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Getting Started In The Stock Market

Why you should invest in the stock market? Simple, financial freedom. What other investment form can you start off with $500 and possibly turn it in to millions. It’s a story you heard of 1000’s of times before.


You don’t have to open a corporation, have accounts and spend $1000 of dollars to open a store front, no products to buy, no employees to hire. You simple open an account with an Investment broker and you’re on your way. But what stocks to buy? First, knowledge is power, read, read & read. There are so many investment books out there to choose from. I would say three books on learning growth stocks, three on learning earnings reports and three on learning charting. The reason I suggest three books is that it will give you a few different views in each area and from the three of them you’ll be able to put your own winning strategies together.


After you read all the books you may find that you excel in one of them better then the others, for me it was the charting. It was like wow I can see it. What a turn on to look at a chart and say this company is going up or down in just a couple of minutes. It’s a feeling I would like all of you to have and once that happened for me I went out and got as many books on charting as I could find.


I have a friend who can read an earnings report as well as I can read charts. It’s amazing to see him work as he runs through the numbers like a machine. I came to the conclusion that everyone has their own strengths and weakness’. So after you read all the books, whichever one turns you on the most, consider on buying as many books as you can (or go to the library). I love the market and I hope you will to.

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All About Global Macro Trading

The global macro trading system can work effectively for every trader. If you have an already established system that works for you, why not expand it to participate in global macro trading?


If you have already been an established day trader, have you considered gravitating into a market that has more options such as the entire planet? Similar to a doctor attempting to diagnose an ailment, you have to search and then search once again to reach the end result. At times, the doctor will prescribe medications that just don’t seem to work, and you go back to the doctor to try something different. Well, it is no different in the stock market. You may think you are on track and it fails, so you attempt something different up until you find something that works.

If you are a stock trader, you understand this methodology. You have your system tweaked to the point where you know how to check your price to earnings and then price to book. You also look at the return you will receive on your equity, right? The better the system you have built, the better protection you have in the market thus improving your risk to rewards. The stock market is not an easy business. Sometimes it becomes a matter of trial and error. Eventually, we are fortunate and then other times, we tend to lose. The more educated you are the better a risk to reward you will have.


The global macro trading market provides an edge as it is worldwide, which means you can trade any instrument using the strategy you have developed globally. That means your chances of locating the best investment are greater. This market has really made a tremendous comeback compared to the last couple of years of trading. This is because a lot of people were trading long and leveraged. The macro traders however were shorting housing and financials then going long and doing some real interesting trading in short treasuries and dabbling in the commodities market.


What this really means is the global macro trading market provides a lot of options to test a variety of strategies. So if you set up your strategies to build on a model that you wish to invest, in you could be a real winner. This is a specialized market and the person who is new to stock trading might want to educate themselves before becoming active. If you are an active day trader that utilizes the same stocks day in and day out, you might not have an interest in global macro trading. However, anyone else that wants a variety and has a need to venture into a new market with a high variety, then global macro trading might be for you.

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New Home Sales Report For July

Yesterday the news came out that new home sales jumped 9.6% for the month of July. It was the fourth straight increase in sales. Sales rose to an annual rate of 433,000, up from June’s rate of 395,000. Many are saying that the bottom is definitely in and now is the time to buy, but is that really the case.
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Yes, sales are up more than 30% from the bottom in January, but nowhere near the peak of four years ago. Of course that’s was because of the inflated bubble that was created by the Fannie Mae and Freddie Mac sub-prime loans.
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So does this really mean that the bottom is in and we can expect the economy to turn around? I doubt it. Why I think that is because of the fact that the numbers are (I feel) are mis-leading. Many of the new home sales that have been happening in the last month or so were first-time home buyers. That’s because of the government’s incentive plan for first-time homeowners who qualify for an $8000 tax credit. That in itself is misleading on the fact of it’s a tax credit, not a rebate. Which means of you don’t have enough of tax liability, you won’t be able to write off all of the $8000.
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What does that mean for the industry? Well, home builders saw a jump in their stock price today, but will it be able to maintain those levels? I doubt that too. mainly because when the program will be terminated at the end of November. I believe the market will dry up again with sales. As it is, some builders have already seen a dip in home sales. In Arizona, A.F. Sterling Homes stated that sales in July stalled because the builder couldn’t guarantee the homes would be completed in time to qualify. The industry (real estate agents and builders) are really leaning on Congress to extend the the credit on the grounds of the sales could reverse from their current trend. As a matter of fact, Randy Agron, the vice president of A.F. Sterling Homes was quoted as saying “The real estate market is really a fragile thing. It’s not the right time to take (the tax credit) away”.
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With that in mind, do you really think the bottom is in? It has been proven in the past that when the government gets involved with trying to “save” the economy, it actually extends it by not letting the free market follow it’s natural course. With this program as well as the financial bailouts and “Cash For Clunkers”, we have three major industries being manipulated within the American economy.
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All I can say is…hang on, it’s going to be a bumpy ride.

