Any investor who holds stocks or bonds of a certain company is, in part, owner of that business.
In view of this, do you know what happens if you own stocks or bonds of a corporation that goes into Chapter 7 bankruptcy?
No?
Let us tell you what you’re facing if such a scenario ever happens:
- If you are a stockholder and the company files for bankruptcy, you will not only see a massive decline in the value of your shares but you will also move to the very end of the list when it comes to paying back debtors.
What this means is that if the business goes down, you undertake the largest part of the risk, and actually, you should forget about ever being remunerated.
- If you are a bondholder you face a much lower risk than the stockholder, but you are not free of loss.
When a company files for bankruptcy, the first things it has to pay are back wages, mortgages, credit lines, and the money it owes to other companies. Whatever cash is left afterward is used to remunerate bondholders, but in many cases you will not receive your full investment.
The best way to stay away from companies that could go bankrupt is to buy stocks and bonds of businesses that have had lots of cash, little debt, and a solid profit and income growth for the past three years.
And where do you find such companies?
Go to finance.yahoo.com and type in the ticker symbol of the company that has caught your eye. In there, take a look at the bar on the right-hand side and select “key statistics”, right there you will find all the important information about that company’s finances.
It is crucial that every investor understand what he is doing when he puts money into a company; it is your responsibility to thoroughly research and learn to ensure you are making the best choices.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
Showing posts with label investing rules. Show all posts
Showing posts with label investing rules. Show all posts
December 31, 2010
December 28, 2010
Want to Make Money Investing? Befriend Margin Trends
When an investor researches companies to invest in he normally looks at different margins such as the gross margin, the operating margin, the pre-tax margin, and the net profit margin.
In any case, he is in the right path if he concentrates on the operating margin. The operating margin is the difference between how much a business makes and how much it spends to operate.
If a company makes at least 15% more than it spends, it’s probably gotten the attention of the investor.
Right then, there is another thing the investor has to know…
Last year, was the operating margin lower or higher?
How about the year before?
And the year before that?
The investor wants to confirm the margins follow an upward trend, which could happen due to various things:
- A strong and/or rising pricing force.
- A shortage of products; meaning the company makes fewer product than it can sell.
- Technological leadership.
- A move from lower-end to higher-end products.
- Growing productivity.
- The capacity to manage costs effectively.
The investor has to research thoroughly to find out what exactly is producing the higher margins; however, all of the reasons above are good.
In truth, with an operating margin that follows an upward trend, even if you don’t research further, you know that a business is running from a strong position.
Profit margins reach the heart of what make a business successful. Take retailers, for example.
During 2008, many retailers sold more than ever over the holiday season; nevertheless, they had to reduce prices to entice the customers and in consequence, their margins were crushed to the limit. In other words, sales went up but profits went down. This is what happens when margins take the wrong turn.
If you want to do the research for yourself, you can get the numbers from Reuters Finance online. Look for a specific company and access its “Ratios”. We wish you good luck!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
In any case, he is in the right path if he concentrates on the operating margin. The operating margin is the difference between how much a business makes and how much it spends to operate.
If a company makes at least 15% more than it spends, it’s probably gotten the attention of the investor.
Right then, there is another thing the investor has to know…
Last year, was the operating margin lower or higher?
How about the year before?
And the year before that?
The investor wants to confirm the margins follow an upward trend, which could happen due to various things:
- A strong and/or rising pricing force.
- A shortage of products; meaning the company makes fewer product than it can sell.
- Technological leadership.
- A move from lower-end to higher-end products.
- Growing productivity.
- The capacity to manage costs effectively.
The investor has to research thoroughly to find out what exactly is producing the higher margins; however, all of the reasons above are good.
In truth, with an operating margin that follows an upward trend, even if you don’t research further, you know that a business is running from a strong position.
Profit margins reach the heart of what make a business successful. Take retailers, for example.
During 2008, many retailers sold more than ever over the holiday season; nevertheless, they had to reduce prices to entice the customers and in consequence, their margins were crushed to the limit. In other words, sales went up but profits went down. This is what happens when margins take the wrong turn.
If you want to do the research for yourself, you can get the numbers from Reuters Finance online. Look for a specific company and access its “Ratios”. We wish you good luck!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 25, 2010
Are You Acquainted With the Witches of the Investing World?
If you’ve been around for a while you probably have -although you may not have all the information about them-, but if you have just started your journey into the investing world you should learn what ‘triple witching’ and ‘quadruple witching’ are, because these “witches” highly concern you as an investor.
Simply put,
A ‘triple witching’ day is a day when stock options, stock index options, and stock index futures all expire on the same day.
A ‘quadruple witching’ day is a day when stock options, stock index options, stock index futures, and single stock futures all expire on the same day.
These days occur on a quarterly basis and the media normally gives them a lot of attention, basically because the expiration of these investment products can, and most certainly will, produce higher unpredictability in the market.
This is why, if you are a short-term trader, you have to be on the ball about witching days, which happen on the third Friday of March, June, September, and December. We are sure you can clearly see how sudden changes in the market can affect your short-term investments.
On the contrary, if you are a long-term investor, both these days will not impact you in a significant way. However, you should be aware of them, because when they come- as we already pointed out- the market can get kind of wild, and if you are ready for some unpredictability, it is easy to remain calm.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
Simply put,
A ‘triple witching’ day is a day when stock options, stock index options, and stock index futures all expire on the same day.
A ‘quadruple witching’ day is a day when stock options, stock index options, stock index futures, and single stock futures all expire on the same day.
These days occur on a quarterly basis and the media normally gives them a lot of attention, basically because the expiration of these investment products can, and most certainly will, produce higher unpredictability in the market.
This is why, if you are a short-term trader, you have to be on the ball about witching days, which happen on the third Friday of March, June, September, and December. We are sure you can clearly see how sudden changes in the market can affect your short-term investments.
On the contrary, if you are a long-term investor, both these days will not impact you in a significant way. However, you should be aware of them, because when they come- as we already pointed out- the market can get kind of wild, and if you are ready for some unpredictability, it is easy to remain calm.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 21, 2010
The Market is Not at Your Service
Atypical markets need atypical thinking.
What do we mean by that?
Well, in the last few years the market has been highly unpredictable, probably unstable as never before. Emotional trading has hit the highest point, and in consequence, the moves in the indices have been hard to believe.
This unpredictability has made the trading tools investors normally employ not as reliable anymore; the time frames they habitually consider are not as reliable, and the correspondences between investments are completely misaligned.
Let’s dig a little deeper.
In normal circumstances, a good investor looks at daily charts to find trade opportunities; however, because of the present radical unpredictability, he should apply the same indicators he normally uses, but… on hourly charts.
For instance, for the longest time we have seen how the futures markets led the ETFs -Exchange-Traded Funds-.
Normally, when the S&P futures and Nasdaq futures were overbought or oversold, the Spyders and the QQQQ moved in the other direction.
