Taking a Long-Term Look at the Market

by Martin Lukac

If you can stick with your investment strategy for the long term, chances are that you will make a profit. To do this you will need to invest without liquidating your investment, without panicking and without losing sight of the benefits of investing for the long term.

That sounds easier than it really is. Investment results cannot be predicted. When you look at the market in the short term, it can often look appealing to just sell and invest elsewhere. But you can't focus on next week, next month or next year when looking at your investments and their profitability. You have to look a little further into the future.

No one can accurately predict where the market will be next year or in ten years. What you have to look at is a broader picture. When you look at the history of the stock market, there are ups and downs. However, the market has generally moved higher and higher. Keep this in mind when the market takes a downturn. The stock market is volatile in the short run, but is fairly rewarding in the long run. You simply have to keep in mind that you are investing for the long run.

Look at your IRA. This is a long-term investment tool. For those who have 10 to 40 years until their retirement, the IRA has an enormous potential to build wealth. But it does this over the long term. When you have 30 years to invest, you have a good chance of coming out further ahead through the stock market than by investing in bonds or CDs. Even if you only have 10 years to invest, chances pretty good that in 10 years, the S&P 500 will be much higher than it is today.

In the end, the value of your IRA depends on how you choose your investments today. The key to successfully building your wealth through long-term investing in the stock market is found in having a plan. You take that plan, stick with it and remember to look at the big picture when looking at your stock investments.

Set guidelines for your investments and follow them. Don't invest or liquidate based on a hunch, gut-feeling or impulse. Ask yourself what you want out of your investments. What kind of lifestyle will you want during your retirement? How much will your child's college education cost? What are your financial hopes and dreams? Are you looking to retire early or work as long as possible?

Create a plan that includes setting aside a regular amount of money for investing. That is the key to reaching your goals, no matter how little you have. You don't have to invest a lot of money at once if you are investing for the long run. It will build and grow more than you can imagine. Even small investments can grow quite large over time.

Investing for the long term doesn't necessarily mean that you invest and forget. Yes, you can do this if you choose extremely safe stocks, but it probably still isn't a good idea. Things change over time, especially when it comes to finances and the stock market. You have to review your investments to make sure that they are still performing in a way that will get you to your goals. It is a good idea to know ahead of time how much loss you are willing to take from a stock before you sell it. Most people follow the 10% rule. Know what your out point is before you invest. Watch your stocks to make sure that they perform according to your standards.

Investing for the long run is a good investment strategy. It reduces your risk considerably. The longer you have to invest, the less your risk.

About author:
Martin Lukac http://www.MartinLukac.com, represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com

Published under category : Stock Trading Strategy

Easily Avoidable Stock Market and Investing Mistakes

by Chris Ryerson

If you are like many millions of Americans investing in the stock market sounds scary and comes with a lot of reservations. This is natural and as it should be since the stock market can be very risky. However by follow some simple steps, taking it slow and making deliberate moves you can mitigate many of the risks involved with stock market investing. This does not mean you will never lose money because you will however, by following these guidelines you can ensure that in the end you will come out profitable.

If you are just getting started with investing then one of the easist ways to get up and running and typically the safest is to get a stockbroker. Later you will want to do away with a stockbroker and save on the fees and have more control. However when starting out a stockbroker can be very useful in getting you familiar with how the stock market works and how to begin trading. It can also be very helpful to find a trusted friend that invests and use them to bounce ideas off of and discuss the process with. Once you get some basic level experience you will want to strike out on your own and go for it making your own decisions etc. However, when you first get started having advice and someone to show you the ropes can really help.

One of the worst stock moves you can make is with variable annuities using the premium of your insurance. A variable annuity is an insurance contract that allows you to invest your premium in mutual fund-like investments. This sounds good in paper, but if you look at it a little harder, you’ll find that they are bad investments in the long run for the following reason:

Some other things that you want to watch out for and be carefully when considering investing follow.

Tax cuts Ordinary investments in stocks and mutual funds qualify for low capital gains treatments, thus smaller taxes. Your gains from investing your premium, on the other hand, get taxed as income as soon as you withdraw the money.