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Naked Short-Selling Banned

It has finally been decided that the art of naked short-selling will be banned from now on, which is a good thing since that technique of trading is what caused the demise of Lehman Brothers and many other stocks of the financial sector.
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I’ve never really been a fan of short-selling any stock even though I’ve done a handful of times. Short selling is the idea of betting against the stock, expecting it to go down in value. A trader will borrow and then sell shares of a company, only to buy them back at a lower price to return them back to the entity that they borrowed them from. With naked short-selling, the trader doesn’t worry about borrowing the share before he sells them. At that point he/she has to look around for someone to borrow the shares from. In most cases there aren’t enough shares to go around, causing turmoil and wild swings in the stock price.
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Now the SEC has included a requirement that all brokers must buy or borrow the shares promptly to cover the short sale. The SEC is also considering several other ways to limit short selling. Let’s not forget that it was the SEC that removed the up-tick rules a few years ago.
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The up-tick rule refers to the price of a stock has to move up in price by at least a penny before anyone else can short the same stock. That helps avoid a runaway drop in the stock price.

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The Stock Market Is Getting Ready For Another Run ...

Here we are again going through another correction in the markets. The three indicies have dropped over the past week off their seven month high and I’m not surprised. Over the last three months the markets have been on a tear coming off their lows. I mentioned before about how the markets wouldn’t be able to continue these gains without some sort of correction and profit taking.
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Even though I’ve been waiting for this pull back for some time, I did expect it. I will say that the markets aren’t as weak as I thought. I no longer expect to see the DOW reach 7000 again. As a matter of fact I don’t think it will get below 7800.
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The word on the street is that there is a large amount of money sitting on the sidelines waiting to jump back in, which means that once investors and traders feel that the waters a safe enough to come back in, it will help the markets rebound even more. Yesterday I heard that many of the hedge fund managers are already invested in and that they don’t have much capital not isn’t in the markets. The report stated that they are concerned that they may miss the next surge in the markets and they don’t want to be caught sitting it out.
If that’s the case, it can also be said that if they get skittish and pull their money out to avoid another big loss, we will see the 7800 level on the DOW.
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I don’t think so on the latter issue because the housing market is showing signs of stabilization, as well as the financial sector. Jim Cramer last night even had a segment in regards to the housing bottom. Since last August he has been saying that the housing bottom would be around June 30th of this year. Well, he ripped the board down and said that after yesterday’s housing number were the third straight month that they have improved. Other indicators are looking good too.
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With that in mind, I will start building positions in the stocks that I’ve been watching for sometime. Over the next two weeks, I will be looking at Apple, JP Morgan, Research In Motion and Agnico Eagle Mines. Of course there are others that I do like, but I would want more of a pull back before jumping on board with them.
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If you’re looking to take advantage of some free advice from Jim Cramer (besides his TV show), Check out his Action Alerts program that he’s always mentioning on his show. I’ve been a member for over a year and find some sound information from him, along with some great picks. Follow the link for a two week free trial of his Action Alerts subscription.
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TheStreet.com 120x120 Free Trial

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Finance, Energy And Politics, Oh My

It seems that the stock market doesn’t react the way it should when important economic news is released. Over the last two months there has been negative news reports released that would normally cause the indicies to drop, but instead they have responded in the opposite manner.