Nevertheless, out of the blue, the futures have become so unpredictable that it is hard to know when to pull the trigger on a trade, to the point that now it appears as if the situation has flipped and the ETFs are the ones leading the futures.
Isn’t this exasperating? Of course it is!
But you have to understand and accept that the market is not at your service; thus, it is you who has to change to deal with the market you are in.
We don’t mean you have to change your principles, but you can’t be inflexible in your approach to making trades and money.
In this crazy market, it is crucial that you keep your investing strategies simple... and an open mind.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
What do we mean by that?
Well, in the last few years the market has been highly unpredictable, probably unstable as never before. Emotional trading has hit the highest point, and in consequence, the moves in the indices have been hard to believe.
This unpredictability has made the trading tools investors normally employ not as reliable anymore; the time frames they habitually consider are not as reliable, and the correspondences between investments are completely misaligned.
Let’s dig a little deeper.
In normal circumstances, a good investor looks at daily charts to find trade opportunities; however, because of the present radical unpredictability, he should apply the same indicators he normally uses, but… on hourly charts.
For instance, for the longest time we have seen how the futures markets led the ETFs -Exchange-Traded Funds-.
Normally, when the S&P futures and Nasdaq futures were overbought or oversold, the Spyders and the QQQQ moved in the other direction.
Nevertheless, out of the blue, the futures have become so unpredictable that it is hard to know when to pull the trigger on a trade, to the point that now it appears as if the situation has flipped and the ETFs are the ones leading the futures.
Isn’t this exasperating? Of course it is!
But you have to understand and accept that the market is not at your service; thus, it is you who has to change to deal with the market you are in.
We don’t mean you have to change your principles, but you can’t be inflexible in your approach to making trades and money.
In this crazy market, it is crucial that you keep your investing strategies simple... and an open mind.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 18, 2010
Want to Learn to Estimate a Trade’s Risk/Reward Equation?
One of the basics of the investing arena is to understand the risk/reward equation of a trade. It is crucial that every investor know this equation before making investment decisions; nevertheless, you, as an investor, may not know how to estimate one.
Here you will learn how to do it.
Before entering a trade -no matter if it is a stock trade, an options trade or a futures trade- an investor must look at its risk/reward equation.
First, he should look at the risk factor and always have a stop-loss point in mind to protect his investment.
Lets see an example of a short-term stock trade:
You are interested in a stock that is being traded at $86.
A good stop-loss point would be a move below the 50-day moving average; this is, at $84. In this case, your loss would be close to 2.5%. The chart shows patent resistance at the $96 level; so, your target gain is $10 or 11.6%.
Now, if you take the target gain of 11.6% and divide it by the target loss of 2.5% you get a risk-reward proportion of 4.6, which is a very good risk-reward equation.
We know a very good investor who only makes trades when the risk/reward equation is over 3.0, and the higher the better. When he blends this basic tool with the power provided by options, which is his preferred type of trade, he gets really nice profits.
Even though you hear different every day, investing does not have to be a pain in the b... Use basic tools such as the risk/reward equation and you will make the most of your gains and decrease your losses, and you will discover that making money is easier than you ever imagined!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
Here you will learn how to do it.
Before entering a trade -no matter if it is a stock trade, an options trade or a futures trade- an investor must look at its risk/reward equation.
First, he should look at the risk factor and always have a stop-loss point in mind to protect his investment.
Lets see an example of a short-term stock trade:
You are interested in a stock that is being traded at $86.
A good stop-loss point would be a move below the 50-day moving average; this is, at $84. In this case, your loss would be close to 2.5%. The chart shows patent resistance at the $96 level; so, your target gain is $10 or 11.6%.
Now, if you take the target gain of 11.6% and divide it by the target loss of 2.5% you get a risk-reward proportion of 4.6, which is a very good risk-reward equation.
We know a very good investor who only makes trades when the risk/reward equation is over 3.0, and the higher the better. When he blends this basic tool with the power provided by options, which is his preferred type of trade, he gets really nice profits.
Even though you hear different every day, investing does not have to be a pain in the b... Use basic tools such as the risk/reward equation and you will make the most of your gains and decrease your losses, and you will discover that making money is easier than you ever imagined!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 14, 2010
Want to Learn Why Most Expensive Stocks are a Con?
The “efficient market theory” means that, through the magic of millions of investors buying and selling stocks daily, you get what you pay for. That there is a reason why a company is cheap and another is expensive, and many investors swear by this theory.
However, it may not be all that solid. The truth is that the market runs as much on emotion as it does on logic, and the extremes rule! Investors are either too pessimistic or too optimistic.
In reality, an investor rarely gets what he pays for when he invests. He normally gets too little or too much, and lately, when it comes to expensive stocks, the rule is to get too little.
There are many companies out there with price-to-earnings (P/E) ratios over 100. In a P/E ratio, a share price greater than 100 times annual earnings or returns per share is very high. To justify such a price, the business must grow in a huge way and prove without a doubt that it will continue on this path.
But, if you do your homework, you may discover that very few of the companies that appear with such a P/E ratio earned it due to strong growth. Normally, they got it because their earnings fell faster than their price.
Let’s see an example: At one point, eBay’s earnings dropped 65% over 12 months, but its price dropped only 8%. At a P/E ratio of 98, eBay’s price at that point was a lot higher compared to its earnings than what it had been a year before. In other words, eBay became more expensive after having a bad year instead of after having a good one.
Very few super-expensive companies can claim that its high P/E ratio was due to an ultra-fast growth in revenue and earnings; so, run away from them as you would run from a deadly virus… unless of course, you know, by studying their past earnings, that you are in front of a prodigy.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
However, it may not be all that solid. The truth is that the market runs as much on emotion as it does on logic, and the extremes rule! Investors are either too pessimistic or too optimistic.
In reality, an investor rarely gets what he pays for when he invests. He normally gets too little or too much, and lately, when it comes to expensive stocks, the rule is to get too little.
There are many companies out there with price-to-earnings (P/E) ratios over 100. In a P/E ratio, a share price greater than 100 times annual earnings or returns per share is very high. To justify such a price, the business must grow in a huge way and prove without a doubt that it will continue on this path.
But, if you do your homework, you may discover that very few of the companies that appear with such a P/E ratio earned it due to strong growth. Normally, they got it because their earnings fell faster than their price.
Let’s see an example: At one point, eBay’s earnings dropped 65% over 12 months, but its price dropped only 8%. At a P/E ratio of 98, eBay’s price at that point was a lot higher compared to its earnings than what it had been a year before. In other words, eBay became more expensive after having a bad year instead of after having a good one.
Very few super-expensive companies can claim that its high P/E ratio was due to an ultra-fast growth in revenue and earnings; so, run away from them as you would run from a deadly virus… unless of course, you know, by studying their past earnings, that you are in front of a prodigy.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 11, 2010
Beware of Fantasy Value!
Are you an investor who likes to buy companies on the cheap?
If this is so, then you probably look at their P/Esprice-to-earnings ratios… and that’s OK, but make sure you know what you’re looking at.
