1. Your Questions About Stocks
George asks…
STOCKS?????????????????
How do you invest? What is the best website? what are stocks all about? how do you make
money from them?
Steve Winston answers:
As the answer below states, you should start at investopedia.com. They are a very good
resource for starting out. If you have cable TV in the United States (or elsewhere), you should
find CNBC on cable TV. They have a major US cable station and CNBC worldwide, that follows
stock markets in Asia, Europe and the United States. You can also follow them on their website
for all kinds of financial and political news that affects the financial markets.
I have also included a few more, marketwatch and smart money.
Http://www.investopedia.com/university/beginner/
http://www.investopedia.com/university/stocks/
http://www.cnbc.com/
http://www.marketwatch.com/
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2. http://www.smartmoney.com/
The next thing you will need is to find yourself an online broker. Smartmoney magazine runs a
survey every year and below is their results for 2009.
Http://www.smartmoney.com/investing/stocks/smartmoney-2009-broker-survey/?page=8
Good luck in your investing! I'm not sure that my answer is the answer you were looking for, but
investing in stocks is something you will have to read about online. All of the websites I have
listed have tutorials and very good information to help you get started.
Happy investing!
Betty asks…
What are stocks? How do they work and how important are they in
the stock market?
I'm 16 and I'm just curious about stocks. I've been hearing them a lot these days, and I know
that they play important roles in the economy. However, I've never gotten to know a solid,
concise description of stocks, and how they work. Why invest in stocks? How do stocks fall?
Are the amount of stocks owned by businesses proportional to their size?
Thank you.
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3. Steve Winston answers:
If you're a rookie in investing or stocks, go to
www.finance.yahoo.com.
Open up a portfolio without using real money. You can give yourself as much or as little money
to try out the market. The stocks you want to focus on is consumer staples, consumer
discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and
bad times. Most of my positions are in these stocks. Some names include 3M, Procter &
Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody's got to eat and wipe their
butts regardless of the state of economy. Many of these companies survived through the Great
Depression.
That's the benefits. You can sleep at night knowing your money is doing well. There are NO
guarantees that you won't lose money. It's just that these stocks are the best. They pay good
dividends too.
Then once you're comfortable and test the waters of the market, you can finally put some real
money in. Go to Scottrade.com. They're excellent for beginners.
If you're new to stocks, DON'T DAY TRADE. You'll a rookie in a world of professionals. I tried
day-trading with Citigroup and AIG when they were a little bit over $1. I had some luck at first,
making about $30 a day but I was way over my head. My luck didn't last long and I had to
rethink my strategy.
Day trading involves A LOT of commissions to the broker. With all the commissions deducted
from each trade, you'll be lucky if you only lose half your money.
I would just day trade using Yahoo! Finance. Open a stimulation account, give yourself $100
worth of fake money and play it in the stimulation format. You'll see what I mean by losing
money every easily.
Good luck.
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4. Daniel asks…
What stocks will be a wise investment to hold long term?
I am sick and tired of seeing my stock portfolio sometimes decreasing a few thousand dollars in
one day. I am always looking for new stock investments. Which large corporate stocks are still
available that have always made a profit and still have profit growth, have a low PE ratio, pay a
dividend that will not be cut, have little or no debt on their balance sheet, and will be safe in this
bad economy that we are facing. Provide the ticker symbols of these stocks and the reasons
why the stock of these companies should be purchased.
Steve Winston answers:
You're looking for a lot of things that others are looking for, however, there is very little out there
that meets your requests. Of anything, I would suggest companies like Johnson & Johnson
(JNJ), Altria (MO), Walmart (WMT) and Procter & Gamble (PG). I would avoid the
pharmaceuticals despite their high yields and relative stability as there is question regarding the
drug policy of Obama, who will likely push generics. Therefore, you are stuck looking for
companies in the consumer staples arena for the most part, and then very select companies
outside that arena that will do well in either a strong or weak economy. However, for the
long-term, I would definitely encourage people to invest in commodity-related industries (such
as oil, metals, fertilizer, etc.), as they have fallen off a cliff because of our deflationary
environment. However, with the substantial monetary stimulus that the government has been
injecting into the financial sector, our country will emerge from this in a much weaker financial
state than the likes of China (using a fiscal stimulus versus a monetary stimulus) or Japan (has
a strong budget surplus, just lent the IMF $100 billion). Therefore, I expect inflation to take a toll
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5. on the economy going forward, which may prolong this recession, as it will likely begin its
rampage once the economy begins to recover, and will likely exceed the levels we saw earlier
this year (oil at $140+). In regards to timing, I can't help but continue to be bearish on the
broader markets. The markets broke my previous expectations of S&P 500 to the 800 level, and
I have revised my expectations to S&P 500 to the 575 level. I have done so as the market just
broke a long-term support line (from the 2002 market bottom) today, and broke a bearish
descending triangle pattern yesterday, which was confirmed today by a failed retest of the
previous support line. Therefore, if you do enter any of these companies, do so only with the
long-term in mind, and create a dollar-cost averaging strategy to build your position and strictly
adhere to it. At some point, there will be a recovery in the markets, but there is little fundamental
or technical reason to consider entering the market aggressively now. Just my opinion, I hope it
helps.
Best of luck!
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