The same goes for the good news that is also released. Look at how the news came out yesterday about the billions of dollars that will be paid back by ten of the major banks. You would think that the news would make investors and traders want to invest in these companies, making the price rise, well it’s wasn’t the case. As a sidebar comment, It amazes me that the money isn’t being returned to the Fed’s, instead it will be held by the Treasury Department just in case it will be needed again. My opinion is that the money will be used in the department’s slush fund and never returned to the tax payer.

The talk is out again about drilling in the Gulf of Mexico. The talks should have never halted. How are we to ever take control of our economy if we are depending on foreign countries to supply us with our energy needs? Oil is abundant in the gulf and we are not taking advantage of it, but I guess it’s OK since Russia is working with Cuba to drill in the gulf. That’s real good that they are doing so, this way they can also sell oil to us and we won’t be dependent on the Middle East. If you’re not sure, that last comment was a sarcastic one. Keep an eye on the alternative energy sector for some good gains. When oil gets above $70-$80 per barrel, solar and wind energy becomes more feasible and profitable as an investment.

The politicians are not doing the job that they were sent to Washington to do. The spending in this country is way out of control and needs to be pulled back. The private sector has to take charge of their future. We can not expect the government to come to their rescue. If the company can’t make a profit, then it needs to close no matter how many people it will affect. In the long run, having the Federal government get involved will only hurt more than it would have originally.

Keep your eyes on the stock market and be ready to raise capital (cash). I expect a pull back soon enough.

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(NYSE:AGM) Federal Agricultural Mortgage Corp.

Back in October 2008 I wrote a post about Federal Agricultural Mortgage (NYSE:AGM). At the time the stock price went up by over 350% in just one week. Well the stock fell back down to it’s pre-spike price during the next three weeks, where it’s pretty much has been since then.
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Until Tuesday morning where it started it’s 113% price gain. That’s right the stock jumped after the earnings report was released showing that they’ve steered the company around to post a net income of $33.5 million or $3.31 per diluted share. What makes it interesting is that there are no analyst covering this company. As per Yahoo Finance.com, there is no info available for AGM.
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The main reason for such a great quarter was driven by the financial derivatives along with the trading assets.
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What I will say is that most of the gains in the share price happened before the markets even opened. Needless to say that means that most average Joes didn’t see much profits unless they jumped in the stock before the close of Monday trading hours. I you jumped in a the opening of the markets you would still have made over 7% with the trade. Typically a stock will continue on momentum for the next day or two, so don’t try to chase this stock since most of the gains have already happened. I may be wrong and it could take another good jump in price, but I wouldn’t recommend it. Especially since the financial sector took a beaten today and will most likely continue for the rest of the week.
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*DISCLAIMER* At the time of this post, I do not have a position in AGM.

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The Stimulus Plan Doesn’t Stimulate Anything

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Well, it’s been three weeks since Obama has taken office and he’s already having a hell of a time trying to get his administration candidates approved as well as the stimulus package. To top it all off it seems that Wall Street along with Main Street have not confidence in the new President.
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The Dow had a horrible day today because of all the “politics as usual” mentality going on in Washington. The government laid out it plan for the financial bailout which basically told us nothing in regards to specifics. It seems that all that Tim Geithner told everyone was that the government will spend more than $1 trillion in private and public support, but really nothing else.
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Wall Street went on a selling spree to unload many stocks to take refuge in safer investment like gold and bonds. The DOW fell 382 points today which is over a 4.5% drop.
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The Treasury’s plan is to restore the credit markets. To work towards removing the bad assets from the bank’s books. They also state that it would help open the path for consumer and business loans. If it is anything like the first TARP plan, they know that they’re going to spend $1 trillion, but they have no clue as to how they’re going to spend it.
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All I got to say is that after last night press conference and today’s treasury announcement, they’re proving to me that this administration has no idea on how to fix this problem and take care of their lobbyist and other cronies at the same time. It’s sad to think that if they really wanted to end this nightmare of a recession, all they have to do is stop the federal spending, cut the taxes and the rest will take care of itself in a short period of time.
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Why would the government need to raise taxes if they aren’t spending as much money? If they have to cut jobs, so be it. If the corporate taxes were less along with payroll taxes, companies would be able to hire the people they would be laid off from the federal jobs that were cut to save on spending. I’m not a genius, but it doesn’t take a rocket scientist to figure that out. Go to any Ivory league college and ask an economic professor and they will tell you the same thing. The less they spend, the less they will need to raise taxes.
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As for the stock market, the DOW close at 7,888 and at this level it’s nothing but a buying opportunity for traders who are looking to a few good deals. Do your research and buy incrementally.
Happy trading.

