Stock investing basics

stock investing basic is more important for a newbie who is thinking or in an intention to make an investment in stock market.

The first basic thing for a newbie is to know more about what is stock or share?

Stock or share is a portion of ownership of a company allotted to you when you make any investment in that particular company. The portion of ownership depends upon the number of stock you have bought of that company. Making investment in any company means you are participating in the growth of that particular company. Any profit made by the company is divided among the stock investors in the form of dividend or bonus, along with the benefit of increase in price of the stock. As long as company is making consistent profit and shows quarter-on-quarter or year-on-year growth potential the chances of substantial rise in stock price is more and so are the benefit also in the form of dividend and bonus.

Once you are familiar with what the stock is then you need to be familiar with the other aspect of stock investing basics such as fundamental analysis as well as technical analysis of stock for making perfect stock investment which will give you consistent returns.

More information on Fundamental analysis
More information on Technical analysis

Rewards from stock investing

In my previous piece of writing I have given the concept of stock investing. On this page I would like to tell you about the reward you will get by making a stock investing.

From long term perspective the rewards from stock investing are pretty good if you are only in just right stock at right time and that you can achieve with the help of fundamental and technical knowledge.

Assets history has proved that there is no other asset class where investors had made pretty descent earnings other than stock market in long term, but for that the only thing is that you just need to be in right stock. I would once again like to emphasize on just right stock. There are tons of stocks traded on stock market but not all stocks can give you descent returns on long term basis so your choice for stock investing on long term basis should just needs to be perfect.

Once you are in perfect stock your long team earning will grow substantially, the more than you have expected. The rewards you will get in long teams are
• Dividend: Dividend is a distribution of a portion of a company's earnings allotted to the shareholders. The board of direction decides the amount of dividend to be given to shareholder i.e. dividends per share. If the company is making a consistent profit chance of getting dividend once in two years, annually or biannually is high. The dividend can be in cash, bonus shares/stocks, or property.
• Substantial price increase in your stock holding
• Allotment of subsidy shares if any merger or de-merger of another section from the one main company happens.

The person who had made stock investing in the very early days of stock like Wal-Mart, Microsoft, or in any other Fortune 500 companies had achieved significant growth in their asset. In the future there will be new companies replacing the place of Wal-Mart or Microsoft or any Fortune 500 companies and you have to hunt such companies for your asset growth and to get steady return on long term basis.

Worldwide stock market rally on Fed’s meeting ahead

Monday October 29, 2007


The Asian market were on rollercoaster movement today which was mostly impacted by Friday’s strong ending on Wall Street and ahead of Fed’s meeting this week. All the major indices amongst the Asian pack made a significant positive ending lead by Hang-Seng 1000+ points gain and Sensex gained almost 600+ point and end at its all time high. European markets were also open on strong positive note, rising for the third session in a row.

Australian market ASX 100 end 1.35% at 5495, Japanese market Nikkei end 1.17% higher at 16,698, Hang-Seng end 3.89% at 31586 and Indian market Sensex end 3.82% at 19977.67.

The Indian markets seen another milestone after Sensex touching all time high at 20,000 marks. The Reliance pack leaded this rally followed by L&T and ONGC. Today gain was third biggest single day absolute point for the Sensex. All the major indices showed solid performance.

Volatility–a playing game in stock market

There are certain stock investor communities in stock market who feel volatility plays an important role in their profit margin in-fact they like to do stock trading whenever there is significant amount of volatilities in stock market. According to them volatile stock often gives them an advantage to make their stock trading successful. Any significant upward rise in stock which is volatile gives a sell signals while any significant dip gives a buy signal.

Volatility is a significant fluctuation in prices of stocks or swings in stock market. Any significant increase in volatility in stock market concerns a lot of stock investor as it does not gives any perfect direction to stock market but for genuine stock traders it is a positive signal to make money if there is good kind of volatilities in their selected best stocks.

There are many different views on volatility but according to me it gives a good chance for stock trader to become active and make their successful stock trading. Volatile stock shows significant movement in their prices which give chance for stock traders to enter in that stock and exit by making profit. It is a riskier job but for trader it is their daily business part. They know the exact entry point and exact exist point in these type of stocks.

