Stock Investments - a few points to share
August 6, 2008 9:00am CST
I would like to share a tips that I have collected after reading about the investing methods of people like Warren Buffet, and other top investors. You can see details on the website listed on my profile, if you like. 1. The first one is the usual one, have a long term view. Put only that money in stock market that you will surely not need in coming two-three years. 2. How to buy stocks? Buy only the stocks that are part of the major index. Such stocks are of companies that are leaders in their respective fields and that have a track record of good volumes. Diversify. Put your money in different stocks across different sectors. Most important, a point that you won't find anywhere else, don't invest all your money allocated to a particular stock in one go. See how low it has gone in past two years, then the all time high. The difference is the range of price. Invest money according to the level at this range. For example, if the current price is in the middle of the range, invest half of your money. 3. How to sell? If you wait too long, you can lose all the gains made. If you sell early, you may miss a chance. The solution - trailing stops. Sell the stock if the price declines by 25% of the high price. As the stock price rises, the stop loss would also rise.
11 Aug 08
What is your opinion on dollar cost averaging? Is intraday trading is fine? It is never easy to time the market. We never sell the stock when it is time to sell. I just adopt a simple strategy. In some stocks, I put the money, wait for about 10-15 % and sell it off. I dont lament on those stcks even if it corsses 50%. But we can stay invested in some bluechip stock which may just give an annualised 12-15% on long term. Am I right? Can you please explain the technique of buying the stck again? I could not get it properly.
12 Aug 08
Dollar cost averaging is a good thing if you want to keep it really simple. But the buying strategy I have discussed on my site is an improvement on dollar cost averaging as it enables us to buy stocks on good(low) average cost on a definite basis. Normal dollar cost average does not ensure that because it all depends on the market conditions. Your strategy to sell on 10-15% is on the whole a good one. Or you can check the trailing stops strategy(on my site). Buying long term in any case is the best strategy of all. When you buy long term (3+ years and most likely 5+ ) it doesn't matter whether you bought cheap or dear. Buying and selling for a short term should be done only with a portion of your funds, which should not in any case be more than 25% of your total funds. Rest, you should use to buy when markets are down and then keep for a long term.
9 May 10
Thanks for the simplified tips about stock investing. I already encountered that "trailing stop loss" in the past, but it is only now that I fully understand how to apply it effectively. With your tips here, I suspect you are "online day trader" of stocks. Are you?
6 Aug 08
Hi, Thanks for the advice. I think that we need more education in stock market investment. I learn about fundamental analysis which is used by Warren Buffett and I read a lot about how Warren Buffett make money from stock market. Then, I read about technical analysis. It is faster than fundamental analysis. So, I am going to try using it on fundamentally strong stocks.