Stocks - Getting Started In The Market

Hollywood loves the stock market. The chaos of the stock exchange floor, the tension of boiler room day-trading, devious power brokers making back room deals; it all makes for great drama. Then you have the true-to-life stock market stories in the news: insider trading, big money IPOs, the dot com bust. All of it is enough to make you steer clear of the market for good and travel down a safer investment path. But don’t be frightened, history shows that long-term, there’s no better place to put your money to watch it grow. Here are a few tips to get you started.

Stocks 101

Simply put, when you purchase stock in a company, you become part-owner of that company. Along with other shareholders, you all combine as investors in the business, and therefore reap its rewards, or suffer its losses. Stocks are most commonly divided into separate categories depending on the size and type of the company (e.g., mid-cap, small-cap, energy, tech, etc.).

While speculation can drive stock prices in the short term, it’s long-term company earnings that determine a stocks gains or losses. Speaking of short term, that’s when stocks are extremely volatile. Over a span of just a few months or years, stocks can climb to astronomic heights or drop to pitiful lows. But, since 1926, the average stock has returned over 10 percent per year. That’s better than any other investment vehicle out there, and that’s why stocks are your best bet for long-term investment.

Picking Stocks

Before you dive head-first into the market, there are a few things you should know about picking stocks. First, the market’s performance as a whole is not necessarily a reflection of its individual stocks. Good stocks can keep growing even in a down market, while bad stocks have the frustrating tendency to drop or remain stagnant in a strong market.

Also, remember that history is not indicative of a stock’s future performance. Even solid stocks can slip from time to time. Remember that stock prices are based on a company’s earnings outlook, not its past performance. If the future looks bright for a company, a $100 dollar stock is probably a good buy. If earnings look less than promising, even a $5 stock can be a waste. Finally, investors determine a stock’s value by measuring a handful of primary criteria, most notably cash flow, earnings, and revenue.

“Diversify”

It’s the rallying cry of all smart investors. When compiling an investment portfolio of stocks, it’s smart to own shares in companies from several different industries. Consider it a “hedge bet”. When one part of the economy experiences a downturn, you’ll have other stocks in your portfolio to put your faith in.

When building your portfolio, the safest bet is to pick from financially strong businesses with earnings growth above the average. Surprisingly, that limits the lot to choose from, as only around 200 stocks today fit that bill. A solid portfolio features somewhere in the ballpark of 20 stocks selected from seven or more industries. A general rule of thumb is to invest in stocks with an above-average rate of growth and reasonable valuations.

Buy and Hold

Day trading is a great way to lose your nest egg, but quick. As we noted before, stocks over the short term are highly volatile. Sure, brokers today are offering cheap trades, but beware. There are a ton of hidden fees and taxes involved with day trading, not to mention the amount of attention required by you to monitor the blow-by-blow proceedings of the market. Our recommendation: buy and hold. A ten percent return over the long term is nothing to sneer at.

Should I Buy International Stocks?

Going International

A lot of noise has been made recently about the importance of investing in international markets for greater returns. In fact, the world's greatest investor, Warren Buffett just made a huge international acquisition. Should you be looking as well?

Buy What You Know

The legendary money manger Peter Lynch of Fidelity Magellan Fund fame always preached investing in what you know. He used to do "research" on some companies by talking to his wife and kids about new products or retail chains. He was famous for sitting in malls and watching stores to see which were busy and which weren't. This all fit into his strategy of using more than the financial news and crunching numbers to find the "next big thing" before anyone else. If he didn't fully understand the business from top to bottom (beyond just the numbers) he wouldn't buy.

The same should be true for your investment portfolio. You need to be invested in businesses that you understand. You need to have your money in companies that you can see and touch. If you don't know how the company makes money (remember Enron?) and what outside forces affect a company's earnings, you really shouldn't trust your money with them.

Going Abroad

The problem with international investing is that many companies overseas don't have a presence in the US yet. This makes it difficult to fully evaluate their true business prospects. Still, people are flooding markets in India, China and other markets with hopes of higher returns. Almost two thirds of mutual fund deposits last year went to international funds. This makes sense because many international markets have fast growing economies and have huge populations. People are seeking the potential for great returns.

The problem is that there are a lot of forces beyond your control or understanding outside the US. The Chinese government is just starting to come around to the idea of capitalism. Russia is moving away from political freedoms and back to more government control of the economy. When a free market does not exist, growth is hindered. The list goes on and on.

If you are going to invest in individual international companies, they should be ones that you have personal experience with or know very well. We think that the overall growth will be strong internationally but the overall risk will be high as well.

I Really Want International Exposure.. What Do I Do?

We believe the safest and most cost effective way to have some exposure to the international markets is through two Exchange Traded Funds. The first is the iShares MSCI Emerging Markets Index Fund EEM. As the name suggests, this is a fund designed to track the performance of the MSCI Emerging Market Index. You get a passively managed basket of stocks that give you exposure to smaller, faster growing, emerging markets. The expense ratio is .77% and pays around 1% in yield. The turnover is very low at 9% which makes the fund very tax efficient. The shares have experienced a recent pull back and you now have a great opportunity to buy at a discounted price.

The other ETF to look into is iShares MSCI EAFE Index Fund EFA. This will give you exposure to the rest of the more developed world outside the US. Here, you have exposure to Europe, Australia and the developed countries of the Far East. The Fund has an expense ratio of .36% and a turnover ratio of only 8%. It also pays a nice 1.64% yield which more than covers the expenses. This fund has also seen a recent pull back and might be showing signs of a buying opportunity.

Overall, be careful in international markets. Investing is difficult enough in American markets. EEM and EFA can make great additions to your Core Portfolio for international exposure and diversification. If you want to have some individual international companies for your Trading Portfolio, feel free to speculate. You should fully understand how the company operates before investing. Make sure that you understand the risks involved with owning these companies and understand what makes them a good investment in their respective country.

Stocks Or Mutual Funds?

If you happen to have some money left over at the end of all the bill payments and you have no need for anymore toys, or even if you are beginning a prudent and fiscally responsible gamble on some wealth that incorporates investment opportunities, you may find yourself wondering whether investing in stocks or purchasing mutual funds will offer the best returns. You might also consider this question when considering how to set up a retirement fund.

In order to help make the decision, it is important to understand what stocks and mutual funds are.

Stocks: Most people believe they have a basic understanding of what stocks are, simply because of their exposure to the term in every day usages. Stocks are individual bits of companies that are available to be purchased by the public in open trading on the stock exchange. Stocks are often sold in bundles, and thus to purchase a stock in a specific company often entails some kind of minimum purchase. Stockholders have a vested interest in the company’s well-being, as the price of their stocks are directly related to a company’s performance. Stocks are divided according to the kind of business they represent, which is known as a sector.

Mutual Funds: Mutual funds are collective investments that pools the money from a lot of investors and puts the money in stocks, bonds, and other investments. Mutual funds are usually managed by a certified professional, as opposed to the individual management of stocks. In essence, mutual funds incorporate many different types of stocks.

The question of whether or not to invest in stocks or mutual funds will primarily come down to the personal expertise and wealth of the individual. Many people will be tempted by the “game” aspect of buying stock, as well as the chance to invest singularly in a company that is well-known or can be easily researched. The fact is, however, that by the time stocks become available on the market they are generally already highly priced, and investing in individual stocks is a highly risky maneuver as your entire process hangs on the well-being of just one company. Even wealthy investors diversify their portfolios by investing in several different types of stock, and this can simply be unaffordable for the average person.

The better bet for the beginning investor is to purchase mutual funds. Mutual funds will pool the costs of many different stocks, lessening the risk of losing your money and raising the chances of gain. Mutual funds may not provide quite the excitement of investing in a lucky stock, but they are good investments for a long-term financial opportunity. In addition, mutual funds are managed by professionals that are well acquainted with the pitfalls and opportunities of the investment sector, which will cut down on both risk and the time it would take to pick individual stocks through research and appointments. Mutual funds will also distribute the risks among several investors, and it is all managed by someone who likely has contacts within the financial world.

For the individual with some extra money, who does not have the time or the expertise to properly “play” the stock market, mutual funds will prove the better option.

Why Learn To Trade Stocks?

Stock trading has numerous benefits as a viable part time occupation.

In contrast to a second job, there are no special qualifications to begin. The stock market doesn’t care about your level of success, education, ethnic origin or any personal characteristics. Complex employers, office politics or difficult employees do not play a part in trading. Additionally you have the freedom to trade from any location. If you follow a few simple rules you can run your business on your own terms.

The most important factor is to be clear about why you want to trade stocks. What do you hope to gain financially from learning to trade?

Are you looking to:

1. Create an enhanced lifestyle with supplemental income?

2. Replace a full time income with a passive income stream?

3. Become independently wealthy by creating a financial base independent of other income sources?

What would being a successful trader mean you? Imagine yourself making successful trades and gaining financially. Think about what it would feel like to have extra money in your bank account and to achieve your targets. With a clear picture of what you want and how that would feel you will be able to remain focused and motivated.

Your first task.

Your first task is to put one primary goal for your trading plan in writing. Additional goals you set can then support your primary plan.

Know Yourself

As well as learning to trade stocks it is essential that you understand how you react under stress. Being aware of your own behaviour patterns and the common causes of and reactions to stress when trading will help you to master stock trading.

