Monday, 22 November 2010

Automated Stock Trading Software and GM Stock

Using stock market software is part of the game now whether you are comfortable with it or not. It just makes thing so much easier and quicker. I can manage all my stocks in one place using Google Finance. I can see everything quickly at a glance without having to log into multiple web sites and compare the data across split screens. Yes it was a bit of a pain to set up in the first place as I have accounts with different brokers. I still tend to use Fidelity’s site every now and then to keep track of how my mutual funds are doing. I haven’t found a way of integrating that with Google Finance just yet. If anyone knows let me know as I’ll be all set from the one screen. I want the perfect stocks for dummies interface!

Automated stock trading software is something I get emailed about every now and then. It tends to be those annoying spam emails that end up in my junk mail box and I really have no business reading. Still, I find myself pondering over them wondering if they could actually make this whole game any easier. Its human nature to try and find shortcuts and lets face it some of the work in buying stocks is really boring. I mean seriously, who enjoys reading over companies annual reports. Especially if it’s the fifth one you’ve read that day. Unfortunately automated software isn’t quite as sophisticated that it’s going to replace all the boring manual work for you. Well, none that I’ve seen anyway. You can use them if you’re interested in day trading or currency trading to manage all those transactions for you. I can’t imagine trading in those markets without using some sort of software. The idea with the automated offerings is you put in a host of parameters at the start and it goes off on it’s own buying and selling as you have instructed. The keyword in that last sentence is ‘you have instructed’ as there’s no thinking involved in this software. It’s just matching patterns based on your initial criteria. Unfortunately we don’t have any Skynet style system that will make you rich. If I did I wouldn’t tell you anyway.

Anyway I’m not saying they’re all bad I’m sure they have their uses. Day traders and currency traders will know what I’m talking about. For value investing, I’ll be keeping my money for now.

In other stocks news this well GM stock is back and available to trade! It’s been up and down like a fat kid on a trampoline since opening on Monday. My advice? Stay away for now and let it settle down. I’d imagine the price will dip and climb until the end of the week. So check back at the start of next week and see how the GM stock price is doing then. The stock market has been pretty unstable as it is lately without this giant of a company making a reappearance. General Motors Co. pulled off an IPO worth $15.8 billion, which was quite hard to believe but in many ways announced the return of the company. I’m sure many of you will remember GM being bailed out by taxpayers to the tune of $50 billion not too long ago. The U.S government sold 478 million shares at $33 each share on the opening day. Things are about to get interesting. Many market experts are estimating that the stock will level out at $36 a share but how can they really be sure. I’d stay away for now, but that’s just me ever the cautious one. General Motors has a bit to go to convince me of parting with my cash. If you're new to how to buy stocks for beginners I'd recommend you do the same.

Friday, 9 July 2010

A Few Other Trading Options

Most of the posts on this blog related to buying stocks and shares in a company of your choice. I thought it would be useful to do a little round up of the other trading options available to you. I can honestly say that the traditional method of buying stocks, thats getting an online broker and then making an investment through them for companies I identify is not the only way I invest.

You've probably heard a lot about mutual funds but maybe not so much about all index trackers. It's basically an investment fund that buys up the whole market. All the securities in a particular index are picked up by your investment. Why would you want to do this? Well there's several very good reasons. Firstly it offers you a great deal of protection. If you're buying up say the top 100 stocks in a particular index, if one of those companies goes bust you won't take the hit as hard as you would if you owned single stocks. The threat of losing your money is spread very thinly and you really avoid the problem of having all your eggs in the one basket. Just take a look at buying BP stock to see how much could be wiped off the stock price in a matter of months. All it takes it one major incident and the companies price as halved. Imagine you had all of your stocks in BP before this happened? I'm sure some of you had you poor souls!

Another major advantage is low maintenance fee. Most mutual funds require an annual fee paid for the management of the fund. The people who do the investing have to identify stocks and their time costs money. This isn't the case with index funds. There's no real research involved and so the actual management is minimal. This of course means less costs to you. You will probably still have to pay an annual fee but it will be much less than compared to a traditional mutual fund. If you're buying stocks through a broker you'll have to pay a brokerage fee for each transaction. This payment is not required when you're using an index fund.

The other reason I'd recommend you take a look at index funds as another trading option is the fact that you can set up a monthly payment and sit back and relax. No need to worry about how your stocks are performing. You don't have to watch the prices go up and down every day. If your stocks go down in price, great you pick up a few bargains with the next payment. If they go up in price, it's also great as the total price of your holdings just went up! It's a win win situation. Just take a looking at buying BP stock to see how much could be wiped off in

I'd recommend looking an index funds as a great way to invest almost in the background. You set up your monthly payment and forget about it. In many years time you'll be surprised at how much your regular payments have added up to a nice little nest egg perhaps for retirement or for that dream home you always wanted.

