about a dollar better than the $3.82 you see in the body of the data. Usually, where ever you get your quotes, you would only see the $3.82 price.
You must understand though, that the market moves so fast that no stock quotes are really "real time". They might be close but never up to the second. However, the 20 minute delayed quotes that you get most of the time at most financial sites are now a thing of the past if you use Yahoo Finance. Whenever you have a volatile trading day or a stock with breaking news that you are interested in buying or selling, it does help greatly to be able to get quotes that are real time and free.

THAT SICK FEELING IN THE PIT OF YOUR STOMACH

2011-08-09T10:26:00.000-07:00

We've now all seen first hand what a panic sell off in the stock market looks like. For anyone who owns stocks, they've also felt what it FEELS like too: a tight feeling of uneasiness and helplessness that sticks with you the whole day and makes sleeping at night a very difficult.

There is no doubt that the 500 and 600 point down days on Wall Street we have just seen were based on economics and news but fueled mostly by sheer panic. After all, nothing really changed in the last week or so except a lot of added coverage of the debt ceiling debate and the credit downgrade over the weekend. These problems have been years in the making and aren't brand new. But the wall to wall coverage spooked people and made them want out at any cost.

Fear and greed are primary motivators in the stock market and right now fear is on display for all to see. If you are thinking of buying, you might want to wait a bit because it might not be over. As I write this the market has just given back all of it's 200+ point gain on Tuesday and is now down close to 200. My advice? Don't get too greedy just yet because you might get burned as we could have more down days ahead.

If you want to be a long term investor, you have to have the ability to sit back and do nothing. You have to have the stomach to take the losses when the world looks like it is ending. You have to have the confidence that with time, the market will come back. There is no guarantee of course. But history has shown that so far, the stock market has ALWAYS come back. You really should have a long investing time horizon so that you can wait these things out.

In times of high volatility like these, there is a lot of added interest in stocks. People who aren't lifetime investors see the market as the lead story on all newscasts, newspapers, and of course the Internet. They get interested in maybe picking up a stock or two while it is on sale. But what they really should be doing is picking up a copy of Stocks For Dummies or some other such book and learning the basics first. Don't just jump in without knowing the risks, especially at a time like this!

PROOF THAT INVESTING IN STOCKS IS IMPORTANT

2011-07-26T09:08:00.000-07:00

There is a news article out today that is in all the major news services detailing how the wealth gap between whites and minorities has widened in the last 25 years. I think this story is very misleading because it is all about race when the real story should be about EDUCATION: people who have access to education are doing better than those who don't. This graphic should have groups split into "education" and not "race":

This story talks about skin color, politics, and all sorts of other issues that I won't discuss further because they have nothing to do with the stock market. However, stocks were mentioned twice in the article as being one of the reasons whites are doing better than some minorities.

Apparently whites are apt to have more of their money and savings in the stock market than minorities are. They might own individual stocks, 401K's, and mutual funds that have rebounded nicely since the crash of 2008. Minorities, on the other hand, are more likely to have most of their money in real estate (their houses) where we have seen valuations NOT go back up.

Stocks are never guaranteed to do well but over time they have always outperformed all other forms of investing. Everyone should have the opportunity to invest in them. It is also true that the earlier in life you start investing, your chances of making a good lifetime return are increased. However, it is understandably hard to get interested in the stock market if you don't have any money to invest! Why would someone pick up and read a copy of Stocks For Dummies if they don't have any money, right?

If there is anything you should take away from this it is that all kinds of education are very important. The basics of the stock market and investing in stocks should be taught early on in schools if we want to raise kids that will have a chance to do well financially in life. Everyone should have access to information about the stock market and how to invest in it.

Poor people not only don't have money to invest but it is also unlikely that they have the knowledge of HOW to invest it if they if their fortunes changed. The stock market is and always will be very confusing to most people and something that is looked at as a playground for the rich. In reality though, it is anything but that.

MAKE MONEY BUYING "CLOUD" STOCKS

2011-06-22T09:40:00.000-07:00

There is a tremendous amount of buzz about the cloud almost everywhere you turn. Apple's announcement that it is bringing iCloud to you by the end of this year has only magnified all the attention this type of technology is getting.

While cloud computing isn't new, it is ramping up in importance and it appears to be the real future going forward. It won't be long before most or all of what you do will be stored in the cloud rather than on your desktop or laptop. Whether you like it or not and whether you think your information will be safe or not, everything is going to be moving to the cloud.

Over the next 10 years, businesses everywhere are going to be investing in and making the move to the cloud. This leads investors to the question: what stocks should I buy to take advantage of this trend and what stocks are poised to make the most money?

The purest stock play on cloud computing is Salesforce.com (CRM) but by the looks of it's chart it is probably much too late to get in. Here is the chart for CRM:

One thing is clear with stocks and the stock market: you have to get in early if you want to make the big money and that means being very good at figuring out what the future holds and what companies are poised to take advantage. By the time something like "cloud computing" is all over the news, it is probably already too late to find a stock that will profit and get your money in at a low price.

There are many other companies that will make money from the cloud as they are involved one way or another. Stocks like Apple, Microsoft, EMC, Google, Amazon, IBM, and Accenture among others will be involved in the cloud and should benefit from it. They all have other products though so their stock prices are not as directly connected to the success or failure of cloud computing.

I personally own EMC and it has more than doubled in the last two years. How much of that is attributable to it's involvement with setting up equipment for the cloud I don't know, but I am glad I have the stock and don't plan to sell.

ANOTHER DOT COM BUBBLE COMING OUR WAY?

2011-05-12T09:02:00.000-07:00

The Dow and Nasdaq are two indexes that track the progress of the stock market and they are the two that are most often quoted. When you watch the business news every night, read the newspaper in the morning, or watch any business show on television during the day, those two averages are the ones that you will see prominently displayed.

The Dow Jone Industrial Average is comprised of 30 stocks that are thought to be a representative sample of the market in general. It is an average of those 30 stocks which are all large established United States companies. In other words, if the Dow goes down on any one day, chances are that the stocks you own will also have gone down. I have included a graph of the DJIA since about 1983 below:

The Nasdaq Composite is a different index that includes companies from all over the world. The NASDAQ is an average of all the stocks in the index and they are often more growth oriented than the stocks on the Dow. The NASDAQ has many more technology companies, Internet companies, and companies that are in new industries than the Dow does which is why it's graph looks somewhat different over the same time period:

The biggest difference between these two historical graphs of the Dow and NASDAQ is seen between the years of 1999 and 2002. That was the time period known as the Dot Com Bubble when all the enthusiasm for Internet companies quickly changed from euphoria to pessimism and people were rushing to sell their Internet stocks.

The NASDAQ had climbed to over 5000 and you can see that it was going straight up at one point, a trajectory that spelled doom because of too much enthusiastic buying. When things crashed, they REALLY crashed for all the Internet companies and since the NASDAQ had a much higher percentage of such businesses, you can see the big difference between the two charts. While the Dow did go down, it didn't go down nearly as much because it had many more companies that were in "traditional" industries.

If you take out the 1999 to 2002 period, the charts of the two indexes look a lot alike but technology stocks seem to be getting hot again. There is a lot of enthusiasm for Internet companies right now and stocks that come to mind are Netflix and Apple as well as all the IPO talk from Groupon, LinkedIn, and Facebook. Heck, they are even talking about doing an IPO for the company that makes Angry Birds (Rovio Mobile)!

The NASDAQ has climbed back up to reach it's highest point since the Dot Com Bubble and you have to wonder whether people are valuing these Internet companies too highly. Things change quickly on the Internet and while these companies may be doing well now, it hardly guarantees the kind of success people are hoping for in the future.

WHY STOCKS SOMETIMES GO DOWN AFTER GOOD EARNINGS

2011-04-25T14:40:00.000-07:00

Netflix has just come out with another quarter of great earnings. They made just over 60 million dollars compared to earnings during the same period last year of 32 million dollars. That's great right?

Then why is the stock down more than $12 or almost 5% in after hours trading on 4/25/2011? Tomorrow investors will probably follow through and bid the stock down when the market opens. So, what gives?

This is a great example of a stock that goes down after great or good earnings. Something like this often doesn't make sense to beginners and to people that are just starting out. It is confusing unless you have a deeper understanding of what makes stocks go up and down.

Netflix's earnings were stellar and no one is denying that. Most companies would love to be making money and doing that much better in 2011 than in 2010. But for Netflix's stock price it wasn't good enough because more important than today's earnings, their management cautioned about the FUTURE. Management said that things might start to slow down a bit. That's what did it.

You see, Netflix is a very hot company right now that has had it's stock price come close to tripling in just a year. In order for that to continue, absolutely everything has to go perfectly. When a stock is that hot, you have to have earnings AND a future outlook that blows everyone away.

Actually, management's outlook is almost always more important to investors than the current quarter's earnings no matter what stock you are talking about. That is why it is also possible to have bad earnings along with a good outlook from management and have a stock go up. You see, the future is more important than the past in the eyes of investors.

Everyone knows that Netflix has been tremendously successful in their business model and they continue to sign up people at an impressive rate. They have put competitors out of business and now they are aggressively moving into streaming video which is the delivery system of the future.

But investors want to know if their phenomenal success is going to continue and any hiccup or warning about anything slowing down will make the stock stall or go backwards as we have just seen today. That will happen regardless of current earnings as people who invest in stocks are always more concerned about what the future holds.

WHICH ONLINE STOCK BROKER IS THE CHEAPEST?

2011-03-03T09:48:00.000-08:00

In 2011, the lowest stock broker fees are found at OptionsHouse. Just $3.95 per stock trade is the cheapest price I could find of any of the online discount stock brokers.

As you can see buy their name, they specialize in trading options which are different than stocks. Beginners won't want to get involved with options until they learned a lot about the basics of stocks and the market. However, just because they specialize in options doesn't mean that they don't have a great platform for regular stock trading.

With OptionsHouse, your money is protected by SIPC just like it would be for any other online discount broker. They have an A- Rating from the BBB and they have won several awards from Barron's as well. In short, your money is safe with OptionsHouse even though they give you the cheapest stock trades.

At $3.95 per stock trade, you are getting a price that is less than half of what several of the more famous online brokers charge like E*Trade, Schwab, and TD Ameritrade. You are also getting a much better price than brokers like Scottrade ($7) and Firstrade ($6.95).

If you are looking for the cheapest stock trades online, OptionsHouse is the place to go. I personally don't use them because I have used E*Trade for years and I don't want to go through the hassle of switching. I usually don't make more than 10 trades per year though so my extra cost is not too great. However, if I were an active trader I would seriously think about switching because the money I could save with the cheaper trades from OptionsHouse would be significant.

WHY CHAOS IN EGYPT DOESN'T MEAN CHAOS IN THE US STOCK MARKET

2011-01-31T08:19:00.000-08:00

Wait a minute. The stock market is actually UP on Monday 1/31/2011 after we all watched a weekend of wall to wall coverage of the crisis in Egypt. How can the market be going up when there is obviously so much uncertainty and danger in that part of the world?

I have to admit I thought the stock market would be down big today as there is one thing investors hate: uncertainty.

There is so much uncertainty about Egypt right now that no one knows what is going to happen, knows what could happen, or knows what to do about it. We have hardly heard a peep out of President Obama as he doesn't know what side to back or what to say either so he is just waiting and watching like the rest of us. (well maybe he is doing a little more than that)

There are questions about the Suez Canal and whether it will be able to stay open and let ships through. If not, that would impact business worldwide. There are questions about what type of government would take the place of the current pro US regime there now if it falls. There are deep implications regarding any new Egyptian government and Israel and that also will affect the whole world. It could all eventually lead to another war between who knows how many countries.

Why isn't the US stock market going lower today? The biggest reason is probably because people have gotten over the shock of the news over the weekend. If there was any panic here in the US it would have been on Saturday and the markets were closed that day. So now, people have had a chance to digest everything and they might not feel it will have quite as big an impact on us as they might have thought on Friday or Saturday.

