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Buying Penny Stocks

Are penny stocks only worth a penny? Well in most cases not even that much, but on the other hand, some $100 stocks are not worth the investment either. I’ve seen yahoo shares go from .78 to $118, back to $4.85 and now 4 years later $23. Home Depot in Dec of 1999 hit $70 a share and now 8 years later it $21.

If your looking for information to learn how to buy stocks for beginners, here’s some that will help you out immensely. Buying a penny stock is just as hard as buying a Dow 30 stock, but the rewards are far greater for a $1.00 stock to grow 100%. It just has to go to $2.00, where as a $100 stock has to go to $200, which is a far greater feat. Most of the time, a $100 stock will have revenues of $2 or $3 billion for its share price. To double in one year, revenues will have to grow to $4 or $6 billion, where as a $1 or $2 stock might have revenues of $50-$100 million. It’s easy for them to grow revenue to 100 or 200 million in a year. This is why the small cap market outperforms the Dow every year.

Just remember that most every company out there was once a stock under $5.00. I have always said that there’s a stock going up over 100% every day in the stock market and if you do your DD’s (due diligence) you can be the one who finds it. Just don’t look for them in the mid – large cap stock. Penny and small cap stocks are where you will find them. Look at the earnings report and make sure they are increasing 50% quarter over quarter minimally and then check out the chart. Look at the volume to see if it has been rising steadily and see if they have been in a trading range for a 3 to 6 months period. The trend is your friend.

Once you see them breakout from that trading range – BUY! The chart will always tell you what to do before the news comes out. Most of the time one or two week after a breakout, the news will come out and push the stock higher. Remember, you want to be ahead of the herd not with them. If you try to follow the herd, it’s likely that you missed the big gains or you got in too late and you missed it all together. Always remember to sell and secure your profits. As Jim Cramer likes to say, “bears make money, bulls make money and pigs get slaughtered.

This is just some of what has to be done, so when you’re ready to start buying stock online, do your DD’s first.

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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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Penny Stocks

In the past, we spoke about buying penny stocks. My partner and I have been into small cap stocks and quite a few of them could be considered a penny stock. I have a diversified portfolio and that includes having interest in small and large companies as well as being in different sectors.
I have to admit that right now I favor smaller companies (particularly alternative energy) at this time. Smaller companies that are publicly traded can double or triple their size a lot easier than large cap company.
Buying penny stocks can be very rewarding, then again it can financially wipe you out. Here at Beating The Stock Market.com, we try to explain and enlighten you about the stock market. I myself strive to learn more each day about the markets and in my travels I find some great tidbits of information. Well here’s one that I read a few years back and I just ran into it again today. I felt that you guys/gals out there would like to read it. The publication is titled Penny Stocks and I hope it was worth your time.

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Money Hacks Carnival

Today the latest carnival was released today. This week’s edition was hosted by helpmycashgrow.com He has a great blog and does a great job on the carnival. This edition has some great posts that deserve a moment of you time.
Here’s the link for anyone who wants to read some great post.

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GDP (Gross Domestic Product) Vs GPI (Genuine Progr...

The GDP, aka Gross Domestic Product. The means by which our country’ growth is measured. The most common way to understand the GDP is the expenditure method.
GDP= consumption+gross investment+ government spending+(export-imports)
GDP= C+I+G+(X-M)
By my calculations, this equation can’t be as sound as it seem’. Am I to understand that government spending is to be looked upon as something good? From what I can see is that if consumption(personal) falls less than what government spending goes up, the GDP will still rise for that year. That would be looked upon as something good. That doesn’t sound right to me. When government spending rises, it leaves the politicians no other choice but to raise taxes. Which we all know you’ll be paying.
There are too many variables that need to be considered in this equation. That is why in 1995 the GPI(genuine Progress Indicator) was created. It takes into account those variables in each part of the GDP.

They both are based on the same personal consumption data, but that is where the similarities end. Here is the list of categories that they differ. The GPI makes a lot of sense to me. Then again, who am I?
The following information was provided by Lisa Smith @ Forbes.com.
* Personal Consumption – As mentioned, this is the exact same data used to calculate GDP.
* Income Distribution – GPI is adjusted upward when a greater percentage of the nation’s income goes to the poor because an income increase provides a tangible benefit to the poor. GPI is adjusted downward when the majority of a nation’s increased income goes to the rich.
* Housework, Volunteering, Higher education – GPI factors in the value of the labor that goes into housework and volunteering. It also factors in the benefit of an increasingly educated populace.
* Service of Consumer Durables and Infrastructure – Money spent on durable goods is treated as a cost, while the value the purchases provide is treated as a benefit. Long-lasting goods that provide benefits without having to be frequently repurchased are viewed positively. Goods that wear out quickly and drain consumers’ wallets when they must be replaced are viewed negatively. GDP, on the other hand, views all expenditures as good news. Infrastructure spending by the government is treated in a similar manner – if spending provides a long-lasting benefit, GPI views it as a positive; if spending drains the government’s coffers, GPI views it as a negative. Again, GDP views all spending as positive.
* Crime – Rising crime costs money in legal fees, medical bills, replacement costs, and other outlays. GDP views this spending as a positive development. GPI views it as a negative.
* Resource Depletion – When wetlands or forests are destroyed by economic activity, GDP views the events as good news for the economy; GPI views these events as bad news for future generations.
# Pollution – Pollution is good news for GDP. Industry gets paid once for the economic activity that creates pollution and again when money is spent to mitigate the pollution. GPI views pollution as a negative.
# Long-Term Environmental Damage – Global warming, nuclear waste storage, and other long-term consequences of economic activity are factored into GPI as negatives.
# Changes in Leisure Time – Prosperity should lead to an increase in leisure time. Most modern workers would disagree with this theory. GPI views an increase in leisure as a positive, and a decrease in leisure as a negative.
# Defensive Expenditures – Defensive expenditures refer to medical insurance, auto insurance, healthcare bills and other expenses that are required to maintain quality of life. GPI views these as a negative. GDP views them positively.
# Dependence on Foreign Assets – When a nation is forced to borrow from other nations in order to finance consumption, GPI factors in the result as a negative. If the borrowed money is for investments and benefits the country, it is viewed as a positive.
The Calculations
GPI calculations take all of these variables into consideration, using economic statistics and mathematical formulas to place value on them. That value is then added to or deleted from the GDP figure. For example, expenditures on consumer durables are a negative adjustment. Data from the National Income and Products Accounts are used to estimate the cost of consumer durables, and the figure is subtracted from GDP.

The amount of money that foreigners invest in the U.S. is subtracted from the amount Americans invest overseas. A five-year rolling average is used to determine whether the U.S. is becoming a lender or a borrower. If our economy is healthy enough that we are a net lender, the resulting number is added to GDP. If we are borrowing to sustain our economy, the resulting number is subtracted.

GPI Is Not Yet Mainstream
While GPI factors in to many of the variables that have direct impact on peoples’ quality of life, capitalist economies tend to focus strictly on making money. Because of this, GPI has not yet been widely adopted in such economies, although its proponents note that it has been reviewed by the scientific community and recognized for its validity. GPI-type measures are in use in Canada and in some of Europe’s small and more progressive nations. Over time, other nations might slowly adopt the concept as environmental concerns move into the public’s consciousness.
lisa smith @ forbes

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