The reason that many people lose money in the stock market is because they lack the proper knowledge base. Independent of trading styles there is one thing common to all successful traders; the use of a tested and proven system.

In learing to trade you must be willing to let go of pre-formulated ideas and start fresh, develop new successful habits, and the discipline necessary to trade successfully over time.

Are you willing to do this?

Successful stock market trading eludes many people because they don’t have contact with an experienced, successful trader or trading system that actually works. Going it alone can be potentially expensive when learning by trial and error. Investing in a solid education and taking advantage of the insights and experience of a successful trader makes a lot of sense when learning to trade successfully.

Looking To Get Started With Penny Stocks?

If you are looking are thinking that Penny Stocks are a “Get Rich Quick Scheme”, I’m sorry to disappoint you. Although great fortunes can be made from penny stocks, people can also lose everything they invest in Penny Stocks. The most important investment you can make at the start of your investment career is to invest in education.

Why Education and not stock?

Diving head first into the stock market is a great way of losing your money which is why we don’t recommend it. The best thing to do is to read, read and read some more before investing. One of the best places to get free information on penny stocks and trading methods is from the internet.

Forums, websites, news sites and eBooks are a great way to improve your penny stock investment education. There are some great books that you can borrow from libraries or purchase cheaply from shops.

When reading on the internet, please be cautious of stock recommendations and strategies and methods. Stock recommendations and opinions from internet forums can be biased and cannot be fully trusted without doing your own research. Similarly, eBooks with strategies which promise great returns usually do not work as suggested. The reason for this is, even if the strategy worked well for the author, there is no guarantee that it will work for everyone else because everyone is different although you may learn something that you did not already know.

Google News has a business section which is group for free up-to-date information on stocks. Yahoo Finance also has good news section and also provides free charts and company information.

No matter who you get advice from, whether it’s from a financial consultant or friend, you should always carry out your own additional research. You should make decisions based on facts rather than opinions.

When you feel confident enough you can try some “test trades”. You can either keep a record of your trades on paper or you can use a stocks simulator website where you invest with “fake” money. There is a website called Champion Investor (ChampInvest.com) which is great for this purpose as it also calculates profits and losses automatically. Also, if you the top performer of the month, you will be rewarded with £1000.

Using a stock simulator means that you will not lose your hard-earned cash if you make a bad investment. Instead, you will learn not to do it again without losing your money.

If you are consistently able to make a profit with your “test trades” then you can move onto the real thing. Keep your investment strategy exactly as it was when you were making profitable test trades, but instead of using “fake” money, you will be using your own money through a stock broker.

So, to summarise - if you are looking to get started in penny stocks, please do not dive in head first without investing your education first.

When To Sell Penny Stocks

Penny Stocks can be a very effective way to provide you with a secondary income. They can be used to create passive income because they do not require you to be constantly watching over them. The problem that most people have when it comes to stocks is - not knowing the right time to sell.

Penny Stocks can rise very quickly but they can also fall quickly too. The reason that most investors hold onto a stock is because the fail to separate their emotions from their actions.

All of your penny stocks buying and selling should, of course, be based on sound research both of the market and the companies’ recent history. How the company is doing in terms of profitability, whether they are just about to, or have just announced profits, losses or new patents, discoveries and products, can all affect your decision on whether, or not, to buy.

Knowing the right time to sell your penny stocks however can sometimes seem, as much an art as a science, although getting it wrong can be fatal. Many people seem to put all their research efforts into knowing what penny stocks to buy and when to buy them.

Investors seem to forget about researching to sell stocks. Instead, they let their emotions take control and sell at the wrong time. Investors selling at the “wrong time” fall into two categories. These categories are, The Runners and The Sitters.

The Runners like to take profit way too early. They see their Penny Stocks rise a little and sell because they don’t want to “risk too much”. I’ve seen it time and time again; these people set out to earn a 25% Return on Investment and end up taking profit at 1%. Someone who takes profit twice at 25% earns a lot more than someone who takes profit twice at 1%. Usually, as soon as they sell a penny stock, it will rise even further and they’ll be wondering why they sold so early.

The Sitters are the heavily emotionally involved in their penny stocks. They are gamblers at heart and just do not want to let go of a losing position because “it could bounce back any day now”. When they do let go of their Penny Stocks - there is virtually nothing left. The sitters like to sit on a losing position. They like buying but dislike selling.

Do you want to be a Runner or a Sitter? Well, I hope you are neither. You want to be a winner. A winner will separate their emotions from their investment thinking and will also research when buying and also when selling. They will buy and they are not afraid of selling.

There is great deal of profit to be made from trading in Penny Stocks. But you have to know not only what to buy but also how long to keep it and when the best time to sell. The answer, as with most things in the world of finance, is good information and research. But that doesn’t end when you buy. Find out why your penny stocks are rising and this will put you in a much better position to know when to sell.

Forex Versus Stocks

Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company.

When the company does well and makes a profit, the value of the stocks rise. Stock owners can sell their shares for a profit or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends – part of the profits that are distributed to share holders.

Stocks are traded on stock exchanges. Most stocks are bought and sold through brokers who charge a commission or fee for this service. American stock exchanges include the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are only listed on one exchange, although large companies may have listings on several exchanges.

Stocks were traditionally seen as long term investments. So called 'blue chip' stocks - those having proven value over many years - may form the backbone of an investment portfolio. Short term trading is a relatively new phenomenon made possible with the advent of Internet trading. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in one trading period. It is relatively risky and any profits realized are reduced by broker commissions charged on each transaction.

Stocks may sometimes be bought on margin, meaning that the investor borrows money to buy the stocks. Margin rates are usually around 50% - the investor can borrow as much as half the value of the stock.

FOREX

The Foreign Exchange Market (FOREX) is quite different from the stock exchange. In contrast to the stock exchange, the FOREX is primarily a short term market. Most traders enter and exit deals within a 24 hour period – sometimes within a few minutes. Many FOREX trades can be made in one day without building up a large brokerage fee because FOREX trades are commission free. Brokers earn money by setting a spread – the difference between asking and selling prices.

The FOREX is the largest financial market in the world. It is handles transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle daily transactions worth about $100 billion. The huge volume of FOREX means that it is one of the most liquid markets in the world. There is always a buyer and seller for any type of currency because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments or move on to other markets.

The FOREX is not located in any one location. Trading markets are located world-wide and because of difference in time-zones trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time.

Stock exchanges have more limited trading hours. While it is possible to trade on exchanges world-wide, each exchange is independent and operates for just 7 hours a day. There is no way to buy or sell a certain stock that is only traded on one stock exchange when that exchange is closed.

Other advantages of FOREX? It is more predictable than stocks. It follows well established trends; it allows high leverage – typically 100:1 instead of 2:1 on the stock market; and it doesn't require a large investment – mini accounts as small as $250 can get you started in FOREX.

Dividend Paying Stocks

I would like to share with the reader an article printed in the financial section of U.S.A. Today on March 7, 2003 which exemplifies the awesome power of a stock dividend.

MICROSOFT TO ISSUE FIRST DIVIDEND TODAY:

Microsoft investors will get their first payday today, when the tech giant shells out its first dividend. At 8 cents a share, the dividend will cost the company $850 million. Co-founder Bill Gates, who owns about 1.2 billion shares will receive a dividend of $96.5 million. The dividend marks a shift for Microsoft, which had long hoarded cash - to the tune of $43.4 billion – for research, acquisitions and legal claims.

After reading this article I couldn’t help thinking about a report, which I believe stated that there were an estimated 33 million people in America living under the official poverty level. Bill Gates, by giving away his Microsoft dividend to those living under the poverty level could begin to create 96 millionaires, year after year after year. What a boost to the economy that would be! Imagine all those new millionaires every year spending money on something other than food, Salvation Army clothing and shelter.

Bill Gates (by giving away his Microsoft dividend) could begin to eliminate all the hardships for those people currently living under the poverty level. Of course, I would probably start feeling sorry for all those people who were living right at the poverty level. I could almost hear Ma telling Pa now, “If we only didn’t sell those $40.00 worth of aluminum cans, we could have been millionaires right now.” Then again, those newly created millionaires would probably begin buying computers filled with Microsoft software and Bill Gates would start getting his money back. And, if that wasn’t enough, the newly created millionaires probably hadn’t read my book! They would probably start using their computers to start day trading in the stock market and end up right back where they started. Holy moly! I better finish this book or they won’t stand a chance!

(Note: Bill Gates and family have already given millions and millions to charity. It was announced on CNBC that on April 24, 2003 Bill Gates had just donated 28 million dollars to S. Africa’s AIDS program.)

As an individual investor in the stock market for almost 40 years I have found that companies that raise their dividend every year outperform those companies that stop or trim their dividends.

For example, Dominion Resources had raised their dividend from 1984 to 1994 every year, and then stopped in 1994. Since then the company continues to pay a 64½ cent a share dividend, with a dividend yield of around 4 percent a year. The stocks performance since 1994 has been mediocre, rising in price from the 40 dollar range in 1994 to the 60 dollar range in 2004.

Now compare that stock’s performance with Comerica, a company that has raised their dividend for the past 35 consecutive years. In April of 2003, Comerica’s stock price was around 37 dollars a share, paying a dividend yield of around 5%. Today, July 20, 2004 the stock closed at $58.28 a share, paying a dividend yield of 3.57%. A $21.00 a share move in the stock in 1 year and 3 months and in March of 2005 the company will probably raise their dividend again for the 36th consecutive year. (By the way, Comerica’s stock performance for the past 14½ years (with dividends being rolled back into the stock) has returned a little better than 15% a year, compounded annually.)