Investors might also see the news that Mubarak has formed a new cabinet and is working to stay in power and get things under control. This would have a calming effect on investors as they are less likely to panic and sell based on improving news. As long as Mubarak stays in power, the market will likely not nosedive.

There is also a good economic news story or two out today such as this one about consumer spending having gone up in December for the sixth straight month. Any good economic news will help stabilize the market and there are more economic numbers out later in the week for jobs, automobile sales, factory orders, and construction spending. These numbers could have a big effect on which way the market goes along with developments in Egypt of course.

One of the things that is made clear today is that the direction the stock market moves, either up or down, is very much determined by the way people FEEL about things. Today was a classic day where the market COULD have opened down 200 to 500 points based solely on what is happening in Egypt. However, because investors don't apparently think the situation is quite as bad as I thought they would, the market opened up and remains up at midday.

STEPS TO SHORT A STOCK

2011-01-06T14:15:00.000-08:00

This last weekend I decided I wanted to short a stock. It is something that I normally don't do and in fact the last time I shorted anything was over 10 years ago. But I saw a stock that I thought was too high that had been going steadily up for some time now and I thought it might have a pullback sometime soon.

The stock market as a whole has also been going up now for a while and I think a correction could possibly be around the corner (my opinion). So those two factors along with a few more reasons made me want to short the stock and I decided to do that on Monday.

I have an E*Trade account with plenty of cash in it but I wasn't sure they would let me short a stock and when I tried the system wouldn't let me. It turns out you need to have a margin account which I didn't have so in order to short anything, I would have to apply for a new margin account or upgrade my existing account.

I clicked the button to upgrade my account and was led to another page I had to fill out. The information they wanted included things like net worth, yearly income, and other things like that I didn't really want to divulge. In addition to that I had to agree to their terms and conditions for a margin account and wow, that was a LONG and complicated page of legalese.

When you short a stock you are borrowing money from the broker and that is the main reason why you have to agree to all sorts of things that might make you uncomfortable. The main thing you need to understand is that they can force you to get out of the position if you start losing money and don't have enough cash to back it up. The broker can sell your other stocks at any time and they can cover your short at their discretion because they don't want to lose money.

The best way to avoid anything like that from happening is to have more than enough cash in your account to cover any losses you might have if your short stock starts going up. In my case I will cover my short way before I lose more than I have in cash so I should be alright.

Once I applied for the upgrade to the margin account I was able to short the stock right away even before being approved. This might be because I have a long history with E*Trade and so it might not happen that way for you. A couple days later I also go the notification that my margin account upgrade was approved.

Who can open a margin account and what the requirements are I don't know exactly. Suffice it to say that the more money you have in your account and the longer you have been with your broker will undoubtedly increase your chances of getting one.

So, now I am in the strange position everyday that all people who short stocks are in that I want the market to go up so all my long positions will make money but I want my one particular short stock to go down. It is a funny feeling and can give you mixed emotions betting against a stock and it is definitely not something I will do much of. I also don't suggest shorting stocks for a beginner because there is just too much risk for beginners to really understand and they should be learning how to pick winning stocks anyway.

SANTA CLAUSE RALLY STARTS 12/1/2010? DOW UP 249

2010-12-01T13:06:00.000-08:00

Today is the first day of December and it started with a bang up 249! One might ask: Is this the start of a Santa Clause rally?

Interestingly the Santa Clause rally you may hear talked about this month refers to the week AFTER Christmas and includes the first 2 days in January. Now this is not the "official" definition because there isn't one. But most industry experts agree that it is the week after Christmas and not the whole month that is part of a Santa Clause rally if one takes place.

Most people automatically assume that a Santa Clause rally is for all of December because that makes the most sense. It has been speculated that stocks go up then because people are more optimistic around Christmas and in a stock buying mood. It has also be attributed to people getting money as Christmas presents and/or Christmas bonuses and being more apt to buy stocks rather with that money.

December has historically been one of the best months for the stock market but nothing is ever guaranteed of course. Todays rise of almost 250 points is a great start but things can change fast in this economic environment.

Remember that there is always trouble around the corner and this year we see high tension between North and South Korea as well as some uncertainty in Ireland. We also just have news that 2 million people are about to lose their unemployment benefits so December could be a rocky month for stocks despite today's big gain.

ARE INDIVIDUAL STOCKS INVESTORS "DUMB MONEY"?

2010-11-09T13:26:00.000-08:00

A writer in The Wall Street Journal yesterday called the money individual investors put in the stock market "dumb money". You can read the article here.

The article goes on to say that because earnings are up, optimism is up, and the economic numbers are improving that more and more regular people are putting their money back in the market.

The term "dumb money" in stocks is similar to the term "dead money" in poker tournaments. In a poker tournament, all contestants that are recreational players are thought to be buying in with dead money since they presumably have little to no chance of winning. Only the professionals put in the smart money because they have the best chance to win.

Dumb money in the stock market is similar in that it presumes that individual investors have no idea what they are doing and are incapable of analyzing stocks and making decisions based on fundamentals. It assumes people invest with their hearts because they like certain stocks but they lack any concrete data or reasons to pick those stocks. When individuals pick their own stocks and decide it is time to go back into the market, they are doing it with "dumb money".

Stock analysts and anyone in the industry have smart money because they presumably know what they are doing. It is their "job" to know what they are doing. I assume that if people put their money in mutual funds or any vehicle where a "professional" gets a commission it wouldn't be as dumb of them.

Wall Street has often been portrayed as a very exclusive "club" of young professionals who get paid millions and live the high life. Whenever there is a stock scandal of any kind, politicians spew on and on about how Wall Street needs to be regulated or controlled in some way. Wall Street is viewed as a haughty group by many and using the term "dumb money" doesn't help stop that perception.

Articles like this which propagate the myth that individual investors are dumb seems to me to be a dumb thing to print. Why insult people? Actually, why insult the very people that you are hoping will use your professional money management services? It sure doesn't make me want to run out and hire a financial expert to take my investing to the next level!

STOCK INVESTORS SHOULD BE PREPARED TO BE WRONG

2010-10-09T10:46:00.000-07:00

Am I the only one that buys stocks only to watch them go down the next couple of days? It seems that 90% of the stocks I buy go down right after I buy them. It's almost as if my buy order signals the stocks to go down! Now I am pretty sure that I must be experiencing selective memory but it does seem that way nevertheless.

If you are going to learn to invest your money in the stock market, one thing you have to be prepared for is that you will have losses. You will make bad stock picks and you will be wrong some of the time. It doesn't matter whether you are picking your own stocks or whether you are taking the advice of a professional, you will have stocks that are losers sooner or later.

The good investor will learn how to minimize those losses by getting out before too much damage is done but he also knows when to buy back in. The good investor will also be able to pick more winners than losers and learn how to negotiate the ups and downs of the market for a lifetime of smart investing.

One way you can lose money is by doing a lot of panic selling. Some investors hate to see their stocks go down and once it seems like that is the way a stock is going, they sell it. Selling isn't always bad of course, but if you are doing it all the time based purely on emotion because you are scared, you will find it very hard to make money in stocks. You should usually be buying and selling stocks based on a stock's fundamentals and the future you see that company having.

2008 was an awful year in stocks and a lot of people lost a lot of money. The same thing could be said right after 9/11 when the market went down fast because of fear and panic. Now, anyone who sold during those times when the market was plummeting did avoid further losses and that is good for some people. But if you kept your money in after 9/11 you got it all back several years later and a lot more.

The same thing will probably be said about the Dow going from 14,000 down to 7,000 in 2008: if you left all your money in you have gotten a lot of it back as of today and will most likely get all of it back, eventually. That is if you have the time to wait.

Panic selling and selling based on fear means that you are most likely afraid to buy back into the market. You are often paralyzed and your money will be out of the market too often. It is a fine line between being out of the market based on what you see happening with the economy or a stock and being out of the market just because you are scared.

When you invest in stocks, you have to be prepared to withstand some losses and be alright with the fact that your stocks may not go up the second you buy them. You also have to know that some of your picks will be bad ones. The good investor will be able to recognize the bad picks based on what is happening with the company or economy that turned the pick from a good one to a bad one.

IS IT TOO LATE TO BUY APPLE (AAPL)?

2010-09-21T15:35:00.001-07:00

Is now the time to buy Apple stock? Is it too late or should you buy some in anticipation of it going up more for Christmas? I bet thousands of stock investors are asking themselves that question right now and have been for months.

The time to buy AAPL in 2010 was about a month before the iPad came out on April 3rd. You can see in the chart below how the stock was going sideways until the beginning of March and from that point it went up fast. Some choppy waters during 4 months of uncertainty after that and then straight up again.

If you bought Apple stock before the iPad was released you were betting that it would be a hit. That is how people can make a lot of money in stocks very quickly: by being correct about things in the future. But if you bought AAPL before the iPad release and it was a bomb, you would have lost a lot of money so that is the risk.

Right now people are trying to figure out just how big the iPad is going to be. All the signs show that it will continue to be huge as Dell and other competitors are going to be coming out with their own tablets. Apple has also said that the 2nd generation of the iPad that will be released in 2011 will have a smaller screen.

The question is though, should you buy Apple stock here at it's all time high of 283? Or should you wait and hope to catch it at around 250? Will this Christmas be the Christmas of the iPad and see off the chart sales? If you wait to buy, it may never go down and continue straight up and you will never get in.

These are the questions stock market investors have to ask themselves all the time. Greed plays a big part in people's investing decisions and greed has probably played some part in Apple stock going as high as it has gone so fast. People just don't want to miss out and that means they keep bidding the stock higher!

An analyst at Kaufman Bros. has just come out with his new price target for AAPL of $374 which is almost $100 higher than where it closed today. This high number adds fuel to the fire and makes people want to get in now so they don't miss out. But at $283 there is a lot of room to fall and so the risk is there. If iPads don't sell as well as hoped this Christmas season, the stock may fall rather than go up.

So, it is your decision how much you have to have Apple stock. It is your decision whether you can risk missing out by waiting for it to go lower. And it is your decision whether you could stomach the loss you might have if something goes wrong and the stock stalls. Like all stocks in the market, every individual investor has to make up their own mind how much they are willing to risk and what to risk it on.

SUPPORT AND RESISTANCE AT 10,000 On 8/26/2010

2010-08-26T14:05:00.000-07:00

The Dow has been going up and down all year and August has been a bad month. Today it closed below 10,000 and if you look at the chart below, you will see we have gone nowhere in over 10 years now. The Dow Jones first closed above 10,000 on March 30, 1999 and here it is August 26, 2010 and we are right back at the same place! That is a long time to have gone nowhere.

Was there support at 10,000 and have we just broken below it? Will tomorrow and the weeks ahead mean the selling will accelerate because we have closed below 10,000? And what exactly is support and resistance in the stock market anyway? These are two terms that you might need a Stock Market For Dummies book to understand.

Support is a technical term that means there is a bottom price where there seems to be more demand than supply. In other words, once a stock (or the Dow) drops to a certain point, there seem to be enough people that rush in to buy because they feel that is a good price. This means that it is difficult for a stock to pass below support because people will usually buy it up. Once it does pass below support, that is a bad sign because it shows that there are few buyers willing to buy.

Resistance in the stock market is just the opposite of support. In the case of resistance, it is a price above which there are more sellers than buyers. If a stock goes up but has trouble passing a certain point, it is because that is the price that people are happy to sell at and take their gains. When a stock rises above resistance it is a very good thing because that demonstrates that demand for the stock is high and there is more demand than supply.

10,000 in the Dow is not a technical support or resistance level: it is just a number. However, it is a number that is special for psychological reasons because 10,000 sounds and looks so much better than anything in the 9,000's. People, whether they are aware of it or not, respond to these psychological stimuli and are more apt to attach importance to them.

The Dow closing below 10,000 on August 26th, 2010 may make people sit up a little more and wonder whether this signals more bad things to come. Or, they may think nothing of it and the market will go back up tomorrow. That is what is so fascinating about stocks: you never know how people are going to react to situations that come up on a daily basis and it is people willingness to part with their investment dollars that drives the stock market up and down.

