Sunday, March 25, 2012

Stock Trading Tips

The following tips are to help long term and short term investors create wealth and enjoy a healthy trading career:

Long term

1. Set out a plan and stick to it
2. Pick companies that you will enjoy following
3. Take some profits & let your winners ascend
4. Don't make too many adjustments to your account
5. Cut losses
6. Diversify by investing in utilities, IT, financials, health care and internationally
7. Enter the market at different times
8. Reinvest your dividends
9. When the market crashes have a contingency plan, don't panic, buy more stock
10. Consider passing your stock to your kids on a step-up in basis

Short term

1. Set stop losses
2. Accept being wrong and move on
3. Do not take trades personal
4. Do not try to make your money back with the same stock that took it
5. Do not double up to recover from a loss
6. If you have entered a losing streak take a break and stop trading for the day
7. Take profits when you have them
8. Occasionally take some of your gains to take a vacation or buy more education
9. Do not use all your money on one trade
10. Do not confuse luck with skill

When trading stock it is important to realize that the market is always right and a trader must stop a loss before it becomes out of control. Protecting money is a must to survive, too many bad trades and you won't live to trade another day.  If you have never traded before I recommend starting small and paper trading.  A day trader that wants to make money fast and exit a trade within minutes or hours wants a stock with at least 1-5 million in volume and daily avg movement of at least $1-$2.  A long term trader can buy just about any kind of stock but they may prefer those with high volume.

Sunday, March 18, 2012

Protect Your Money

Money does not grow on trees it has to be worked for, it is constantly changing hands and being traded in exchanges.  As a responsible member of society there are rules to help us keep it in our hands as long as possible and we also aim to multiply it.  Financial matters are one of the top reasons couples argue. Loving money isn't necessary but it should be respected for our own good.

The following helpful rules are ways to help the novice or expert have a healthy financial life and protect their money:

1. Be organized with your money and create a budget
2. Set out saving/investment goals and stick to them
3. Do not take financial advice from people that have no money
4. If you need a financial planner get more than one opinion
5. Do not spend more than you make
6. Use credit wisely and do not use it to buy items that you will not be able to repay immediately
7. Do not leave your money in cash form for a long period of time
8. Do not make financial decisions in haste or fear
9. Be well informed and adjust your money allocations as the environment changes
10. If interest rates are low look for higher yields (stocks)
11. If interest rates are high then safer securities can be used (bonds,CD's etc)
12. College is a good investment unless you will end up paying student loans for over 10 years
13. Do research on the career you want and the average salary
14. Do not place all your money in one type of investment learn to diversify
15. Always leave some money on the side to be able to enter opportunities because they will arise
16. Your rent should not be more than 30% of your monthly income
17. Get health insurance
18. As you begin to age consider a secondary insurance Medicare may not be enough
19. Beware the 5 year look back it can become a 10 year eventually
20. Start estate planning accordingly you do not want your loved ones to go through probate

Friday, March 2, 2012

Top Dow Dividend Paying Stocks

AT&T (T) has traded at a 52 week low of 27.27 and a 52 week high of 31.94 with a beta of 0.48. Despite the awful summer we had in 2011 it held on pretty tight and did not drop as hard as other stocks.  With that said it currently pays a dividend of 5.80% and trades at 30.87 it also showed improved revenue compared to a year ago. Moving forward it is expected to show growth above 5% in the next five years according to analysts.

Verizon (VZ) has traded at a 52 week low of 32.28 and a 52 week high of 40.48 it currently trades at 38.67.  Verizon has a beta of 0.41 it had a large move after the August drop last year to move up from 33 to 40 in 5 months.  Looking at option contracts buyers believe it will move above 40 and remain there for the rest of the year.

Merck & Company Inc (MRK) is paying a dividend of 4.40% and has traded between 29.47 - 39.43 over the past year.  Most of that ground was covered from August 2011 - January 2012 when the stock rallied quite nicely.  The company will not cut down on R&D while other pharmaceutical companies will cut down this year.  Finding new drugs to replace the expiring ones has put a stump on its price which has hovered at about 38 for the last few weeks.

Pfizer (PFE) pays a dividend of 4.20% at a price of 21.41 which is a pretty good deal to get a piece of the Dow.  The stock appears fairly cheap although the company plans to cut some of its R&D.  Currently the company has plenty of projects in Phase III clinical trials and it does not have a huge exposure to Europe that is why the European crisis has not moved the stock much.   A few of Pfizer's drug patents expired in 2011.  Lipitor was one of them and some others will expire in the U.S. in 2012.

General Electric (GE) currently trades at 18.97 its dividend at 3.60%.  The company has gone on quite a ride because it mirrors the economy and now it also reflects the world.  Going forward it appears it is situated for long term success but it still can be a bumpy ride.  It is expected GE Capital will start paying dividends possibly in the middle of the year.  It is the cheapest stock of this bunch yet it is a long term investment this is not a get rich quick stock.