Stock Market Basics - Part 2

The constitution of a society requires that we learn the basics of the stock market and how to evaluate stocks for investment purposes. In order to raise funds of the company goes through a process rather than to make their stock available for purchase. The question is: after the initial public offering, or IPO, what are the reasons to consider purchasing a particular title?

There's really only one reason to buy any type of storage. Want to make money. That's it. Buying shares in any company does not every company asset. That only happened at the IPO. If you buy shares in a large well-defined blue loop or a small cap technology company you are buying this stock for some other investor. So why do it?

There are a variety of reasons why investors choose a specific title. The thing to remember is that there are exceptions to almost every rule. So let's start with the approach of "critical." This method involves a review of the financial framework of the company over its competitors. It examines market share, profitability, book value and a variety of financial factors. Much of this information is widely available on the Internet and other sources.

The problem can be shown by the following examples: Cisco and Intel. In the 90s these were some of the "stock redemption". These are collapsed when the tech bubble burst and have failed then. However, both titles are still leaders in their respective fields, both have huge profit margins and steady growth in sales. Their fundamental to say that these stocks should be in constant growth, but are not. Why not?

Technical analysis says that the stocks to follow specific pattern repeated. In other words, Cisco and Intel have been removed. But they did not.

Then there's the hot tip. These are securities that have some new technology or a patent that makes them a "sure thing". Bioject Medical Technologies has a needle-free injection system for vaccines. Who would not buy that equipment? Their warehouse was in the range $ 30 average in the 90s is now trading for 35 cents per share.

If these ideas do not work what is? The value of a security may be affected by a number of things. In fact, probably does not matter what affects the price, only how to respond. The price of stocks goes up and goes down. Always has and always will. This is the basis of the stock market. Before purchasing any title, identify the boundaries. If the stock goes down now, decide when you want to cut your losses and sell. Then do it! If a stock starts to rise, raising the sale price. Every time he goes up, raise the selling price. Remember, when the title begins to fall, the fund is zero. And all stocks will fall at some point.

When you sell, try to determine your profit. If you are able to grow their investments at a rate that is higher taxes and inflation, you are doing fine. If you are not doing well, then you need to think about how you select your inventory. More on that later, but the key principle in the base of the stock market is to make a plan and stick to it .......