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• Characteristics of a Good Stock

  Stock trading can be a challenging way to invest your money in. It requires getting adept in knowing which stocks make good investments and which ones are not. Considerable research is usually needed in place of gut feeling in order to succeed in this type of moneymaking venture. For some trading in stocks might be too risky a deal and quite an exciting challenge for the others.

   

  One of the essential skills needed in stock investing is having that knack of finding a good stock. There are quite a lot of stocks out there to invest in. But not all of them may give you a good return on your investment. When looking for good stocks to invest in, you should know how to look for certain characteristics that make up a good stock to invest in. here are some of them.

   

  Product Appeal

  Good stocks come from companies that create, produce or have something that people would want and need for years to come. A good indicator of a good stock is if the business it engages in is something that creates a considerable demand from people for a long period of time. A company with the hottest product today would not matter to a savvy stock investor if that demand is only for the short term. Success in stock investing would take you far if you try to look for stocks with such an appeal.

   

  Competitive Advantage

  You would usually find good stocks from companies that have established themselves and leading in their field or industry for quite a time. The reason why they are considered good stocks because such companies have been able to establish what is called a competitive advantage.

   

  This competitive advantage can come in different aspects of the business. A great and established company may have a strong competitive advantage in a business where it takes quite a substantial amount to capital to start, such as in heavy manufacturing sector. A competitive advantage may come in the form of a recognized brand or name which has become popular through the years. With these competitive advantages, it is usually hard for new competitors to get a share of the market. Thus, this advantage spell the difference for good stocks.

   

  Market Leader

  Another common characteristic of good stocks is that they come from a company considered as a leader in their filed or industry. But there is more to this. The better stocks come from those market leaders who try to set the pace and use their size and experience to protect their position. They try to set the agenda that the whole market and industry try to look up to.

   

  There can also be market leaders that become complacent with their accomplishments and rest on their laurels. Sooner or later, these complacent companies may find themselves being bumped off the top position by an aggressive competitor, losing considerable stock value in the process. You should try to beware of buying stocks from such companies as they may not be playing their advantages right.

  Posted in Stocks

  April 30th, 2008 / No Comments

• Stocks You Should Have Bought Five Years Ago

  Hindsight is always 20/20 so they say. The fun part with looking back is tracing your steps and think of what-ifs. It should not always be bad.

  That is the thing with stocks. You will never what the next big thing will be, unless you have psychic powers that could accurately predict the future.

  For fun, let us look back at the biggest trend the last five years and see if we could see what the future might hold for us. Here are five stocks you should have bought five years ago.

  Online games. Yes, it is now more than a fad. It is already a lifestyle. Although online gaming companies are not really bent into playing the stock market game, it would have been rad if they were. That way, the hardcore could be transacting both virtually in real life. Nevertheless, online games already have lives of their own, sustaining themselves with a broad and heavily consuming market.

  Google. It was only recently when Google officially became an IPO. Considering all the phantom money that company is earning, its stocks would have been a commodity the first day it started trading.

  Nokia. This Finnish company has finally hit paydirt with its business strategy of not putting all of its eggs in one basket, meaning diversifying its products to each and every demographic there is. It also means a less than complete unit, at least features wise, with every release. But it seems that nobody is complaining since Nokia is now considered a major player in mobile technology, finally penetrating the US market.

  Web 2.0. Here is another abstract stock that could have made it big in Wall Street. If only MySpace, Friendster, YouTube (which is now owned by Google), pooled their resources and infiltrated stock trading, then maybe traditional businessmen and financial analysts would not pencil them in as just another fad. However, they might have learned when the net bubble bursted the first time around.

  Nanotechnology. This may be a product of sci fi, but we are getting there. They are now already developing self-repairing gadgets with the use of intelligent microscopic robots. This is more of an investment to look forward to.

  That being said, this may be a techie-biased entry, but trends do point in that direction. This is not the dawn of the information age. We are already standing with the midday sun blazing right above us.

  Posted in Stocks

  April 24th, 2008 / No Comments

• Things You Need to Know About Brokers

  The immortal William Shakespeare once said, “The first thing we do, let us kill all the lawyers.” Most may not realize it, but brokers are just as slithery and cunning as their mates who passed the bar. In that case, just replace lawyers with brokers and you have a quote that is right for this millennium.

  Why all the hate with brokers? Searching for a viable topic for a new entry, I scoured online to look for things you need to know about the current market. What came out were a hodgepodge of results from real estate, mortgage, stocks, and investments. That was kind of broad.

  And then I saw a trend with how much hate are spewed against brokers. My search was not that extensive, yet there were a number of pages about brokers from hell and what they do which came up on top of the listing.