HOW BAD ECONOMIC NEWS AFFECTS THE STOCK MARKET

2010-08-20T09:51:00.000-07:00

The stock market is greatly influenced by the general economy and I have always stated that on this blog.

Following up on my last post about is this summer rally real?, we are now seeing that August hasn't been a good month for stocks. I am writing this on 8/20/2010 and as of mid morning the Dow Jones chart for August looks like this:

As you can see, August has seen the Dow go from a high of a little over 10,700 down to just under 10,200. That's around a drop of 5% and bad news is now starting to come out about the economy more regularly.

Just today there was this MSNBC article about more an increasing number of people are having to take hardship money out of their 401K's. That money comes with a 10% penalty and taxes have to be paid on it so anyone that does this REALLY needs the money and is desperate. This is a big indication of just how bad it is out there and how many people are in big trouble financially.

Also just yesterday, the market went down because of a bad jobs report. More jobs were lost in July then economists had predicted and companies look to be pulling back their hiring. I have talked about how I think we are in for bad times ahead as I think all the debt and foolish stimulus bill shenanigans are starting to catch up with us. I think the real unemployment numbers are MUCH HIGHER than the "official numbers" and I think things are going to get worse.

Now, the stock market CAN go up in troubled times but that is rare. The politicians can spin all day long about how things are about to get better or things are really not as bad as they seem but I don't believe them. I THINK THINGS ARE MUCH WORSE THAN THEY SEEM and we are going to be seeing that soon.

It the bad economy news stories continue to come out day after day and week after week, it is going to seriously stop average people from wanting to buy stocks. That will make the market go down and that is where I think it is headed. Reality sooner or later has to catch up with us and the stock market is going to act accordingly which means it is going to go down.

Let's hope I'm wrong but that is the way I see it.

IS THIS SUMMER 2010 RALLY REAL?

2010-07-28T15:10:00.000-07:00

We have had a bit of a summer rally and July has been a good month for stocks. Profits have been good for many companies that announced this 2nd quarter earnings season and so the market has responded accordingly. But will this upward momentum be able to be sustained? Is this summer rally going to continue or die?

The fact is that the economy has not gotten any better. The unemployment rate is still around 9.5% and people are out of work in all demographics. Both personal debt and the countries debt is higher than ever and President Obama keeps throwing money he doesn't have at every problem that crops up. How long can this last and not have an effect on stocks?

The world's economy isn't doing much better as we have seen problems in Greece and elsewhere. Remember, any bad news from other countries now has an immediate affect on our US markets as this is truly a world economy. Our US companies do business everywhere and if something bad happens overseas, our market will go down as well.

The November elections are also right around the corner and there is going to be a lot of media coverage everywhere about that. People are upset and Obama's policies and the economy is going to get a lot of scrutiny which will expose some of the realities that people might have momentarily forgotten. I don't think any of this is going to be good for the stock market and for bolstering people's confidence in a continued rally.

All this adds up to my belief that this summer stock rally of 2010 could be about to be over. This Stock Market For Dummies blog believes we might be in for some tough times ahead and cash might be a good place to be. The stock market may have a little more upside to it but I think we will soon see a lot of ups and downs with perhaps more down days in the immediate future.

THE CLOSING PRICE AND AFTER HOURS PRICE: WHAT IS THE DIFFERENCE?

2010-06-01T01:00:00.000-07:00

One of the things that might be confusing about the stock market for dummies is the closing price for stocks and the after hours price.

The closing price you see in the newspapers is the 4:00 PM price of the stock which is when the market officially closes. However, there is some after hours activity that normal investors like you and I don't get involved in. Usually this activity is not very important to the price of the stock unless some big earnings announcement is made or some big important news story happens after 4:00 PM.

The New York stock exchange, with the proliferation of news and people's access to it, has become a more global entity in recent years. The Internet and ease of making trades from anywhere in the world has contributed to this. Information of all sorts is available all the time to anyone who wants it and this means some changes were made in the after hours of the stock exchange. This means that there is now after hours activity and things going on behind the scenes that "normal" investors can't get involved with unless they know how.

If you have a stock that closes at 100 and then announces great earnings, you will see the price go up on all the tickers online and maybe on television. The next morning, even though the stock closed at 100 the day before, it may open much higher and you will have to buy it at that higher number. The same goes for bad news being announced as stocks can go down in after hours too.

By looking to see if there is any activity in a stock after the market closes, one can usually determine whether anything important has happened to the stock since the close. If you see the price of a stock being quoted higher or lower in after hours by a significant amount, it can often mean they announced great earnings or made some other important announcement like a merger or new product.

The after hours price of a stock is not something you should get too caught up in or worry about in my opinion. After all, you should be buying stocks as an investment and if a small movement in a stock's price after hours is going to influence your decision, then maybe you should find a stock where you expect bigger gains.

STOCKS GO UP, DOWN, UP, DOWN

2010-05-04T15:42:00.000-07:00

Things seem to have stalled here lately in the stock market and we are seeing it go up one day and then right back down the next. You can see what I mean by looking at the 1 month chart of the Dow below:

There are many reasons for this up and down movement but what it probably signals the most is that investors are getting a little nervous. The market has moved up very steadily for about a year now all the way from it's low last year of just under 7,000 to over 11,200 a day or two ago. When the stock market continually goes up and back down for a period of time like it has it can mean that the steam has run out of the rally and investors are really torn at what to do. When people are selling one day, buying the next, and then selling the day after, it can mean there is a lot of confused people out there and a lot of differing opinions.

You can read Jim Jubak's opinion of the matter where he likens it from the mood changing from a half full glass outlook to a glass half empty outlook. Stocks just don't keep going up forever and there is always something around the corner that can stall momentum. The financial shenanigans in Greece seem to have helped make investors very nervous in a market that was already very high.

Why do stocks go up one day and down the next? Well, as I have written about before, the market moves on people's perceptions of what is happening and what they think will happen. It is all about whether people see positive or negative things in the future and right now it looks like there is possibly more negative than positive out there.

The Obama administration has this country in more debt than most people realize and that could become very troublesome down the line. If foreign investors start pulling out of America and don't buy up our ever increasing debt, where will that leave us? No stock market can withstand something like that.

This Stock Market For Dummies blog wonders whether it might be time to start selling a stock or two just in case? Maybe it is time to move some money out of stocks and put it into something safer for a while? The problem is that once you sell and get out it is very difficult to figure out when to buy back in again. However, maybe some safety is a good direction to go right now?

INVESTING FOR DUMMIES - AN OVERVIEW

2010-03-09T11:16:00.001-08:00

The stock market is just one of many places where you can invest your money. Other investment options people commonly use are bonds, savings accounts, money market accounts, treasury bills, gold, silver, and I am sure there are many more. Every one of those investment vehicles has a different level of risk and which one(s) you use should depend on your individual situation and goals.

Investing in the stock market over the long term has, for many years, been recommended by experts as the place you can get the greatest return. Take note that this is over the long term only as it is agreed that stocks can be very risky if you have a short investment time horizon. We have all seen first hand evidence of this as the market started going down steeply in 2007 and didn't rebound until the beginning of 2009. Many people lost a lot of money during that time and many lives were changed for the worse.

Here in 2010, if you want to invest your money safely with little risk you will not be able to make much more than 1%. Interest rates are very low and they pretty much have nowhere to go but up from here. However, there is no indication when things will begin to change as there is financial turmoil across the country. It is likely that interest rates will remain low all this year.

Bank certificate of deposites (CD's) and treasury bills are the two most common ways to invest the money you have sitting around that you want to earn interest on. Savings accounts and money market accounts also pay interest buy usually a lower percentage. You can also buy bonds and sometimes do better with those.

Gold and silver have done very well in the last dozen years or so. People buy these metals for different reasons: some buy them as investments and others buy them as a form of insurance. Both gold and silver are thought to be hedges against uncertainty and thus a form of insurance during difficult times such as we are having now. People who buy them with insurance in mind do not care too much whether they go up in value and are hoping they can just retain their value. Gold and silver have never gone to zero in value and most likely never will.

Other people like to buy these metals for investments in hopes that they will keep going up in value. Anyone who has invested in either silver or gold in the last 5 years have done very well as they are both near their historical highs.

The stock market is the place where most people invest their money with the hopes of making the most in return. The stock market has historically outperformed all other forms of investments when looked at on a long term chart. However, you should never invest money in stocks that you know you will need soon.

You can make money in the stock market by buying stocks of individual companies yourself through a stock broker or you can buy baskets of stocks known as funds that are managed by a professional. Choosing which stocks to buy and then figuring out when to sell them is something that can take a lifetime to master. For this reason, many people favor and recommend you buy funds so that someone who is qualified can make the decisions. There is a fee for most funds though, and that is another expense that you have take into account.

You will owe taxes on any money you make from any of your investments. Whether you make interest income, dividend income, or profit from the sale of stocks you will owe taxes on that money to the United States government. If you make in the thousands of dollars this may require you to send in money on a quarterly basis otherwise you will incur late charges that can be quite steep. The US governement (and all governments) always want their share of any money you make.

If you feel you are in the "investing for dummies" category, note that learning how to manage money is not something that is learned overnight. It takes time to learn what all your options are and what risks you feel comfortable taking. It is important that you take only the amount of risk that allows you to sleep well at night. Your money is hard earned and if you don't feel comfortable taking risks to try to get bigger returns, that is OK. Investing is a personal issue and there is no formula that is right for everyone.

ARE PENNY STOCKS FOR DUMMIES?

2010-02-09T09:41:00.000-08:00

8/11/2010 Update: While I think penny stocks are risky, they continue to be of interest to many investors. I have found this Penny Stocks VIP newsletter that is 100% FREE to sign up for. All you have to do is enter your email and then click on the "confirm email" link when they email you. You will then be set up to receive their free VIP newsletter.

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For years, people have been fascinated with penny stocks and the idea of making money by investing in them. One reason is that because they are so low in price, anyone can afford them. But are penny stocks a real investment opportunity you should be looking at or is it one you should never get involved with?

There are many definitions of what constitutes a penny stock. Some people consider every stock that is under $3.00 to be one while others make the cutoff at $1.00. No matter what you deem to be a "penny stock" the important thing is that it costs very little for a reason.

Some people believe that all stocks start out as penny stocks and grow from there. They might get this ideas because of the stats on some stocks which include all the different times a stock has split. Big stocks like Microsoft may have split so many times that after that has been factored in, it looks like the stock was originally offered for just pennies or a few dollars. Seasoned investors know, however, that Microsft and other high fliers like it were never offered for such low prices and the opening cost was much higher. The adjusted stock price is something you should understand before you make incorrect conclusions.

There are several things that make penny stocks much riskier than other higher priced stocks. One of the things is that in most cases, stocks that only cost pennies or a dollar or two are that way for a reason. When you get down to such low valuations, there is usually a reason why they don't cost more and that reason is never a good one. This makes most penny stocks very risky to buy but they continue to get interest from beginners and certain sectors of the market because of the "potential" upside.

Something that is the case with many penny stocks is a lack of history and information. They are often listed on "pink sheets" and anything there is not required to file with the SEC. This means you will be buying penny stocks without the usual scrutinization and regulation that is associated with regular stocks on the NYSE and Nasdaq. Of course even with regulation, things can go very wrong with any stock you buy as evidenced in recent years by stocks such as Enron that have gone bankrupt and lost investors millions. However, buying penny stocks can mean taking an unnecessary risk on something you know very little about. That is truly the stock market for dummies you might say.

Another problem with buying penny stocks for beginners is that with any stock priced so low, there is a lack of liquidity. This means that you may have trouble selling your stock because there are not enough buyers. Penny stocks are something that you should really understand before you get into them and you should only do it with money you have to lose. Too often, young investors who don't have much money choose to take shots at penny stocks just because they are cheap and they hope to find the next Dell or Google and end up losing their money.

STOCK INVESTING IN 2010 - GREEN LIGHT AHEAD?