The simple point I’m trying to make is to invest in those companies that have a history of raising their dividend every year. There are hundreds of them. A company that just pays a dividend is not good enough; find those companies with a historical record of raising their dividend every year.

To read the PREFACE from the book ‘The Stockopoly Plan- Investing for Retirement’ visit: http://www.thestockopolyplan.com

What Is A Link Exchange And How Does It Help?

A link exchange is a very new thing in the online advertising business, you will have to first find website that offer some kind of link exchange program. This is where you will register to be a member and exchange link with other members, then you will have to create a sort of banner ad for other members and they will do the same for your website. This will be highly beneficial as you will be creating more places for clients to find you and improving your page rank at the same time. The search engine spider bots look for these along with SEO, meta tags, content and user friendly web design when they are assessing your website for a pagerank. The more places your website link is found, the better.

Another good way to generate traffic for your webpage or website is by doing backlink building. Backlink is a way of getting people to host a link of your website on their website. This is not an easy thing to get or do, as you will have a high rank in Google or Yahoo for anybody to even think about hosting a backlink for you. Another name for this in inbound links, which explains the whole process, it works just like link exchange, only you do not need any type of banner advertising for it, it is as simple as just a link on your website.

You could also up your page rank if you use Google ads as your advertiser, this way you will be right on the top of the page, whether it is the first page or the second page of the search engine. When it comes to advertising on the internet the page rank number you get your page to rank is very important. Many people only look on the first page of a search engine when they are looking for something so you must make sure you are there for them to find. You could also do text link advertising, this is done by entering the link to your web page on the end of your email page as a signature. This way all the people you send emails to during the day will click on your text link and visit your site, although this is only to a handful of people. If you do email marketing you can reach more people.

You can also do link building. This will be when you post blogs on numerous websites like My Space or Facebook and other community sites. You must write as a third party with no connections to the business you are promoting. You are not allowed to promote directly, but rather chat about anything you like. Just leave your link at the bottom of the blog for people to click on. That is about it. These are just some of the many ways of getting a higher page ranking and marketing your business successfully online.

1031 Exchange

The 1031 Exchange, from the Internal Revenue Code Section 1.1031 is a code that can end up saving individuals money on certain business and investment property transactions.

The 1031 Exchange allows sellers of some real estate and personal property to be exempt from paying the capital gains taxes if they are “exchanging” the property they sell for a new property of “like-kind”. This code only applies to business property and investment property, not purely residential property.

An example would be selling a property used as an office for a business and buying a similar property that will be used as an office instead. Any profit made on the sale will not be taxed because it is to be used towards the purchase of the new property. The newly purchased property doesn’t necessarily have to be the same type and size, but it has to be used for the business or investment purposes. Similarly, a property purchased for investment purposes can be sold to buy a different property for investment purposes, without taxing the profit. The broad definition of exchanging for a “like-kind” property allows for some flexibility.

There are further factors to be considered involved in the 1031 code. The purchase of the new property must take place within 180 calendar days of the sale of the original property. This gives individuals time to work out all of the details involved in purchasing and selling real estate. It is often more financially efficient to make the sale and purchase as close in time as possible. The 1031 code requires a qualified intermediary after 45 days of the sale to ensure that the gains are used towards the purchase of the new property. This prevents individuals from using the profit for their financial gain. Qualified intermediaries, however, charge fees for each exchange and additional properties.

Strange Exchange

Just when you think the sports world has produced every possible bizarre trade imaginable, they still manage to top themselves ...

A broadcaster for a rabbit. And a cartoon rabbit, at that.

When baseball journeyman Harry Chiti got dealt to the New York Mets for a player to be named later, little did he know that player would be him. The Chicago Cubs could spare a backup catcher during the early season, and apparently, the Mets saw enough of Chiti afterward. So, when they later gave a list of players from which to choose in order to complete the deal, Chiti's name was there. Perhaps their choice said something about the other players, but there can be no doubt that the Cubs got equal value in return.

At least that transaction was a player-only deal, albeit only one player.

Transactions involving no players have had various impacts on the teams involved. An obvious example was a swap between the Detroit Tigers and Cleveland Indians. In mid-season, they managed to trade managers. Jimmy Dykes was shipped to the Tribe, with Joe Gordon moving to the Motor City, making it the only deal of its kind in North American sports history. Both were probably disoriented for the rest of the season, but they'd surely agree that it beat being fired, which is usually what happens when teams want to jettison their skipper.

However, there was a more notorious no-player deal. It might have happened more discreetly, except it affected New York Yankees. The year was 1972, and while half a decade had passed from The Summer of Love, pitchers Mike Kekich and Fritz Peterson kept its spirit alive. They and their wive were close friends. Really close. So close, in fact, that during spring training of the next season, they wound up making a trade of their own. When Marilyn Peterson changed houses with Susanne Kekich, it was news which made more than the agate type in America's newspapers.

Said Yankees general manager Lee MacPhail, "We may have to call off Family Day."

A bag of baseballs isn't nearly as hot for headline fodder. So, when minor-leaguer Tim Fortugno was unceremoniously moved to another team in return for one of those bags, we can only imagine that the amount of $2500 in cash got tossed into the deal to make him feel better.

Much more cash was put on the table in 1919 for an emerging star named Babe Ruth. The Boston Red Sox had just completed a lousy season and owner Harry Frazee wanted to unload salaries. He also had his eye on Broadway, so he sold Ruth to the Yankees for $125,000 and a $300,000 loan (with Fenway Park serving as the collateral). Frazee used the proceeds to stage 'No No Nanette,' the sprightly musical that gave the world tunes such as 'Tea for Two' and can still be found up in lights to this day. This is the deal that gave rise to the Curse of the Bambino, which may have affected the Red Sox for so many years, but Frazee did very well by it.

Ruth justified his title as the Sultan of Swat in 1927, becoming the first player in history to hit 60 home runs in a season, a revered record that would stand for 34 years. That wasn't the only notable achievement in 1927; Walt Disney also brought the first cartoon rabbit to the silver screen.

Oswald the Lucky Rabbit looked like a rip-off of Felix the Cat, and he probably was. However, cartoon characters were a novelty back then, so Oswald enjoyed a measure of commercial success. In fact, Disney was certain he could expand the rabbit's fame if he had a bigger budget, which is why he traveled to Universal Studio's head office and requested as much. The studio refused, even showing their power by cutting the budget by 20% and telling Disney to like it or lump it. Chagrined, Disney quit and decided to work independently. He was certain he could create another cartoon character to help him realize his visions of commercial success.

We now see that the empire built around the fame of Mickey Mouse never forgot its origins.

When the ABC network decided to move Monday Night Football to its subsidiary, ESPN, long-time broadcaster Al Michaels decided he didn't want to accompany it. He expressed a preference to remain paired with virtuoso analyst John Madden, who left to join NBC, which had acquired the NFL's Sunday Night Football broadcast rights.

Michaels' career was launched at the 1980 Winter Olympics in Lake Placid, New York. He exclaimed to the USA, "Do you believe in miracles? Yes!" when the American hockey team completed the biggest upset in team sports history by defeating the Soviet Union's juggernaut and paved the way to an improbable gold medal. One of the best in the business, Michaels ultimately moved to the prime time of Monday Night Football and stayed there for 20 years.

NBC saw his addition to their broadcast team as a natural move. ABC saw an opportunity, too, and the idea of a trade was broached.

ABC is owned by the Disney empire. They noted NBC's association with Universal and decided it was time to bring Oswald the Lucky Rabbit home. Dick Ebersol, president of NBC Sports, did a double-take. He accepted the trade package for Michaels containing cable rights to golf's Ryder Cup through 2014 and expanded access to Olympic highlights, but he had never even heard of the cartoon rabbit.

Michaels took being swapped for a cartoon pioneer in stride. "Oswald is definitely worth more than a fourth-round draft choice," Michaels said, referring to the compensation that New York's Jets got for releasing head coach Herman Edwards to the Kansas City Chiefs.

Walt Disney's daughter, Diane Miller, is thrilled, saying "Having Oswald around again is going to be a lot of fun."

And so it came to pass that the strangest sports trade to date was sealed. NBC got the polished veteran it wanted, while Disney could be hoping their re-acquisition can earn a Comeback of the Year award.

For Oswald, it's going to be a brand new ballgame.

What Is A Traffic Exchange?

If you have surfed the internet for very long, you have probably ran into what is referred to as a "traffic exchange". These programs can be designed in many ways, with many different functions. In this article we are going to cover what they are, where to find them, and how to use them to actually receive quality traffic as opposed to just plain "hits".

A traffic exchange is, simply put, an exchange of traffic. The basic idea is to view other member's websites or ads, and in exchange, different members will view yours. There are 2 basic types of traffic exchanges available today:

1. The manual surf exchange. In this type of exchange, you manually click through the other members websites or ads. Usually there is an anti-cheat method of some variety being used to insure that the system is not being cheated. I can assure you that any exchange that does not have an anti-cheat system is being cheated by several people.