In a few words, if you see a forward P/E, disregard it.
Why do we say this?
Well, because basically investors use P/Es to measure how cheap a stock is, and “value” investors adore P/Es below 10, this is, when the share’s price is less than 10 times earnings per share.
But P/Es vary among sectors and some value investors just look for P/Es that are below average in their sector.
The easiest way to look this up is through the “ratios” report that is available on the Reuters website for every listed company. This source uses only the P/E Ratio (TTMTrailing Twelve Months).
Other financial websites also give the ‘forward P/E’, which shows what a company is expected to earn over the next year in comparison to its current price.
The ‘trailing P/E’ and the ‘forward P/E’ may seem very similar; however, there is an important difference between them:
- The ‘trailing P/E’ is a real number. It records what has already happened; thus, it can’t be doubted.
- The ‘forward P/E’ is basically a guess. It is the best estimate on what a business will earn in the future. If analysts boost future earnings they can make a company look much cheaper than it really is.
A ‘forward P/E’ is less reliable when it is based on an economy that is long gone, and in current times, when the economy is uncertain, you should not trust analysts who live in the past.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
If this is so, then you probably look at their P/Esprice-to-earnings ratios… and that’s OK, but make sure you know what you’re looking at.
In a few words, if you see a forward P/E, disregard it.
Why do we say this?
Well, because basically investors use P/Es to measure how cheap a stock is, and “value” investors adore P/Es below 10, this is, when the share’s price is less than 10 times earnings per share.
But P/Es vary among sectors and some value investors just look for P/Es that are below average in their sector.
The easiest way to look this up is through the “ratios” report that is available on the Reuters website for every listed company. This source uses only the P/E Ratio (TTMTrailing Twelve Months).
Other financial websites also give the ‘forward P/E’, which shows what a company is expected to earn over the next year in comparison to its current price.
The ‘trailing P/E’ and the ‘forward P/E’ may seem very similar; however, there is an important difference between them:
- The ‘trailing P/E’ is a real number. It records what has already happened; thus, it can’t be doubted.
- The ‘forward P/E’ is basically a guess. It is the best estimate on what a business will earn in the future. If analysts boost future earnings they can make a company look much cheaper than it really is.
A ‘forward P/E’ is less reliable when it is based on an economy that is long gone, and in current times, when the economy is uncertain, you should not trust analysts who live in the past.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 08, 2010
Learn the Ultimate Secret to Investment Success
Why do you buy a certain stock?
- Because it has bottomed out
- Because it is ridiculously cheap
- Because it is offering a huge dividend
- Because most analysts have given it a thumbs-up
- Because it offers an appealing long-term return
The fundamental secret to investment success is understanding your reason for buying a stock.
To see it clearly, let’s analyze the reasons above:
1. It is very inexact to state that a company has bottomed out, since you can’t know where the bottom is: even if a stock is down 95%, it can still drop another 50%.
2. It is not smart to buy from a cheap company… it may be tempting, but it is also foolish.
There is a reason why a company is cheap, and it is not a good reason. More expensive companies offer better investment opportunities.
3. Huge dividends entice investors; however, these are high normally because investors are running away from the stock, which lowers the share price, which, in turn, raises the dividend yield. Before buying, research why so many are selling.
4. Are you sure a company that is rated high is safe? Consider this:
o Many analysts inflate ratings. As long as a company doesn’t stink, they give it a thumbs-up.
o If most analysts are rating a company high, they can’t upgrade it, and rating upgrades bring in hordes of new investors.
It is best when analysts are kind of indifferent towards a company. In any case, if the business is good, the ratings will go up, which will bring new investors who will increase the price.
5. The only good reason to buy a stock is if you think the company will give good long-term returns compared to other investments.
This company may go down a bit short-term, but it has proven it can grow profits, manage its cash prudently, is in a good sector and has a reasonable price.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
- Because it has bottomed out
- Because it is ridiculously cheap
- Because it is offering a huge dividend
- Because most analysts have given it a thumbs-up
- Because it offers an appealing long-term return
The fundamental secret to investment success is understanding your reason for buying a stock.
To see it clearly, let’s analyze the reasons above:
1. It is very inexact to state that a company has bottomed out, since you can’t know where the bottom is: even if a stock is down 95%, it can still drop another 50%.
2. It is not smart to buy from a cheap company… it may be tempting, but it is also foolish.
There is a reason why a company is cheap, and it is not a good reason. More expensive companies offer better investment opportunities.
3. Huge dividends entice investors; however, these are high normally because investors are running away from the stock, which lowers the share price, which, in turn, raises the dividend yield. Before buying, research why so many are selling.
4. Are you sure a company that is rated high is safe? Consider this:
o Many analysts inflate ratings. As long as a company doesn’t stink, they give it a thumbs-up.
o If most analysts are rating a company high, they can’t upgrade it, and rating upgrades bring in hordes of new investors.
It is best when analysts are kind of indifferent towards a company. In any case, if the business is good, the ratings will go up, which will bring new investors who will increase the price.
5. The only good reason to buy a stock is if you think the company will give good long-term returns compared to other investments.
This company may go down a bit short-term, but it has proven it can grow profits, manage its cash prudently, is in a good sector and has a reasonable price.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 06, 2010
Learn to Invest in the Safest Stocks in 6 Simple Steps
There are 6 simple steps on the road to hitting the jackpot. If you follow them, it’s almost guaranteed that you will get at least 12% in total annual returns… how do we know that?
Well, because these are pretty much the safest investments around… if you buy right.
The trick is to find primarily strong, attractively priced businesses that happen to pay dividends, and this is how you do it:
1. Never trade income for value
Even in an expensive market with overpriced companies, there are stocks available at discounted prices, even of dividend-paying businesses, which have proven to be tougher than other companies.
Dividend-paying companies grow when the market grows and are much better off when the market slows down.
Dividend + value = double protection against a declining market.
2. Watch payout ratios
These state the proportion of earnings that goes out as dividends. The historical average is 55%; nevertheless, there is no guaranteed number.
As a rule, anything below 55% is fine. If the payout ratio is over 55%, consider this: if it has gone up over the past 6 quarters, drop it, if it has gone down, buy.
You should look for companies that can give dividends and grow; they should give shareholders good cash but not so much that they sacrifice growth.
The higher a company’s dividend yield is, the more likely its payout ratio is going to be high. If you find a company with a high payout ratio and low dividend yield, you are in front of a loser.
3. Do not accept a dividend yield lower than 4%
There is not enough choice above 4%, and too many businesses are below it. Not worth it!
4. Seek at least 10 quarters of uninterrupted dividend growth
Dividend checks must grow, not shrink; thus, you need evidence that a company can maintain sustained dividend growth.
Get a record of dividend growth and identify a solid growth plan executed by experienced leadership.
5. Verify past price performance
The company you choose must already be climbing up the charts.