2009-12-28T08:59:00.000-08:00

This is the last post of 2009 for this stock market for dummies blog and we have seen a very good year for anyone who bought stock this year. After a horrendous 2008, the market bounced back to settle in at over 10,000 once again. Will there be more good things to come next year?

As the job situation and economy is really not much better than it was a year ago, one has to wonder whether stocks have gotten ahead of themselves a bit. When and if people start to realize they are paying higher taxes, the unemployment rate is still around 10%, and the prospects for a quick turn around under Obama isn't happening, it seems the stock market may slow down and even turn back around.

Having gone up so much in 2009, it might be a good thing to become a cautious investor in 2010 just to be safe. The stock market moves on perception and if the public perception of our economy turns real negative again, the stock market will head right back down. Obama healthcare and all the other taxpayers money he has used for bailouts and pet projects cannot be making the situation any better.

The Christmas sales numbers aren't out yet but I have a feeling they will be average at best. Will be see another rash of companies declaring bankruptcy after those numbers come out like we have seen in years past? Christmas is such a big percentage of the retailer's year that a bad Christmas is enough to send many of them into bankurptcy in this economy.

The stock market gave a lot back last year of what it took the last two years but that doesn't mean the same will happen in 2010. You have to be smart with your money and not have too much of it in any one place. Those that have all their money in stocks are gambling to an extent and for them it truly is the stock market for dummies.

STOCK PICKING FOR DUMMIES (AND SMART PEOPLE TOO!)

2009-08-06T08:52:00.000-07:00

Picking the right stocks is a challenge for any level of investor. It is almost made more difficult by the abundance of "professional analysts" that freely give their opinions on radio, television, the Internet, and magazine. Anywhere you look, you can find free stock tips and suggestions which make the stock market for dummies a difficult place to navigate.

So, where does one go for stock picks they can trust? There are two places and they are both free. The first is Morningstar and you can sign up for a free membership or a free 14 day trial to their premium membership. Obviously, you will be getting more with the Premium membership, but you don't have to sign up for that and can go with just the totally free one if you like. Either way, you will be getting stock news, stock analysis, and stock picks all for free.

Morningstar has been around since 1984 and they have put together one of the most comprehensive stock market sites on the Internet. They have more than 6 million registered users and they are often ranked with the best investing sites on the web. I like them because they have Pat Dorsey who makes stock recommendations that are always conservative in nature. He makes suggestions and analysis that I know has been well thought out and can be trusted based on his past record.

The second stock picking for dummies resource is Jubak Picks. Jim Jubak has just gone out on his own after writing for 12 years for MSN Money and his new site is much of the same but just more of it. He is another conservative stock picker who has consistently beaten the market year after year and his site is totally free. All his buys and sell are well explained for investors of any level and his picks are documented for anyone to see.

Learning the stock market is hard, especially if you have little time to keep up with the market and individual stocks. These two investment websites will at least give you a starting point and some interesting stock tips to learn. There are so many stocks out there that one has to have some sort of sifter that identifies companies that might be worth a look. The fact that both of these sites are free makes them that much better.

HOW TO FIND GOOD STOCKS TO BUY FOR DUMMIES

2009-01-11T20:00:00.000-08:00

One of the most difficult things any stock market dummy or veteran has to do is to find good stocks to buy. Figuring out how to buy stocks for beginners is relatively easy and something you only have to learn once. Figuring out what stocks to buy, on the other hand, is a decision that has to be made over and over for the rest of your life.

There is no shortage of opinions on TV business shows and magazines from the stock gurus. Jim Cramer and his type on TV always have a list of stocks they say you should buy. In my experience, their choices are no better than the ones I can make myself by throwing a dart at a dart board. For instance, how many stock gurus warned us to pull all our money out of stocks when the Dow was in the 14,000's? Some experts might have been cautious but no one saw anything as bad as what really happened.

So, where can you find trusted opinions of what stocks to buy? One good choice seems to be Morningstar. Morningstar is one of the most respected names in independent investment research and opinion, as well as the recognized leader in stock and mutual fund analysis. Their mission is to create great investing products to help people reach their financial goals.

Consistently ranked among the best investment sites on the web, Morningstar offers a wide range of online portfolio management tools, financial data, unbiased stock and fund analysis, video commentary, and more.

There is one reason above all others that I like Morningstar. Pat Dorsey is a stock analyst who both writes and does video analysis of the stocks he deems worth investing in. As a conservative investor, I like to listen to those experts who are not afraid to say they do not like a stock's potential and that they recommend not investing in it. Pat Dorsey is someone who often says "no" to a stock and many of his picks are conservative in nature. By contrast, many of his colleagues seem to be positive about almost everything which really provides no value to any stock market beginner trying to come up with some good stock picks.

Morningstar and Pat Dorsey is one source that should be considered when putting together a list of best stocks to buy right now. Their website is comprehensive and will provide good value to both stock market beginners and stock market veterans alike. Of course, when you are trying to find stocks to buy you should do as much research on your own as possible and get several opinions as well.

HOW TO CHOOSE A DISCOUNT STOCK BROKER

2008-12-13T13:40:00.000-08:00

One of the things that is very confusing for stock market beginners is how to choose an online discount stock broker. If you go to Google and search for them, there are dozens that come up. If you watch the television business news, you will see many of them advertise. How can you possibly know which one is right for you?

There are subtle differences between these discount stock brokers but for the beginner, most of these differences are not important. It is unlikely that you will ever need some of the services and differences that they offer, at least not for a while. Stock market beginners need to keep things simple which means finding an online broker that has a good, clean, easy to understand and navigate website as well as competitive prices.

You will be protected equally by law no matter which online stock broker you choose. Your accounts will be guaranteed up to $250,000.00 (just up from $100,000.00) and everything else that is basic will be virtually the same. You may find differences in prices as some offer trades as low as $4.95 while others may charge $9.95 or $12.95. Just because one online stock broker is cheaper doesn't mean it is any less reputable than another that charges more.

One thing to look out for is hidden fees. Stock market dummies as well as seasoned traders always need to read the fine print. Hidden fees and miscellaneous charges are tactics used by some of the discount stock brokers to raise their bottom line. Other differences may include things like being able to write checks from your account, short trading, and free trades if your order is not executed within a certain time period.

A big difference between each online discount stock broker is the website layout. Each company will of course use it's own software and some are more easy to understand and navigate than others. For instance, I love the E*Trade website as it is so easy to find your way around and find the information you need. The H&R Block website, on the other hand, seems archaic compared to E*Trade's and I always get irritated when I go on it as it will not allow me to easily find certain things. Unfortunately, you may not be able to fully test the website of a prospective stock broker before you open an account.

There is no right or wrong way of how to choose a discount stock broker. If you are a stock market beginner you will probably want to start with one of the better known ones who fall on this list:

TD Ameritrade
E*Trade
Scottrade
Charles Schwab
Zecco
First Trade
T. Rowe Price
ShareBuilder
Options Xpress

A BEGINNERS GUIDE TO STOCK DIVIDENDS

2008-12-12T17:11:00.000-08:00

What are stock dividends? In this time of market crisis and uncertainty in 2008 – 2009, many stock experts are suggesting buying stocks with dividends and holding them until there is a recovery. One of the reasons for this is because it is difficult to find an alternative such as a high yield certificate of deposit. At least with a stock that pays a dividend, you are getting a small return with the hope that the stock will go up when things get better.

Not all stocks pay a dividend and most that do are under 1%. With some careful research though, you can find stocks that pay a higher dividend. What the stock gurus are saying is that you might find stocks that pay a reasonable dividend and buy those instead of stocks without dividends.

A company stock may pay a dividend for many reasons but the most common one is that they want to return something to their investors. Some companies, like Microsoft, may have a lot of cash and decide to give some of it to their investors in the form of a dividend. Other companies might need all their cash for research and development and not pay a dividend. Tech stocks are notorious for not paying out dividends.

No stock dividend is guaranteed safe. Any time a company gets in trouble, the first place they go the cut costs is their dividend if they have one. Therefore, even if you find a stock with a great paying dividend, you cannot buy that stock and be able to count on it. Especially now in these troubled times, stock dividends are in trouble across the board.

Some dividends are safer than others because of the financial position of the company. If a company is doing well, the dividend is probably safe and will not be reduced. Companies like to have a record of increasing their stock dividends but this is not always possible, especially in dire times like these. The stock market for beginners is now a rough place to get started but buying stocks with dividends is a good place to start. You need to do the research and find out what companies are doing all right and pay a nice healthy dividend. If you buy this type of stock, even if it goes down the dividend minimizes the losses.

CAPITAL GAINS TAX IS GOING UP WITH BARACK OBAMA

2008-11-05T14:27:00.000-08:00

Stock Market beginners may wonder what capital gains taxes are and why Barack Obama is going to raise them. First of all, capital gains taxes are those that must be paid on any stock you sell for a profit. If you buy a stock and are fortunate to sell it at a later date for more than you bought it, you will have to pay capital gains taxes.

Capital gains taxes are at a different rate (usually higher) than other taxes because politicians in Washington can get away with it. Politicians on both sides want your money and they will tax you on anything they can. Unfortunately, not that many people own stocks or have enough money to own stocks and that is why there is no outcry from the common man about capital gains taxes. If everyone owned stocks and had to pay that tax when they made money, it would be much harder for sneaky and dishonest politicians to raise the capital gains tax.

Barack Obama has made it very clear that he will raise capital gains taxes. Like every Democrat, he wants your money and he has no sympathy for anyone who works hard and has money to invest. His belief is that if you have money to buy stocks with, you must have too much money. Barack Obama is going to raise taxes on capital gains and then in the next sentence will tell you that your taxes are not going up.

Barack Obama and all politicians are liars. He has said that he will not raise taxes on anyone who makes over $150,000.00 per year and yet he has made it clear that he will raise capital gains taxes. He hopes that you are not listening carefully and are a stock market dummy and too stupid to understand that by raising the capital gains tax, he is raising EVERYONES tax who owns stock. Everyone in America who owns stock and now pay more tax than before Barak Obama was elected. Geez, we are not all stupid dummies you know, Barack.

HOW TO BUY AND SELL STOCKS FOR BEGINNERS

2008-10-23T06:57:00.000-07:00

If you want to learn how to buy and sell stocks for beginners, there is a lot to learn. Actually, the buying and selling part is not to hard but deciding what to buy and when to sell it is the hard part.

Buying and selling stocks for dummies is sort of like gambling. In fact, many people have lost way more in the stock market than they have at the Blackjack table. With this stock market sell off and panic of 2008, people have lost trillions of dollars combined. Retirement accounts and savings have nearly been cut in half in some cases. The baby boomers are in big trouble right now because they are all set to retire soon and now many of them are facing a situation where they may not be able to retire. It is very sad, really.

I mentioned this because learning how to buy stocks and sell stocks for beginners is not a guarantee that you will make money. You must understand that before you learn how to invest your money in the stock market. In fact, you should never have money in stocks that you cannot afford to lose. If you are saving money to buy a house, you might be inclined to invest it in stocks in hopes that it will go up faster. But it can go down fast too as we have just seen these last two months and so that kind of money should NOT be in stocks.

If you have money you know you will need soon, you should put it in a bank CD or government T-bills. That way you know the money will be there when you need it. Yes, the interest on that money may not be much right now but it is guaranteed. And guaranteed is a good thing because no investment in stocks is ever guaranteed. If you were to invest your money that you need in stocks and they were to go down, you might feel like a dummy. Be smart and put the money you absolutely need in safe investment vehicles where you cannot lose it.

So, this all comes back to how to buy and sell stocks for beginners. It is not hard as all you need is an online stock account with any of the brokers. You can see their ads all over the Internet so pick one as there is really no big difference. They will all say they are the best and maybe some are a little better in some ways than others but they pretty much all offer the same things. You can go with one of the cheapest online trading sites or a slightly more expensive one. Eitehr way, your money will be guaranteed with each of them up to $250,000 (this is in case the broker you choose goes bankrupt and not the stocks you choose to buy through them). Each of them have different online software so the main difference would be there: how easy their site is to navigate and understand.