If one has to become expert in trading volatile stock they need to have significant knowledge of stock market as well as has to know how the movements of stock happens and this only can be achieved by consistent monitoring the stock price movement on daily basis. One can use Newton law’s rule while stock trading on stocks which are volatile. According to Newton law’s every action has equal and opposite direction and same law applied to volatile stock also. Every significant upward action in volatile stock should need to have download reaction and every significant downward action in stock should need to have upward reaction.

Any view expressed in this website is solely of author’s personal view. Before stock investing or stock trading you should need to take advice of your stock market advisor.

Penny stock

Penny stocks are stock which value is not more than $5 per stock, however these stock are more likely to be treated as a speculative playing stocks by large number of stock investors. Maximum of the small retail investors are fascinated by these stocks due to their low price.

Pennystocks are mainly low liquid, low volume and highly speculative stocks which tend to move any direction is significant way. One has to be more aware when trying to do stock trading or stock investing in this high risk penny stock as chances always remains high that these stocks tends to move in your opposite direction, but nevertheless one can make high descent earnings from these stocks if they are in right stock at right time and at right price.

Peny stock does not give transparent financial history due to which the main movers of stock market avoids to do any type of stock trading or stock investing in these stocks owing to which these stock lack enough liquidity as well as enough volume and due to these reasons there is significant price fluctuation. Whenever there are large number of buyers than seller in these stocks the stock make a significant upward move and if there is large number of seller than buyer there is significant downward move, which at many a point breaks the circuit which has been put by regulatory authority.

Proper technical study, stock market savvy and high risk taker peoples definitely makes good money from best penny stock but newcomers to stock market mainly the retail investor should remain out of these stocks as long as a clear fundamental picture arises from these stock.

Tips for penny stock trader

Stock investor information

There are separate categories to define in stock trading - stocks investor and stock trader.

1. The first being long term stock investor. They normally buy and hold a stock position for couple of years to almost endless period. They may do some research on a stock before buying, maybe checking out some of the fundamentals such as the PE. ratio (price to earnings), valuations, dividend paid, market capital, or market analysts recommendation but to be a successful stock investor in stock market one much have a good fundamental and technical knowledge by which he can determine at which level which stock to buy and at which level to sell by making good profit.

The fundamental analysis knowledge means that the stock investor should have to know about the valuation of any particular stock, PE ratio, market capitalization, product, % of market that particular company hold etc. Fundamentalists study the cause, while technicians study the effect. "Price" is the final result of all forces that can affect a stock. Price even discounts the future, unknown news, while fundamentals reflect the past. It is because of this reality, we often see tops being made on good news and bottoms being made on bad news.

2. The second category consists of "stock traders." They hold a stock position for a few days or weeks or a month at the most. This group tends to treat the market as a business. They are not interested in fundamentals like the stock investor category. They are more interested in a stocks price movement, which they can determine by technique chart. When the people of this category make a stock purchase they know exactly where the exit points are. Their profit and loss points are predetermined. This group is guided by a set of predetermined rules, when a rule is met a reaction takes place either buying or selling.

Technical Analysis is basically the study of Price Chart, undertaken to get an idea about future price action of any traded stock. A Price Chart plots the quotes of a stock traded on a stock market. All past\present\future news relating to a stock, together with stock investors' opinion about it, determines the price of the stock on the trading floor. The "Value" discounts everything; therefore study of anything else is unnecessary. Technical Analysis comprise of a variety of techniques to study such price action over a period, by which stock trader can make a good decision at which price the shock has to buy and at which price it has to be sold. If stock trader is perfect in these things then that stock trader can make decent money in stock market.

How Technical Analysis helps stock investors and stock traders?
With the help of Technical Analysis, the stock investors and stock traders can enter the stock (long or short) when it starts trending, instead of locking their money during the periods of consolidation. Traders may look for such trending moves in daily (or shorter) charts, while the investors may look for such trending moves in weekly/monthly charts. Volatile market trading strategies are appropriate when the trader believes the market will move but does not have an opinion on the direction of movement of the market. As long as there is significant movement upwards or downwards, these strategies offer profit opportunities. A trader need not be bullish or bearish. He must simply be of the opinion that the market is volatile.