6. Seize the stock on a dip
Dividend companies are, in general, less volatile; however, it is worth buying them on dips. This could improve you return between 5 and 7%.
Of course there can always be sad surprises, but dividend companies are normally a winning choice. Nevertheless, finding primarily strong companies requires thorough research; if you don’t have the time, look for professional help.
With dividend-paying companies you don’t have to choose between great returns and safety, you can get both!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
Well, because these are pretty much the safest investments around… if you buy right.
The trick is to find primarily strong, attractively priced businesses that happen to pay dividends, and this is how you do it:
1. Never trade income for value
Even in an expensive market with overpriced companies, there are stocks available at discounted prices, even of dividend-paying businesses, which have proven to be tougher than other companies.
Dividend-paying companies grow when the market grows and are much better off when the market slows down.
Dividend + value = double protection against a declining market.
2. Watch payout ratios
These state the proportion of earnings that goes out as dividends. The historical average is 55%; nevertheless, there is no guaranteed number.
As a rule, anything below 55% is fine. If the payout ratio is over 55%, consider this: if it has gone up over the past 6 quarters, drop it, if it has gone down, buy.
You should look for companies that can give dividends and grow; they should give shareholders good cash but not so much that they sacrifice growth.
The higher a company’s dividend yield is, the more likely its payout ratio is going to be high. If you find a company with a high payout ratio and low dividend yield, you are in front of a loser.
3. Do not accept a dividend yield lower than 4%
There is not enough choice above 4%, and too many businesses are below it. Not worth it!
4. Seek at least 10 quarters of uninterrupted dividend growth
Dividend checks must grow, not shrink; thus, you need evidence that a company can maintain sustained dividend growth.
Get a record of dividend growth and identify a solid growth plan executed by experienced leadership.
5. Verify past price performance
The company you choose must already be climbing up the charts.
6. Seize the stock on a dip
Dividend companies are, in general, less volatile; however, it is worth buying them on dips. This could improve you return between 5 and 7%.
Of course there can always be sad surprises, but dividend companies are normally a winning choice. Nevertheless, finding primarily strong companies requires thorough research; if you don’t have the time, look for professional help.
With dividend-paying companies you don’t have to choose between great returns and safety, you can get both!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
December 03, 2010
What’s Surer Than Cash in Your Account?
The answer is NOTHING!
Earnings can be suspicious as a result of creative accounting…
Revenues can be booked in one year or several…
Capital assets can be sold and the value listed as ordinary returns…
But cash deposited in your account is a sure thing. It is strong confirmation of a company’s real power, its earnings. Cash is tangible evidence of a business’s success.
This said, dividend-paying stocks may not be thrilling or adrenalin bursting investments, but businesses that are stable and make regular payments are the ones that, at the end of the day, make investors rich.
In case you want to give them a try, here we give you 4 important terms you should understand when investing in dividend-paying stocks:
- Declaration date
This is the date on which a company’s board of directors makes known the amount of the next stock dividend and its ex-dividend date, record date and payment date.
- Ex-Dividend date
This is the date on which the stock trades without a dividend. In other words, if you buy the stock on or after this date, you will not be entitled to the next dividend.
If you decide to sell the stock before the ex-dividend date, the buyer will receive the dividend instead of you.
On the contrary, if you sell after the ex-dividend date, you will receive the dividend, not the buyer.
- Record date
This is the date on which a company establishes the list of shareholders that qualify for the dividend. To be on the list, you have to own the stock at least one day before the ex-dividend date.
- Payment date
This is the date on which the stock dividend is paid to the shareholders of record. Shareholders receive either a dividend check or the money is deposited in their accounts.
Dividend-paying stocks may be the thing missing from your investment portfolio to ensure a steady growth of your bottom line.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
Earnings can be suspicious as a result of creative accounting…
Revenues can be booked in one year or several…
Capital assets can be sold and the value listed as ordinary returns…
But cash deposited in your account is a sure thing. It is strong confirmation of a company’s real power, its earnings. Cash is tangible evidence of a business’s success.
This said, dividend-paying stocks may not be thrilling or adrenalin bursting investments, but businesses that are stable and make regular payments are the ones that, at the end of the day, make investors rich.
In case you want to give them a try, here we give you 4 important terms you should understand when investing in dividend-paying stocks:
- Declaration date
This is the date on which a company’s board of directors makes known the amount of the next stock dividend and its ex-dividend date, record date and payment date.
- Ex-Dividend date
This is the date on which the stock trades without a dividend. In other words, if you buy the stock on or after this date, you will not be entitled to the next dividend.
If you decide to sell the stock before the ex-dividend date, the buyer will receive the dividend instead of you.
On the contrary, if you sell after the ex-dividend date, you will receive the dividend, not the buyer.
- Record date
This is the date on which a company establishes the list of shareholders that qualify for the dividend. To be on the list, you have to own the stock at least one day before the ex-dividend date.
- Payment date
This is the date on which the stock dividend is paid to the shareholders of record. Shareholders receive either a dividend check or the money is deposited in their accounts.
Dividend-paying stocks may be the thing missing from your investment portfolio to ensure a steady growth of your bottom line.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com
November 26, 2010
4 Things an Investor Must Look Into Before Buying or Selling a Stock
Investment information indicates investors are currently having a hard time surpassing market averages.
Nowadays, you have to go beyond the pure technical line of attack, since the environment is one where individual stocks rise and fall together with the broader markets and neither provides a close inspection of the balance sheets of individual companies.
Today it is crucial to analyze major market indices to make sure that you are investing along the market trends, otherwise you will be taken aback by a market that’s looking at the bigger picture.
Basically, there are 4 things that an investor must look into before buying or selling a stock to make sure he has the winning hand in the current market environment:
1. Is the market trending or caught up in a trading range?
It is a lot easier to profit from trending markets. If you are in such a market, let your winners run.
A trading range is kind of spiky. In this case, you must take profits quicker and, if you decide to buy at all, buy smaller size positions, because your stocks will be very vulnerable to moving up or down due to irrelevant market noise.
2. What’s up with the dollar?
The dollar is an important leading aspect in markets focused on macro affairs. Today, a weaker dollar means stocks are stronger, but a stronger dollar weakens stocks.
In many instances, the dollar leads the market, getting weaker when stocks are about to get stronger.
3. How are market leaders doing?
One of the best ways to sense the market is through the leading stocks.
Market leadership has a tendency to rotate; nevertheless you can see where the leadership is by observing stocks that are attracting uncommonly large trading volume and the ones that have recently and steadily been making new highs or new lows.
If the market trending is up and leadership stocks are doing well, you can assume the market is healthy.
If leadership stocks begin to holdup, it is time to get cautious. Tighten up stops, trade smaller positions, or move to cash.
4. Review balance sheets
After identifying the trend and making sure the market is healthy, you must look for companies with true potential.
Ask yourself these questions:
Is this company making money?
Does the company have a good sales growth forecast?
Is its case for future growth rational and realistic?
