Monday, May 18, 2009

Stock Market Fundamentals : Time is the Essence

There are those who like to invest in stock market and shares with the belief that they are fuelling the economy or the industry they trust in. They ‘buy and hold’ shares for longer periods hoping to be rewarded with bigger fortune. This may sound appealing to most investors seeking long-term goals like saving for a college education or a peaceful retirement. But then the tour to the exchange is a bit adventurous, for the future is blurred and meets no end.

Though many advocate the ‘buy and hold’ philosophy on the grounds that it lowers your taxes and saves on your commission, the share holding may ultimately yield low profits. Eventually when the time comes to sell, it may be a bear market. Even if the market were to be bullish, there is the possibility of inflation eating into the dollars you made.

In the last 100 years in the history of trading there have been 30 occurrences of a bear market. The ‘corrections’ that followed never brought up the market to the post bear market position. It is a fact that every stock exchange faces a bear market periodically as a part of an established linear cycle. Though brokers always believe the market will come back, sometimes, it may be too little or too late for many.

While trading in shares or stocks, the foremost aim is to protect the original cost of your holding. In “market timing” you buy the shares and hold them in your portfolio on line for further trading. Shot term bullish and bear market trends are required to be monitored so that one knows the moment when to buy or sell. The ‘market timing’ investor aims to keep his losses low and protect his capital too. He is more sensitive to the volatility of stocks and shares. He believes he is lowering his risks and looking at long time trading gains that are consistent.

The ‘Buy and Hold’ believers have great faith in utility stocks. However exchange records reveal that after every crash the utility stocks index never manage to reach back to their old heights. Instead of parking your dollars in shares for a long and doubtful period, it is better to buy and sell over shorter periods of time pulling out and trading in according to what the stock exchange market prices indicate.

One must not mistake ‘market timing’ trading as speculation. Here the investor has a different goal. He is like the businessman who buys and holds goods as per the trends in the market. He will want to sell the latest goods in the market when they are still in demand and get rid of those that are no more in fashion.

Even high-quality stocks and shares have suffered from the bear market. ‘Buy and hold’ approach does not appeal to those who find reading the market regularly and keeping themselves alert at all times an exhaustive exercise.

But once you master the art ‘market timing’ by keeping your ears to the ground and acting on the signals, you will realize you have made your gains while others were simply waiting.

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Wednesday, May 6, 2009

Stock Market Savvy Students

Investing with your Child

Many children study about business and finance in their schools. These small students are made to work on imaginary situations to make them realize the actual situations of the market. Children can learn a lot from the stock market to understand business. If your child is a stock market savvy, then you very well work with him.

You can actually invest and teach your child the basics of investing in the stock market. It is imperative for your child to know what exactly bonds and shares are and how do they function. As the concepts related to bonds are even difficult for adults to understand, present your child relevant books and magazines that explain them in detail. There are many books available in the market and your local library. 

However, the basic task is to explain the child the concepts. There are also guides available in the market that tell you how to invest. There are also many television shows on many business channels that let your child have an in-depth look in investing but make sure that your child does not get carried away with the lure of investing heavily in the stock market.

Once your child has understood the concept of investing, you may look for a certain bond or share that you may be interested in. In this time, you may also look for the business that interests you. The founders of these businesses are usually colorful personalities and have very unique tale to narrate.

Now that your child understands the concepts behind investing, you can begin your search for a specific stock or bond. Take this time to research about specific businesses in which you are interested. Quite often, these businesses have interesting stories and their founders may be colorful characters with inspirational tales to narrate. Investing requires more than just throwing money on bonds and shares. Every abbreviation in the stock market denotes a very unique business. If you teach this to your child, he will learn more about the stock market. Another interesting activity will be to find the story behind investment houses. Ask your child to find answers to the questions such as, "What is Charles Schwab known for?" or "When did Merrill Lynch become a listed company?" Moreover, there are other social groups that are as popular for investing. A popular example of investment group for making wise decisions at stock market is the Beardstown Ladies. A book named "The Beardstown Ladies' Common-Sense Investment Guide" that is written by these ladies will prove to be extremely useful to you and your child.

Teaching your child about the stock market is a rewarding experience in the sense that your child will learn about real-world application and you will spend quality time together, which is the best investment on a higher plane.

By : Frank Marque
Frank Marque is the administrator and delegate of E Commerce Needs, your online source for all electronic commmerce. Visit us online at: .E Commerce Needs, your online source for all electronic commmerce.
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