Monday, 21 June 2010

Should You Buy BP Stock

With the environmental disaster that's happening in the U.S at the moment there's been a lot of talk regarding BP's share price. It's almost halved in value since all the trouble started. So is this an opportunity to create something good out of the catastrophe and actually make some money from it? You could always give some of the money back to the environmental agencies involved in the cleanup if it helps to clear your conscience.

Before you rush off to log in to your broker account and buy a 100 in BP stock, have you done any research to decide if it's actually a good buy. Are you simply getting caught up in the media hysteria again. I've done it myself. I sit and watch tv all day and then I'm convinced that I must buy x amount of stock in that company because Bobby Bigshot on CNN told me. I feel like that after some of those infomercials too but maybe that's just me. The key is to keep your head. Always do your research and don't get caught up in the media hype.

In any case, lets look at BP. They're going to have to pay back billions of dollars to the U.S government. A final figure hasn't been agreed yet. You therefor have no way to predict what kind of profit they're going to make in say the next 5 years. Any profit they do make is going to end up going straight back to the U.S government to pay for the mess they've caused in the south. That for me means I won't be picking up the bargain stock while it's low. Don't let that swat you one way or the other though.

You might think it's worth the risk. You've done your analysis and can't see a downside to this. If not then great, go for it. I just don't like taking any risks with my money. I worked to hard to get it in the first place! It's certainly something I'll be keeping a close eye on in the future though. It'll be really interesting to see how it affects the share price of the other big oil companies operating in the region. Will they go up as a result of BP's downfall? Or is the slick back stink they've lot going to stain the other oil companies and force investors away from backing this type of area with their cold hard cash? Time will tell, lets save the birds first and worry about all this later.

Friday, 19 February 2010

Hot Stocks for 2010

I know I'm a little late with this post since we're almost in to March already but I thought it would be useful to have a little round up of what we can expect in 2010. You haven't all gone and blown your budgets already have you? No I didn't think so. This is actually a trick post anyway because if you've read any of my other messages I'd never actually recommend a stock tip to go and buy. I will however pass on a few ways on how to buy stocks for beginners and how to buy stocks for dummies. That way you can do a little work yourself and retain no liability if it doesn't work out. Sometimes it won't work out! I've been down that way and unfortunately suffered from the technology bubble bursting. I'm sure I wasn't the only one to suffer from that right? Anyway Kraft finally bought Cadbury in the UK much to my disappointment. To be honest it's not about the stock is more about my love for chocolate. If you've read any of the press coming from Warren Buffett you'll see that he was dead against the move from the start. Don't listen to Warren Buffett at your peril! One piece of advice I would give if you're looking for quick stock picks for 2010 then why not have a look at what Berkshire Hathaway has been buying. It's kind of cheating I know but it's not at the same time. You can see what Warren Buffett decides is a good purchase and then do a little research of your own to decide if it's still a good investment. The problem with following a trend like this is that you often get on just as the price has been ramped right out. Just the shear mention of Berkshire Hathaway's name against a stock is enough to drive the price up through the roof. Everyone see's who's interested in and decide to invest in it themselves. This is a sure fire way of paying over the odds for a share or stock in a company. This is the same the world over. It doesn't matter if you're in the Japanese stock exchange or UK, a bargain is still a bargain.

So now that my ranting is over here's the stocks that Warren Buffett's been buying in 2010. Could this be an insight into 2010 hot stocks? Perhaps. If you're looking hot penny stocks, well that doesn't really go with the ethos of Berkshire Hathaway. The two biggest investments Buffett made this year has been in the document and information management company called Iron Mountain. You might have seen them in your office coming to collect the back up tapes from your servers and such like. Buffett doubled his investment in the company to 7 million shares. Can we expect that this type of company will be on the rise in the near future? Probably, Iron Mountain is the market leader in this kind of work and will only get stronger and stronger. Fantastic name too. Buffett always increased his shares in Republic Services Inc. to 8.3 million. This company deals with garbage and waste management. Again this is a service that is going to grow and grow and will likely be unaffected by recession or any other type of outside interference. Investing for dummies this could be, stick to what you know and the market leaders in their field.

Buffet also increased his shares in Wal-Mart by more than a million bringing the total to 37.8 million shares. Wal-Mart are always a sure fire bet due to their stranglehold in the US supermarket area. They also own number one supermarket chain ASDA in the UK. The most interesting investment he made, perhaps another hot stock for 2010 is his purchase of more stocks in a bank. Which one was it this time? Well it wasn't Sun Trust Banks Inc. He actually reduced his shares from 2.22 million to 1.54 million. So which bank has he shown faith in? Wells Fargo & Co. Another 2010 hot stock? Do your analysis and find out for yourself! It was interesting that he chose to invest in another bank though considering the terrible time of it the financial sector has faced recently. It is somewhat reassuring that someone of Buffett's caliber has decided to back a bank and invest heavily. Could this be a sign that things in the financial sector are about to pick up?