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Stock Market News For The Week

It’s amazing how this week has turned out for me and for some investors that I talk to. I’m not talking about the traders who buy and sell everyday or even the day-traders. I’m referring about investors who have more of a buy and hold mentality. I’ve spoke before in another post about how in these trouble times that the buy-and-hold system isn’t really working. There’s too much volatility in the markets to do that type of trading, but with the moves (or lack of) of the markets this week…who knows.
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In this week the markets have held up quite well and I’ve made some good gains because of the strength and stability in the markets.
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News came out late last week about the Ponzi scheme that Bernard Madoff was running for some time. Taking over $50 billion dollars from many people. I would have figured that more people would have pulled out more money on that news.
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I guess that the Federal Reserve basically removing the lending rate this week help. That really got the markets fired up on Tuesday afternoon. It seem to continue throughout the week as well as news came out about the condition of the financial industry. The dollar has weakened in the last few trading days, which makes me a little confused to how the markets have been moving, but I’m not going to complain at this point.
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It seems that the stability is coming back to the markets as the VIX levels drop to more of a normal and acceptable area. Yes, the markets were flat, but with all the bad news that came out, we should be happy on the performance of the markets.
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Quite a few of the positions that I’ve taken in the last week were down from my core, so I did buy more of those stocks and from Monday to Friday, they’ve all made moves to the upside. With weeks like this when things could have gone worse than they did, It makes me wonder if we’re basically at the bottom already. I guess next week will give us a better clue on the answer of that.

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Is America Doomed?

What is going to happen to America? It seems that the true meaning of capitalism is being destroyed. The problem is capitalism is being destroyed by the very people who say they’re trying to preserve it. How can this be? It’s how I see it. What are your thoughts? here’s mine.

First we started with the financial sector, now it’s the American auto industry. When are the taxpayers going to see the return on their investment in these sectors? At the rate it’s going, I doubt it will ever happen in our life time.

Yes, I know that the government is saying that this will help the economy, but aren’t they the same people who put us in this mess?

In the 1990’s NAFTA was signed and many business’ went over the border to make the products that were being built here in this country. Ford and General Motors have opened factories in Canada and Mexico since NAFTA was past.

When the bill was past in 1996 to help all American buy their own home. I’m sure the politicians were aware of the fact that it would be done with taxpayer’s money through Fannie Mae and Freddie Mac with the help of adjustable mortgage rates. It helped people get into homes that they couldn’t even afford.

Twenty plus years ago we heard that there was going to be more energy efficient cars within ten years. How come my 2005 truck gets the same mileage as the 1985 Grand Am I owned fifteen years ago? What’s with these CAFE laws and all the other regulations that are put on the automakers when the cars haven’t really improved over the decades.

Now after all this crap that has gone on for too long, the companies that are in trouble are going to the people who caused these problems for help. All the while the American people sit in their living rooms watching mindless TV and are none the wiser. Go figure.

I know that this isn’t a political site, but in all actuality this post isn’t about politics. It’s about the way Capitalism is being destroyed by people who have their own agenda. Wall Street and Main Street are one and the same and from where I live, it doesn’t look like capitalism to me.

We need to stop bailing out these companies that don’t handle their business in a proper manner. If you can’t make the business profitable then you shouldn’t be in business.

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