2. The auto-surf exchange. This system is easier to use, but far less effective. In essence, it runs automatically with no effort on your part, changing websites or ads every so many seconds. Obviously, if you don't even need to look at it to have it work, chances are, people aren't viewing your ads either.

Most, if not all exchanges of both types will offer new members free "credits" or visitors just for signing up. This amount can vary between 50 free visitors all the way up to 10,000 free visitors or more. However, in regards to the exchanges offering an extremely high signup bonus, if everyone is given 10,000 free credits upon signing up...who is left to surf the exchange?

In addition to sign up bonuses, other things to pay attention to when signing up for an exchange are surfing ratios, timer rate, referral bonuses, and extra features.

All exchanges have surfing ratios. These can vary from 1:1 to 5:1 and up. What this means is that for every X amount of times you view someone elses site, your site will be viewed in return Y amount of times. So if there is a 3:1 surf ratio, for every 3 sites you view, your site will be shown to someone else one time.

All exchanges also have varied timer rates. This is the amount of time that a website is shown to you before you can move to the next site. Average timer rates are about 30-15 seconds per site. On auto-surf exchanges, this is the amount of time before it automatically switches to the next ad. On manual exchanges, this is how long you must wait before you see the next site or else you will not receive credit for viewing the site.

Most exchanges also offer referral bonuses, by giving you extra credits for referring other people to the exchange (referred to as a "downline"). Often, exchanges will give you part of a credit for every page your referrals surf.

Some exchanges offer nifty "extra" features, such as lotteries, games, trivia for points, ways to bet your points, and many other things to keep you from being bored as you click away.

So now that you know what one is, how can you use it to actually get traffic? Obviously people will view your site if they see it in an exchange, right? Sadly, the truth is that this is not the case. 95% of all traffic exchange surfers pay no attention to the sites they are viewing, no matter how attractive their design and content. They are focuses on the clicking to get credits, or in the case of many traffic exchange "pros" they have 20+ browser windows open and are clicking "next, next, next" one after the other with little regard to what is on the page before them.

But before you get discouraged, I do have good news for you! There are ways to get people to actually look at your site and pay attention to it! A few tips and tricks to use are:

1. Don't make the page long and filled with text. In fact, a great thing to do is to make a splash page that catches their attention, with a "bookmark me" and "enter here" link. With only a 10-30 second window to catch someone's eye, you have to be loud, bold, and fast! Use obnoxiously bright colors, get straight to the point, and offer a fast easy way for them to bookmark you or open your site in a new window so it doesn't interrupt their surfing. That is why is it a good idea to make a seperate page that you use only for exchanges.

2. Offer something that they want that they will see and stay for. Free samples, free ebooks, and especially free advertising. Anything that you can give them that will give them an incentive to take a second look at your site.

3. Get rid of the popups. Most exchanges won't allow more than one popup window, if any. And when surfers hit a popup window, or anything else that interrupts their quest for credits, it merely annoys them and makes them want to leave your site faster.

It is possible to get visitors to your site, and signups for programs using traffic exchanges. However you have to think like a surfer in order to do so. You also have to be active in the exchange. Obviously, the more people surfing, the more the exchange works.

So where can you find a good traffic exchange? I am about to give you several links to the ones that I have found to be the best of the best. I am personally a member of over 150 exchanges, and have a good idea of which ones are worth surfing. All I ask is that you please use my referral link given below.

http://www.trafficpods.com/index.jsp?ref=snlash
http://www.nomorehits.com/cgi-bin/start.cgi?referrer=snlash
http://trafficg.com/index.php?member=snlash
http://www.trafficroundup.com/newuser.php?ref=snlash1
http://www.trafficswarm.com/go.cgi?370497
http://hitsafari.com/newuser.php?ref=snlash

With this information you can make the most of traffic exchanges, and get visitors and customers to your website. Happy surfing!

How To Choose Stocks

Everyone wants to see growth from their stocks. That is why they take their funds from the bank and start investing them. Many first time investors remove their funds with a feeling of trepidation and anxiety. The stock market is a volatile storm where many drowned.

The first step is to learn how to buy a stock. Many investors jump right in learning investment strategies and adopting techniques that worked for others, before learning the simple steps to buying a stock. Without a good understanding of the rules of buying a stock, it becomes impossible to make the strategies work.

The strategies do work but only when the investor chooses the right stocks for their own portfolios. The strategies do not tell investors what to buy and when to sell. They are only meant to tell investors how to manage their stocks. First, the investor must buy some stocks.

Step #1: Read the Wall Street Journal

The Wall Street Journal is not the only paper that can help investors. The business section of your local paper can often offer tips that will never make it into the Wall Street Journal. However, The Journal can teach new investors the lingo, and the basics of the markets. The more you read, the more familiar the markets become, and the easier it is to research stocks.

Step #2: Pick Industries

No one expects an investor to build a portfolio with a few stocks from mining, a couple from manufacturing, a drug developing company, a foreign natural resource harvester, and a marine biology firm. This is foolish investing. Instead, investors should focus on one or two industries and learn everything they can about that industry.

There are many places to research. Sometimes a simple place like finance.yahoo.com or Morningstar.com can provide all the resources needed to find an industry you will not tire of.

Step #3: Decide How Much to Invest

This is one of the hardest parts of investing. Many people have a set amount to invest. They experience some success and hit ‘pay load.’ Then the temptation sets in. If they had invested $10 000 instead of $1 000, their payoff would have been 10x higher. What if they had of invested $100 000? This type of thinking is dangerous.

Never invest more than you can lose is a nice mantra, but in the real world, resisting temptation is much harder. As the years past, some investors start counting up the intangible money they ‘may have’ earned if they invested more. This leads to frustration instead of joy when a stock does well.

Eventually, they start investing more than they can afford to lose. Then, they lose it -

Step #4: Avoid the Crowd

Some new investors believe the best way to buy a stock is buy whatever is ‘hot’ at the moment. They skip through websites and financial papers until they find something that is ‘hot.’ Unfortunately for them, they have not yet met the Bull or the Bear.

Buying hot stocks is only for people who are able to determine why that particular stock is hot at the moment. Buying on an impulse or gut feeling is just as dangerous. By the time a stock is hot, the ‘real’ investors have already bailed, having made their money, and are leaving before the crash.

These four steps will help a new investor buy a stock which should perform well, instead of buying a stock that bottoms out within a few weeks.

When You Must Exit In Stocks

There are a lot of articles that talk about how to get in to the stock market. Which is great. A lot of people want to get in to the stock market but don’t know where to start. However once all of these people get in to the market, they need to know how to get out. After all the money you make on the stock is not made when you get in to the market. The money you make on the stock market is made when you get out of the market that is when you sell your stocks. Hopefully you will sell your stocks for a profit and that leaves you with a profit.

So how to get out, while staying on top? Well you need to work with your own stops and limits. What the heck?

· You need work with stops and limits, which means that you have a set of stop points and limits. So before you start you need to know where and when you are going to stop.

· It’s best to set your stops and limits early on, because once your emotions get involved. So for instance if you own a thousand shares in a company that is currently at $2.5 per share. You get excited because the price is steadily rising by a few cents every day. Something tells you to sell when they get to $3. Once it gets to $2.9 you decide to wait it out. Sure enough the stock rises to $3.50 over the next while and you decide to keep waiting it out. This is where it gets tricky, because as we all know what goes up must go down. So waiting it out can end up costing 50 cents a share when it drops and imagine the profit you would have made on your original buy price!

· Never expect to make a bundle in a week. You will have good weeks and of course you will have bad weeks. If you implement a range of stops and limits those bad weeks a little easier, or at least not completely wiped out.

· Never partake in revenge trading. Revenge trading means that once you lose money you start investing to get your money back. But this rarely works because if the market has just taken a dip it’s not a great time to get a whole range of new stocks. Wait till things have calmed down a bit.

· Most brokerage firms have an automated stop system that will immediately sell or put your stocks out there the minute they reach your stop point. This means that you won’t have the chance to renege on your stop point.

· Always sell and buy when you feel comfortable, never put yourself under the pressure of too many tips and trade gossip.

· You need to make sure that you never spend more in the stock market than you can live without. If you do take a dive you will find it very hard to recover if you have nothing.

· Periodically speak with an advisor and look over your portfolio. Don’t keep stocks that aren’t or do not look like they will growth and improve.

Downbeat Stocks

Trading on the stock market profitably can be done using numerous methods and techniques. A lot of investors tend to think trading a high volume of stocks while the markets are in an upward or downward swing is the only way to make good money from investing. However, looking for stocks which are moving fast isn’t the only way to trade profitably. As a matter of fact, this method can lose you a lot of money very quickly. This method does work. The timing and the stock picks must be done almost flawlessly in order to produce good gains. It is true a lot of money can be made quite fast using this method. However, as previously mentioned above, this method can also be a recipe for disaster. You can lose all of your money just as quick. This type of investing isn’t for the faint of heart. All is not lost. There are other methods of investing which will allow you to make a more steady income without having to trade large volumes. If you want to set up your investing so that you get a more “passive” income from it, there are some things you should do. It’s critical that everything is set up carefully and correctly. These types of investments must still be watched by you. If you don’t monitor these investments, the returns may be lower than what you had hoped for and expected. Even worse; these investments instead of bringing in a passive income are losing you money. Don’t think that you can just walk away from investments which you deem as passive income investments. It’s important you check in on them on a regular basis.

