Archive for Stocks
How many stocks should I carry in my portfolio?
I am looking to invest long-term (20+ years) and this is my first time buying stocks. I have a medium to high risk tolerance. I will be initially investing $2500. The goal is growth for retirement fund.
Wondering how many different stocks to buy with my $2500.
Also, what would you say are good markets/industries to buy into now for maximum growth over the next 20 years?
I already have mutual funds… so I’m hoping to get into something with more potential payback (realizing the added risk also).
To absolutely minimize your individual risk, the theoretical number is 20. Beyond that the risk reduction of added stocks is minimal. But with only 2500 you can not begin to approach that, but it is a goal. The fact that you currently have mutual funds does mitigate your risk somewhat. As one responder mentioned when you have more than 10 it becomes somewhat of a task keeping track of them. And with 10 your individual risk is only slightly more than at 20. I attempt to keep my portfolio below 20 but by tracking the portfolio with Yahoo, it becomes much more managable to track a larger number of stocks.
The key is not only having say 10 different stocks but they should also be distributed amongst various segments of the economy and across various economies (read countries).
What are good markets/industries for the next 20 years?
Think about India, China, oil, health care. An excellent way to invest in oil with a small amount of money is to purchase an ETF, such as PXE or XLE or IYE or VDE or IEO or PXJ or USO. XLE is the most popular.
For China there is also an ETF: PGE or FXI
Regretably there is not yet an ETF of Indian stocks but there are about 12 or 16 traded on the NYSE. There are a couple of closed end funds that specialize in Indian stocks.
For health care there is these ETFs: XLV, IBB, PPH, BBH, IHY, PJP, IHE, IHF, IHI, XPH, XBI. Seems like there are more ETFs than there are companies. ha ha.
Information about buying stocksHow to Short sell stocks online with a discount online brokerage?
I am new to stocks overall. I would like to know how can I short sell stocks online with a discount online brokerage such as Etrade, TDameritrade, charlesshwab, etc. It is even possible to short sell stocks online with a discount brokerage or will I have to contact individual brokerages?
You sell short stocks the same way you would normally do when you sell stocks you already own.
For most brokerages and platforms, there’s usually a "sell short" button right beside the "sell" button on the trading platform.
My brokerage doesn’t even distinguish between the two. Just one sell command for both normal sell and short sell. So if I had 200 shares of ABC, I can choose to sell 400 shares, and the position reverses to -200, ie. short 200 shares.
How many stocks can a company have on the ASX? How are the value of these stocks determined?
Who states that company A is allowed to have x number of stocks, and how is the share price determined?
When a company becomes a corporation or a partnership or limited company or something, it cuts itself into shares and divides those shares among the company’s owners. A corporation is a person under the law. It can make decisions on it’s own, according to the rules established by the shareholders or the shareholder’s representatives (the directors). A corporation can create new shares of itself and sell them to an outside person, if it wants to. Also, any one of the corporation’s existing shareholders can sell his/her shares to any oyhrt person. If it is a closely held corporation, the price is determined by direct negotioation with prospective purchasers. In other words, either the corporation officials negotiate directly, or the shareholder who is selling the shares negotiate directly with the prospective buyers.
If a company wants to sell shares to the public, rather than some specific person or select or limiited group, it can do so by doing what is called floating the shares, or doing a public offerring. When you float shares, you enter into an agreement with an invnestment bank, under which the investment bank usually agrees to sell whatever shares it can at or above a price determined by the corporation, or a set number of shares at the best possible price. Sometimes it contracts with other investment banks to help it sell the shares. In that case, the other invnetment banks usually buy some shares as well. The people buying the shares are called subscribers, or subscribed buyers. They contract ahead of time to buy a certain number of shares at a certain price. The subscribers are usually other investment banks, brokerage houses, mutual funds, pension funds, and other investment companies. If the investment bank cannot find enough subscribers to buy all the shares, it will often try to sell shares in the public offerring to individual investor clients, usually on the basis of the client’s willingness and ability to buy large quantities of shares, The investment bank usually buys a number of shares as well, and often agrees to buy whatever shares cannot be sold to other subscribers at the specified price. The subscribers pay the specified price, but the investment bank usually gets a discount and sometimes a flat fee for it’s services. If there are more than one investment bank involved, the primary invnetment bank usually gets a bigger discount and/or an additional fee, and the other investment banks get a smaller discount. Also, usually the price that the shares are sold for is designed to be intentionally low, relative to the expected trading price of the shares, so that subscribers are compensated for buying such large quantities of shares all at once. Once the public offering or float is completed, the subscribers and the investment banks involved sell the shares to the public, usually through their own brokers, or simply maintain a trading inventory of stock to be sold and buy and sell shares of the stock for their clients (like a used car dealer might do).
