What are Traits of a Great Stock?
Are we at the bottom yet? No one knows for sure. But if you believe in the ultimate strength of the U.S. economy, now would be a good time to look for bargains. It will be the sector leaders that benefit from the initial upturn.
Buying great companies at a good price is always a good strategy. Look for industry leaders that have superior market position as well as solid financial fundamentals. Here are three important characteristics you should consider when looking for great stocks.
Level II Quotes Capture Stock Prices
A number of online brokers now offer stock investors Nasdaq Level II price screens as part of their service. Depending on your account size and/or trading volume, you may receive the Level II service free or at a reduced cost.
Market Cycles Create Stock-Buying Opportunities
Observant investors can find good stocks in just about any market, however it is easier in some situations than others.
Interest Rates and Stock Prices
The direction of interest rate movement is of primary importance to the stock market. The rate cut by the Fed last week was a good example of what can happen when the market wants some good news and responds with big bump.
Although timing the market is usually not a good idea for long-term investors, it makes sense to be aware of upcoming events that are likely to move the market.
If you were planning to sell and knew the Fed was planning a rate cut, you should hold off until after the announcement to pick up any bounce. Of course, if a rate hike was anticipated, you might want to sell before the announcement.
In many cases, the market prices a rate hike or cut in advance of the actual event, so there is often little change in the market. However, when the market is particularly volatile, the rate cut or accompanying statement can move prices significantly.
Buying Growth Stocks is all about the Future
What will the stock do tomorrow? Will the company continue to grow at a faster pace than the market in general? Important questions for the growth investor.
Keep in mind that growth stocks in the right industries have done well in the past recessions and, as a group, did very well when the economy picked up.
Investors confuse the economy and the stock market - they are not the same. The overall market is slumping badly, but 40 stocks hit new highs yesterday.
Market News Sources
The current market is almost entirely driven by news - and most of it is bad. The Fed meets Tuesday to put another bandage on its patient in the intensive care unit.
While things are grim, don't get your news from chat rooms and fear mongers. Go to sources that offer the best in covering what will eventually become the best stock buying opportunity in many years.
Understanding Cyclical and Non-Cyclical Stocks
Just like in war and football, investing is about offense and defense. It’s hard to find success with just one tactic. Cyclical and non-cyclical stocks should be part of your arsenal.
Stuck in Bad Investment Thanks to Stock Broker
The financial press is constantly reporting stories of investors who find themselves stuck in a bad investment. It is sometimes hard to decide who is at fault, the broker who wants a fat commission and/or fee from a sale or the investor who is so eager to make a quick buck, he overlooks the risks.
Finding Winning Stocks in Down Market
When the stock market is on a slippery slope with no obvious way to gain traction, it’s easy to assume that the only way is down for all stocks.
However, in every market you can find winners.
Using Relative Strength in Stock Selection
Do you know the relative strength of your stocks? Do you check the relative strength of the stocks you are considering for investments? In choppy or down markets, it's especially important to find stocks that are outperforming their peers. Relative strength helps you do this.
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Wednesday, June 18, 2008
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