In order for you to use the stock market to make some passive income, it is very important you begin with under priced stocks. It isn’t very helpful to you, in this endeavor, to purchase stocks which are from solid companies, but are priced too high to make a passive income with. What’s critical is you make the time to do some research so you can purchase good stocks at good prices to make good passive income with. The stocks you want to buy are ones from solid performing corporations, but the stock price has to be lower than what market value of the stock should be. When you find such stocks, there is one more critical component. You need to do some digging as to why the stock price is lower than what it should be. Just because it is priced lower than what it should be, doesn’t mean you should jump in and buy it. Heed our advice very carefully. Do more digging to find out why the stock is priced lower than it should be. If you don’t take this warning seriously, you can lose a lot of money on what you thought was a good deal. If you put in a solid effort on research, including why the stock is under valued, you will be able to locate some really great “downbeat stocks” to invest in. You will get a good return for these stocks without having to do a lot of trading and profit taking.

When you are doing your research you should first use the industries tab. This will allow you to sort through them to find out which are going to do well for you. If you sort them by using the "RT" then you should be able to get a better view of what is going to work well. You need to find the ones that have the lowest "RT" rating as these are likely to be the most downbeat stocks that will give you the best opportunity for a good profit.

There are two separate criteria that you need to look for to make sure that they have potential. But you need to make sure that they have both of these elements and not just one or the other to know that it is a good stock. You need to make sure that the industry has a cumulative PE of 8 or less. You also need to make sure that the industry has a price to sales ratio of less than 1. When you find a stock with these two characteristics then you need to also make sure the industry also has the lowest "RT" on that day. Do not ignore these conditions as they are very important to making sure that the stock you are buying is going to make you a good profit. You will not find these conditions very often so when you do, you will need to buy a considerable amount of stock to make it worth your while, very often from 100,000 to 500,000 is a good idea. As you will find stocks like this only 10 or 25 times a year it is important to buy them when you do. Then you will find that there are good longer profits over a year or more. This may give you a win percentage of over 94% and massive returns.

Very simply put, when you find them make sure that you buy the stock that has the highest relative value with lowest PE. This will give you the right information on which to base your buying. You also need to do some research on the stock to make sure that it is a good buy. www.form4oracle.com is a very good place to look at the recent activity on the stock and this will help you to get a better view of what is going on with the trading. It is only after you have done all of the research and made sure that all of the conditions are right that you should buy. If you do this then you will make sure that you have the best chance of making a good profit. This may give you 1 to 3 years returns in the triple digits consistently and this can give you a very nice income indeed.

Buying Stocks. But Where?

Silly question you may say! Of course you buy stocks via your broker or online using your brokerage account.

But …

It’s not necessarily that easy if you want to buy foreign stocks which you shouldn’t really underestimate nor neglect. There’s a whole batch of foreign stocks out there that make great investments but that are not available in your country, or only with difficulty.

And that’s the reason for this article. Several of my subscribers emailed me saying that they were interested in a stock but couldn’t purchase it in their country. Now why is that?

If you want to buy Microsoft or Wall Mart stocks for instance, you will not experience any problems at most stock exchanges let alone the USA. These two stocks alone already have a trading volume of over 10 million + every day on Wall Street. Even the regional stock exchanges like Chicago or San Francisco etc. have a high trading volume with Microsoft and Wall Mart. Buying and selling takes place within seconds.

But although most foreign stocks are also found on the trading floors of New York and other international exchanges, there are exceptions. Like the Canadian company Loblaw for example. You won’t see Loblaw stocks anywhere in Frankfurt, which is the largest stock exchange in Germany. There’s only a bit of volume at the regional stock exchange in Berlin. On average about 17 stocks per day. And that’s nothing!

The same is true for other big exchanges too! You will not find every single stock in New York, London, Frankfurt, Sydney or Hong Kong. It simply has to do with supply and demand. If there’s hardly any demand for a stock in XYZ country – for whatever reason – you won’t have the necessary supply. So either the stock is not available in your country at all, or only at very low volumes.

The difficulty with very low trading volumes is, that if you don’t only want to buy say 10 or 20 stocks, but maybe 500 or even 1000, this volume will be difficult to get and may take several hours or even days.

What can also happen then is, that your order will automatically be split up into several orders until the entire volume ordered is purchased. This is what happened to one of my orders a few years ago. And every order is charged with a commission. Considering the extra charges for each order at your local stock exchange, it might even be cheaper if you buy the stocks at a foreign stock exchange where volume is much higher.

And that’s exactly what you also do if you find a good stock that you are eager to get hold of, but can’t buy it in your country at all! You buy your stocks at a foreign exchange which in most cases will be the country of the stocks origin. This will also involve higher charges because you gonna have to do this via 2 brokers.

So let’s take the Canadian Loblaw again. If I would like to buy this stock, I’m gonna have to see my broker here in Germany who will then buy the stocks at the stock exchange in Toronto which will involve several extra commissions and charges. Because not only my broker will charge a commission but the broker in Canada too. So I’ll end up paying 2 brokers who are involved in my transaction.

So that’s simply how it works. My broker will contact a broker in Canada who will then make the purchase for me. And apart from extra charges involved it will also take longer before the transaction goes through.

But these extra commissions shouldn’t be overrated. If you find a great and solid stock that you really want, then go for it and because if you’re an investor and not a trader, you are probably contemplating a long-term investment anyway. And in the long run, commissions and other charges are negligible anyway.

At the end of the day it’s only important which stocks you buy and not the place where you buy them!

Yours in Successful Trading

Ricky Schmidt

How Do You React When Your Stocks Are Down

When trading large and small caps and dealing with the market, losses are inevitable on occasion. It may be a bitter pill for many to swallow but for those who are pros to the game it is a pill that should be expected along the way.

Many people point to Warren Buffett as an example of how well the 'buy and hold' method of investing works over the long term. So while it is easy to hear those words and accept them as a reasonable investment strategy, its another thing all together to actually act on when your stock has dropped 20% during a single trading session.

Anyone has suffered through the woes of a bear market knows that it is quite difficult to stick to your initial investment strategy when all around you people are jumping ship and liquidating assets. This is an investment strategy that requires discipline along with nerves of steel. Fears of depression often have investors heading for the hills and using logic that is at best faulty and at worst financially devastating.

If you have done your due diligence on your investment before you bought, then you should be able to weather the storm over the long term. As a matter of fact, the drop may provide the perfect opportunity to add to your position. Its important to remember that the buy and hold strategy works best with large cap stocks.

In these situations, perfectly stable companies may begin selling for fractions of their actual value for the interim-this by no means indicates that these companies will not fully recover and prove to be a perfectly solid investment. Below you will find three fundamental truths that should help weather your short-term market losses and stand fast when others are running for higher ground.

Its More Than Just A Sheet Of Paper

What you hold in your portfolio is a part of a company. Unlike day traders who buy and sell over the short term, hoping to make money by playing the up and down movement of the share price, long term investors are looking to own a piece of a company; to share in the story of the company. What your shares represent is a piece of everything the company owns. From pens to buildings, you own a portion of it.

In order to be truly successful as in investor you must do two things. First, you must not let emotion rule reason. Business and emotions are never a good combination. This is no different when it comes to investments in the stock market. Second, you must be able to evaluate the business and the potential of that business completely separately from the price of the stock. Remember that even the best company in the world is a lousy investment if you pay too much for the privilege.

Focus On The Big Picture

Are you trading large and small caps with the big picture in mind? If you look at any chart over the long term, you can easily identify areas where a company has dipped, only to trade much higher a few months later. In most businesses, there are seasonal changes that affect the share price. If you are trading large and small caps with the big picture in mind, then you can easily identify this as an opportunity to add to your portfolio. When the company releases news, how will it impact the company? Plenty of companies have for example, sought financing by issuing shares. Typically, this involves providing the buyer with the shares at a discount to the current market price. Not surprisingly, the share price drops to that amount. This is usually where the traders bail (hitting their stop losses on the way down). However, if the company is a solid one, that is going to use the money for expansion, acquisition or debt repayment, the market will reward investors over the long haul. If you sold based on one days trading actions, you would be out of a position, just when the company is poised to move higher.

Whether your are trading large and small caps for the short term or long term, the following tips should help to improve your returns:

Consider buying after a major correction. Markets go up and markets go down. Over time, they always go in an upward direction. Often corrections will provide excellent buying opportunities because of the "herd mentality". This often creates an oversold situation, which is perfect for buying! Just ensure that you are buying a strong company.

Remember there is money to be made going long, just as there is money to be made going short. Just know the trend before you decide which way to go.

Never buy a stock just because it has a low price. A low price and a great stock makes for a good selection. A low price on it's own does not. There is normally a reason why a stock is at the price it is at. If you want to gamble, go to Las Vegas.

The biggest mistake stock market investor make is to make the current situation fit the one they bought the stock in. I've seen countless swing traders buy a stock based on the movements of the 15 minute charts, only to say well, the daily chart looks good. If the share price of your company is down, you need to reassess what is happening now. Based on the current due diligence, is this just a temporary move down, or is this part of a larger change in the trend of the share price.

There is plenty of money to be made investing in the stock market, however you will make more money if you invest without emotion, and assess the current situation to identify if the party is over, or if you have been presented with an amazing opportunity. Buy and hold does not mean buy now and look at your positions in 10 years. It means investing in solid companies, and assessing along the way. Sometimes, things change, and you have to be willing to accept the change. The successful investor can easily identify if the share price is down for a bad reason, or is down to present them with a perfect opportunity to add more shares.