3. The third category consists of day traders. This category has all the characteristics of the 2nd group except they leave nothing to chance. All positions are closed before the end of the day, buying and selling without hesitation, according to their guidelines, strictly 100% business.

Uptrend continues in Stocks Market

Saturday October 27, 2007

US stock market ended higher on Friday after having a volatile week; however technology stock rose higher on Friday’s stock market trading session as Microsoft declared whopping 23% jump which was mostly driven by brisk sales of the new Halo 3 video game. Microsoft shares raised $3.04, 9.50% to end at $35.03. Stock market investor also showed good interest in financial stocks after mixed bags of number in major blue chip companies.

The Dow Jones ended the week up 284.68, or 2.11% at 13,806.70. The Standard & Poor's 500 index ended up 34.65, or 2.31% at 1,535.28. The Nasdaq composite index ended up 79.03, or 2.90% at 2,804.19.

At the present time it clearly seems like stock investors are eagerly waiting for Fed’s decision on interest rate cut at their next week meeting which will bring cheer to stock market.

eBay stock seems good for me from stock trading point of view at this point as the ebay stock chart is showing some good strength.

Lackluster stock trading day

Friday October 26, 2007

Wall Street saw a lackluster stock trading day on Thursday mostly dogged by credit and economic worries along with steady rise in crude oil prices. Over the last few days the oil prices are steadily rising high; giving a bit of concerns to stock investors; that might give rise to inflation and which might impact the economy a whole, however housing and credit data is now an ongoing concerns which is making the stock market to trade in a narrow zone. Investors are still confused about the definite direction of economy and whether the Fed will be forced to lower interest rates again to boost spending. The Fed cut interest rates last month by a 0.5% basis and now market is expect not the same amount of cut in interest but at least 0.25%, which will be somewhat positive news for the market, but still going forward the market will be having a tough days to gain momentum unless clear and good picture arise from housing and credit data front.

EMC - A data storage software and hardware company showed impressive result, which the market showed a thumbs-up and that stock was up 8.7% gained almost $1.97 to $24.40; however after a disappointing guidance from Symantec company the stock tumbled $2.52 and ended at $18.50.

The Dow Jones fell 0.02% or 3.33 to 13,671.92 after a strong volatile session. The blue chip index was temporarily down more than 100 points.

According to me if there is any interest rate cut by Fed next week, the stock investor definitely will take this as a positive note and maybe the market will rise higher, but still in coming days I don’t see the market will make any new highs unless clear pictures arise from the housing and credit data.

At this point from stock trading point of view, my strategy will be to take a short term trading position by buying in selective stock and at every significant high I would like to book my profit, and any significant deep of 500 to 600 points in the Dow Jones, I would like to do selective stock investing.

Strong comeback for US market

October 24, 2007


The US market showed strong bounce back on Tuesday mostly was helped by strong earnings by blue chip company comprises of American Express Co and Apple Inc. The technology sector were in limelight and were the biggest gainer following the excellent quarterly result by Apple which were ahead of street expectations with a 67% jump in fiscal 4th-quarter profit on strong sales of Macintosh computers, iPods and iPhones. However concerns still were roving around housing and credit which might drip over into the rest of the economy.

The stock market increased its recovery from Monday after seeing a very bad session on Friday as well as conservative sold off for five continuous market sessions as uncertainties about the credit market's outcome on the economy after a time when several blue chip companies presented sluggish outlooks and S&P downgraded more mortgage-backed securities.

The Dow Jones rose 100+ or 0.81%. The Standard & Poor's 500 index rose 0.88% to 1,519.59; the Nasdaq composite index rose 45.33 to 2,799.26.

Wall Street stock investors are also expecting some more good positive news from Fed at their meets next week to decide the future of rates.

At this point, from only stock trading perspective I would like to book my profit at higher level whereas from stock investing perspective I would still like to wait and watch and see how the situation pan out in coming days, but at every significant dip of more than 500 points, I would like to do bargain hunting in selected stock pick from long term stock investing perspective.