Once you sign up to your online broker you need to send them money. Usually this is done by a paper check. Send them your money by writing a check and when they receive it you will see it in your account and you are ready to go. You can then buy any stock you want when the market is open by pushing a few buttons.

Likewise, you can sell any stock while the market is open with a push of a few computer buttons as well. Technically, it is very easy to learn how to buy stocks for beginners or anyone online. The hard part is learning how to choose what stocks you want to buy and then deciding when to sell them. It may take years or maybe even a lifetime to understand the fundamentals of stocks and how to choose the best stocks for your goals. Good luck!

WHERE DO YOU GET A FREE REAL TIME DESKTOP STOCK TICKER?

2008-10-22T13:13:00.000-07:00

All the business TV's shows have a stock ticker but it is always 20 minutes delayed. If you go online to MSN, AOL, or any other popular service the stock quotes and stock ticker are also delayed. Even if you sign up and open an account with a major broker, the quotes you get online are 20 minutes delayed.

Where do you find a downloadable application that will put a real time free desktop stock ticker on your computer? Stock tickers are very cool looking and to have one on your computer desktop would be very handy, especially now with the stock market being so volitile. There can be 100 to 200 point swings in just minutes and stocks go up and down like yo-yo's. Being able to get real time quotes is very important right now and without them you feel more and more like a stock market dummy than ever before.

With all the major brockerage account services you have to sign up, deposit money, and then make a special request to get real time quotes. It is a pain to have to do all that but real time quotes are a necessity in panic market. Having a free real time stock ticker on your desktop would make things a whole lot easier. In order for it to work you would have to, of course, be constantly connected to the Internet but most computers are now days.

If you look online for a free real time desktop stock ticker all you can find is something like the picture below. Not only is that not real time but it is not really a ticker. I am talking about a stock ticker like you see on TV that goes across the screen in real time. This kind of ticker is always up to date and gives you stock quotes that are accurate to the second. There is almost anything imaginable on the Internet and I find it hard to believe that one can't find such a free stock ticker for thier desktop. If you know where to find one, please leave a comment and let us know where it can be found.

WHAT IS YOUR INVESTMENT RISK TOLERANCE IN STOCKS?

2008-10-12T12:33:00.000-07:00

Before you run out and buy stock in this bear market, you had better know what your risk tolerance is. There are a lot of stock market beginners that are now suddenly interested in the stock market due to this panic sell off and it being in the news everyday. This has prompted many people who have never invested in stocks to suddenly be interested in how to buy stocks.

What is risk tolerance for dummies and how does it pertain to you? When you buy a stock you need to know why you are buying the stock, what you are hoping it will do, and just how low you are willing to let it go before you decide to sell. Now, of course, everyone hopes the stocks they buy will go up and they will never be faced with the grim decision of when to sell a loser. But in this market right now, most of us are faced with steep losses.

Risk tolerance is your ability to stand pain: in this case financial pain. Every one of us invests for different reasons and with a different time horizon. For instance, if you are in your 20's you have a lot longer time horizon to ride a bad market out than someone in their 70's. In fact, someone in their 70's might not want to be invested in stocks at all because they will not be working and may need the money any day or year.

Additionally, not every one has the same inner strength and the ability to take financial losses. Some of us have a very low risk tolerance meaning if their stocks go down they lose sleep, worry a lot, and let it affect their every day life. If this sounds like it may be you, then you as a stock market beginner needs to know that when you buy stocks, you can lose everything. It may be hard for you to see your hard earned money become much less while you sit and watch. In this panic market right now especially, this is a very probable result at least in the short term.

On the other hand, if you feel you have a strong stomach and can take the day to day ups and downs of this volitile market, then perhaps you have a higher risk tolerance. It is important to note for any stock market beginner or dummy that it might seem easier said than done to sit and watch your money go down. If you have never invested before and are wanting only now to learn how to buy stock and invest because of what you see going on, you might think you have a high risk tolerance but when you actually do it you might find otherwise. Sitting on the sidelines it is easy to say you have a strong stomach for losses but when you actually buy stock you might find it is not as easy to watch your stock investments go down.

WHAT STOCKS TO BUY WHEN THE MARKET IS LOW

2008-10-09T19:48:00.000-07:00

The stock market is going up and down now like a yo-yo on an hourly basis. Right now is not the time to buy stocks as everything is just too uncertain. The way things are right now, the market can easily go up or down 500 or more points any day and that is just too risky to be buying stocks.

Around October 23rd is when the financial and insurance companies are going to know for sure how much of the Lehman brothers 400 billion they are individually going to be responsible for. At that time, there will be a little more certainty and a rally might be in sight. The market often rallies at the end of October as well so that looks like the time with the best chance to get a rally.

What stocks do you buy if a rally occurs and do you hold them long or short term? Unfortunately, if we get a 20% or so bounce there are going to be a lot of sellers as there are many people right now that would gladly sell many of their stocks right now for 20% more than they are worth. So short term might be the way to go.

But as for what stocks to buy when the market is low is anybody's call. Maybe you should look at some of the stock picker ads and find out what the experts are saying. Whatever they say, they could be wrong or they could be right.

HOW TO FIND HOT STOCKS FOR DUMMIES

2008-10-01T07:10:00.000-07:00

How do you find hot stocks? Or do you even try? The problem with the stock market is that everyone has an opinion. There are several channels on cable TV now that are devoted just to business and they continually have segments on where they interview analysts. These stock analysts always have their hot stock picks, tips, and market predictions and they can sound so very convincing. Stock market beginners will easily get sucked in with all this positivity.

Many times when you watch FOX Business or MS NBC, the stock gurus are asked about a list of stocks. It seems that very rarely do these "experts" say that you should sell a stock or not buy it. If you listen to these guys on a daily basis you will get the impression that the stock market is always just about ready to soar. Of course there are exceptions and not every analyst is that way but in my opinion most of them are usually positive in their stock market predictions.

Why are these stock experts, hedge fund managers, and guest hosts always so positive about stocks and the stock market? It is like they are pitchmen for the Dow and NASDAQ and trying to sell a product. In their case the product is the stock market and they want you to get involved and start buying stocks. If they can continually paint stocks in a positive light then there will be more business for them from all the stock market dummies.

If you are a beginner and want to learn how to buy stocks and how the stock market works, perhaps it is best not to listen to these financial shows that tout theirs stock tips of the day and hot stocks ready to soar. If you listen to these stock gurus all the time, you may get the idea that it is easy to make money in stocks. If you pick the right stocks and have good market timing it is, but not many can do that and especially someone who is in the stock market for beginners.

HOW TO BUY STOCKS FOR BEGINNERS AND DUMMIES

2008-09-29T09:58:00.001-07:00

6/22/11 Update: If you want to learn how to buy stocks and have fun doing it then I recommend the FREE online fantasy stock trading game called Wall Street Survivor. This is a great free simulator where you can even win weekly and monthly prizes. This is a wonderful website where you are given $100,000 in virtual money and can learn how to buy and sell stock and manage your own portfolio just like you would in real life. Please see my review of Wall Street Survivor.

________________________________________

There is no "best" online discount stock broker or right or wrong way of choosing one. Stock market beginners should probably start with one of the better known ones who fall on this list:

TD Ameritrade
E*Trade
Scottrade
Charles Schwab
Zecco
First Trade
T. Rowe Price
ShareBuilder
Options Xpress

The stock market is way down and you don't know a thing about the stock market. You know that it is better to buy stocks when they are low because you have heard the saying "buy low and sell high". You think this might be a good time to learn how to invest in the stock market and how to buy stocks. Does this sound like it might be you?

If you want to learn to invest in the stock market for beginners now might be a good time. But then again, if you only want to make a quick buck, you might think again. I know many stock market beginners are thinking to themselves that this might be a great time to make some extra cash even though they don't know anything about the stock market. New investors want to take advantage of a bad situation, learn how to buy stocks, and make a quick buck.

Unfortunately they don't know how to do it. Beginners don't know how to open a stock market account and then have money transfered to it. Stock market beginners don't know how to buy and sell stocks or what the symbols mean or any of the stock market terms. They have no idea of the tax consequences of buying and selling stocks and have no idea what any of it all means. Beginners just know that the stock market is way down and they want to try to profit from it.

If this sounds like you then you must tread carefully. The stock market is there for investing and not to make a quick buck so if you don't know what you are doing, you probably won't make any money. In fact, you might lose a lot of money instead! If you do really want to know how to buy stocks online for beginners you need to open an account with one of the online brokers and then buy some stock. You can find some good deals for online brokerages but you have to know where to look. Good sign up bonuses and new account brokerage deals are there but you also have to understand what they are offering and what the rules are. The stock market for beginners is a tough place so if you are just trying to make a quick buck you had better beware or you might end up losing money instead!

HOW TO HANDLE BIG STOCK MARKET LOSSES

2008-09-29T08:53:00.000-07:00

Right now, anyone who is in the stock market might be sitting on some big losses. In fact. probably almost everyone who owns individual stocks or is in mutual funds has huge losses right now in 2008. This is a big barrier for stock market beginners and dummies and it makes them wonder whether the stock market is worth learning. If you have all your money in an IRA then you will have the same big losses but at least you wont have to mess around with your taxes yet.
There is a $3000 maximum loss that you can declare every year on your taxes for stocks. $3000 is hardly anything in today's economy and so most people are going to have to carry over their losses for many years to come. What a pain in the ass....thanks, you slimey polititions in Washington.

Everyday lately I sign on to my computer to see how much I lost that day. It used to be how much I made, then it went to maybe I made money or maybe I lost, and now it is always how much I lost everyday in stocks. Huge stock market losses are enough to make people sick and it is hard to put everything into perspective.

How do you deal with losing a months pay in one day in the stock market? Depending how much money you have in the stock market, there may be days where you lose way more than a day's pay. Everyone is always trying to find the hot stock and there are always stock market gurus and analysts who will sell you their "hot stocks of the day". When the market is down big like it is now though, there aren't a whole lot of super hot stocks. Everyone is losing money.

In order to deal with huge losses in stocks, one really has to learn how to compartmentalize things. The stock market is the stock market, work is work, your family is your family, life is life, etc. They are not related. Also a little recession humor goes a long way to with helping out your disposition. If you are properly diversified then these big stock market losses will not effect you as much. Everyone needs to learn how to diversify, especially stock market beginners.

IS NOW A GOOD TIME TO GET INTO THE STOCK MARKET?

2008-09-25T10:16:00.000-07:00

If you are asking the question "is now the time to buy stocks" then you might also be asking "is now the time to buy real estate". Look how much both the stock market and real estate market has gone down just in the last 3 months. If you have cash right now, you are in a great position to profit.

The reason (well one of the reasons) we are in this mess in the first place is that so many people are in debt. People have been living a lie and living well above their means. Just because someone is living in a million dollar house does not mean that they have money or are rich. They could be deep in debt and on the verge of bankruptcy and you would never know it. People have been buying houses that they cannot afford and assuming that their value would go up. As long as the value of their house continued to go up they were fine because they could alway refinance.
Are you someone who is in debt? If you are then you are in trouble right now because you are not going to be able to acquire more debt to pay off your old debt. Some people keep on getting new credit cards to pay off the old credit card bills and continue to go into more and more debt. If that sounds like you then I am afraid you are part of the problem.

What if you lose or have lost your job? Many people are losing their jobs right now because of this mess and they are already in debt or have little savings. What are they going to do now with no job. With no job they can't afford to pay their mortgage and might lose their house. Since house values have gone down they don't really want to sell because they will have a "loss" from what they could have gotten a year or two ago. Maybe there will be no one willing to buy the house anyway. If they can't or don't want to sell their house to downsize and they can't get new credit to pay the mortgage, what are they going to do?

What does all this have to do with the stock market you ask? Nothing other than most people who have no savings or are in debt will not be able to take advantage of the beaten down stock market and profit from it when it explodes back up. Maybe the stock market will never "explode" but you can be sure that sometime it will start to go up again. It doesn't matter whether you are a seasoned stock proffessional or a stock market dummy or beginner, one thing is for sure, if you have no cash then you can't invest and play the game.