Penny Stocks

Penny stocks are usually not listed at the major stock exchanges like the New York Stock Exchange (NYSE) or the NASDAQ because they don't meet the listing requirements. Listed stocks must have a minimum number of shareholders, minimum assets and file financial reports regularly. They are also under the strong supervision of the SEC, the Securities and Exchange Commission.

Penny stocks are usually traded on the OTCBB or on the Pink Sheets. The OTCBB (OTC Bulletin Board) is an electronic quotation system for over-the-counter securities that are not listed with one of the national stock exchanges. The only requirement is that the companies file financial reports to the SEC. If not, the company is removed from the OTCBB listing and the stock can only be quoted on the Pink Sheets. The Pink Sheets activities are not supervised or regulated by the SEC.

If the company has less than $10 million in total assets or less than 500 shareholders in total then no filings must be done at all.

Penny stocks are for these reasons wide open to scams and manipulation. The stock price is usually far below $5 and market capitalization is very small as the companies itself are very small. The lack of reporting requirements can make it difficult to find verified information about the company, its financial situation and outlook.

Many fraudsters take advantage of this and publish misleading information to manipulate the stock price. Because of the lack of public interest and low number of shareholders the trading volume is generally low. This means that a few buy or sell orders can have dramatic effect on the share price.

The low liquidity is at the same time the biggest advantage of penny or micro-cap stocks. While a listed stock can almost never move several hundred percent within a few days, a penny stock can do that easily. The low share price makes it possible to acquire a big amount of shares with a small amount of money. Little price increases or decreases have therefore big impact on the performance.

The low stock prices and limited capital requirements often attract novice traders but penny stocks are definitely a playing field for experienced investors only. Penny stocks are high risk investments. Many companies won't probably succeed and go bankrupt. The shares will end up worthless.

Many penny stock companies have no or very limited working capital, assets or are in development stage for months or years before any revenues can be expected. Be aware that you probably can't sell your shares for days or weeks or only at a big discount because of the limited liquidity.

The Evaluation Of Stocks

In order to effectively invest your money into stocks of any kind, you must know all of your stock options so that you can efficiently earn money. Because stocks are simply small shares of a company, the more stocks you purchase to more you own of a certain company. For example, if you purchase 100,000 stocks in AutoZone, an automotive store, you would have more say in what takes place in the company that someone who only purchases 1,000 shares of AutoZones stock. There are two main types of stock in that, you, the investor should become familiar with so that you can properly purchase the stock that is right for you and your monetary situation.

Common Stock

Basically stated, a common stock is, well, common! When you hear people talking about stocks in general, it is these types of stocks in that they are referring. It is simply a piece of paper that represents some degree of ownership of a corporation as well as some form of profit from that particular company. Interestingly enough, investors in common stocks receive one vote per stock owned to elect board members, the people who oversee major decisions made for the company as a whole, for a particular company. In the long- term, this type of stock means capital growth for the investor, however, if the company is forced into bankruptcy, the investor will not get paid what they are owed until creditors, bondholders, and preferred stockholders receive their payments.

Preferred Stock

In general, preferred stock is stock that is owned by preferred stockholders in that all of the companys earnings and assets go directly to the preferred stockholders first. Because preferred stockholders are paid before common stockholders, preferred stockholders choose to give up their right to vote in the election of board members. For this reason, preferred stockholders have no right in the selection process of the company. Preferred stockholders purchase stock in a certain company for monetary gain only in that their main goal in investment is earning a return on investment. Of course, there are four variations on preferred stock investments.

Voting - Preferred stock members can opt for the right to vote in a company in that they own stock. By doing this, they ensure the power to make sure that they receive all monies owed to them because they are able to bribe people into places of management. For example, Bob is a preferred stockholder who wants to ensure that his profits are paid to him no matter what happens to the company. Bob tells Tom, a man up for board election, that he will make sure Tom wins the election as long as Tom agrees to pay Bob his profits, whether the company goes into bankruptcy or not.

Adjustable Rates - Preferred stockholders receive an agreed upon profit based on stipulations provided by the company.

Convertible Stock - Preferred stockholders have the right to convert their preferred stock into common stock, allowing the investor to lock in their profit while they potentially profit from a rise in common stock. Basically, preferred stockholders are protected no matter what types of investment decisions they make.

Participating Stock - With this type of stock, preferred stockholders not only receive a set profit, but they are eligible for a certain percentage of the companys earned profit over a set period of time.

For this reason, it may seem that a preferred stockholder position is the way to go, however, with increased power comes more headaches. If you are a beginning investor, it is better to work on common stocks for a number of years before trying to get involved with preferred stocks.

Because common stocks and preferred stocks are so different, companies are not allowed to customize either type of the stocks. The reason for this is that some companies may be corrupt and want the voting power to remain with certain investors. Companies are held under law to make sure that the voting power remains fair among both common stockholders and preferred stockholders.

It is your money and your choice, however, it is suggested that you become educated when playing with the stock market. It is important to know precisely what stocks are as well as the main characteristics of a common stock as well as a preferred stock. As with any investment, the ultimate goal is to gain a profit and this can only be done with stocks if you thoroughly understand them.

How The Value Of Stocks Are Influenced

A stocks value can change at any given moment, depending on market conditions,investor perceptions, or a number of other issues. When investors pour money into a company's stock, they do so because they believe that the company is going to turn a profit, and the company's stock will go up in value. However if the investors decide that the company's outlook is poor, and they don't invest, or if they sell the stock that they already own, then the company's stock price will fall.

Investors that purchase stock, believe that others will by the stock as well, and that the share price will rise. Investing is a gamble, but its nothing like betting on horses. a long shot always has a chance to win the race even if everyone else is betting on the favorite. But in the stock market, the betting itself actually influences the outcome. Should lots of investors bet on a particular stock, the price of the stock will rise. The stock becomes more valuable because investors want it. The reverse is also true, if investors sell their stock in a company, the stock will fall in value. The more a stock fall, the more investors will sell.

Some people just invest in stock to get a quarterly dividend payment. Dividends are a portion of the company's profits that are paid out to its shareholders. Lets say that if a company declares a annual dividend of $8 dollars a share, and you own 100 shares then you will have made $800 dollars a year, or they would be paid $200 dollars each quarter. The company's board of directors decides how large of a dividend the company will pay, or if it will pay one at all. Most of the time only large, mature companies pay dividends. Smaller companies need to keep reinvesting their profits in-order to continue to grow.

All stocks don't act alike. One of the basic differences is how closely a stocks value, or price, is tied to the condition of the economy. Cyclical stocks are the shares of a company that are highly dependant on the state of the economy. When the economy slows down, their earnings fall rapidly, and so dose the price of their stock. However once the economy recovers, a company's earnings will rise rapidly and their stock will go up.

Are You Looking To Buy Stocks?

Investing for the future is important if you ever plan to retire. One form of investment is buying stocks in corporations. Stocks represent a portion of a company, so when you buy stocks, you are essentially buying into the company. You can benefit from any profits it makes, but you can also lose money if the company’s performance, or the market as a whole, goes down.

When you look at investing in stocks, you may want to consult a financial advisor who works with stocks and mutual funds for a living. He or she will have knowledge of which stocks you should buy and which ones you should avoid. If you wish to choose the companies you will invest in, look for companies that are growing and offer some stability. Also, if sales in, say, electronics are very high, you may want to invest in a company that manufactures electronics. Take some time to research the stock market before you make your investment decisions.

Once you have decided on some stocks you would like to purchase, you’ll need to pay attention to what the market is doing. In order to benefit the most from your investments, you’ll need to time when you buy, and when you sell, your stocks. If you choose some stable companies and buy stocks in them while prices are low, because of the market or because of a period of time where the company is not bringing in large profits, it is most likely that your stocks will increase in value.

When you are looking to sell your stocks, it is good to set a price for yourself and decide that when your stocks reach that price, you will sell them. Often, people hang on to their stocks, wanting to get the most out of them that they can, and then the market drops and they lose money.

You can see that there is frequent decision making in the process of buying and selling stocks. If you are willing to put some time and effort into your investments, you will be pleased to see how much you will profit from your stocks.

Stocks Look Pricey

The first quarter of 2006 is over. Now is a good time to reflect on stock prices and the opportunities they present.

Bargains are scarce. Equities are expensive. In recent weeks, I’ve heard several fund managers say valuations are still attractive. I don’t agree. Generally speaking, valuations are unattractive. Returns on equity are higher than historical levels. A market-wide return on equity of 15% is unsustainable. Price-to-earnings ratios may not fully reflect how expensive stocks are. Price-to-book ratios are more alarming.

There are two additional concerns. Most discussions of the relative attractiveness of equities focus on the S&P 500 and forward earnings. The S&P 500 is not the most representative index. It may not be the best index to consider when looking at market-wide valuations.

Forward earnings are (necessarily) estimates. Where current returns on equity are unsustainable, projected earnings that use similar returns on equity may overstate the earnings power of equities in general. This can occur even where the estimates appear reasonable given current earnings. If you start with unsustainable base earnings, you are likely to overestimate future earnings even if you truly believe you are assuming very modest earnings growth.

