STOCK MARKET TIPS

Complete Guide to the Stock Market

2009-08-08T09:44:00.000-07:00

The stock market can be defined as the public market meant for the trading of various listed company's stocks and derivatives at matched price. Its size was estimated at about $ 36.6 trillion US at the first week of the October. Anyone can participate in stock market whether it is small stock investors or large funded traders. According to the Securities Contract Regulation Act (SCRA), 1956, defines stock exchange as any body of individuals constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.

The stock market is one of the most important sources for the companies to raise their money. It allows businesses to be publicly traded, or to raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides, allows investors to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments like real estate.

An investor should keep some points in mind while investing in stock market:

1. Make sure your broker is registered with SEBI and the exchanges and do not deal with unregistered intermediaries.

2. Ensure that you receive contract notes for all your transactions from your broker within one working day of execution of the trades.

3. Do not get misled by the market rumors, like advertisement and 'hot tips of the day'.

4. Investing in very low priced stocks or what are known as penny stocks does not guarantee high returns.

5. Be cautious about stocks which show a sudden spurt in price or trading activity.

BSE or Bombay Stock Exchange is the oldest stock exchange in Asia that has a rich past of stock trading in the country. It is the first stock exchange in India which obtained permanent recognition from the government of India under the Securities Contracts Regulation Act, 1956. It has facilitated the growth of the Indian corporate sector by providing it with an efficient access to wide pool of finance resources. At present, BSE is the world's number one exchange in terms of the number of listed companies. The BSE Index, is India's first stock market index that enjoys an iconic stature. It is an index of 30 stocks representing 12 major sectors.

Speaking about NSE or the National Stock Exchange, it is India's leading stock exchange covering various cities and towns across the country. It was set up by leading institutions to provide a modern, fully automated screen-based trading system within national reach. The exchange has brought about speed & efficiency, safety and market integrity. It has played a catalytic role in reforming the Indian securities market in terms of micro structure, market practices and trading volumes. The market uses state of art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in stock trading services.

These days, exchanges have tied-up with various leading names in the virtual world of Internet and mobile communication to deliver up-to-date knowledge to the subscribers of NSE stock market news alerts, BSE news alerts etc. These alerts spill out all second-by-second information about both, NSE and BSE stock gainers, thus, helping the dormant investors updated about the latest movements in the Indian stock scene.

The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Paisawaisa as a finance specialist.For more to know on the updates of stock market, NSE stock gainers visit http://www.paisawaisa.com/

How Does a Stock Market Crash?

2009-08-08T09:23:00.000-07:00

Have you ever wondered "how does a stock market cash" or "is it possible to take advantage of a stock market crash"?

Did you know that it is easier to make money during a stock market crash than it is during a raging bull market - Why? Because stock investing is driven by two emotions:

FEAR & GREED

If you look at the stock market history & old stock market graphs you will notice that the stock market index falls much faster than it rises. There is an old saying that "the bulls need to walk up the stairs but the bears jump out the window". So once again let's look at the question how does a stock market crash.

The main reason behind a stock market crash is Fear. Whether it was the stock market crash of 1929, the great depression or the current credit crisis that we are going through, whether it is in the USA, Australia or Iceland the main reason behind the crash is fear.

When investing in shares or getting stock market advice people often forget to think about all of the other investors who are doing the exact same thing. Plus the majority of money invested into the market doesn't come from mum and dad investors but huge corporations and fund managers.

Whenever you buy shares you are buying them at a time when other investors have done two things
1. They have already bought the shares and are sitting on a profit or a loss.
2. They have already sold the shares with a profit and a loss and are looking at the right time to buy them again.

Taking this into account, let's pretend that you buy share at $20. 6 months ago this share was trading at $14 and it has slowly climbed to $20 and you are hoping that it will continue to rise. You know own the share just like the all the investors who had already bought it but there is one big difference - Theses other investors are all sitting on profit. So they are now watching the stock price like a hawk because the last thing they want is a stock market crash to come along and wipe out their profit. To make things even worse most investors aren't only thinking about the profit but they have already spent the profit in their heads. So when the share price starts to turn around you think "it's ok, I'm sure it will come good" - whereas they are thinking "oh no I don't want to lose my profit (new car) I better sell. This fear of losing profit starts to grow and more and more people start jump off the bandwagon - Apart from you who has bought at the top, your still saying "I think it's going to turn around".

