Investors, analyst, economists, and the financial media have systems and theories for finding successful stocks. When an investor purchases stocks, they are investing in the long-term financial growth and success of the company. Beginning investors should learn to read and understand basic financial data, including a prospectus or financial statement. Other factors beginning stock investors should look at include: • Earnings: The company should have several consecutive successful years, which will be identified by a growth in their earnings. An annual 10% growth is a good indication of a solid company. • Sales: Look for an annual increase in sales every year. • Debt: Look for an annual decrease in debt every year. If debt reduction isn’t occurring, then make sure the debt is at least holding steady. It should be lower than the company’s assets. • Equity: The equity in a company should grow every year. If you are a beginning investor, you should do a little research. Be sure to read the company’s annual report, the 10K and 10Q reports the company files with the Securities and Exchange Commission (SEC) as well as some unbiased research reports. The Wall Street Journal, Investor’s Business Daily, and some stock investment websites, like Yahoo Finance, Google Finance, and MSN Money are good resources. Many investors analyze trading pattern variables in order to choose the right mix of stocks and companies. A good metric for beginning stock investors is the daily trading volume. Some investors and analyst believe that heavy trading (either buying or selling) adds value to a stock. If the stock price rises, investors look at the volume to see how many other investors are buying. When a stock price falls, the potential investors want to see how many traders are selling. These investors are simply comparing supply and demand. Supply and demand is a basic principle of stock investing for beginners. New investors should pay attention to the stocks highs and lows. Before beginning investors buy, they can compare a stock’s current price against that of its yearly high and low. This factor can be an indication of performance over a year.Overall long term performance is another metric for stock investing for beginners to consider. The basic principle of investing for beginners is to ‘buy low” and “sell high”. Investors can accomplish this by purchasing stock in profitable companies. These companies are making, selling, or distributing good and services that the general public wants and needs. Another basic rule of investing is portfolio diversification. A broad stock portfolio will help you weather the inevitable ups and downs of the market. Stock investing for beginners is dependent on analyzing trends and becoming familiar you with the basic financials of a company. This will make choosing the right stock a little less risky. Of course, the stock market carries always carries inherent risk, but with a well thought out, diversified portfolio, should handle the ups and downs of any given day, week, month, or year. Finding good stocks has never been easier; all an investor needs is internet access and some common sense. Are you looking for more information regarding stock investing? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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