Stock Chart-Technical Analysis Tool

A stock chart is a string plotted on a graph for stock prices versus specific time frame. Once you are familiar with technical analysis, a concept used in identifying stock movements, then you could find the technical stock chart a more useful tool used in technical analysis, in-fact chart formation is most important aspect of technical analysis.

If you want to make stock investing, or to day trading or stock trading or online stock trading you definitely need to thinks about stock price chart formation technical pattern for your above help in making a vice decision to select perfect stock pick. There is a big community in stock market who strongly believes in stock chart pattern in-fact maximum of them use it on day-to-day basis.

Stock price chart helps in many way giving you a perfect view of price movement on per hour, per day, per week, per month, and so on basis to make a exact decision.

US market - Still seems not out of woods

October 23, 2007

The Wall Street sees increase volatility on Monday’s trading session. Experts are still doubt about the market direction and are looking for definite clue to make any call from online stock trading perspective, but still market end in positive territory on Monday cheered the investor’s mood little bit. Merck & Co quarterly results were somewhat decent but it rival drug maker Schering Plough Corp.'s gave disappointed set of result, a way below market expectations along with many blue chip companies.

Despite the fact that the key US stock indexes performance were good on Monday, there are still big uncertainties on Wall Street concerning how tribulations in the financial markets might haul on corporate and economic growth in coming future.

Given the positive closing of Dow Jones on Monday, the Asian markets open in positive territory on Tuesday bringing back the investor sentiment back in the market. The Indian stock market showed a strong comeback after the tumbling sessions of more than 2000 points. The Sensex was up of more than 800 points. European stock market rebound on Tuesday session after taking positive clue from US market and Asian market along with strong results from engineering sector.

From stock investing point of view selected stock pick which showed good quarterly results seems good, but still the direction of the market is not sure, but bargain hunting clearly seems evident.

Avoid stock investing at this time - major correction seems ahead

Monday October 22, 2007

With the significant plunge in Dow Jones on Friday made a worst scenario all over the world. The major stock markets of world were badly hit on Monday post US stock market activities on Friday. A strong 366 points plunge in Dow Jones industrial average was one of the major reasons along with weak news from credit and housing front. Japan’s Nikkei stock market was down 2.24%, Hong Kong's Hang Seng index was dropped by 3.7% almost 900+ pounds and along with weak opening in European trading market with fall of more than of 100 point in Britain's FTSE 1.21%, France's CAC-40 fell 1.75%, Germany's DAX index fell 1.29%. Indian stock market which was badly hit about 2000 points in Sensex from it highest point of 19000+ near to 17000 in just two sessions were recovered somewhat after getting some positive news from domestic front along with better quarterly results.

Looking at the present scenario it clearly seems like there is still a major correction ahead in US market stock market along with strong volatility. At this point I would like to short the market and at every significant dip of say more than 300+ point I would like to do bargain hunting in selected stock pick from long term stock investing point of view.

Cautious approach in stock investing

Stocks on Wall Street rose on Thursday. The party was mostly led by industrial and pharmaceutical stocks, as investors were more cautious and defensive in advance of jobs data that may perhaps demonstrate how much housing and tight credit markets may have damaged the economy.

Overall on Thursday, most of the stocks were trading in narrow range and lackluster trading session as investors took more cautions approach as the center of attention continued on Friday's nonfarm payrolls report. Also the reports on the job market, service sector, and August retail sales bring up some cheers to investor’s mood by making a positive ending in Thursday’s trading session.

The Dow Jones index ended inch up at 57.88 points (0.44%), at 13,363.35. The Nasdaq Composite Index was up 8.37 points (0.32%) at 2,614.32.

My feeling for today’s (Friday) stock trading session remains a strong volatile day keeping investors in no comfort zone, but as a trader I might take a very short long position if there is any significant dip of about 150+ points in Dow and also I might go for stock investing in highly research stock in small quantity, eying mostly defensive sectors like pharma or telecom.

US Market seems stretched out

September 05, 2007

US market still seems to be stretching more of its bounce back rally from big fall happened two weeks back. The investor’s confidence seems quite good even after a slight negative clue from economic data which was bit slower than expected and slight slowdown in manufacturing growth. Bargain hunting was clearly seen in technology and telecom sectors as these stocks were in limelight even after credit concerns, but demand for computers, cell phones and other such products appears strong.