  What makes them evil? Think of how you would treat a used car salesperson. You are eternally on doubt, questioning everything because you just do not trust his guts. Now, think of how someone would approach a professional financial analyst. His opinion is revered, everything he says swallowed hook, line, and sinker. Well, most do fall into that trap. The thing is the two professions work nearly the same way.

  To clear things up though, there is nothing wrong interacting with brokers per se. They still know more about the market in general than you do, so some of what they say actually counts. The beef here is when brokers from firms suffer from an apparent conflict of interest, doing action that benefits more the brokerage firms than their clients.

  That is just plain wrong. How? Because by doing so, they are merely like salespeople that instead of selling used vehicles, they hawk to you stocks and other forms of investments that upon further scrutiny, helps his company more than you do as a client. Where is genuine service there?

  What are some of the wicked methods they do? First of all, they earn off directly from you through markups and markdowns. This is besides the fees and the commissions that you pay to them off the bat. If you are savvy enough, you could do away with brokers so that you would not need pay for markups.

  Another thing that brokers do is that they force you to buy bonds from their inventory over another helpful and more investor-friendly bond. This way, the brokerage firm gets to unload its inventory, while at the same time, the broker gets more perks for every successful transaction involving in-house bonds.

  A sly tactic they adopt, especially done on those who are not in the know, is that they take advantage of calls. These are bonds who are nearing the call date of the issuer. What brokers do is that they sell you a bond that is nearing its call date, then later tells his client that the call date is due so that the investor would unload his money and put it into another bond. This is what they call as double dipping.

  Why would someone force another to buy something that would cost more when there are cheaper alternatives available? Only salespeople do that. That is why there are cases where the investor shells out more money than he needs to.

  Why this way of thinking among brokers? First of all is sales pressure. Since somebody above them is dictating what they need to do, brokers are pressured to perform and produce preferable results.

  Another probable reason is laziness and ignorance. They do not bother gathering new information and learning more, thus, making some of their advices outdated and obsolete.

  Nevertheless, there are ways to get out of the rut. It is inevitable to ask for professional opinion. A recommendation when looking for a financial advisor is to go indie. Independent brokers exist and they are in most cases free from conflict of interest because there is no higher up dictating to them what to sell or what to do.

  As much as possible, avoid junk bonds. They are risky and unstable since they are nearing their call date. Another way to do intelligent investing is to diversify your investments. Mix your portfolio with large companies and small companies, growth companies and value companies, and local and international companies.

  It is good to keep an open mind, especially when dealing with your finances. Ask if you have to and do not stop until everything is clear to you. Inquire how the broker would be compensated from making a sale. Determine if he would receive non-monetary perks in addition to the commission when there would be a successful transaction.

  Finally, your advisor would not get hurt if you ask him for other options. Remember, he should put premium to your needs more than anything else. If he starts to become pushy and insistent on particular accounts, put your guard up or ship out.

  Put into mind also that some things are probable but not guaranteed. This just says is to take a careful calculated risk before jumping in.

  Posted in Brokers

  April 15th, 2008 / No Comments

• Worldwide Recession: Is it for Real?

  As early as 2007, there were already signs of an economic downturn in the United States. This resulted in the weakening greenback in the world market while prices for commodities went up. And if conspiracy theorists are to be believed, it is because there are no wars that is keeping the American machinery busy, thus stagnating the economy.

  Looking beyond though, all this talk of recession is creating undue vexation within the mainland but also concern among other countries where they depend, if not rely heavily, on the US economy. And for some reason, where the American economy goes, the rest of the world goes as well.

  What does this mean? Whatever temporary gains some countries had the past few years might eventually be canceled out if this perceived recession goes on. Is there really a recession? The signs are there. Still, it is a matter of perspective. Some would be more hit than others, but the point is eventually everybody would take a hit. Is this already depression? Some say, not yet, but we are getting there. Others disagree by saying that mainland America is already in that state and unless something happens, things would only get worse while at the same time pulling the rest of the world with it.

  Playing conservative at this time, according to some analysts, might prove to be counter-beneficial because the less money there is going around, the worse the situation would get. This somehow conjures of what occurred back in 1929 where The Great Depression left people, for lack of a better term, depressed.

  According to some experts though, the situation today is quite different than the one experienced nearly a century ago. Unlike in 1929 where the economy crashed dramatically, the decline is more gradual now. This is akin to the analogy of the frog that died without realizing the bowl of water it was in was being slowly heated.

  Far from doomsday, there is still a glimmer of hope. For one, the 2008 US elections is crucial in how the economy shapes up for next year. At the same time, it has unintentionally distracted the real issue at hand although the economy card would play a vital role in the candidates’ campaigns as voting time nears.

  In the end, it is fun to be a spectator in these interesting times, although some action should be generated from all sectors to prevent an economic blip turn into a global catastrophic event.

  Posted in Investing

  April 2nd, 2008 / No Comments