So how does a stock market crash? Of course there are many contributing factors but fear is most definitely the biggest. Unfortunately for most investors they end up losing money because they typically buy when the market is high and sell when the market is low.

So how can you not fall into that trap? Simply by knowledge, education and experience. No one will be able to time the market perfectly (buy at the low and sell at the peak), not even Warren Buffet does that. But if you can buy during the bottom 30% of the market and sell during the top 30% you will go along way to becoming a successful investor.

What about making money when the market is crashing? I said before that you can actually make money during this period and that is true. Why? Because fear is much easier to predict than greed therefore the market moves quicker. So if you know a few very simple strategies you will actually be able to make huge profits in a quarter of the time.

So maybe the question you should be asking yourself is not how does the stock market crash but how can I take advantage of a stock market crash?

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Strategy For Smart Investors

2009-08-08T09:07:00.000-07:00

The recent economic slump has proved disastrous for many investors and have left many of them bankrupt. Now the question arises that can it be avoided in such a turbulent time? The answer is "yes" it can be avoided with right strategy of smart investing. Smart investors do not do anything great, they coin the right strategy and follow it without getting perturbed with market fluctuations to harness the optimum benefit. The right strategy for smart investors is to make good, solid preperation to withstand market turbulence by applying innovative as well as calculative strategy in place of basic investment principles followed by most of investors. To make this point clear, I will quote one of situations that is often witnessed in the financial market. It is seen that most of investors sell their investment when its price is rockbottom following the basic investment strategy. This results them in getting locked in losses and they find themselves in such an awkward position that they could not benefit from rebounding stock prices in the case of market upward swing. But the smart investor will not do so, he/she will go for more investment when the price is rockbottom instead of selling and will wait for the market turnaround.

The right strategy for smart investors is to keep into consideration the fact that stock market crash is more of a routine thing, but despite various crashes it has overall upward growth, which averages roughly 10% a year. So investment in stock is always going to prove beneficial in long run. But investment should always be done taking into account your asset allocation, time left in your retirement and your toleration potential of abrupt price swing. Based on these factors you should devise your strategy for long term or short term investment. As per the right strategy for smart investors you should never be impatient seeing the market's peak and valleys and should keep your strategy on track of maintaining sound investment plan.

It is often seen that people go for extensive market research and they take their investment decisions on the basis of news about latest happenings in the market. But it's not a wise decision to do so, according to right strategy for smart investors. It's good to be abreast with the latest happenings in the financial market but you should be rather concentrating on your investment goals and the strategy that you have devised for your investment rather than on day to day market movement. If you want to make changes in the investment portfolio you should do it in a thoughtful way and should consult with your financial advisor before taking a plunge. Diversification of your investment is considered one of the best strategy for smart investors. Diversification of your investment among different investment classes would lessen your risk in the case of market downturn. In place of stocks, you can even diversify your investments in bonds and money market funds that will give you more security.

Apart from all the above mentioned factors, there are certain other things as well that should be kept in mind as per right strategy for smart investors. You should also review your personal situation annually and based on your evaluation you can take the decision of rebalancing your investment portfolio or could even consider increasing your contributions. But you should never try to time the market because owing to its unpredictability you could run into huge losses. If you make your investment decision based on these strategies for smart investors, you would be even profiting when the market is going through turbulent time.

How to Easily Invest in Penny Stocks

2009-08-08T09:06:00.000-07:00

Everyone today is looking for a way to make a buck fast. With a declining economy, high unemployment, rampant foreclosures and worthless retirements Americans are turning to alternate methods of investments. Especially those that will not take a lot of money out of their pockets.

Penny stocks is just one of those methods. What is this kind of stocks? They are common stocks that cost less than $5.00 a share. Today it is impossible to buy stocks for a penny but $5.00 seems like a good deal. Just keep in mind when you purchase peny stock they are usually offered by new untested companies, who are looking for a way to raise capital. In this article I will highlight some of the things you should know before you invest your hard earned money in penny stocks.

First, it is essential that you find out as much as you can about a particular penny stock. It is true that you could possibly earn some money quickly but at the same time many people have also lost money fast.

Secondly, you should work with a broker who is familiar with stocks. You want someone who deals with them on a regular basis and will tell you the truth, not what they think you want to hear.

Third, if you do not use a broker I suggest you at least subscribe to an online subscription service. With the aid of a broker or an online service you should be able to be a more informed investor.