OK so I know it's not quite a hot stock for 2010 list but to be honest things don't change from year to year. If you do your analysis properly, work out the intrinsic value of a company and decide if its worth investing in. There's no point in trying to predict the future and don't get carried away because you can buy stocks online so easily these days. You want to try to keep a clear head and look at things from a very analytical point of view. Keep emotions out of it and assess investment opportunities on their relative positives and negatives. Stock market for dummies is probably a misleading title but I guess we all have to remain focused on the job in hand. Warren Buffett's purchases are a little taster of what we can expect in 2010. Just make you do your research properly first before you jump in and copy him blindly! You might just have missed the chance of a bargain in the stock market by that point.

Monday, 18 January 2010

Stock Market for Dummies

If you’re new to the stock market I can appreciate the amount of information online can be totally overwhelming. I’ve been investing in the stock market for over 5 years now and when I think back to when I first started out I really didn’t have a clue what I was doing. I made the terrible mistake of jumping in too early before I really understood the market. I spent days in my local library pouring over investing guides and on various sites online trying to get a handle on what I was doing. I got so bored of doing this that I decided to jump in and finally buy some stocks. Big mistake!

At the time the economy was booming and houses were being built all over the place. As a result I bought stock in one of the biggest house builders in the country. I spent some time looking over their company results for the past few years and it all looked like a good investment. However over the past few years my stocks have plummeted in value. The economy is shrinking and so no one is looking to buy a new home. For those who are it’s become almost impossible to get a mortgage and so there are so many new homes left empty all over our great nation. The house builder’s stock getting money and so stop building homes. You can see where this is going right? So what’s the moral of the story? Don’t be a dummy in stock market! Make sure you keep your patience and don’t dive in too early or you’ll be sorry. An ill informed investment is just a gamble and I don’t know about you but I hate gambling with my money. Stock market for dummies is difficult enough without taking unnecessary risks.

I’ve gotten better at it over the years perhaps I’ve learned from my earlier mistakes. To be honest, if you make a mistake like this which looses you a large chunk of your free cash it’s not something you’re likely to do again. It’s perhaps the kick in the back side you need to give you a little bit of common sense. I always advise to go for the long term game with stocks. With that mindset you loose the fear of missing that next hot stock pick. You’re buying a stock that you’re going to hold for life and so you won’t dive in and buy it simply because it’s gone down a few points. You’re only buying it because you’ve done the necessary stock market research and know that it’s a good buy anyway. It’s not that it’s a few points cheaper than yesterday. I did that with the before mentioned housing stock. It looked like excellent value for money at the time but if I knew then what I know now I would have avoided it like the plague. That’s why I’m not ashamed to admit that I was a bit of a dummy in stock market. When you start out there’s a good chance you’ll make a few mistakes in some cases it’s the best way to learn. Just try not to loose too much money while you do it.

If you’re looking for a stock market broker here’s a tip to look out for. Some of them have started introducing a yearly fee for simply having an account with them. It’s ridiculous right? I certainly thought so when I got the bill in the post. They not only charge you per stock market transaction they’ll also charge you just for holding your stocks for you. Anyway I’ve decided to switch and ditch my current broker for purely this reason. I can get cheaper elsewhere so keep this in mind when you first setup your stock market broker account. Look to see if they have an annual charge for simply having account with them. This is slightly different for companies like Fidelity who you may have a mutual fund with or a tracker account. They apply a charge once a year to your investment for management purposes. They have never been sneaky about it like my broker and have always told me about the charges up front. You’d expect to pay this management fee for mutual funds anyway but it’s something to keep in mind if you’re going down that road.

I’ve always felt that there is a real lack of stock market education for beginners out there which is one of the reasons I started this site. If I can teach people how to buy stocks for beginners by telling them about the mistakes I’ve made in the past then great. The money is better in your pocket than being lost to the market.

