The Consumer Perspective To Choose Stocks

Investing in the stock market sometimes boils down to one essential element, namely good choices. No matter how well we do our research, how often we buy and sell, or how much we pay experts for their tips and advice, without choosing stocks that represent value, we won’t succeed. Although some are good at predicting the direction of the market and timing the ups and downs, if they don’t purchase the right stocks, they will still meet with difficulties when trying to reap profits.

For that reason, some of the best paid people on Wall Street known primarily for their talent at picking stocks. Financial advisers give talks and write books and newsletters about how to choose stocks that will outperform the market, and most experts echo the same sentiment and agree that one of the best ways to judge a stock is from the point of view of a consumer. By using instincts we have already honed as ordinary shoppers, we can often ferret out information that even the most skilled and software-savvy market watchers miss. While they study analytical charts, earnings reports, and the stock exchange ticker tape, folks just like yourself actually do business with the companies they invest in, because their experience as a customer speaks volumes about the value of the company and its products and services.

Here are the kinds of things to look for as indicators of a company’s worth:

1)    How popular is their product or service? If everyone you know uses it, and is satisfied with such things as price, customer service, and reliability, the company is probably well situated among the competition.
2)    Are the employees satisfied? One of the best ways to judge a company is by talking to employees. Many companies put on a good facade, but underneath the fancy marketing is plenty of discontent. But if employees like a company – especially if they like it enough to buy stock in it – that’s a very good sign.
3)    How well known are they? You may find a great start-up company with all the trappings of success, but discover that it is lesser known. Many small or regional companies are popular in their own back yards, but the rest of the world may not yet know about them. Buying such unknowns can be a great way to invest in the next hot stock. If the fundamentals look good, sometimes being lesser known is a good thing for investors getting in on the ground floor.
4)    If they went out of business, where would you go for similar products and services? If you can’t think of a convenient alternative, the company is probably in a niche market that enjoys customer loyalty and repeat business.

Shop around, and notice what you see and how each business makes you feel. Then trust your intuition. Make a list of companies that get your attention, and then call their shareholder relations department and ask for more details. By starting your list with companies you already have a first hand experience of, you raise the chances considerably that you will make smart choices.
     


                             Photo by: Sujin Jetkasettakorn
 

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Conciousness In The Stock Market

It might be that you as many others have a social conscience and would like to do the right thing, either in your own community or the world community. May be you’re concerned about environmental issues or the opportunity for fair trade and human rights, or would like to protect animals and promote healthy eating and exercise for children. Whatever your area of ​​interest, you may want to act in a manner consistent with your beliefs and convictions. But at the same time, you may be interested in making money in the stock market. Many see this as an irreconcilable conflict, but they no longer have a reason, thanks to the many stock funds generated specifically to the needs of people who want to play the market without compromising their values.

Mutual funds are a great way to investigate the socially conscious side of Wall Street. These are not stand alone stock, but groups of stocks that are managed by trained professionals. When you buy shares in a mutual fund, essentially you are contributing funds to that particular  mutual fund, the fund manager is using the money to buy stocks he thinks will do well and meet the objectives of mutual fund investors. Due to differences in the value of property funds, your moneys is more protected against risks than those invested in stock ownership from only an independent company. Today, many mutual fund companies specialize in socially conscious investing. When you buy in these mutual funds, that have committed to only use your money to invest in companies that advance the things you believe, you get two benefits. First, the peace of mind of knowing that your investment in the stock market is for good reason. Second, you can promote your cause and support companies that share your values, by dedicating your money to back their commitment to those values. So you have the opportunity to obtain both, financial rewards and personal satisfaction.

You can also buy shares in individual companies, doing some background research to determine which ones meet your criteria. For example, if you want to help protect the environment from companies that pollute, you can buy shares of companies that make “green” products such as alternative fuels that do not contaminate. Or you can buy shares of companies that clean up oil spills, plant a tree, or manufacture  biodegradable consumer products.

The idea is that you can have your cake and eat it too. It is possible to make money in the stock market at the same time, while committed to the values ​​of social consciousness by investing in the right stocks. Research the market to inform yourself or talk to a knowledgeable broker. The possibilities are out there.

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Stocks and Bonds…. Bonds and Stocks…

What is the difference between stocks vs. Bonds? People are now interested in knowing what a better way to invest. Trust be told, many believe that Bonds is better because they are a safer investment because it will almost certainly achieve a positive return on investment.

Here is a brief description of a bond. Your company has issued Bonds in exchange for your bond with your money for some time. When time is up, you will repay the loan with interest. So long as the company is financially stable, you can be pretty sure that money.