Fourth, One thing you should definitely be aware of is that penny stocks are dealt with over the counter, not on the stock exchange. Therefore brokers work on commissions based on transactions.

Fifth, become knowledgeable with the different companies that offer penny stocks. You want to invest your money with well run companies that offer a decent product. You want to feel that the company has a good chance of success.

Lastly, you should never have more than 10% of your portfolio in penny stocks and do keep in mind that 70% of investors do lose money with penny stocks.

INTRO TO PENNY STOCKS

2009-08-08T09:05:00.000-07:00

Penny stocks are those stocks that cost only a few pennies per share. These cheaper stocks are often thought to be a great way to get started with building a share portfolio or to develop a trading strategy using only low amounts of capital.

The primary reason these particular stocks is so cheap is because they are portions of smaller companies or perhaps even newer companies to be listed on the stock market. This also means they're not as prominent on the stock exchange as some of the shares from much bigger corporations.

Before you jump into buying any stocks, it's important to research into finding the right broker for you. Always check how much your broker will charge you for each trade you place. Some brokers charge a flat fee for transactions while others charge a percentage of the trade value.

As penny stocks are so cheap by comparison to bigger companies they can be quite inexpensive to get started. The amount you need to deposit into your trading account is quite low - usually starting from only $150.

The great thing about investing in the stocks of smaller or newer companies is that there is potential for those companies to grow into giants over time. This can see your initial investment of cheap penny stocks skyrocket into the hundreds of dollars per share.

Unfortunately, the opposite is also true. Smaller companies also have the risk of failing so your stock values can plummet down to zero just as quickly as they could rise.

Finding the right penny stocks to add to your portfolio can sometimes be a little more challenging than sourcing the more well-known stocks that are shown often all over the media. There are thousands of different shares listed on the stock exchange, so sorting through these to find the right ones to add to your portfolio can sometimes take a little patience.

Some brokers may recognize your effort to locate penny stocks and begin recommending different shares for you to buy. Always remember that a recommendation is not a command to buy. The decision to add stocks to your portfolio must always be yours and yours alone. Spend time doing your own research and crunch the numbers yourself before making a decision.

While investing in penny stocks won't make you rich overnight, you can easily begin to build a share portfolio with only a little money of your own. Understand that there is much more to investing than just trading to realize the capital profits and understand how potential dividend income from your shares could also increase your future portfolio's overall value.

WHAT IS A BULL STOCK MARKET AND BEAR STOCK MARKET

2009-08-08T03:57:00.000-07:00

What Is A Bull Stock Market And Bear Stock Market Unless you are involved in the stock market, or understand the jargon you may not understand what the term bull market or a bear market means. Stock prices are reflected in what is known as the financial market trends. These trends can best be demonstrated in a price chart and the purpose is to pick the best investment and trading opportunities. You may ask what drives these trends. Buyers and sellers are the driving factor, they are also known as the bulls and the bears.

When we say that it is a bull or bear stock market we are talking about the driving force behind the market. The bulls are the buyers so that would make the sellers the What Is A Bull Stock Market And Bear Stock Marketbears. Incidentally when we use the term bull or bear we could also be talking about specific securities and sectors.

A bull market is a market that is associated with investor confidence. As a result of this increase in confidence investors are more likely buy in anticipation of making a capital gain. The most memorable and longest running bull market was seen in the 1990s. This was the time when the U.S. and other global markets saw their fastest growth spurt ever.

Just to recap, in a bull stock market the investors are buying. They are looking for more ways to increase their capital gains. So then if it is a bear market, the opposite would be true. Investors will be more pessimistic about buying and are more inclined to sell their stocks to cut their losses. A bear stock market does not come about from a small decline, but a considerable drop in prices over a prolonged period of time. From 1930 to 1932 was probably the most infamous bear market in history. This bear market was the beginning of the Great Depression. There was a much less severe bear market from 1967 - 1983, which included the energy crises of the 1970s and the unemployment surge in the 1980s.

As we already stated a bear stock market does not come about as a result of a small dip in stock prices, it indicates sizable fall in prices over a prolonged period of time. It is most commonly accepted that in order for the stock market it to be considered a bear market there has to be a price fall of at least 20% in a key stock market index from a recent peak that happens over at least two months.

To summarize a bull stock market has investor looking to buy to increase their capital gains. They will be seeking out the best investment opportunities. A bear stock market has these same investors looking to sell their stocks so they can minimize their losses. Historically the U.S. has been a bull market. That is one of the factors why we have been considered the land of opportunity.