The Dow Jones industrial average rose 91.12 points (0.68%) to end at 13,448.86. The Standard & Poor's 500 Index was up 15.43 points (1.05%) at 1,489.42. The Nasdaq Composite Index was up 33.88 points (1.30%) at 2,630.24.

Global markets were trading in mix pattern ahead of definitive clue from US economic data and upcoming Fed meeting in mid September. Profit booking was clearly seen in majority of financial stocks in European market on renewed concern about the extent of the credit crisis, and coming event of Thursday's interest rate decisions by the European Central Bank and the Bank of England.

Looking at the present situation, it clearly seems like US market is too stretched after the good bounce back rally and profit booking is clearly evident at this point. From stock investor’s point of view, it is still not a good time to make any stock investing rather than I would prefer to book my profit.

Global market stable

September 03, 2007

Global stock market traded in mix ahead of US Labor Day holiday. The statement made by President Bush and Federal Reserve Chairman Ben Bernanke made the US market stable along with bringing stability in most of the worldwide stock markets. As it is known that US economy plays an important role not only for NYSE and Dow Jones, but it also plays and important role for worldwide stock markets. Any charming news from US market brings joy and cheer in other stocks market. With the discovery of globalization and interdependent economy, stocks market from all over the world tends to react if there is any slight fluctuation in economy of developed countries.

With the positive news coming in from last two weeks have improved the sentiment and confidence of most of the market and hope it will remain till the upcoming Fed’s meeting.

At this point, I will keep my wits away from any stock investing, and would trade stock in selective stock pick till clear picture comes from economic data front and Fed’s next move regarding any interest rate cut.

Mid term stock investing

As compared to long term and short term, mid term stock investing strategy is quite different, in-fact it is purely done by doing technical as well as fundamental analysis. The long term strategy purely depends upon fundamental story of your favorite stock pick, and short term stock pick is purely depends upon technical analysis.

One can differentiate the stock holding categories as
Very short term: Stock holding for very short term basis can be treated as stock trading or just to trade stock, which can be day-trading, or buy today sell tomorrow stock trading, or maximum couple of weeks, but not beyond that.
Short term: Couple of weeks to less than a year.
Mid term: 1 year to 4 years perspective.
Long term: 4 years till the investor wants to hold his stock pick.

Mid term stock investing is basically done to reduce extra burden of tax and to make adequate profit gain from the cash which you have achieved in your bank savings. It is neither a good understanding nor a bad understanding to hold a stock on a medium term basis.

Many a times it do happen even though your stock pick choice is perfect right and you have done stock investing in right stock, at right time, and at right price, but due to some unusual circumstance happening in the stock market, you immediately comes in danger zone, and your stock pick is also hammered significantly keeping you on loosing side, and this can last until the stock market completely recovers from it unusual circumstances. Many good stocks unnecessary gets hammered with any negative influences in stock market, but if your stock pick is just right, you definitely have a chance to make good profit in medium term also.

It is having said that stock investors like returns from their investment, if your stock pick is just perfect, even though after you stock pick gets hammered, it has more chance to bounce back at the same phase, because their valuation becomes more attractive and investors rush in to pick those stocks, giving you the stock rise. So for doing mid stock investing, technically as well as fundamentally the stocks should be good.

Stock market prediction is very complicated process, and looking from the mid term perspective it is still more complication, at such condition stock research is most important aspect which is done with the help of technical analysis and fundamental analysis.

Investor’s Sentiment held by Bush and Bernanke

August 31, 2007

With the end of this month, U.S. stock markets finished with one of the most volatile months in years. No doubt that according to me, as a stock trader, volatility is a paradise, which gives huge swing in the stock from top to down and down to top which helps traders to make good day trading with sufficient gain. For stock investing point of view, volatility is worrisome because it does not give a definitive clue of market direction.

Yesterday’s stock market upward move was mostly driven by statement made by Bush and Bernanke which was as per market expectation. Investors were reassured of making every effort to protect the economy from market turmoil.

The major indexes fluctuated but regained after President Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.

The Dow rose 119.01 (0.90%) ending at 13,357.74. The Nasdaq composite index rose 31.06 (1.21%) ending at 2,596.36.