The actions of A, on the other hand, is not guaranteed and change over time. Therefore, most people believe (sometimes correctly) that bonds are a better investment, because it is more stable.

But here’s something that very few investors are aware of: If done correctly, can actually share the same investment is guaranteed to give you a positive return on investment in the Bonds, and maybe even more.

You see, when you focus on investing in financially sound companies with good numbers and hope for the future, you can almost guarantee to make money. However, when, like most investors, seeking to extend their investment in all things, and includes the company’s financial problems on the ground and is asking for trouble.

The reason that so many investors to lose money is to invest in companies regardless of their financial statements. The only reason to be invested at all, they think the share price will rise in the short term. Therefore, the first sign of trouble, run them out.

On the other hand, however, if you focus on the company’s solid, stable, not only guaranteed for a positive return on investment, but you can make more money than you Bonds. Warren Buffet is known to reach levels of 15-20% growth in its portfolio of nearly every year. Not possible without a strategy that focuses on the company can be sure to make a profit.

So do not be misled by focusing only on those links because they are safer. He opened his eyes, actually realize that many actions you can invest in ensuring a profit.

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Ensuring Success. Not Gambling.

Today, many people want to learn how to buy shares to raise equity. When it comes to making your purchase, there are several options available today. In the past, you should contact your financial advisor or broker-dealer and let them work it for you. They will phone in your order to someone in a stock exchange house, which in turn will locate a company’s shareholder willing to sell that particular stock for you. That was then, this is now. Now, you can almost always make your own purchases over the Internet.

Quite simply, there are now many sites that allow active trading with minimal cost. Note, however, that for every transaction you pay a fee. More than one investor has lost a lot of money trading assets, simply because they were forced to pay a fee for each transaction.

While these fees usually do not appear to be much (1-2% of total) they accumulate in a hurry when you do a lot of transactions, especially if your investments lose money or barely break even. The best strategy is to buy a stock only if assured that the PM is good long term investment. This way, you do not pay the costs associated with trading assets, and enjoy also a lower risk from daily market fluctuations.

How can you be sure, and became the owner of a long-term value? Although there are definitely some ways to go about doing this, an important skill you must have is the knowledge of how to read company financial statements. Quite simply, it is necessary to determine how well has company progressed during the last ten years.

This is probably the most important factor, because if when companies operate profitable for at least ten years (preferably longer) this is a good sign they will continue to perform well. These stocks often do not get all the publicity, quite simply, most investors focus on new companies with the potential of spring and make a million dollars overnight. Unfortunately, often lose more money that this companies will ever make.
Of course, you can still go through a traditional broker to make your purchase. Remember that they are paid a commission for every transaction they make.

Many times, they try to push you to buy a particular stock, so they pocket the money for a transaction. Never trust a broker for your financial future, you need to know how to do your own research and determine what action is the best choice. The conclusion is that there are some techniques on how to buy stocks. You can invest online or through a broker, but no matter which method you choose ,is absolutely necessary that the company you’re to invest in will profit in the future, so you better make sure of it.

Avoid active trading stock, as this can be a risky proposition. Active trading is like gambling. Very few operators win a profit with this approach. Do your research, find the value, and only then worry about buying stocks.

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Quick Explanation Of American Depository Receipts.

The investment known as ADR stands for American Depository Receipts, which is a tool used to make it easier for investors to invest in foreign markets. Instead of having to find a broker with capabilities in the foreign markets where the securities trade, an investor can just receive ADR’s from a depositary bank that collects the foreign company’s shares.

These ADR’s can be then represent shares in that foreign market. There are many advantages to using ADR’s that we have talked about in class such as the liquidity of these assets. Since the whole process of investing in foreign markets has become easier, the market has become far more liquid. The annual dollar volume of ADR’s has increased from $75 billion dollars in 1990 to $550 billion in 2002. Instead of having to different brokers and red tape to sell foreign investment we can simply trade ADR’s.

As technology advances it has become easier to invest in foreign companies and we can see this through the use of depositary receipts. Not only are depository receipts issued in America but they are also issued in other countries as well such as Euro DR’s, Singapore DR’s and China DR’s. In the Wall Street Journal on 2/24/06 there is an article, “Bank of Communications Seeks Listing” where we can see that Hong Kong-listed Bank of Communications Co. has gained approval to offer shares on China’s stock exchange and are willing to offer China depositary receipts (CDR’s). By issuing CDR’s, the bank is better able to sell shares to foreign investors.

For more information on American Depository Receipts, try checking out some of the Wall Street Journal articles in their online database. Just go to their webpage at www.wallstreetjournal.com. It is a great resource. I would also try checking out some of the other articles you may find in a google search.

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