Is right now a good time to get into the stock market? Maybe or maybe not. Today might or might not be the bottom of the market and of course no one can see the future. One thing is for sure and that is that it is a better time to invest now than it was 3 months ago. It is always better to buy stocks when they are low than when they are high as they have more room for growth.

Right now there is a lot of fear and panic in the market. People are scared to buy stock and they are selling and over selling stocks. The stock market for beginners is a scary place and many people are scared into selling. If you can find stocks that are oversold then now is a great time to buy stock. There is no guarantee any stock will not go down further but it has to be getting somewhere near the bottom.

This type of housing and stock crises does not happen everyday. Many people will lose and have already lost fortunes. But these kinds of dark times are not bad for everyone. It is in times like these that you can find great buying opportunities and make a killing. If you have the nerve to do the opposite of what everyone else is doing, in this case buy when they are selling, at some point you will start to profit. The trick is trying to determine when the bottom is near. Most people live their life looking back and saying "what if I only knew". It will happen in this 2008 market meltdown as well. At some point stocks will rise again and if you are not on board you will be left looking back and saying "what if".

This does not mean that every stock will be a good buy. Another reason we are in this mess is that companies are going bankrupt. Companies that go bankrupt or are on the verge of going bankrupt are not "good buys". The trick is finding good stocks that are too low because they have been oversold because of the stock market panic. Stocks for beginners are going to be hardpressed to choose the right ones.

It is best in times like these to find someone who knows what they are doing and is a good conservative investor. You need to find someone to bounce stock ideas off of and someone who knows the stock market environment. One of these people might be Jim Cramer and you can get a free two week sign up for his newsletter that will give you all his stock picks before he actually makes the trades. Will he guarantee every stock he picks to be a winner. No he won't and can't because no one can see the future. But he may be able to give you an idea of what stocks to be looking at to start buying.

The stock market goes up big one day and down big the next and right now is a very volitile time in the market. At some point it will be a good time to get into the stock market and it might be very close right now. On thing is for sure. It is a great time to start looking at and analyzing different stocks and start trying to figure out which ones might be undervalued. If you are not in debt and have cash on the sidelines, this buying opportunity is what you have been waiting for. Take advantage of your cash position and learn how to buy stocks for beginners to get in some stocks at a low price so you can profit in the future.

WHAT STOCKS ARE SET TO EXPLODE?

2008-09-25T06:54:00.000-07:00

Are you trying to find stocks that are ready to explode? The stock market is way down right now and anyone who can figure out which stocks to buy today may make a nice gain. History shows that buying stocks when they are at their lows is the real way to make money in the stock market.

How do you figure out which stocks are set to explode? One way is this free offer Get free stock alerts from Jim Cramer at TheStreet.com. You can gain full access to Jim Cramer's $3 MM Personal Portfolio — and you will be emailed before he makes a trade!

Managing money is hard especially for stock market beginners. But, Jim Cramer is so committed to helping people learn that he created a charitable trust portfolio to show investors how and why he makes trades. For over 10 years Jim Cramer was a successful hedge fund manager and now he writes for RealMoney.com. Over the years he has developed a strict set of investing disciplines that have helped all kinds of people be successful through any market.

If you want to know what stocks a real pro is going to buy before he does it, this offer is for you. You can get a 14 day free trial and now is the time to sign up to see how Jim Cramer is going to take advantage of this stock market panic to make money. This is where the real stock market professionals separate themselves from the stock market for beginners. This is where the real investors make their stock market fortunes at times where the stock market is tanking. You need to know what they are buying right now that will explode later for nice double digit gains.

DOES BUY AND HOLD WORK IN 2008?

2008-09-22T07:16:00.001-07:00

Buy and hold used to be the way to go in the stock market. Buy a good solid stock, hold it for five, ten, even twenty years and you would show a profit. The stock market seemed to go up slowly but steadily. Don't gamble on stock's the gurus said, INVEST in them.

Does the buy and hold stock strategy work in 2008? In fact, has it worked at all in the last ten years or so? Stocks strategies for beginners is one of the most difficult things to get a grasp of. Buying a stock is easy, you just go online, click a few buttons, and you have bought your stock. When you should sell that stock, however, is always the hardest decision.

Stocks seem to fluctuate more now than they did years ago. With the advent of the Internet and day trading, so many dummies and beginners have come into the market who really aren't investors. They are traders trying to make a quick buck and it is almost like they think they are playing a video game. These stock day traders are in and out of stocks so fast it can make your head spin. They are in fact the opposite of the buy and hold investor.

In addition to the online day traders, there have been big events like 9/11, Enron, and other big companies going bankrupt and having shady dealings. These events all work to take down the stock market in days. They undo years of steady progress and in weeks take down the stock market to levels it was years ago.

Buying and holding used to be sound stock investment strategy. You could put your money away in a group of stocks and be reasonably confident you would get back more in many years time. There was no real need to keep up daily with the stock market news because you could feel confident over time your stocks would go up. Is this true today? I think not and this is why it is harder now for beginner stock investors to understand the market and get started investing. The stock market for dummies has gotten more difficult to negotiate the ups and downs.

SHORT SELLING STOCKS FOR DUMMIES

2008-09-19T15:27:00.000-07:00

The SEC today (September 19, 2008),banned the short selling of stock of 799 financial companies through October 2. I think they will extend the band much longer than that perhaps until after the election in an effort to make sure the market is given the best chance of being stable.

What is stock market short selling? How do you short sell a stock? Shorting a stock is the opposite of buying the stock. When you decide to short a stock you do it because you think the stock price of that stock is going to go down. What happens is this: a stock market investor who sells a stock short borrows shares from a brokerage house in order to sell those shared to another investor. Proceeds from the sale go into the shorter's account but he must buy those shares back at some point in time and return them to the lender. When you buy the shares back it is called "covering".

Short selling stocks is not a strategy stock market for beginners should use. Only investors who know what they are doing should ever attempt this because you can theoretically lose more than when you just buy a stock. When you invest in a stock, the most you can lose is what you have invested and the stock would have to go to zero for that to happen. However, when you short selling a stock, the stock could go up and up and never stop. The more it goes up the more you lose so there is no limit to how much you could lose when you short a stock.

STOCK MARKET 2008 PANIC = TIME TO BUY?

2008-09-16T10:12:00.000-07:00

9/29/08 Update: Another big panic today with the Dow closing down 777 for its biggest one day drop EVER! There is fear absolutely everywhere!

The stock market is at a two year low right now and there has been nothing but pain this year. Yesterday the US Dow Jones went down over 500 points which was it's biggest drop since 9/11 and it has transfered over to the International markets as well.

There is no doubt that this stock market panic is the real thing as company after company comes in with low earings or warnings about slowdowns and lower earnings to come. As I right this, the market has come back a little as it was down over 130 but is now up 50 points or so.

If you sell now in September 2008 you will be part of the panic and contributing to it. You will probably be getting the lowest price for your stock as many stocks are at a 52 week low. However, if you don't sell, things might get worse and you may lose more money. It seems selling could be wrong and holding could be wrong. Alas, these are difficult times for stock market beginners and veterans alike.

If you look at the 2008 Dow Jones stock market chart below, you will see that everytime there appears to be an upturn, it ends up heading back down to a lower point. Yesterday's drop was all out panic as people just wanted out. Some people have bigger balls than others and then some people may be smarter than others too. We will only know in the future when we get there.

Is it time to be buying right now in the midst of this panic? This is where the pro's seperate themselves from the stock market dummies and beginners. The pro's have a plan and they have lots of information as well. That doesn't mean that the professionals will be correct whatever they do, but it does mean that they have a better chance of understanding the market and the sentiment of investors.

For stock market dummies and the average stock market investor, it is extremely difficult to see and understand when the stock market might be approaching its low point. A panic in the stock market is often a good time to pick up a few stocks at an oversold low price and the professionals are good at that because they have the fundamentals in front of them and can more easily estimate a companies true worth. If in a stock market panic sell off a company gets oversold by frightened investors, the hedge fund managers and stock traders may be the ones buying the stock.

Again, there is no way to tell the future and today may have been the stock market low point or it may come sometime in the coming weeks or months. There is still panic in the air and another bad company story may be right around the corner to send the stock market lower. However, we do know that at some point there will be a turn around in the stock market. It may not reverse on a dime and head right back up, but it will turn around in some fashion. At some point we will have all wished we had started buying stocks rather than sitting on our hands and doing nothing. Is that time now? Is it time to start looking for stocks to buy rather than stocks to sell?

IS IT TIME TO BUY THE STOCK MARKET?

2008-07-12T15:41:00.000-07:00

There are many different theories on when is the right time to buy into a stock market that seems to just keep going down. Right now, it seems the bad news just keeps on coming and there is no end to the falling stock market.

This is a difficult time for any investor and especially for stock market beginners. Is now the right time to jump in? Should we wait? Should be just keep our money safe in our bank account? Or maybe this is the turning point that will change the stock market forever.

In the 1970's and early 1980's there was a very long period where the stock market did nothing at all. Could we be seeing the beginning of something like that? No one knows, of course, but if history repeats itself then it is still not time to jump back into the stock market.

History has shown that the proper time to jump back in is when the market keeps going down for a protracted period (as is happening now) and then there is a period of one day to several days where it gets REALLY bad. This is something about the stock market for beginners that they would not know or understand.

Yes the stock market has had an awful year and yes it has had some bad days, but it has yet to have a day or two where the market seems to fall off a cliff. I am waiting for that day or two where everybody and their brother are selling every stock all day long. I am waiting for those several days when it seems like the end of the world is coming and that there is no possibility of anything ever recovering. When there is a serious panic in the streets, that is when I will start buying this stock market. That is when the bottom is near and the turn around will happen.

STOCK DIVERSIFICATION FOR BEGINNERS

2008-06-29T16:28:00.000-07:00

Over the past several decades, people on Wall Street have preached the virtues of stock diversification, drilling it into the minds of every investor within earshot. Even stock market beginners or dummies have heard about diversification. Everyone from the CEO to the delivery boy knows that you shouldn't keep all your eggs in one basket - but there's much more to it than that. You shouldn't go on financial tips alone...you need to diversify and study your options.

The concept of "don't put all your eggs in one basket" is a wise one for those who are unable or unwilling to evaluate the attractiveness of investment opportunities. But as it happens, excessive diversification presents a serious hurdle to wealth building.

There undoubtedly is less risk in holding a concentrated portfolio of well researched investments than holding so many stocks your returns are bound to be nothing more than average. The ideal portfolio size, depending on your net wealth, may be between 5 and 20 stocks. It is better to have a smaller group of well researched and understood stocks than it is to have a sizable laundry list of all the popular companies. For it is much easier to find 5 exceptional opportunities than 25.

HOW TO AVERAGE DOWN FOR DUMMIES

2008-06-23T15:13:00.000-07:00

This stock market for dummies lesson is about averaging down.

If a stock you have invested in falls in price you have a few options...
You can panic and sell out, hold onto your investment waiting for the stock to rebound, or buy more stock at the now lower prices. The latter is a strategy known as "Averaging Down" because it will bring the average price of your investment down.

It works like this: you buy 100 shares at $100 a share, the price falls to $80 a share and you then buy another 1000 shares which brings your average cost down to $90.

Is this a good strategy?...
It's a bad strategy if the price has dropped because the fundamentals of the company have changed to a significant degree and the stock is now unattractively priced or it was simply a bad investment in the first place.

But if your initial investment was based on sound research and understanding of the company and the fundamentals of the company haven't significantly changed for the worse then it is the best strategy to take. Because if it was good at $100 it's great at $90.

Inbox Stocks - Is This Another Scam?

2008-06-01T14:19:00.000-07:00

WHAT CAN YOU EXPECT WITH INBOX STOCKS? I AM GOING TO FIND OUT, AS I DO THIS INBOX STOCKS REVIEW OF THE FREE OFFER. I've just signed up at Inbox Stocks for an interesting free trial offer. You'll be able to type in your name and email address and then, for the next 4 weeks after, you'll receive one free stock pick per week. You can watch along to see if this guy and his service is worth the cost. You will be able to watch live, each week, as his actual stock picks almost double. (he says)

He also claims that his stocks can often rise over 100% within a matter of days. He claims that you can take advantage of a pattern everyday within the first 45 minutes of the stock market's open. This only works for OTC stocks (over the counter).