How to Get Started in the Stock Market

2009-08-07T07:59:00.000-07:00

How to get started in the stock market is one of the most challenging questions with no real definite answer. The Stock Market is a lucrative business opportunity as long as you are equipped with the necessary skills and knowledge. Like any other business ventures, you have to do the groundwork prior to plunging to this trading form of business.

The initial and utmost essential groundwork is the research. Research all the related topics about Stock Market and acquire the necessary knowledge. This will be your basic foundation prior to starting a stock trading business.

If financial self-education is quite complicated for you, you may utilize the services offered by full service brokerage. These are financial firms that will be your financial mentor such as to help you on how to get started in the stock market and decide when to purchase stocks. This is one of the best options for beginners in the Stock Market though indeed there will be corresponding transaction fees because they will be acting on your behalf.

This is also considered as the first step on how to get started in the stock market. You must open an account in your preferred brokerage. It is similar to opening a bank account. Ensure that you read the terms and conditions in the agreement no matter how tedious and time consuming it is. Note that this will be the details of your financial rights from then on.

During the starting phase of your investment in Stock Market, it is recommendable to invest in limited amount only until you get acquainted with how the system of stock trading works. This type of business is quite complicated if you don't have the fundamentals of it.

No matter how enticing it is to invest soon in Stock Market, one should not invest without proper knowledge of how the system works.

For further inquiries, please send an sms to megainsightconsult@yahoo.com

Investing For Beginners - Stock Market Basics

2009-08-07T07:52:00.001-07:00

An accounting professor of mine once told me that if anyone wants to be successful with investing they can be. Stock Market Basics truly are not a difficult thing to learn. At its core the Stock Market is essentially a free market system, meaning that it's based on forces pulling against each other; these forces are supply and demand. As a beginning investor it's important to remember that these pulling forces are based on several things, such as a companies fundamentals (revenue, profit, assets, liabilities), technical evaluation and even "acts of god." To be able to interpret these market forces and company profiles requires some knowledge in accounting and economics and also a desire to keep up on stock market and company news. Thus Stock Market Basics can be learned by education, which is the foundation for success as an investor.

What Is The Stock Market?

I'll liken the stock market to an auction. If an auctioneer has 50 widgets for sale he or she is likely to start the bidding out at a price that's much lower than if he or she had only 1 of the same widget to sell. The more the auctioneer has to sell (supply) the less money the widgets are probably going to sell for because buyers (or demand in this case) are limited (based on price, supply, etc). The stock market is similar to this. However instead of buying a product or service the buyer actually buys ownership in a company.

The way that the market works is actually strikingly similar to an auction. Brokerage companies (companies through which you can purchase stock of other firms) often have representatives on the floor of all the major stock exchanges, such as the New York Stock Exchange (NYSE). These representatives could be thought of as auctioneers. They take orders from those who want to buy stock and they take orders from stockholders who want to sell their stock. They then match up orders and, voila! A stock trade has taken place.

So What Do I Do First?
In order to start trading stocks you'll need to open an account with a brokerage firm, they have offices in different cities.

Next you'll want to think of a company that you want to invest in. Ideally it should be a company that you know a little bit about, or personally support. Then you would want to do some research on them. For example, if I wanted to buy shares in Apple I would first do some research on the company to discover for myself if I think they will continue to be profitable in the future. A good (but very general) rule of thumb is that as long as a company continues to increase their earnings they will continue to grow and so will the value of their stock.

Prices Fluctuate, So Don't Panic!

It's important to remember that even though over the long-run (we're talking years, not months) the value of a stock is based almost entirely on fundamentals, the share price of a stock is still subject to irrationality and bubbles. In other words if I were to buy 100 shares in a company today, expecting to hold it for 5 years before I sell it, I can expect that the share price will, over the days and the months, have its ups and its downs. I should be confident, however, that my decision to purchase an ownership (through 100 shares of stock) in the company will pay off in the long-run.

Investing is not something that should be taken lightly. If a friend of yours gives you a tip that they think a certain stock is going to go way up, you probably shouldn't listen to them. Don't trust anyone except yourself, your gut and your wallet when it comes to investing. This way if you make a stupid investment (and we all do at some point) you'll have no one to blame but yourself AND you'll hopefully be able to learn from your mistake.

For more information, please send all questions/inquiries to megainsightconsult@yahoo.com