Maintaining an inventory of stock is called making a market, or being a dealer. Brokers, on the other hand, buy from dealers or on the exchanges) on the behalf of their clients, who pay them a commission, and pay a price (the bid price) above the price paid buy the broker on the stock exchange, or receive a price (the ask price) below the price paid by the broker, in exchange for having a definite price and a guarantee that they will be able to get the shares or sell the shares they are trying to buy or sell. The difference is called the bid-ask spread. Buying or selling stock this way is called entering a market order, because basically you get the last exchange price plus or minus about half the sperad. Also, sometimes the dealers are also brokers at the same time if so, they simply sell or buy the shares directly.
When brokers or market makers (dealers), want to sell or buy shares to each other, they usually go to an exchange, and buy the shares themselves, or on the beahalf of clients using limit orders. Exchanges are where the share price is continuously being negotiated by floor traders, or determined by computerized auction via limit orders. This price is the price published in the financial media in the paper, on TV, and online. When people enter limit orders with their brokers to buy stock, the broker goes on the exchange to try to buy stock on their behalf, according tho the terms of the limit order.
Assuming there are only four people trading limit orders on a stock an a particular moment; lets say you enter a limit order to buy 100 shares at $100 per share or less. Another person enters a limit order to sell 100 shares at $101 or more. A third person enters a limit order to buy 100 shares at $98 or less, and a fourth person enters a limit order to sell 100 shares at $99 or more. The guy who wants to sell at $101 or more is not able to sell any shares at that time, and has to wait until
How many stocks do you need in your portfolio to be diversified?
It seems like whether you have $10,000 or $10,000,000, if you were to choose around 10 stocks (not penny stocks) in different sectors, you’d be diversified enough. Any thoughts?
According to modern porfolio theory, there is little additional reduction of risk beyond 20. There is signficant reduction in risk by adding addional securities below 10. So a good rule of thumb is somewhere between 10 and 20.
One thought is this. No only different sectors but also different geographic areas and different economies. If all of ones money is invested in U S securities, then the corrolation of investments is much greater than it would be between securities of say other regions.
Information about the Best StocksStocks: How do stocks with dividends grow compared to stocks without?
I’m looking for a link to such studies here, so hopefully I can save time from doing my own studies. Basically, I’m looking for edges in the market, and even if dividend stocks grow at the same rate as non-dividend stocks, and dividends are a percent, than I will have a percent plus compounding on that percent every year. May not be much, but every edge counts. Please note that only statistics and studies will help me here. Thanks!
Part of earnings "growth" is earnings from investments made from earnings. Companies have two choices when it comes to earnings, pay it out as dividends, or reinvest it in existing or new businesses to generate additional income going forward. Companies that pay higher dividends are investing less and therefore figure to be growing slower. Companies that pay lower dividends figure to be investing more, and growing faster. No free lunch here.
The story on cheap stocks-Is there money to be made? How much does one need to know?
I am thinking about buying up some cheap stocks-like in the $2-20 ea bracket. Has anyone that is "new" to stocks and the market made any money this way? How much of a time investment would it be to learn the ins and outs and keep an eye on the markets? Some say we(the us) is going into a mild recession of sorts-it seems so. Would you suggest informed investing in some cheap stocks right now?
Cheap Stocks (penny stocks) is the the place to make money in the market after about 10 years or more of trading experience. Most professional stock traders (and semi-professional) won’t ever go near them.
I spent the past thirty years investing. One year ago started to learn trading. I’ve gone through a dozen books which ‘ll need to re-read again. I listen to www.traderinterviews every week.
I watch http://www.alphatrends.net/ every day.
The hardest thing to "understand" is the relationship between profit and money management. To be successful at penny stocks you’d have to assume 70% of your trades will lose. I trade mid and large cap stocks. I’m considered "good" if 50% of my trades are good. The trick is a good win/loss ratio. Managing your losses is critical.
I’m making money……… but I need to improve my skills. There’s no way I know enough to get into stocks under $20.00.
A professional trader I listen to every day basically says the same thing;
http://streamer.thinkorswim.com:8000/shadowtrader.m3u
(Check it out between 9:15AM – 11:30AM & 1:30PM – 4:00PM, every trading day (EDT).
Pick up some books on trading. That’s a start…… This stuff is hard work…. but fun and potentially rewarding.
What happens to the stocks of a bankrupt company if the company is bought by some other company?
What happens to the stocks of a bankrupt company if the company is bought by some other company.
I am plaaning to buy stocks of Bearing point. The company is bankrupt now and selling its operations across the globe. What will happen to my stocks if I buy them?
Only if a company comes in and offers to buy the company as a whole will you make money through that sale. For example, IBM recently offered to buy Sun Micro for $9.40 per share – if the offer had been accepted, all shareholders would have turned in their Sun Micro shares for that amount. However, no one out there has offered to buy BearingPoint, so BearingPoint is selling off pieces of its businesses to satisfy creditors and hopes to emerge from bankruptcy after reorganization.
Whether your stocks will be worthless or go up will depend on how well BearingPoint can reorganize and run their business after emerging from bankruptcy.
Information about Value Stock