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Stocks_-_Getting_Started_In_The_Market

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					Title:
Stocks - Getting Started In The Market

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616

Summary:
Hollywood loves the stock market. The chaos of the stock exchange floor,
the tension of boiler room day-trading, devious power brokers making back
room deals; it all makes for great drama. Then you have the true-to-life
stock market stories in the news: insider trading, big money IPOs, the
dot com bust. All of it is enough to make you steer clear of the market
for good and travel down a safer investment path. But don’t be
frightened, history shows that long-term, there’s no b...


Keywords:
invest, stocks, shares, tips, investment, wall st, options, trade


Article Body:
Hollywood loves the stock market. The chaos of the stock exchange floor,
the tension of boiler room day-trading, devious power brokers making back
room deals; it all makes for great drama. Then you have the true-to-life
stock market stories in the news: insider trading, big money IPOs, the
dot com bust. All of it is enough to make you steer clear of the market
for good and travel down a safer investment path. But don’t be
frightened, history shows that long-term, there’s no better place to put
your money to watch it grow. Here are a few tips to get you started.

Stocks 101

Simply put, when you purchase stock in a company, you become part-owner
of that company. Along with other shareholders, you all combine as
investors in the business, and therefore reap its rewards, or suffer its
losses. Stocks are most commonly divided into separate categories
depending on the size and type of the company (e.g., mid-cap, small-cap,
energy, tech, etc.).

While speculation can drive stock prices in the short term, it’s long-
term company earnings that determine a stocks gains or losses. Speaking
of short term, that’s when stocks are extremely volatile. Over a span of
just a few months or years, stocks can climb to astronomic heights or
drop to pitiful lows. But, since 1926, the average stock has returned
over 10 percent per year. That’s better than any other investment vehicle
out there, and that’s why stocks are your best bet for long-term
investment.

Picking Stocks

Before you dive head-first into the market, there are a few things you
should know about picking stocks. First, the market’s performance as a
whole is not necessarily a reflection of its individual stocks. Good
stocks can keep growing even in a down market, while bad stocks have the
frustrating tendency to drop or remain stagnant in a strong market.

Also, remember that history is not indicative of a stock’s future
performance. Even solid stocks can slip from time to time. Remember that
stock prices are based on a company’s earnings outlook, not its past
performance. If the future looks bright for a company, a $100 dollar
stock is probably a good buy. If earnings look less than promising, even
a $5 stock can be a waste. Finally, investors determine a stock’s value
by measuring a handful of primary criteria, most notably cash flow,
earnings, and revenue.

“Diversify”

It’s the rallying cry of all smart investors. When compiling an
investment portfolio of stocks, it’s smart to own shares in companies
from several different industries. Consider it a “hedge bet”. When one
part of the economy experiences a downturn, you’ll have other stocks in
your portfolio to put your faith in.

When building your portfolio, the safest bet is to pick from financially
strong businesses with earnings growth above the average. Surprisingly,
that limits the lot to choose from, as only around 200 stocks today fit
that bill. A solid portfolio features somewhere in the ballpark of 20
stocks selected from seven or more industries. A general rule of thumb is
to invest in stocks with an above-average rate of growth and reasonable
valuations.

Buy and Hold

Day trading is a great way to lose your nest egg, but quick. As we noted
before, stocks over the short term are highly volatile. Sure, brokers
today are offering cheap trades, but beware. There are a ton of hidden
fees and taxes involved with day trading, not to mention the amount of
attention required by you to monitor the blow-by-blow proceedings of the
market. Our recommendation: buy and hold. A ten percent return over the
long term is nothing to sneer at.

				
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