The Stock Market Essay Research Paper The

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The Stock Market Essay, Research Paper The Stock Market Have you ever noticed how everyone thinks they know what is best for you? Everyone telling you what to do when you are the only one who knows what is the best for you. You maybe wondering what this is about, would you believe me if I told you it is about the stock market. Well it is, you may have thought that this had nothing to do with the stock market, but actually it is everything about the stock market. Why trust everybody else when you can invest yourself ? Develop your own system of trading and get started. This may raise another question, ” How can I find the right stock and buy them with out the assistance of a stock broker?” In the following information I will take you through the process of finding hot

stock picks and turning them into tremendous profits. Eventually you will even develop a trading system. First of all lets get the basic steps down before we move to the more advanced steps. The two main ways to make money in the stock market is from dived ends and buying low and selling high. To make great outrageous profits you will have to riley on buying low and selling high. This is very easy to say but very difficult to do. With dived ends you will receive a small percentage gain every quarter of the year, this helps with your profits but not much. To buy low and sell high you first have to find some stocks or funds. With this information and your motivation with stocks you can rule the world! O.K. maybe not the world but definitely your own portfolio. Morgan 2 Now that you

have the main concepts down we can move on and try to find some hot stocks. You never want to buy over bought stocks, because over bought stocks means that they are over valued. If you bought a over valued stock chances are that you bought high, and this may force you into selling low and take a loss. An easy way to get a round about feel for a stock to see if it is over or under valued is to look at its PE ratio. To calculate a PE ratio you take the price per share and divide it by the earnings per share and this will give you the PE ratio. Most of the time you don’t even have to find out the p.e. ratio because It will be calculated before hand , so all you have to do is look at it. Many analysts like PE ratios under 60 or so, but it depends on the industry PE ratio also (

another figure that is pre calculated) (Frailey ,50). This is one of the most important figures of a stock. Try to avoid buying stocks with high PE ratios for long term holdings, even if it’s a good company. For example Cisco Systems is a fantastic company, it has split nine times in the last ten years, it has never disappointed Wall Street with earnings but with a PE ratio of 125 this stock is over valued. I would buy this stock at about fifty dollars a share with a PE ratio of about 60. Even the best companies get over valued. Buy stocks like Cisco on short term pull backs and sell them when they become over valued. It is important to develop some type of trading system that will protect your capital and extend your gains. I do not think there is one trading system out there

that will apply to every stock, so what you must do is modify other systems and develop your own ( “cut and paste” ). The “pyramid system” is the most practical and useful trading system in the world. In this particular system you start off with about ten or so individual Morgan 3 stocks that you think will do very well. There is no way around it, some stock will go up and some go down, face it. In this particular system you will sell your stocks that decline by ten percent. Now that you have liquidated some of your stocks you must have a place to put the money. You will then put that money into your stocks that are going up. Typically the stocks that start to do well will continue to do so and the ones that do bad will also continue (Snell 4). You now have started your