If you are looking for information about stocks for beginners this might not be great for you as it might be too advanced. Also, this could be a scam but it is free to sign up so I am going to give it a try. Again, that's Inbox Stocks if you want to give it a try. I like stuff that is for free and maybe it will at least give me an investing idea or two.

6/20/2008 UPDATE

Here is what has happened so far. I signed up by just giving my name and email and then I immediately got the following letter sent to my email:

"Recently when you read my website (InboxStocks.com) and you decided to subscribe to my newsletter - You took a chance.

I admire that... And... I intend to do everything within my power to make this the best investment you will ever make.

My newsletter is a labor of love. I slave over it like you wouldn't believe.

I want my newsletter to be... by far... the most valuable penny stock investment publication in the entire world.

And so far, I've delivered one penny stock pick per week and have achieved an average 84.795 gain.

This has allowed my subscribers to almost double any money they invest... each and every week!
You should receive your first stock pick, within the next 7days or so... And so that you're ready to take advantage of it, I'll explain the process:

The night before the stock pick, you'll receive what I calla "warning email". This is usually sent at the time the market closes and will explain a little about the pick.

The next morning, roughly 20 minutes prior to the market opening, you'll receive the stock pick.
The "stock pick" always lists vital information, such as the stocks ticker and corporate website at the top of the email.

... The pick however will also be a full report on the reasons I chose the stock, and a background on the company."

That is most of the first letter I got and I am now awaiting the first stock pick. I will never reveal what the stock pick is (that would not be fair as you should do the Inbox Stocks free sign up to get it) but I will tell you what transpires and give you my opinion of the service. I will update this when I have more news.

6/23/08 Update

I got an email this morning from Inbox Stocks but no stock picks yet. The email explained a little about Dave's thoughts on investing but nothing of any real substance.

6/29/08

I have had no further emails for Inbox Stocks. I'm still waiting for the first pick. It's a good thing the sign up is free because not much is going on so far.

7/12/08

Unfortunately, I was on vacation when David released his first stock pick. He released it on Monday morning and claims it was at .36 then. HOWEVER, the stock he picked did not open at .36 but at .48! It did briefly hit .61 and if you had sold it at that instant you would have made a nice gain. However, the stock closed the week at .49 for a total gain for the week of ONE CENT.
This looks to be something that you have to stay glued to your computer for and perhaps sell the instant you have a gain you are happy with. This is definitely not long term value investing. His new email says a new pick will be out next week so I will update then.

8/4/08

The next stock has just been emailed to me and guess what? It is the SAME stock as he picked last time in July. That's right, the same stock as I guess it has since gone back down to it's prior level and now it is David's pick again!

Is The Stock Market Gambling?

2008-05-19T16:52:00.001-07:00

This is a question people just starting out in the stock market may ask. The stock market for dummies could seem like gambling when you pick your first losing stock. So, what is the difference is between gambling and the stock market.

Sometimes it may seem that you can lose just as easily at the stock market as you can at the blackjack table. Ask anyone who has lost money in Enron how they felt after their stock went to zero. You can lose big on a stock but rarely do companies go bankrupt and the stock go to zero.

The difference between pure gambling and buying stocks of companies is that you are betting on the future of the company and you have a track record you can research. If you are invested in many stocks, you might say that you are invested in the future of the country. If something terrible happens to the country, like a natural disaster or a terrorist attack, stocks will go down. If the country flourishes and good times prevail, the stock market will most likely go up. By investing in the stock market you might say that you are betting on our future.

Gambling in a casino is a whole different scenario. There is no casino game that the player has an edge. Just take a look at how big Las Vegas has become to be sure that the house always has the advantage. You might be able to beat the house now and again but over the long run you will lose.

When you buy a stock and it immediately goes down, it might sometimes feel like you are gambling but that is mostly out of frustration. If you do your homework and pick your stocks carefully, you should be able to make money long term in the stock market. The stock market for beginners is a much better place to be "betting" your money than the casinos.

Stock Prices and Perceived Value

2008-05-04T20:07:00.000-07:00

One of the hardest concepts of the stock market for dummies to grasp is what determines the value of a stock. When you buy a stock, you are buying a part of a company. However, that stock price can go up and down drastically sometimes for almost no reason which in turn means the value of the company is going up and down as well.

Lets say you bought some shares of the stock Garmin in the last six months. If you were unlucky and bought it at its high, you might have paid as much as $125.00 and change. Unfortunately if you look at the stock price today, you will see that the price is down to around $43.00. That is a decline of almost two thirds! Wow! This also means that the value of the company went down two thirds as well.

What happened? How can a company be worth only 33% of what it was just5 months ago? Is the company really in that much trouble? Did a hurricane destroy a factory or two? Well, in Garmin's case it is all because the perceived value of the company went down. GPS devices have been very hot for the last 3 years or so and the stock went up steadily because of the perception that Garmin was the industry leader and would sell a lot of units.

Suddenly, with the economy on the downturn and people not spending as much as they did for expendable items, the perception is that Garmin will not sell as many units in the coming years. The company is still doing well right now but everyone believes that things will change. Thus, just because people THINK things might change, the stock goes down and so does the value of the company. The perceived value of the company has gone down.

Stocks can shoot up for the opposite reason when people think a company is in the sweet spot and has a product or technology that will do very well in the future. In that case, the company stock may go through the roof even though they have few sales at this very moment.

Stock prices go up and down daily on what stock market investors perceive the value to be and not necessarily what the company is really worth. It is difficult to fathom this sometimes because you have to change the way you think about investing in stocks. This is another thing that shows that the stock market for beginners is a complicated beast to learn.

Stocks For Dummies

2008-04-23T06:34:00.000-07:00

The stock market for beginners is easy to get started now that most brokers are online. First you will need to open a stock account and you can easily do that online much like you do anything online nowdays. Once you give them all your information you will need to "fund" your account. That means you will need to put money in it. You generally have two options and the most popular is to write a check and send it in to them. This will usually take about 10 business days before you will see the money show up in your online stockmarket account and be able to trade. The second option is to physically take a check in to the companie's office if they have one in the major city that is nearest you.

Once you have money in your account you are ready to buy a stock which is called trading. The stock market for dummies can be a bit overwhelming at first with all the terminology that is thrown around and it takes some time to learn it. Buying a stock is actually quite easy and most online companies will have a tutorial section to help you out. This tutorial section should help you learn how to buy and sell stocks.

A great place to learn and get information about individual stocks is the ValueLine report which you can find at most any public library. This report comes out every month and will give you analysis of many of the stocks you see daily going by your television stock ticker. This ValueLine report will give any stock market beginner some detailed analysis of every stock that is easy to understand. It has stock charts and detailed reasons why it thinks a stock is a good investment or not.

If you are a stock market for beginner then you need to start slowly and try to understand things one at a time. It is exciting when the stock market goes up and you make money but it is not so fun when your stocks go down. It is often better to buy stocks when they are low so that they have room to go up and make you money. In a down market like 2008 it might be a good time to learn how to buy stocks and start investing in the stock market.

How To Buy Stocks For Free With Zero Commissions

2008-04-21T09:36:00.000-07:00

Some companies allow you to buy and sell their stock directly from them. If you choose this method, you will not have to pay any commission to a broker. This is great for stock market beginners and those people who want to buy just a few shares. Many US companies have this sort of plan which is called a Direct Purchase Plan. Many top corporations such as Chevron, Pfizer, JP MorganChase. and others have this type of direct purchase plan for their stock.

It is against the law for companies to advertise these plans so you need to find them yourself. You might contact the investor relations department of the company you wish to buy stock of to find out whether they will allow you to buy their stock directly from them.

When you find a company that does have a direct purchase plan, you should request a prospectus about the program to find out what its limitations are. Some programs require that you already own some stock before you are allowed to purchase more through the program. Many companies allow you to buy more shares with no commissions with the dividends you earn on your existing shares.

If you end up enrolling in their program, you will get a statement every time you make a transaction with them and you will get a 1099 tax form at the end of the year detailing your activity.

Buying stock through a direct purchase plan is a great way to get involved learning how to buy stocks for beginners. Stocks for beginners is something that you will need to invest a lot of time researching and this is just another of the many ways to get involved.

Stock Market For Dummies - Buy High and Sell Low

2008-03-03T09:18:00.000-08:00

Even if you are new to stock market investing, you have most likely heard the phrase "buy low, sell high" sometime in your life. What that means of course, is that it is best to buy a stock when it is at a low price and then sell it at a higher price. That is how you make money in the stock market.

Why then, is the temptation to do the opposite so strong? Why is it so easy to buy high and sell low? Stocks are different from so many other everyday things. When you go to the store, any kind of store, and you see something on sale you immediately are more inclined to buy it. When things go on sale you save money and are thus more inclined to buy. If a dress was $100.00 yeasterday and $80.00 today, it is still the same dress but now you are more apt to buy it.

Stocks and the mentality of stocks seem to work differently. When the stock market is going up as a whole, and individual stocks keep getting more expensive. the tendency is to want to jump in so as to not miss the boat. When any stock XYZ was $50 a month ago, $55 a week ago, and now today at $60.00, investers sort of panic for fear of missing out. Technically, the stock is more expensive today than it was a month ago and yet many people can't wait to buy at the higher price!

Conversely, a stock that is going down is cheaper today than it was a month ago. Yet most stock market investors find it more difficult to buy that stock for fear that it will go down more and they will look silly. They also fear that because the stock is going down that the value of the company is going down. Sometimes that is correct and sometimes it is not.

All I know is that everytime the stock market has gone down significantly, as it has this year in 2008 so far, if I would have pulled the trigger and bought a whole bunch of stocks, I would have made money. Unfortunately I am like most other people and have found that buying stocks in a down market is a very difficult thing to do.

Stock Market For Dummies - Investing in Down Markets

2008-03-01T07:15:00.001-08:00

One of the absolute most difficult things about the stock market for beginners is owning stock in a down market. Today is March 1, 2008 and we have just had the 4th losing month in a row for the stock market, a first since 2002. The Dow lost over 300 points yesterday and things are not looking rosy.

It is times like this that it is difficult to be involved in stock investing. Many people who have little experience tend to panic when the stock market goes down so much. It is hard to know what to do. It is difficult to sit by and watch all your stocks and hard earned money go down almost every day.

This is stock market investors learn about own risk tolerance. Some people are better able to deal with the daily ups and downs of the stock market than others. If you are one of those people that likes to know that your money is always safe, perhaps stock market trading is not for you. However, if you can deal with losing your money day after day in hard times, and perhaps even buy more stock when that is happening, then investing in the stock market could be the right thing for you.

The stock market for dummies is a tough place to be in down times. Over time, you will learn to deal with the level of risk tolerance that you feel comfortable with.

Stock Market For Dummies - Limit Orders

2008-02-21T14:18:00.000-08:00

When you log into your account to buy or sell a stock (see how to buy a stock), you will have to choose what type of order you want to place. The standard options are "market", "limit", "stop", and "stop limit". Most of the time you should pick the "market" option as that just means you want to get the market price for your stock. In other words, you want what ever price is the going price at the moment you are placing your order.

The stock market for beginners is a hard enough place without trying to get too tricky. When you want to either buy or sell a stock at a certain price that is when you use the "limit" option. Let's say that you have 100 shares of XYZ Corp. and you bought those shares at $20.00. Right now the price of the stock is $24.12 so you do have a gain but you would like a little more. If you can, you would like to sell the stock at $25.00.

Rather than wait all day and monitoring the stock market every 5 minutes, all you have to do is to place a "limit" order to sell your stock at $25.00. That means, if the price of the stock ever hits $25.00 for that day, your order to sell will be initiated and the sale will be made. If the stock does not ever reach that $25.00 mark, nothing will happen and you will still own the stock.