Assets in general are pricey. Value investors have few places to turn if they continue to insist upon a true margin of safety.

Bonds are unattractive. Long-term inflation risks make U.S. treasury, corporate, and municipal bonds a fool’s bet. There is little to gain and much to lose. The know-nothing investor who buys a top-quality bond today and holds it for decades may very well find his purchasing power diminished.

There may be some select opportunities in foreign equities. But, these are difficult to evaluate. Foreign government obligations are also difficult to evaluate, but that isn’t much of a problem for value investors, because most foreign government debt is priced to perfection. You’ll have to be willing to take a lot of uncompensated risks if you want to own such bonds.

Of course, there are exceptions to every rule. There may be a few bonds out there that are attractive. There certainly are a few attractive stocks out there. But, even those stocks that look very attractive relative to their peers don’t look nearly as attractive when compared to past bargains.

Value investors face a difficult choice. They can assume stock prices will return to historical levels, and hold cash until the correction comes. Or, they can accept the reality they currently face.

There is no logical reason stock prices must necessarily return to historical levels. During the twentieth century, real after-tax returns in diversified groups of common stocks were very high relative to other investment opportunities. There have been various reasons given for why this occurred. Many have said these returns were possible, because of the higher risks involved in holding equities. Over the long-term, risks were somewhat higher than today’s investors seem to remember, but they were hardly severe enough to justify the kind of performance spreads that existed during much of the twentieth century.

True, if you bought at inopportune times, it was possible to remain in a fairly deep hole for a fairly long time. But, if you gave no real consideration to the timing of your purchases or the prospects of the underlying enterprises, you did better than many bondholders who chose their investments with the utmost care.

This is a disconcerting problem. It may be that most investors are overly sensitive to the risk of an immediate “paper” loss in nominal terms, and therefore overlook the much greater risk of a gradual loss of purchasing power. Issuing fixed dollar obligations may be the best bet for any business or government that seeks to swindle investors.

For the sake of the common stockholders, I hope many of the best businesses continue to issue such obligations when money is cheap. Corporate debt gets a bad name, because it tends to be overused by those who don’t need it and shouldn’t want it (and, of course, by those businesses that do need it but won't survive even if they get it). The businesses that would benefit the most from the use of debt usually appear to have more cash than they could ever need. But, it’s best to think ahead. For truly high quality businesses, the cost of capital will fluctuate far more wildly than the likely returns on capital.

If, during the last hundred years, stocks really were far cheaper than they should have been, is there any reason to believe stock prices will return to past levels? The past is often a pretty good predictor of the future – but, not always. It’s difficult to say whether, over the next few decades, valuations will, on average, be higher or lower than they are today. However, it isn’t all that difficult to say whether, at some point over the next few decades, valuations will be higher or lower than they are today. The answer to that question is almost certainly yes. They will be higher and they will be lower. Maybe for a few years or a few months. Maybe for a full decade. I don’t know.

What I do know is that value investors will have opportunities to make investments with a true margin of safety. But, should they wait?

That’s the most difficult question. Today, I am not finding opportunities that look particularly attractive when compared to the best opportunities of past years. But, I am still able to find a few (in fact, a very few) situations where the expected annual rate of return is greater than 15%.

That will be more than enough to beat the market. It will also likely be enough to provide a material increase in after-tax purchasing power. That’s not guaranteed, but it hardly seems holding cash would offer the better odds in this regard.

So, is an expected annual rate of return of 15% good enough? Is it reasonable to bet on the good opportunity that is currently available instead of waiting for the great opportunity that may yet become available?

I’ll leave that for you to decide.

What Are Penny Stocks and Should I be Trading Penny Stocks?

In the world of financial services there are lots of shades of gray, actually green. Some items are clear and have a simple definition, while others defy being pigeon holed. Penny stocks are one of those very concepts. There is no accepted, official designation for the term "penny stocks" and which are and which are not will depend on exactly whom you ask. The SEC calls any stock under $5 a share a penny stock. Each brokerage firm and financial entity will have a different set of criteria for deciding whether or not a stock is "penny stock" or not.

In the easiest of terms, penny stocks are usually determined by three factors. These factors are (1) the price per share, (2) the market that the stock trades upon and (3) the market capitalization of the company from which the stock derives. Of course, there are some variations on each of these factors, and some brokerage firms will treat all stock from companies under a certain market cap as penny stock.

The Securities Exchange Commission will consider all stocks with a price per share of less than five dollars a penny stock; brokerage firms usually are far more lenient. Having one factor to qualify as a penny stock will not necessarily give a stock that determination, most have at least two and many qualify under all three.

Penny stocks are high risk, but can yield high rewards if you carefully research these investments. Make sure that you understand that it is easy to lose all of the money you have invested, but it is equally easy to make fast money with some smart planning and a lot of good fortune. Some brokers will not deal with penny stocks because they can be considered volatile and wildly unpredictable. They are usually unable or unwilling to do the necessary background research for these un-proven, small company-based stocks, and in many cases may consider them beneath them.

A small market cap usually relates to a small business, which unfortunately in this economic crisis period has a higher rate of total business failure. Although probably not a good idea for the beginning trader, or those with already tight budgets, penny stocks can be profitable in the right hands. Because they are usually from smaller and largely unproven companies, they can be purchased at bargain prices. If the company does suddenly have a growth surge, not only have you gotten in under the huge price increase, you have just made a large profit. Finding these profitable companies is the hard part. There are thousands of Penny Stocks to choose from, but how do you know which ones will become profitable. Just recently a company has developed a computer program that uses artificial intelligence to sift through the millions of pieces of data. So far the results have been phenomenal. They call it the Stock Trading Robot and it is the 1st commercially available stock trading robot of its kind. Check it out for yourself at the link below, just be very diligent and do your homework.

Stocks Vs Bonds: Should You Put Your Money Into Stocks Or Bonds?

So what is the difference between stocks vs. bonds? People today are interested to know what the better method of investing is. Trust be told, many believe that bonds are better because they are a safer investment, as you are virtually assured of achieving a positive return on your investment.

Here is a brief explanation of a bond. The company you hold a bond in has issued you a bond in exchange for your money over a certain time. When the time is up, they will pay the loan back to you with interest. Therefore, as long as the company is financially stable, you can be almost certainly to make that money back.

A stock, on the other hand, is not guaranteed and fluctuates all the time. Therefore, most people believe (in some cases rightfully so) that a bond is a better investment because they are less volatile.

However, here’s something very few investors are aware of: when done right, stock investing can actually be just as guaranteed of giving you a positive return on your investment as a bond, and maybe even more so.

You see, when you focus your investing on companies that have sound financially numbers and good prospects for the future, you can be virtually guaranteed of making money. However, when, like most investors, you try to spread your investments around and include companies on shaky financial ground, you are just asking for trouble.

The reason that so many investors lose money is that they invest in companies without looking at their financial statements. The only reason they invest at all is they think the stock price will be going up short term. Therefore, the first sign up trouble, they sell out.

On the other hand, however, when you focus on sound, stable companies, you are not only assured of making a positive return of investment, but you can make a lot more money than you would with a bond. Warren Buffet is famous for achieving a 15-20% growth rate on his portfolio nearly every single year. This wouldn’t be possible without his strategy to focus on companies he can be assured of will turn a profit.

Therefore, don’t be fooled into only focusing on bonds because they are safer. When you open your eyes, you will actually realize that there are many stocks you can invest in assured of generating you a profit.

Stocks And Shares Explained - Devising A Proven Trading Plan For Stocks And Shares

Are you a profitable share investor or trader?

Most shares investors and traders would move into shares trading or investing after learning some basic charting, usually moving averages and begin to invest, either making some money or losing some in the initial stages. This is of course, inadequate and a bad way for a someone to start off trading in stocks and shares.

Why?

A person would want to invest in stocks and shares because he has good positive cash flow but he is assest poor. By trading in stocks and shares, he is seeking a way to increase his wealth by balancing his cash position with a realistic amount of assets that will grow in time to further improve his wealth position. With stocks as the main asset, it is easy to convert the stocks back into a cash by liquidation in the open market.

My personal observation is that 95% of shares investors and traders do not have some wealth creation principles inbuilt into their trading plans, if they do have a trading plan at all.

This may appear harsh, but how many of you reading this, have ever built in a system of savings and leverage into your trading plans for stocks and shares, while you trade?

It is well accepted that to build up personal wealth, you need to save money- put aside the money until it grows into a huge cashpile, or you continue to do this while you are trading, increasing your capital each time you do so along the way.

At the same time, it is wise policy to use other people's money as a leverage- to increase the capital base and to be able to invest more, with the profits paying back the interest incurred by leveraging.

Therefore, if you are a share investor or trader, it is important for you to consider improving your overall trading plan with these wealth creation principles.

Here are the steps to a typical trading plan with inbuilt wealth creation principles:

1. Put up a capital of at least $5,000

2. Against this $5,000 get a margin loan of $5000 from your stockbroker or bank, so that you now have leverage to buy $10,000 worth of shares.

3. Buy good fundamental blue chip shares that comprise the stock index. Generally, you can buy the shares within the top 20 of the stock index. We will discuss the way to purchase them below.

4. Commit a regular monthly saving of minimum $500 to the trading account, with another $500 coming from the margin loan. This is the part of the savings program to boost your capital sum.