I’m planning to write a whole post about the best stock market books for beginners later on. There’s a few out there and to be honest most of them are terrible. So if you buy the right book when you’re new to stocks and bonds then maybe I can save you a little bit more money here too. I can only recommend the ones I’ve read obviously some have become completely invaluable to the way I play the market. Some of them are truly terrible and are used for various other purposes around my home. It was absolutely not used to guide me in buying stocks for dummies. That’s the thing that can be quite hard to understand at first. All the so called gurus and authors of these books have they’re only methods for investing online and you can’t really mix and match especially if you don’t know what you’re doing. You might end up taking the worst points of two theories and mixing them together for some awful stock market investing technique. But hey at least you created something new! I’ve mentioned quite a few times on this site that I follow Warren Buffett’s value investing technique. I’ve been watching with great interest to see what happens with Kraft’s takeover bid for the UK Company Cadbury. Warren Buffetts investment company Berkshire Hathaway is a major shareholder in Kraft and so Warren Buffett could well be calling the shots for this takeover over bid. Cadbury have so far resisted the takeover but I’ve got a feeling that Warren will be back in there. I read that Kraft had talked about raising money from various different sources to which Buffett seemed opposed. Perhaps because buying things on credit is one of the main reasons that the economy is in such a state. In any case, I always watch with great interest when I see Buffett’s name mentioned in the media to see if there are tips I can pick up. The best stock market advice for beginners can be found from the great man himself through the Berkshire Hathaway website or from the various books he’s published. Value investing will of course be no use to you if you’re looking at penny stocks for dummies. Maybe this isn’t the site for you either!

Anyway the point of this post was to show you that it’s not usual to make mistakes in the stock market just try not to make them too costly or too frequent. Stocks for dummies is a massive subject and the best time to start working on it is…yesterday. The sooner the better. Each day you will pick up some new terminology that you didn’t know the day before. Each little piece you learn will let your brain hook on to more complex topics and it will become easier and easier to follow the terminology and get stuck in to reading those annual reports. To be honest it’s something that I still hate doing! It’s so dry buy I’m at the stage now where I can skim read various parts of it and look at certain figures and know how the company is doing. The various calculations you need to know to work out the value of a stock are in my head and so I can do the math fairly quickly. At the start you may find yourself pouring off these statistics and feeling like you’ll never be finished. Stick with it though, each one makes it easier and easier to read the next one. What we really need is some sort of classes offering stock market education for beginners. Perhaps we could ask Warren Buffett to setup a few classes to pass on his knowledge. The other way is of course to buy some ‘A’ stock in Berkshire Hathaway and then you can attend the shareholders meeting each year where you can ask the great man himself any questions you have. Purchasing stocks for dummies might be a little easier after that question and answer session.

So what can you expect from 2010? The answer to that is…who knows. Much of the stock market literature out there is about predicting which company is going to do well so you can buy the stocks cheap then sell them off when the pick up over the course of the financial year. The problem with that is that you have to look at the past to try to predict the future of a stock price. If you think about it though it doesn’t make any sense. The past can’t be used as a predictor for the future. You’ll often see this on the small print of the companies out there trying to sell you mutual funds. It’s basically a disclaimer for them saying “We can’t predict the future”! Oh and of course don’t come and complain to them if your stock disappears down a big black hole. Stock market advice for beginners is always tricky to give because no matter how careful you are there’s always a bit of a gambling element involved in the process. So the hot stock tips for 2010 should follow the same process you’ve followed for 2009 and 2008 etc. Stick to markets that you know and understand. Try to stick to companies who are leaders in their field (Coca Cola, Gillette). If this is all too much for you then try an all index tracker and save the same amount each month. That way you’ll get bargains when the market is cheap and maybe overpay when it’s not. In the long run it’ll even itself out. I know it’s not as sexy as buying stocks yourself. You don’t hear people at parties bragging about how they’re all index fund is doing do you? Time after time it’s proven to be one of the most successful ways to invest in the stock market. If you’re a cautious investor like me it’s the least risky way you can buy stocks online. You buy the whole market each month, if one company goes bust then you don’t feel it so much as if you had a 100 stocks in the company. The way I approach it is a bit of mix and match. I buy stocks separately and I also have the all index fund which buys the whole stock market. I am a cautious investor buy I still like to have a few stocks to brag about when I’m at the neighbors BBQ…

The way I look at the mutual fund which buys up the stock market is that it’s part of my retirement fund. It’s money which is almost guaranteed to provide me with a little profit and help my retirement be a little easier when the time comes. There’s been a few times when I’ve been tempted to dip in to the money because I’ve seen the latest hot stock tip online and decided that I have to take my safe money and go for a little bit more riskier investment. Thankfully common sense has prevailed in the end and I left the money alone. It makes sense to have two pots of money for this. Allocate a set amount say $50 a month for the all index fund and then whatever you’ve got spare to use on the stock market. That way they are kept as two separate entities and one doesn’t affect the other. You won’t find yourself tempted to dip in to the safe retirement money to fund your stocks. I’ve got it setup so that it comes straight out of my bank account each month and I don’t even notice it’s gone. I’m hoping in 30 years time when I retire there will be something there for me to notice, well I hope my eyes pop out of my head when I see it! Look out for my hot stocks for 2010 post coming soon.