In many cases, a company’s stock price rises with the rising trends; however if it is not rising on its own growth potential too and if it is overrated based on current earnings, once the markets corrects, sellers will probably hit the weak links first and very hard.
So, do your homework and avoid serious trouble when the going gets tough.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
Nowadays, you have to go beyond the pure technical line of attack, since the environment is one where individual stocks rise and fall together with the broader markets and neither provides a close inspection of the balance sheets of individual companies.
Today it is crucial to analyze major market indices to make sure that you are investing along the market trends, otherwise you will be taken aback by a market that’s looking at the bigger picture.
Basically, there are 4 things that an investor must look into before buying or selling a stock to make sure he has the winning hand in the current market environment:
1. Is the market trending or caught up in a trading range?
It is a lot easier to profit from trending markets. If you are in such a market, let your winners run.
A trading range is kind of spiky. In this case, you must take profits quicker and, if you decide to buy at all, buy smaller size positions, because your stocks will be very vulnerable to moving up or down due to irrelevant market noise.
2. What’s up with the dollar?
The dollar is an important leading aspect in markets focused on macro affairs. Today, a weaker dollar means stocks are stronger, but a stronger dollar weakens stocks.
In many instances, the dollar leads the market, getting weaker when stocks are about to get stronger.
3. How are market leaders doing?
One of the best ways to sense the market is through the leading stocks.
Market leadership has a tendency to rotate; nevertheless you can see where the leadership is by observing stocks that are attracting uncommonly large trading volume and the ones that have recently and steadily been making new highs or new lows.
If the market trending is up and leadership stocks are doing well, you can assume the market is healthy.
If leadership stocks begin to holdup, it is time to get cautious. Tighten up stops, trade smaller positions, or move to cash.
4. Review balance sheets
After identifying the trend and making sure the market is healthy, you must look for companies with true potential.
Ask yourself these questions:
Is this company making money?
Does the company have a good sales growth forecast?
Is its case for future growth rational and realistic?
In many cases, a company’s stock price rises with the rising trends; however if it is not rising on its own growth potential too and if it is overrated based on current earnings, once the markets corrects, sellers will probably hit the weak links first and very hard.
So, do your homework and avoid serious trouble when the going gets tough.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 23, 2010
Learn the Secret to Investing Money with a Sure Reward
What do a successful marketing writer and a successful sports business owner have in common?
Well… both followed a simple rule to get to the top: they focused on doing what they know a lot about.
A marketing writer must have ample knowledge about marketing to be successful, and a sports business owner has to know a lot about sports, maybe even be an athlete himself, to do well.
In the same way, an investor will surely be successful if he invests in an industry he understands deeply or works in, because he will be able to pick the right assets for his portfolio, and this, in turn, will ensure him high profits.
You see, when you understand the details of an industry, its ins and outs, its ups and downs, you know exactly what factors make a company perform well or bad.
There are success traits that are obvious when studying a company, such as revenue, profits, and growth; but there are also other qualities that are not easy to identify unless you deeply know and understand its products, services, and customers.
Here’s where a knowledgeable investor has a real advantage.
Consider, for example, the video-game industry. The average investor would probably buy stocks from companies like “Take Two Interactive” (NASDAQ: TTWO) or “Activision-Blizzard” (NASDAQ: ATVI), because of their earnings and share value, among other factors.
However, if you are knowledgeable about the industry or even better, are a huge fan of video games, you might be able to predict if a new game will be a big hit, just like Take Two’s ‘Grand Theft Auto IV’ was, and you will know that the profits generated by such a game are going to be massive.
For example, Take Two’s ‘GTA IV’ was highly announced long before it was released in April 2008, and the stocks’ value increased from $17 in January 2008 to more than $27 in June of that same year.
So, basically, when you invest in stocks before the rest, the “common” people, and understand how much money is involved, you hit the jackpot!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
Well… both followed a simple rule to get to the top: they focused on doing what they know a lot about.
A marketing writer must have ample knowledge about marketing to be successful, and a sports business owner has to know a lot about sports, maybe even be an athlete himself, to do well.
In the same way, an investor will surely be successful if he invests in an industry he understands deeply or works in, because he will be able to pick the right assets for his portfolio, and this, in turn, will ensure him high profits.
You see, when you understand the details of an industry, its ins and outs, its ups and downs, you know exactly what factors make a company perform well or bad.
There are success traits that are obvious when studying a company, such as revenue, profits, and growth; but there are also other qualities that are not easy to identify unless you deeply know and understand its products, services, and customers.
Here’s where a knowledgeable investor has a real advantage.
Consider, for example, the video-game industry. The average investor would probably buy stocks from companies like “Take Two Interactive” (NASDAQ: TTWO) or “Activision-Blizzard” (NASDAQ: ATVI), because of their earnings and share value, among other factors.
However, if you are knowledgeable about the industry or even better, are a huge fan of video games, you might be able to predict if a new game will be a big hit, just like Take Two’s ‘Grand Theft Auto IV’ was, and you will know that the profits generated by such a game are going to be massive.
For example, Take Two’s ‘GTA IV’ was highly announced long before it was released in April 2008, and the stocks’ value increased from $17 in January 2008 to more than $27 in June of that same year.
So, basically, when you invest in stocks before the rest, the “common” people, and understand how much money is involved, you hit the jackpot!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 19, 2010
15 Indicators that Confirm You Are Good with Money
You are not born with the ability to manage your money wisely. It actually takes time, training, and character to learn how to handle money correctly.
Most probably, at school, you never took a “personal financial affairs” class, and no one taught you early on how to save and invest wisely; however, some people have figured out by themselves how it all works and what it takes to make lots of money.
Are you one of them? If you can relate to most of the following 15 indicators, you can be sure that you have mastered the art of making money:
1. You pay your credit card bill in full each month and never pay interests.
2. Even though you may hear otherwise everywhere, you know that the $30 it costs to fill your car’s gas tank is cheaper in today’s dollar than the $15 it cost 20 years back.
3. The only kind of life insurance you would ever consider buying is a term policy.
4. You would never invest in something just because of a hot tip you got from a friend or family member.
5. You are not blindly sold on the fact that the English composition course offered by the Chic University for $1000 is a lot better than a similar course offered by the town’s local college for $50.
6. The car you drive has been fully paid for.
7. Every November, you are fairly clear about how much income tax you will have to pay.
8. If you hear that the S&P Index hits a record high, you don’t feel the urge to get your broker on the phone to ask him to buy.
9. You are not able to understand why someone in their right mind would buy a timeshare property.
10. You don’t know anything about the option market, and are not planning on learning.
11. Every time you are negotiating a purchase and qualify for a discount, you ask for it.
12. You contribute as high as possible to your retirement funds.
13. No matter what wristwatch you wear, a $15,000 Rolex or a $60 Swatch, you acknowledge that all wristwatches are battery-operated, have a similar quartz movement, and all of them will tell you the time with excellent accuracy.
