Hey everyone. I apologize if this question sounds dumb, but I have to ask. When you girls and guys decide your next purchase, whether its stocks, metals, etc, how have you come to that conclusion to buy that item? How did you know to go to that particular item? Just looking through all the different stocks there are SO many. So far I've made two buys so far, but they were from tips given to me from a broker and from a friend who is a member here, but I'd rather not disclose his name. So my questions is, how do you know where to look ? Whenever I go to check the price of a stock I like to look at the details on the company, like 52wk, spendings etc. But again, how do you know what stock is the right stock to take the gamble on? I have a stock I want to buy right now, (WWE), I went to Market Watch last night and went through their sheets and each year their is progress within the company, and there isn't much debt. So all the signs to look for that I've learned so far look positive. BUT, at the same time, I'm not sure if I should put down an order. I was thinking $400-500 worth. The stocks are about $11 a share right now.
You need to follow the company while to learn how it operates and how the market it's in operates. On top of that, you need to learn the sentiment of the traders in the market. For instance, when negative news comes out, many stocks will be over sold and will be a buy when they hit bottom. Or when good news comes out, they are over bought. If a stock is really low due to a bad quarter but the market for the company looks good for the next quarter (along with expenses) then it will likely be a good buy.
Read Benjamin Graham's books - "The Intelligent Investor" is a great place to start. And other books about other investors mentioned here. I'd read through all the company info and filings - 10k, everything. Have a copy of a finance / investment dictionary handy to look up any terminology you don't understand.
Thanks for the two posts above. I'm still getting used to the level of information I need before putting down an investment on a company. I haven't quite gotten to the point where I feel like I'm making an educated investment and not just gambling. One point I would recommend is getting a complete familiarity with a company before putting money down, at least initially as you start making investments. More seasoned investors have the familiarity with the market to gamble a bit, but for newbies like you and I, that's just a recipe for losing money.
One thing you might consider is starting out with some $ either in mutual funds or an index fund, then slowly dollar cost averaging in to your own picks. If you put a couple of grand into your IRA and plan to add a couple of hundred a month, you can perhaps put that first couple of grand into a fund or two, then start buying small amounts of a handful individual stocks each month that you eventually decide to invest in once you're comfortable making your own picks.
I'll be honest, a lot of my picks have come from tips from another investment forum. Then of course after hearing about this company and seeing what others have written it's time to check their website, read through all of the financial statements etc. Look a bit more into how the company operates and also just google it and see what other people think about it. (and by this I don't mean listen to their recommendations, but rather to read through the articles to see if they bring up points that you've missed when going through the financials etc)
Stock screener (yahoo) is an amazing tool to use to help you find some gems in the market. Naturally, it depends on the criteria you want to search for, but there are countless theories on what's your best bet. I know the big dogs look for poorly managed companies, throw their money in, get the CEO fired, then work with the new CEO moving forward. I'm guessing you're not quite in that position, but some people instead try to follow these types of investors.
Yeah, I have found some gems using stock screeners - there are certain characteristics I tend to like in a company, and when I find a few or a few dozen or more that meet those criteria, I dig in and look at each company and decide upon which ones I want to buy (or perhaps short) and how much I want to allocate to each pick. I've also made lots of money riding the coattails of those activist investors like Icahn and others. It can sometimes be risky though. Be prepared to see the stock move sharply the other way if it's disclosed that the activist has decided to sell out of the position, or if it is discovered that he has covered a short (Einhorn) or whatever.