Early withdrawal penalties Insurance plans are designed for retirement. Taking out money from your premium entails a certain amount of penalty from both the insurance company as well as the government. So if you withdraw your profits, you will be penalized.

Death benefit If your stocks are down upon your death, your beneficiaries can get as much as the investments you put in. Unfortunately, if your stocks are up, they get taxed as a regular income.

Costs Annuities with insurance features are actually more expensive than ordinary mutual funds. The more insurance features your annuity has, the more annual feels are heaped against it, which naturally eats up your profits.

Timming There are specific times as well, when to and when to not make an investment. For example times of natural calamity may drive prices of stocks down but there are no insurance these would recover to make a good profit.

As always investing in anything has some risks involved and there are times that you might lose money. The important thing is to remember the points above, start slowly and as long as you are earning money more then you are losing stay with it. It can take a lot of time to learn the ups and downs of the market.

Author`s note:
For more great information stock market investing check out Best Guides Money: Stock Market Investing. BestGuideMoney includes other money saving and investing tips as well. Check out Best Guide Money for all of your money related needs.

Published under category : Stock Trading

The 6 Best Times Of The Day To Trade A Stock

by Larry Potter

1. Post-opening buying: Let's say a stock rises 5 percent or more during the opening and there's no news about it. Typically, the stock will fall off after 30 minutes of trading. Why? Market makers may be trying to open the stock at an artificially high price to sell off excess inventory they've acquired the day before. However, if the stock doesn't fall after 30 minutes of trading, it's liable to continue rising for the rest of the day.

Tactic: Buy at 1/16 above the day's high after the opening. Set a stop at 1/16 below the day's low.

2. Post-opening selling: The opposite of the above strategy. When a stock opens lower on no news, it could be that sell orders from nervous investors have piled up since the close of trading the day' before. Sometimes market makers open the stock artificially low, to draw in more panic sellers. This allows them to accumulate shares, because market makers as a rule buy on price declines and sell on price increases. After 30 minutes, the stock usually recovers in price and normal trading begins. The market makers profit by selling the inventory they've accumulated at the lower price. However, if the stock continues to drift lower after 30 minutes, chances are it'll decline more during the course of the day.

Tactic: Sell short at 1/16 below the low of the day; set a stop at 1/16 above the day's high.

3. Playing the spread: This one's really simple. Buy at 1/16 above the bid. Sell at 1/16 below the ask. The strategy works best with non-volatile stocks where the spread is at least 3/8 of a point. When successful, you make a quarter point per trade, or $250 on 1,000 shares. You can also short the spread by selling short at 1/16 below the ask and covering at 1/16 above the bid. Problem is, it's not always possible to get in and out at these levels. Market makers may easily spot what you're doing and adjust prices so they blow you out. Often day traders try this tactic several times during the day before they succeed.

4. Grinding: Another relatively simple tactic. Follow the message threads at, for instance, Silicon Investor for a particular stock. When everyone is screaming that the stock is going to make a move, jump in with the mob. Be content with an 1/8 or 1/4 point. Then get out before the rush.

5. Fading the market: With this contrarian strategy, you buy into weakness and sell into strength. That is, you buy stocks with small percentage declines relative to the market. You're hoping they'll gain when the market reverses. Hold off buying until the stock trades above its opening. Reason: Previous buyers of the stock will sell to prevent loss, thus driving the price down in the short term.

6. Shop the final hour: Stocks often ease off their highs of the day during the last hour of trading. Why? Because day traders and market makers seek to exit their positions and lock in profits. A price downturn often occurs during the last hour of trading as many seek to exit their positions. This downward momentum can create some lucrative short-selling opportunities.

About author:
Larry Potter is a recognized authority on the subject of trading. For a FREE report on HOW TO TRADE FAST and a 2-week trial to Stocks2Watch®, visit: http://clik.to/stocks2watch and http://commodities-business.blogspot.com

Published under category : Stock Trading Tips