14. You can’t understand why someone would buy a lottery ticket.
15. You can’t remember the last time you borrowed money for an emergency.
If these indicators do not match your thinking, you are not in full control of your money and you should start looking for some guidance.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
Most probably, at school, you never took a “personal financial affairs” class, and no one taught you early on how to save and invest wisely; however, some people have figured out by themselves how it all works and what it takes to make lots of money.
Are you one of them? If you can relate to most of the following 15 indicators, you can be sure that you have mastered the art of making money:
1. You pay your credit card bill in full each month and never pay interests.
2. Even though you may hear otherwise everywhere, you know that the $30 it costs to fill your car’s gas tank is cheaper in today’s dollar than the $15 it cost 20 years back.
3. The only kind of life insurance you would ever consider buying is a term policy.
4. You would never invest in something just because of a hot tip you got from a friend or family member.
5. You are not blindly sold on the fact that the English composition course offered by the Chic University for $1000 is a lot better than a similar course offered by the town’s local college for $50.
6. The car you drive has been fully paid for.
7. Every November, you are fairly clear about how much income tax you will have to pay.
8. If you hear that the S&P Index hits a record high, you don’t feel the urge to get your broker on the phone to ask him to buy.
9. You are not able to understand why someone in their right mind would buy a timeshare property.
10. You don’t know anything about the option market, and are not planning on learning.
11. Every time you are negotiating a purchase and qualify for a discount, you ask for it.
12. You contribute as high as possible to your retirement funds.
13. No matter what wristwatch you wear, a $15,000 Rolex or a $60 Swatch, you acknowledge that all wristwatches are battery-operated, have a similar quartz movement, and all of them will tell you the time with excellent accuracy.
14. You can’t understand why someone would buy a lottery ticket.
15. You can’t remember the last time you borrowed money for an emergency.
If these indicators do not match your thinking, you are not in full control of your money and you should start looking for some guidance.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 17, 2010
Do You Want to Avoid the 3 Major Mistakes Stock Market Investors Make?
As in any other area of life and business, within the stock market and investing field there are all sorts of characters. There are brilliant men lacking the virtue of honesty, and very honest men lacking the advantage of intelligence.
We’ve seen investors be cheated, get confused, deceived, and plainly charmed.
We’ve seen a lot, and we have learned what works and what doesn’t serve you at all.
In this sense, there are 3 huge, but avoidable, mistakes that stock market investors make time after time:
1. They put too much money in one recommendation
As an investor, you have to limit each investment so that in the worst-case scenario, you never get hurt so badly that you won’t be able to move on.
2. They invest in something just because they like the story behind it
Ugh! Wake up! Look at Hollywood! A story, in nature, is designed to blow things out of proportion… to dramatize, never, ever to give rational information.
3. They leave money in an investment after it begins to fall
This is a tricky one, because when investing, you should never act in haste, and it is true that you should not run to get your money out of an investment just because it is losing value; however, you should really analyze each case individually.
There are fluctuations that are normal, but there are other instances where a business starts to fall and there’s nothing to stop it from continuing in that direction.
If you own a business and you invest in it, you know enough about it to attempt something unexpected to change the situation, but when talking about other people’s businesses, you can never control their success or failure.
The tricky part is to know when to get out to avoid being sorry later for having lost an important amount of money in an investment you knew, deep inside, had no future.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
We’ve seen investors be cheated, get confused, deceived, and plainly charmed.
We’ve seen a lot, and we have learned what works and what doesn’t serve you at all.
In this sense, there are 3 huge, but avoidable, mistakes that stock market investors make time after time:
1. They put too much money in one recommendation
As an investor, you have to limit each investment so that in the worst-case scenario, you never get hurt so badly that you won’t be able to move on.
2. They invest in something just because they like the story behind it
Ugh! Wake up! Look at Hollywood! A story, in nature, is designed to blow things out of proportion… to dramatize, never, ever to give rational information.
3. They leave money in an investment after it begins to fall
This is a tricky one, because when investing, you should never act in haste, and it is true that you should not run to get your money out of an investment just because it is losing value; however, you should really analyze each case individually.
There are fluctuations that are normal, but there are other instances where a business starts to fall and there’s nothing to stop it from continuing in that direction.
If you own a business and you invest in it, you know enough about it to attempt something unexpected to change the situation, but when talking about other people’s businesses, you can never control their success or failure.
The tricky part is to know when to get out to avoid being sorry later for having lost an important amount of money in an investment you knew, deep inside, had no future.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 15, 2010
Do You Know the Difference Between Saving and Investing?
The majority of people think saving and investing are synonyms, but this is absolutely incorrect.
There is a big difference between both, and it resides in the fact that investing is what you do to grow your wealth, and saving is what you do to preserve it.
It can get much clearer if we take a practical example. Let’s say that you divide your assets into these categories:
- Private property, which includes your home, art pieces, and other valuables.
Your private property may have a lot of financial value, but you are using it and will continue to use it in the future; thus, it can’t be an investment.
- Active investments, which include any businesses you own or control.
Your active investments are great, providing you keep them active.
- Passive investments, which include stocks, bonds, and others.
Your passive investments are what you normally think about when you talk about investing, but these are risky, and you don’t want to risk your savings; thus, these are not savings.
- Savings, which include any stored, safe wealth.
Your savings are the money you put aside every year after you have bought the properties you want and made the investments that enticed you. Savings are the part you want to retain.
You can put your savings in several media such as cash, bonds, rental real estate, or gold; however, the best option is gold. Gold retains its value against inflation, war, or a weakening currency.
On the other hand, cash gives close to zero return, bonds are very risky, and rental real estate… well, you know what’s been going on. Rental real estate today must be approached very cautiously, if at all.
So, if you haven’t yet, consider thoroughly which of your activities are investments and where you are putting your savings; this small clarification of terms can really mean the difference between retiring safely and just getting by for the rest of your life.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
There is a big difference between both, and it resides in the fact that investing is what you do to grow your wealth, and saving is what you do to preserve it.
It can get much clearer if we take a practical example. Let’s say that you divide your assets into these categories:
- Private property, which includes your home, art pieces, and other valuables.
Your private property may have a lot of financial value, but you are using it and will continue to use it in the future; thus, it can’t be an investment.
- Active investments, which include any businesses you own or control.
Your active investments are great, providing you keep them active.
- Passive investments, which include stocks, bonds, and others.
Your passive investments are what you normally think about when you talk about investing, but these are risky, and you don’t want to risk your savings; thus, these are not savings.
- Savings, which include any stored, safe wealth.
Your savings are the money you put aside every year after you have bought the properties you want and made the investments that enticed you. Savings are the part you want to retain.
You can put your savings in several media such as cash, bonds, rental real estate, or gold; however, the best option is gold. Gold retains its value against inflation, war, or a weakening currency.
On the other hand, cash gives close to zero return, bonds are very risky, and rental real estate… well, you know what’s been going on. Rental real estate today must be approached very cautiously, if at all.