5. Use this additional capital to purchase stocks within the top 20 stocks comprising the stock index.

Where you have a bigger amount of initial capital for trading, you may also wish to broaden the base of stocks for trading by monitoring more than 20 top stocks that comprise the stock index. You may go into the top 40 stocks as long as they are freely traded.

With these basic wealth creation principles of leverage and savings incorporated into the trading plan, we will need to identify and select the actual stocks that are ready for trading within the top 20 or top 40 stocks.

In Part #2 of this article, we will discuss how you can trade profitably using a proven technical trading system to build up your portfolio.

Penny Stocks Buying Selling: Day Trading Penny Stocks Is Risky And Profitable

The world of penny stock day trading is often compared to gambling.

Why?

Because when you win, you win big. If you lose, you can lose a whole bunch of money. The speculative nature of penny stocks or microcap trading is well known. Companies that offer cheap stock are not the same companies you’ll find in the blue chip market. On the contrary, they are often very risky investments.

The reason why their stock is so cheap is because they are just starting out in business or they have mismanaged their business and need a quick bail out. Selling inexpensive stock is a way to raise some fast cash for their enterprise.

Determining which small cap stocks are a good buy is very difficult and not for amateur investors. The truth is, most microcap stocks are pure junk. It’s really common for a novice investor to lose money after being lured into buying a cheap stock that is supposed to make them rich.

Very often, these sure deals are nothing but scams that are designed to make the insider stock picking services big money. They count on your lack of experience and knowledge to make them rich.

Only about 5% of the small cap market is truly worth investing in – the rest should be tossed aside like yesterday’s garbage.

The good news is that with the right information and guidance, you can make really great profits in this market. Most smart investors will sign up for a newsletter that specializes in penny stock picks. The reputable newsletters will only analyze the top 5% of companies that they feel are worth putting money on. They will usually recommend three to five good picks. You then decide whether you want to go with their picks or not.

Another reason why it’s a good idea to go with a newsletter is that you can greatly minimize your risk. Wise investing is all about picking more winners than losers and not putting all your eggs into one basket.

Since you probably have a full-time job, you don’t have time to spend pouring over endless data about thousands of companies out there offering cheap stock. You definitely need experts to do this for you, and you also need the tools to make your investment decisions easier.

Many people get into day trading penny stocks for the thrill of making big money in a short amount of time. While this is totally possible, you must also temper your enthusiasm a bit in order to make good decisions based on factual information.

Here’s an example of a typical microcap stock trade:

Let’s say you find a start up company that’s in the software business. They create medical software for hospitals. This sounds like a pretty good business to you so you take a look at their stock offering.

You see that they are selling shares at 50 cents a piece. So, you decide to buy 500 shares for $250. You sit on the stock for a while then you see that it starts to go up. It peaks at $3 per share and you decide to sell. You’ve just made a nice $1,250 profit from that one stock. That’s a 600% rate of return!

This kind of profit is what excites most people about small cap stocks, however, if the opposite should happen and that stock goes down by even inches, you’ll lose all of your initial investment money. This is why you should never invest money that you need to pay your bills and buy food.

Only invest extra money that you can spare. It’s similar to if you were going to Las Vegas for a vacation and you budgeted a certain amount of money to spend on gambling at the casinos. If you lose it, no sweat - it’s fun money anyways.

Day trading penny stocks can be looked at in the same way. It’s fun and profitable when you win, but not so much when you lose. Unfortunately, many investors gamble with money they shouldn’t be risking and lose it all with one or two bad trades. I know this isn’t going to happen to you because you’re going to learn how to invest the smart way, and in this topsy turvy market, that’s the only way you’ll end up being a winner.

Cyclic Stocks vs. Growth Stocks

In the long run the economic performance of most countries is showing an upward trend. But, although this is true, the global economy and that of individual countries is always subjected to ups and downs.

Many sectors are especially exposed to these up and down swings.

Building and construction companies, automobile companies or steel manufacturers are all hanging on the economy like a marionette on strings. Large profits are taking turns with setbacks or even huge losses during a recession.

And the shares of these companies and sectors are substantially affected by the up and down swing of the economy. When profits increase in good times, more often than not, these stocks skyrocket disproportionately. But when profits decrease, investors let go of these stocks as if they carry the plague.

OK. You might say that this ain't a problem. You just buy cyclic stocks when prices are down and sell when prices are up. By low and sell high!

But unfortunately the economy isn't quite that reliable. Especially not the stock market. If it was that easy to make money with stocks, lottery companies would all go out of business in no time.

There are all kinds of factors that can get in your way like wars, a financial and currency crisis like we had in Russia and Asia in the 90's. Or oil prices are giving us a hard time again.

So you can't tell with absolute precission when your stocks have reached the bottom just like you can't accurately tell when your stocks are at their very peak before the market corrects again.

A nice example for cyclic stocks are General Motors and Ford. The stocks of these 2 companies have performed so badly in the past that they were downgraded to junk status by the rating company Standard & Poors.

The headlines at marketwatch.com read this:

GM, Ford debt cuts take toll on stocks.
S&P slashes automakers' credit ratings to junk status.

Shares of General Motors slid 5.9% while Ford shares fell 4.5% after Standard & Poor's cut its long- and short-term corporate credit ratings on GM and Ford to such a low level, that the word "junk status" was out faster than the 2 stocks fell that day.

But what can one expect if you look at the stock charts of these two corporations.

To view the charts, please click the following link: http://www.stockbreakthroughs.com/Newsletters/cyclic-vs-growth-stocks.htm

Holding on to these stocks makes no sense and is a waste of time and money!

Often the reallity with cyclic stocks is, that investors get in to their trade too late and also get out too late. The media is also to blame for this. When the word of an upswing is out, it's in full swing already. It hasn't just started. Buying then is senseless for an investor that speculates on buying low and selling high.

And when the headlines scream "Recession", the bottom of the valley has already been reached long ago. Selling now makes little sense because by now prices are in the red again.

Also with growth stocks there's no guarantee for the fast and easy buck!

But they have one huge advantage:

In the long run, their prices only point in one direction...UP!

The entry point for a long-term investor is by far not as important as with cyclic stocks. Setbacks are more seldom and, with few exceptions, also not so violent.

A stock like Johnson & Johnson (J&J) or General Electric (GE) is the perfect example for a strong and solid growth stock:

Again, just click http://www.stockbreakthroughs.com/Newsletters/cyclic-vs-growth-stocks.htm to view the charts.

The 3 dips in J&J's chart and the one in GE was only due to the overall global recession between 2000 and 2003 after the big "Internet Bubble" popped. But while most cyclic stocks are still at the bottom, J&J and GE have long been on their way up again.

These kind of stocks you can always buy without any second thoughts.

In my experience, cyclic stocks will lose you more money and cost you more nerves than you can ever make up for with a few lucky "cyclic" trades.

Yours in Successful Trading,
Ricky Schmidt

Home Exchange Vacations Can Beat The Currency Exchange Doldrums

I checked some major world currencies against the dollar this morning. One US dollar buys the following: £0.498828 (British pound), CN$1.1227 (Canadian dollar), €0.73524 (Euro), AUS$1.19574 (Australian dollar).

These figures are effectively putting a stranglehold on Americans vacationing abroad. They add up the airfare, hotel or vacation rental charges, cost of a rental car and eating out in restaurants, and decide that the budget simply cannot be stretched that far.

But this is where home exchange comes into its own. Plan a home swapping vacation and the only major cost is for the airfare to reach your destination. No hotel, no rental home, probably no rental car, and eating out can be reduced drastically. In short, the very home you live in can be your passport to an exciting and affordable vacation.

No money ever changes hands between home exchange partners. You are in their home while they are in yours. You pay all your home expenses such as mortgage, utilities, etc. as you normally would. It’s sometimes agreed that people pay for their own phone calls, if they are likely to be excessive once the exchange is completed and the phone bills arrive.

Many home swapping arrangements also include a car, which of course represents more significant savings. Expensive restaurant meals can also be eliminated, or at least substantially reduced. Exchange partners often leave information on good, non-touristy restaurants that they recommend, while some will go the extra mile and obtain some great coupons and certificates for their exchange partners.

People who are new to the idea of home exchanging are very often very apprehensive at the prospect of inviting “strangers” to live in their home completely unsupervised. To reassure them, I like to compare home swapping to Internet dating. Before couples ever get around to meeting they exchange emails, photographs and phone calls. If they sense incompatibility they drop that particular pairing and move on.

Setting up a home exchange follows those same principles. By the time the exchange actually takes place, the two parties involved are never strangers. In the initial selection process they would have swapped emails, then as the arrangements progressed, phone calls, photographs, possibly videos and certainly many more emails would have been exchanged. Everyone involved feels very compatible and comfortable with each other

Good initial communications are what makes home exchange work. In the 20+ years I’ve been promoting the home exchange concept with probably tens of thousands of exchanges arranged, Ive never received a report of a theft, malicious damage, vandalism, or a case of someone arriving at their exchange destination and finding a vacant lot. It just doesn’t happen!

Many members join initially to save money while they travel. That wish can be accomplished, with savings of thousands of dollars on hotels, rentals, cars and restaurants. But much more than that, many will often confess that the greater advantages they unexpectedly discovered are the experiences of living an area like a local, not a tourist and enjoying the comforts of staying in a home rather than a cramped hotel room with all the associated restrictions.