Posted: April 14th, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 1 Comment »
If you’re investing in individual stocks, be sure to stick with your plan. Too many investors hold on to their losers when the fundamental reason they bought the stock in the first place is no longer a reality. They tell themselves it will go back up, and they’ll ride out the current slump. But what happens if the current slump is the new reality and the stock is destined to languish at it’s new value until the company folds.
Admit when you’ve made a mistake and move on. Have a plan and stick to it. This is another one of those situations where having a ranking system helps. Once a stock’s price crosses a given threshold determined by you, cut it loose regardless of the reason it crossed that threshold. Remember: You chose that threshold for a reason – don’t rationalize yourself out of doing what’s necessary.
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Posted: April 9th, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 3 Comments »
Risk and reward go hand in hand in the stock market. It’s an inverse law which states that the higher the risk, the higher the potential reward. This is also where that adage “if it seems to good to be true, it is” comes into play. If someone is offering you a “risk free” 10% return on your money – run!
Be sure to invest only in things you understand, and know not only what the potential downside is but also what would cause the downside to become reality. Also, sticking to the plan will help eliminate some risk.
If you liked this, you may also like:
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Posted: April 7th, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 3 Comments »
Many experts recommend that the long term investor should ignore the squawking heads on TV. and the financial press, since they’re often just trying to fill up the void of a 24/7 news cycle and paying too much attention can sway an investor from his path. But too much of a good thing is often a bad thing, and it’s no different here. Get carried away with ignoring the day-to-day noise and you may end up ignoring your investment portfolio altogether. This can be bad in the worst of times, but it can also be bad in the best of times.
During bull markets and bear markets, your portfolio can get out of balance and it’s important to dust it off once in a while and rebalance things. A good rule of thumb is to rebalance your portfolio every 6 – 12 months, either once a year near an anniversary or when you set the clocks back and then ahead again. Think of it as your ounce of prevention, a portfolio equivalent to changing the batteries in your smoke detector.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
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Posted: April 2nd, 2009 | Author: Joe | Filed under: 10 Investment Tips for Beginners, Investing, Tips | Tags: Investing, Stock Market, Tips | 1 Comment »
Some members of the media know some things, but most are not worth their weight in salt. Much of the media is simply noise – a by product of the 24/7 news cycle. They can make mountains out of mole hills simply because they need something to fill their broadcast time. They can also overlook the truly important in favor of the shocking and sensational. Don’t confuse professional pundits with professional investors, or businessmen.
The one caveat to this is if you are engaging in trading. If you’re a stock trader, then knowing what the talking heads are saying about your stock or sector of interest is important. However, don’t be surprised when the spin fails to meet reality and you find yourself left holding the bag when sentiment turns the other way for seemingly no reason.
If you’re a long term investor, be a passive listener. Pay attention to big picture events that affect the long term time frame, and the general economic landscape.
If you liked this, you may also like:
Jim Cramer’s 10 commandments of stock trading.
25 Investment rules from Jim Cramer.
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