So, if you haven’t yet, consider thoroughly which of your activities are investments and where you are putting your savings; this small clarification of terms can really mean the difference between retiring safely and just getting by for the rest of your life.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 13, 2010
Give Us 5 Minutes to teach You the 3 Attributes of the Safest Stocks Worldwide
Presently, there are 3 features that make some stocks the safest ones in the world:
1. Reliable financial situation
It is exactly the same as if you were referring to your personal finances… the cherry-on-top when talking about a solid financial condition in business is when a company has a lot of cash and little or no debt.
Take Microsoft, for example. It is certainly one of the safest stocks worldwide because it is in a prime financial situation. It possesses $36.8 billion in cash, stocks and bonds, and less than $6 billion in debt.
Microsoft could pay its debt and still own over $30 billion. Talk about security!
No matter what happens in the world, Microsoft is never in crisis, and its shareholders know it.
Other companies that have a solid financial situation are:
- Johnson & Johnson (JNJ)
- Intel (INTC)
- Costco (COST)
- Automatic Data Processing (ADP)
- TJX Companies (TJX)
But this is just the tip of the iceberg… the safest stocks are also characterized by…
2. Generation of more cash than they reinvest to keep the companies going
Personally, do you like to run out of money four days before you get paid again, or do you rather end the month with $2000 in your pocket?
These $2000 are excess cash flow, and you certainly feel safer when you have them, right?
In the same way, companies that produce excess cash flow yearly are safer than any other.
3. Higher value than their stock price
But not just any value percentage, we’re talking about companies that are worth at least 50% more than their stock price.
Take Intel at $18 a share, for example. Currently, the stock market states that Intel’s business is worth around eight times the excess cash flow it is able to produce in a year, and this is a ridiculously low price.
A lot of investors think that they have to risk a lot to make the big bucks in stocks, but it is exactly the opposite. You should get rid of the risk of losing as much as possible.
If you only invest in the safest stocks you will retire rich, and could even probably retire earlier.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
1. Reliable financial situation
It is exactly the same as if you were referring to your personal finances… the cherry-on-top when talking about a solid financial condition in business is when a company has a lot of cash and little or no debt.
Take Microsoft, for example. It is certainly one of the safest stocks worldwide because it is in a prime financial situation. It possesses $36.8 billion in cash, stocks and bonds, and less than $6 billion in debt.
Microsoft could pay its debt and still own over $30 billion. Talk about security!
No matter what happens in the world, Microsoft is never in crisis, and its shareholders know it.
Other companies that have a solid financial situation are:
- Johnson & Johnson (JNJ)
- Intel (INTC)
- Costco (COST)
- Automatic Data Processing (ADP)
- TJX Companies (TJX)
But this is just the tip of the iceberg… the safest stocks are also characterized by…
2. Generation of more cash than they reinvest to keep the companies going
Personally, do you like to run out of money four days before you get paid again, or do you rather end the month with $2000 in your pocket?
These $2000 are excess cash flow, and you certainly feel safer when you have them, right?
In the same way, companies that produce excess cash flow yearly are safer than any other.
3. Higher value than their stock price
But not just any value percentage, we’re talking about companies that are worth at least 50% more than their stock price.
Take Intel at $18 a share, for example. Currently, the stock market states that Intel’s business is worth around eight times the excess cash flow it is able to produce in a year, and this is a ridiculously low price.
A lot of investors think that they have to risk a lot to make the big bucks in stocks, but it is exactly the opposite. You should get rid of the risk of losing as much as possible.
If you only invest in the safest stocks you will retire rich, and could even probably retire earlier.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 11, 2010
The Most Important Investing Pop Quiz You Will Ever Answer
What do all of these brands have in common?
- Budweiser
- Lysol
- Ben and Jerry’s ice cream
- 7-Eleven
- Gerber baby food
- Brook Brothers
- American Idol
- Motel 6
- Wild Turkey bourbon
If you answered, “They are owned by non-U.S. companies”, you got it!
Today, the United States holds just 30% of world stock market capitalization. This means, if you are not investing outside the U.S., you are missing 70% of the opportunities.
But, how do you decide where else to invest? It’s simple. Look at GDP growth rates.
Why? Because long-term, stock prices are connected to GDP. When an economy flourishes, its stock prices follow close by.
Take Japan, for example.
Since the 50’s and until the 80’s Japan was considered an emerging market. During this time, Japan’s GDP grew an average of 7.4% per year and its stock market returns were shocking.
The Japanese market had a 70-fold increase in value!
Most definitely, the saying that goes: “When the U.S. sneezes, the rest of the world catches a cold” is history now.
Growth today is in the emerging economies, which represent around 30% of the world’s GDP with 87% of the world’s population. YES! 87%!
If you don’t believe it, just take a close look at the GDP forecast for these countries:
- Singapore 14.5%
- China 9.6%
- India 8.2%
- Thailand 8%
- Brazil 7.2%
- Russia 4.5%
- United States 2.7%
- Europe 1%
Emerging market economies are growing so fast in part because of their rising middle class. When per-capita income increases, spending intensifies; this creates earnings growth, which transforms into higher stock prices.
Today, you MUST invest in emerging markets, and it is fairly easy to get exposed to them.
The easiest way may be with an exchange-traded fund (ETF), but you can also consider the Vanguard Emerging Markets ETF (VWO), which has a low expense ratio, 0.27%, against the category average, 0.70%.
However, if you still feel very much attached to U.S. soil, there’s a way in which you can indirectly profit from developing nations’ growth: invest in U.S. companies with ample exposure to emerging markets!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
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- Budweiser
- Lysol
- Ben and Jerry’s ice cream
- 7-Eleven
- Gerber baby food
- Brook Brothers
- American Idol
- Motel 6
- Wild Turkey bourbon
If you answered, “They are owned by non-U.S. companies”, you got it!
Today, the United States holds just 30% of world stock market capitalization. This means, if you are not investing outside the U.S., you are missing 70% of the opportunities.
But, how do you decide where else to invest? It’s simple. Look at GDP growth rates.
Why? Because long-term, stock prices are connected to GDP. When an economy flourishes, its stock prices follow close by.
Take Japan, for example.
Since the 50’s and until the 80’s Japan was considered an emerging market. During this time, Japan’s GDP grew an average of 7.4% per year and its stock market returns were shocking.
The Japanese market had a 70-fold increase in value!
Most definitely, the saying that goes: “When the U.S. sneezes, the rest of the world catches a cold” is history now.
Growth today is in the emerging economies, which represent around 30% of the world’s GDP with 87% of the world’s population. YES! 87%!
If you don’t believe it, just take a close look at the GDP forecast for these countries:
- Singapore 14.5%
- China 9.6%
- India 8.2%
- Thailand 8%
- Brazil 7.2%
- Russia 4.5%
- United States 2.7%
- Europe 1%
Emerging market economies are growing so fast in part because of their rising middle class. When per-capita income increases, spending intensifies; this creates earnings growth, which transforms into higher stock prices.