The same can be done on the low side. If you want to sell the stock at no lower than $23.00, you can place your order to sell if the stock goes down and hits $23.00. That way, you will still have a gain and you protect yourself from losing more if your stock continues to drop. Stock market investing is complicated for the beginner because of all the different terminology. Once you learn what all the words mean though, it is not as hard as you might think.

Stock Market For Beginners - Bull And Bear Markets For Dummies

2008-02-19T06:44:00.000-08:00

A bull market is when everyone is positive about the stock market and wants to buy stocks. A bear market is the opposite as the stock market keeps going down no matter what and people want to sell.

The stock market for beginners is a place where you need to pay attention to what is going on. During a bull market, you can probably make money from almost any stock. Everyone will want to give you their stock pick and chances are the stock will go up. All the pundits on TV will be pumping out their stock picks and you can most likely make money on any of them. Even your hair stylist may want to give you a stock tip.

If you start investing in stocks during a bull market you may get over confident. You may make money right away and think it is easy. This is something to be weary about if you are just starting to invest in stocks. It is not easy and things can turn around in a day.

During a bull market, everyone wants to sell. The stocks you own may go down 4 out of every 5 days. You will be confused and want to sell and wonder whether you should. Remember 9/11 when the stock market went down huge and kept going down for months after? Do you sell or do you hold? Will the stock market ever turn around? Do you buy more at a lower price? These are just a few of the questions that you will be faced with in a bear market.

Most of the time the market is somewhere in between a bull and bear market. Usually the better stocks go up over time and the stocks of companies doing poorly go down. It is best to always try to pick stocks of companies that are doing well or will do well. The stock market for dummies can be a confusing and scary place that takes a lot of time and experience to get used to.

Stocks For Beginners - When To Sell Stocks

2008-02-15T08:02:00.000-08:00

One of the hardest decisions for any investor is when to sell a stock. The stock maket for beginners is very confusing and you are required to make many decisions.

Deciding what stock to buy and when to buy it are also difficult, but before you do you have no stake at risk. Doing nothing does not impact your money either way...you still will have the same amount. Yes, you can feel stressed if you don't buy and the stock goes up but in the end you still will not have lost a dime.

It is different once you own a stock. If the stock is going down, you are losing money. Should you sell and jump off? Should you wait it out? If you have a gain should you sell and protect the gain? If you have a loss should you sell and minimize the loss in case the stock keeps going down?

If the stock is going up you have the same set of decisions. At what point do you cash out and take your gain? If your stock is going up and you don't sell, it may reverse course and go back down erasing your gain. Or, if you sell now, the stock may continue up and you will not make as much as you could of.

When to sell a stock market stock is the age old question that will never be answered. Whatever you do, it will probably be wrong in some time horizon. The best thing you can do is to pick a price you feel comfortable with before hand, and when your stock reaches that point either up or down, you sell your stock. That way you can live with your decision and the stock market for dummies will be a little less stressful.

Stock Market For Beginners And Taxes

2008-02-12T17:21:00.000-08:00

Lets say you bought and sold your first stock and made a gain. Please see stock market for dummies. Congratulations!....but you now owe taxes.

That's right, you know the saying "there are only two things guaranteed in life......death and taxes". The IRS want their cut of that gain you just made so be sure to keep all records. When tax time comes you are going to have to fill out Schedule D and report your gain. If you are going to be investing in the stock market you are going to have to keep track of each transaction whether it is a gain or a loss.

Every stock sale you make, including losses, is going to have to go on that Schedule D. If you are going to trade stock, you have to understand and accept this. There is no getting around it as the brokerage companies are required by law to report all your transactions to the IRS. If your records do not match what is reported, this will trigger a red flag and you may very well be audited. If not audited, you will at least be contacted by the IRS and told that your records don't match what was reported by the IRS. Can penalties be far behind?

If you sell stock and have a loss for the year, you can use up to $3,000.00 of that loss. If your stock trading loss was bigger than $3000.00, the amount over that has to be carried over until next year. The stock market for beginners is hard enough before you add in the taxes. Unfortunately, the government doesn't care.

Your Choices For Online Stock Market Accounts.

2008-02-11T13:47:00.000-08:00

Stock Market For Dummies Lesson 7 - Most people who own stocks now have a broker account online. Every major brokerage firm will allow you to see your account online and to make your stock trades online. To learn more about stocks and buying them online, please see how to buy stocks online where you will see how easy it is to do.

In years past before the computer, you had to pick up the phone and tell your broker what you wanted him to do. Along with the personal service came higher commissions to buy and sell stocks that in today's online world.

In addition to the major brokers there are online brokers that are very reputable as well. Combined they control and manage billions of dollars and they are all insured by FDIC. Here is a short list of some of the biggest online brokers you may want to consider:

E Trade
Scottrade
Charles Schwab
Ameritrade

The stock market for beginners is a often confusing so you must do some studying before you jump in. Once you learn a little though, the advent of the online broker makes it easy to get started and make your first stock trades.

STOCK MARKET INVESTING - HOW TO SELL A STOCK

2008-02-08T14:05:00.000-08:00

Stock Market For Beginners Lesson 6 - At some point in time, you will want to sell your stock. You will do much the same as you did when you bought stock. Sign into your account and this time find the button by your stock that says "sell".

Fill in the numbe of shares that you want to sell and again pick the option that says "market". Click the "confirm" button a couple of times and you will have sucessfully sold your stock. Again, you should shortly get some confirmation that your stock was sold and at what price.

You will now have completed stock market trading for a second time. Hopefully, you were able to sell your stock for a gain, (in which case you owe taxes on the profit amount) but you also could have sold it for a loss. If you sold it for a loss you will of course not have to pay any tax.

It is important to keep both records of your buy and sell for your recordkeeping and tax purposes. Your broker is required by law to send all trading information to the IRS so you cannot get away without paying taxes on your gain if you have one. The more trades you make, you will have gains on some of your stock market trades and losses on others. This will make your taxes more complicated to prepare but if you want to continue with stock market investing, it is just something that you will have to get used to. The stock market for dummies can be intimidating esecially when you add in the tax component.

Stock Market Investing - Holding A Stock

2008-02-08T13:38:00.000-08:00

Stock Market For Beginners Lesson 5 - Now that you have decided to invest in the stock market and you own a stock, you will want to keep a close eye on it. The stock you own will go up and/or down everyday. That is normal and hopefully for you it will spend more time going up than down.

You can check your account anytime for a stock market quote, and you will need to figure out how long you want to keep your stock. You can get stock market advice like this by finding people who have recommended the stock you own. See what they say about your stock. Do they give you their target price? If so, what is it and do you want to hold on to your stock until it reaches that price? At some point you are going to want to sell stock and figuring out when is the right time may be the most difficult decision of all.

Your stock may also go down. In a down market, the stock market prices of most stocks goes down. If you buy a stock and it starts to go down, how long do you want to continue to hold on to that stock? The stock market for beginners is sometimes very difficult to get used to and to figure out. You will need to get used to your tolerance level as some people do not like to lose money for any reason. For those types of people, stock market investing may not be for them. Perhaps they should invest in a safe bank CD

HOW TO BUY STOCKS FOR DUMMIES

2008-02-08T12:45:00.000-08:00

Stock Market For Beginners Lesson 4 - Once you have money in your account, you can now invest in the stock market and buy stock. Since this is 2008 and everything is very simple online, we will assume you are going to want to learn how to buy stocks for beginners online.

When you go into your online account with whatever online stock broker you have chosen, you will get a user account number or name and a password. It will be just the same as any other account you may have on the Internet.

You will want to buy your first stock and you will probably have decided on a stock by reading the newspaper and other stock market news. You can find stock market advice almost everywhere now days. There are many TV shows you can watch where the "experts" make their picks, magazines, radio shows, and many Internet sites all offering free stock market advice and picks.

To buy your stock you need to put in your stocks symbol which will pull up some numerical information about that stock (stock market quote) as well as some news stories. There will be a "buy" and "sell" button and you will click the buy button.

You will then fill in how many shares you want to buy, pick the "market" option, and your stock will be bought for you . You should momentarily see some confirmation that the stock has been purchased and at what price.

Congratulations! The stock market for dummies might have seemed complicated but you have just bought your first stock!

How To Open A Stock Market Account

2008-02-08T12:43:00.000-08:00

Investing in the stock market is not very hard but you do have to pick an online broker and open an account. There are many online discount brokers and one of the best for beginner investors is TradeKing. This is because their fees are low and there are no account minimums.

Generally, if you have less than $1,000 to invest in stocks, I would say don't bother but with TradeKing you can open an account for what you have, no matter how little it is. This makes them a great choice for anyone who wants to set up their first stock account online.

TradeKing has won all sorts of awards from Barron's and SmartMoney for their customer service which can be very important for someone who is just starting out and has questions. They also offer stock trades at $4.95 which is lower than almost all other online brokers. A really good thing is that broker assisted trades are at the same $4.95 rate which is WAY lower than other brokers. A "broker assisted" trade is when you actually talk to someone on the phone and they place the trade for you instead of you doing it all by yourself online.

Whether you pick TradeKing or someone else, you will need to put money in that account which is called "funding" the account. Usually that is done by wiring money from your bank to your new broker account but you can also send a paper check to them if you like. Either method of funding is safe and all brokers will have instructions on how to do it.

Once your money is credited to your stock account (it will obviously take longer if you send a check), you will then be able to immediately start buying and selling stocks. Even though you may be a stock market beginner, you need not be intimidated by all the stock market advice that everyone wants to give. It is quite simple really - when you buy a stock it is either going to go up or go down.

You always have to be prepared to lose money in stocks because it can happen with any stocks you pick. No stock goes up all the time and your investment strategy should be to find companies that are solid, have good products that people like, and are well poised to make money in the future. Invest money for the long term if you want to have the best chance of making money and overcoming all the ups and downs the market goes through.

How Stocks Are Valued

2008-02-07T17:19:00.001-08:00

Stock Market For Dummies Lesson 2 - The stock market is a strange beast and the longer you are stock market investing the more you realize this. If a company is making a lot of money, logic dictates that the stock price will be high or at least going up. This is not always the case, however, as the one thing you must understand is that supply and demand is the most important determinant of a stock's price.

Even if a company is making lots of money today, they might have told investors that the future does not look so bright. If in the future sales are expected to slow down, many people may not want the stock and may want to sell it. In this case, even though the company is doing well at this moment, it might not do as well in the future. This makes people want to sell and the stock price go down.

Conversly, if a new technology is on the horizon, a brand new company may be making very little money right now today but the future looks very bright. At some future time this company may make a ton of money and so people want to invest in stock today in anticipation of what might happen tomorrow.

This is one of the most important concepts of the stock market for beginners to understand. There is no set price or guideline for a stock's price. Stock market investing and the price of a stock is solely determined by what people perceive the value to be.

What Is Stock Market Investing?

2008-02-07T16:34:00.000-08:00

Stock Market For Dummies Lesson 1 - The stock market is a trading exchange where you can buy and sell shares of stock of different companies. The price of every company's stock is driven by supply (the number of shares available) and demand (the number of shares people want to buy).

If you like a company and think they will do well in the future, you will want to buy stock. However, if other people think the same way and also want to buy that company's stock, the stock price will go up because there will be lots of people wanting to buy (demand).

In just the opposite way, if a company is perceived to be doing poorly, there will probably be very few people wanting to buy the stock and more people wanting to sell it. In this case, the price of the stock will go down because there will be more sellers (supply) than buyers (demand).

Stock Market investing takes place mostly at the two biggest exchanges which are the New York Stock Exchange (NYSE) and the Nasdaq. These two exchanges handle the bulk of the
trades. You can invest in stock market by buying stock through a telephone call to your broker or by making the trades yourself on your computer. Being able to make a stock trade yourself online is something that has only been possible in the last 10 years or so.

The best way to learn about the stock market for beginners is to read as much as you can. Understanding the stock market is a big task and there are many free resourses on the Internet including this website.

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2008-02-06T06:51:00.000-08:00

Update April 2009 - Privacy Policy

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