Next week view
According to me, next week will be a volatile week. I will (as a trader) use any 50 to 100 points rise in market as an opportunity to book my profit in my selected stock pick and would buy if there is strong dip of 200 to 300 points. As a stock investor I will keep my holding going on, no matter in which way the stock market will swing.

Stock market surge

August 30, 2007

After getting positive global clues and growing cheerfulness among investor for further chances of interest rate cut by Fed and some strong support at level 13000, NASDAQ and Dow rose higher after previous day turmoil. Stock from many sectors took part to make the index rise higher by 247.44 points ending at 13,289.29. The broader S&P 500 index was up 31.04 points (2.19%) to 1,463.76. The technology heavy NASDAQ composite index rose 62.52 points to 2,563.16.

Previous day stock market CBoE volatility index, also considered as stock market fear gauge, drop significantly to 9.5% versus previous day of 16%.

According to me investors might take a breather at this point and will wait for any definitive clue to play with various factor affecting the stock market further, until then the stock market will move in a narrow range with any 50 to 100 point drop or 50 to 100 point rise from 13,2089 level. My today’s strategy will be as an “investor” I would wait and watch and would avoid buying but will keep my holding continue going on, and as a “trader” I will short the market at every 50 to 100 point higher level and will go long at lower level with any 50 to 100 points drop.

Stock Pick- Dycom Ind.

Dycom Inc. recently announced its 4Q result for the quarter ended June 28, 2007 shows significant jump in the profit margin from $10.1 million to $14.3 million (35%) per share, in the prior-year quarter, which according to report is above street estimation.

Contract revenue rose 25 percent to $317.3 million from $253.2 million in the fourth quarter of 2006.

For the full year, the net income doubled to $41.9 million, or $1.03 per share, from $18.2 million, or 43% per share.

Company’s revenue climbed 14 percent to $1.14 billion from $995 million.

Overview
Dycom Industries, Inc. is a leading provider of specialty contracting services. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, and other construction and maintenance services to electric utilities and others. Founded in 1969, Dycom has grown to become one of North America’s largest specialty contracting services companies and recently has started to provide services on a limited basis in Canada. Its 30 operating subsidiaries serve customers in 48 states and the District of Columbia. Headquartered in Palm Beach Gardens, Florida, Dycom employs a workforce of approximately 10,000 employees in more than 400 locations.

Stock pick opinion
Looking at the company’s fundamental and overall performance and future growth prospectus, this stock pick clearly seems to have good potential to rise further from its current level, but looking at the present scenario and volatility in the stock market, investors should take more cautions approach before making any investment in this stock. According to me any significant fall in this stock would be an opportunity to buy, or who have bought this stock would keep this stock on hold.

Going through company’s fundamental, profit margin and growth prospectus this company is certainly headed toward to become a mid caps company from small caps, but still I would be little optimistic to hold this stock pick on a very long term basis.

Stock Pick Concern
With the growing apprehension among investor about slowdown in US economy can impact this company’s growth prospectus which might impact the company’s profit.

Any stock advice listed on this website is only for the reference purpose. Before investing your money in stock, please do full stock research or take advice of your stock broker or stock expert.

Volatility return to stock market

August 29, 2007

After the yesterday’s sharp correction on NASDAQ and Dow Jones stock market due to growing concerns of credit markets deficiency, which will mostly hurt the financial sectors along with lack of consumer confidence and falling home prices to some extent suggest growing concerns of slowdown in US economy.

Looking at the sharp fall on Tuesday, it clearly seems the volatility has return to Wall Street again along with all the major stock markets of world. Taking clue from yesterday’s fall from Dow Jones and Nasdaq, Asian market opened in red and recovered in late afternoon with news of rising weakness in yen versus dollar/euro giving a strong hand to stabilize the stock market, which significantly help the European market to open in green. No doubt this will help the US stock market to stabilizer around 13000 points and again some 100 to 300 bounce back rally clearly seems to be evident in coming days.

At this situation I would like to take caution approach and would like to do stock investing in selected stocks pick on a very short term basis until the next trigger, possibly the Fed’s next move, hits the market giving a confirm clue to stock market direction.