Today, you MUST invest in emerging markets, and it is fairly easy to get exposed to them.
The easiest way may be with an exchange-traded fund (ETF), but you can also consider the Vanguard Emerging Markets ETF (VWO), which has a low expense ratio, 0.27%, against the category average, 0.70%.
However, if you still feel very much attached to U.S. soil, there’s a way in which you can indirectly profit from developing nations’ growth: invest in U.S. companies with ample exposure to emerging markets!
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook:
November 09, 2010
Are You Ready to Learn the Secret to Finding the Best Stocks?
It is so simple that most people take it for granted, but if only you had known about this secret…
- In 1994, you could have bought Colgate-Palmolive for less than $10 a share and made over 7 times that money.
- In 1995, you could have bought Microsoft for $4 and made over 6 times that money.
- In 2003, you could have bought McDonald’s for $13 a share and made over 6 times that money plus a growing stream of dividends.
How is it that after the crashes of 2000-2002 and 2008-2009 some investors have gained so much?
They know the secret… They identify the companies with the highest sales in their industry.
This is so obvious that it probably makes us laugh, but it also serves to enlighten us about a very important reality within the investment arena:
The best secrets to successful investing are not complicated.
In fact, they are so simple that anyone can understand them; however, very few have the discipline to put them to practice.
When a company is the top seller in a given industry, this means it is successful. Take these examples:
- Microsoft Windows operates around 90% of the world’s personal computers.
- Intel sells around 80% of the world’s microprocessors.
- Campbell’s sells more than 70% of the world’s packaged soup.
- Visa processes over 60% of the world’s credit and debit cards.
- Colgate-Palmolive sells over 40% of the world’s toothpaste.
All of the above are excellent businesses with vast and strong profits, and like these, there are many more out there.
As soon as a business starts selling more than the rest in its industry, it is very difficult to compete against it.
Just imagine trying to start a home-improvement business today. Your competitors are Home Depot and Lowe’s. Ouch!
What about a retailer? You will have to face Wal-Mart!
The best fast food? You will have to sell more than McDonald’s.
Yep! It’s not going to happen… there is no way to dethrone #1.
Just look at Amazon.com. This virtual bookseller sells more books than “real” bookstores. No one can compete against it, because it will always be capable of selling more.
If you had bought Amazon shares four years ago, when they were less than $30 each, you would have been 5 times richer at a time when most investors lost money.
If you find a company that sells a product people like and want, and which is selling more than others in its industry, you can make a fortune buying its stocks. You owe it to yourself to know who is selling the most.
Not all of the best sell more, but the majority does, and you should always be on the lookout for them.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
- In 1994, you could have bought Colgate-Palmolive for less than $10 a share and made over 7 times that money.
- In 1995, you could have bought Microsoft for $4 and made over 6 times that money.
- In 2003, you could have bought McDonald’s for $13 a share and made over 6 times that money plus a growing stream of dividends.
How is it that after the crashes of 2000-2002 and 2008-2009 some investors have gained so much?
They know the secret… They identify the companies with the highest sales in their industry.
This is so obvious that it probably makes us laugh, but it also serves to enlighten us about a very important reality within the investment arena:
The best secrets to successful investing are not complicated.
In fact, they are so simple that anyone can understand them; however, very few have the discipline to put them to practice.
When a company is the top seller in a given industry, this means it is successful. Take these examples:
- Microsoft Windows operates around 90% of the world’s personal computers.
- Intel sells around 80% of the world’s microprocessors.
- Campbell’s sells more than 70% of the world’s packaged soup.
- Visa processes over 60% of the world’s credit and debit cards.
- Colgate-Palmolive sells over 40% of the world’s toothpaste.
All of the above are excellent businesses with vast and strong profits, and like these, there are many more out there.
As soon as a business starts selling more than the rest in its industry, it is very difficult to compete against it.
Just imagine trying to start a home-improvement business today. Your competitors are Home Depot and Lowe’s. Ouch!
What about a retailer? You will have to face Wal-Mart!
The best fast food? You will have to sell more than McDonald’s.
Yep! It’s not going to happen… there is no way to dethrone #1.
Just look at Amazon.com. This virtual bookseller sells more books than “real” bookstores. No one can compete against it, because it will always be capable of selling more.
If you had bought Amazon shares four years ago, when they were less than $30 each, you would have been 5 times richer at a time when most investors lost money.
If you find a company that sells a product people like and want, and which is selling more than others in its industry, you can make a fortune buying its stocks. You owe it to yourself to know who is selling the most.
Not all of the best sell more, but the majority does, and you should always be on the lookout for them.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook.
November 07, 2010
10 Valuable Rules of Investing
You probably already know this, but if you don’t, it is time to wake you up:
There is no such thing as a perfect system for investing.
However, that being said, what we can tell you is that there are systems that work in many cases. A good way to find such a system is to observe what successful investors do and do the same yourself.
Here we are going to give you the 10 rules of investing of a very successful investor, professional trader and market analyst.
This investor didn’t realize from the beginning that he had a system; he only discovered it while working on creating a trading program for a renowned online company. At that time, he had to analyze what he normally did when investing in order to put together a program to teach others how to trade.
This is when he discovered that he actually had 10 rules that helped him gain a great deal and which guided all of the investing he did:
1. Stick to your guns
2. Stay on top of things
3. Avoid being a one-way trader
4. Never get personally attached to your trades
5. Do not think it must be complicated to work
6. Do your homework
7. Trade what you see
8. Breathe in, breathe out, and move on
9. View each trade separately
10. Never follow the crowd
We recommend that intermediate and high level investors create their own set of investment rules or adapt the ones above to fit their style, and that new investors start by following these rules and, as they gain experience, add or modify them to fit a personal style.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook:
There is no such thing as a perfect system for investing.
However, that being said, what we can tell you is that there are systems that work in many cases. A good way to find such a system is to observe what successful investors do and do the same yourself.
Here we are going to give you the 10 rules of investing of a very successful investor, professional trader and market analyst.
This investor didn’t realize from the beginning that he had a system; he only discovered it while working on creating a trading program for a renowned online company. At that time, he had to analyze what he normally did when investing in order to put together a program to teach others how to trade.
This is when he discovered that he actually had 10 rules that helped him gain a great deal and which guided all of the investing he did:
1. Stick to your guns
2. Stay on top of things
3. Avoid being a one-way trader
4. Never get personally attached to your trades
5. Do not think it must be complicated to work
6. Do your homework
7. Trade what you see
8. Breathe in, breathe out, and move on
9. View each trade separately
10. Never follow the crowd
We recommend that intermediate and high level investors create their own set of investment rules or adapt the ones above to fit their style, and that new investors start by following these rules and, as they gain experience, add or modify them to fit a personal style.
If you liked this article, tell all your friends about it. They’ll thank you for it. If you have a blog or website, you can link to it or even post it to your own site. You can get more tips on how to invest your money wisely at CherryShares.com.
Like us on Facebook:
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