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Penny stock guide Ch. 15-20

CHAPTER 15

HOW TO PICK A Penny Stock BROKER

Now, the question arises is HOW DO I PICK BROKER?

You should first decide whether you want a telephoning broker or he should be an online broker as well. Then next you should find the following factors.

  •   Quality of information
  •  How fast is the execution of trade
  •   The markets available
  •   Costs attached with them
  •   Check how much equities they would pay
  •   Would they provide with CFD’S
  •   How much fees would he charge on the unused cash in your trading account
  •   How much discounts. Penalties will be there on frequent /infrequent trading.

WHAT ARE THE QUESTIONS YOU WILL ASK DISCOUNT BROKERS

How much do they charge for buying and selling shares? Do they have any subscription fees How do they buy and sell shares Do they deal with telephone and internet both? Do they offer trade discounts Do they offer and added services like alerts, dynamic market data etc.

CHAPTER 16

GOLDEN RULES OF BUYING SHARES

9 golden rules of buying shares

1. STICK TO THE RULES- Always remember that the stock prices would go up and down, what is needed is to stick to your strategy which you have planned. Swaying away from the rules would only bring losses.

2. DIVERSIFY — Do not invest all your eggs in one basket; invest in various sectors not just the one which is mining.

3. BUY SHARES THAT SUIT YOUR TRADING CYCLES — if you are buying shares for a long term it definitely wont suit you if you are short term trader and it goes other way also… short term shares wont suit the long term trader as well.

4. KNOW YOUR RISK TOLERNACE — A speculative share has a different risk profile as to out of favor  ” blue chip “.Allocate your capital according to your own risk tolerance and the risk profile of the trade.

5. DON’T RUSH IN — The market will be still there waiting for you when you are ready to trade. Learn about the market before you start trading particularly the new investors. The best way to start is with the PAPER TRADE, so as to learn the basics first.

6. DO NOT GET GREEDY — Don’t think that you will be a millionaire in a day, be practical and not over realistic. Don’t think it’s very easy, as it’s very easy to lose money also in the trade market.

7. ONKY INVEST WHAT YOU CAN AFFORD TO LOSE — if the shares are the cause of your worries then definitely either you have invested in the wrong ones, or you have far too many to handle, so SELL them , nothing in the world d is more important than your peace of mind.

8. NEVER EVER CHASE SHARES — exercise patience, never run behind the shares and purchase beyond your limits, because the time will definitely come when you will be able to buy them within your limits.

9. KEEP ACCURATE UP TO DATE RECORDS- The most important of all, for penalties for not declaring your profits and not paying the capital gains are too much high. So stick to the rules.

CHAPTER 17

STOCK MARKET INVESTING TIPS

What should you do to be successful in the stock market, may be the following tips would help you

HAVE A PLAN

If you want your money to grow, wealth to multiply then the first thing you need is a full proof and solid strategy plan. If your plan is not good then you would just end up fixing your errors.

INVEST REGULARLY

Investment in shares is not a onetime game. You should keep on investing if you want to yield good profits.

LOW COSTS

Frequent trading would definitely add up to costs. Certain fees are always there which you need to pay, but do not indulge yourself into counterproductive things, which ultimately would make you use up your profits too. Best is to stick to the basic low cost transactions.

DO NOT BUY TOO MUCH AT ONCE

Try to buy at a certain amount and a certain period of time, which will give you advantaged of best prices. Hence if you want to invest to do not invest at a time, do it over a time frame of days, weeks or months.

DIVERSIFY

It’s the most important and vital thing to diversify as it would help to minimize the risk. All the types of investment, goes thought the cycle of setbacks ups and downs… hence you should diversify to earn profits in long term.

DO YOUR REASERCH

Before you decide to invest choose the right industry and in that choose the correct company. It would take a little bit of time but, do your homework properly before investing because it’s ultimately your hard earned money you want to invest for betterment.

NO EMOTIONS

The most basic thing of investment is, you have to keep emotions aside what it needs is cool, calm and balanced mind.

KNOW YOURSELF

You should now yourself about the market as well as which stock is good, if you are not able to do that than its always advised to have a professional do it for you .yes, we definitely talked that we should keep our costs low, but in this respect it’s always good to have someone manage your trade if you are ignorant about it,

CHAPTER 18

DIFFERENCE BETWEEN STOCKS AND SHARES

For the first time investors it is difficult to decide where to invest his money .which option to select and when all the information seems to be confusing. In that the most common question asked is what the difference between STOCKS and SHARES is.

In today’s financial market, the distinction between the both is somewhat blurred, however

STOCKS mean ownership of certificates in multiple companies. You may not be only the stockholder but also the shareholder for each particular company as well.

SHARES mean ownership of certificates in a certain company. It makes the person the shareholder of that company.

The common misconception about stocks and shares is that they are different things. In reality they are the same thing but are referred to differently when talking about more than one company.

DIFFERENCE BETWEEN STOCKS AND BONDS

Sometimes it’s difficult for the new investor to differentiate the difference between the two. If I must say so, there are people who have been investing for a long time, but still they have not been able to articulate the difference. People think that stocks are more riskier then bonds and basically it is true also,

STOCK means ownership of certificates in multiple companies. The price to the stocks will actually depend upon the performance of the company. If company is doing well you will share the appreciation, but if the company has gone in loss, then u will equally be sharing the loss.

BONDS are “credit “given by the investor to the company. It’s a kind of loan provided to the company to carry on their activities. The percentage the investor gets is fixed.

The shareholder would stick to the shares even in bad times and would expect that the company would do better in future, but the bondholder is just concerned with his initial amount and the interest from the company.

It is possible that investor has invested in a small and a risky company and if the company shuts down then the bond holder has to lose his initial investment as well, but this happens in a rear case.

So what would be a wise investment BONDS OR STOCKS?

Well. It depends on the person personal decisions and what is his risk tolerance. Though the ideal long term portfolio could be a blend of little bit of both.

CHAPTER 19

FUNDAMENTAL ANALYSIS

It is always been a difficult and a confusing decision as to which stocks to buy. The financial analysts heavily depend to the Fundamental analysis at that time.

Fundamental analysis is looking at the basic or the fundamental financial level. It helps as key to determine the company’s health and gives the idea of the value of its stock. Fundamental analysis is the cornerstone of investing. Its core objective is to do the financial forecast of the company

To conduct companies stock evaluation

To make projections about its business performance

To evaluate its management

To calculate its credit risks.

TECHINCAL ANALYSIS

Technical analysis forecasts the future directions of the prices, through past data and market trend. It ‘ignores’ the actual financial condition of the company, market currency, it just solely goes by the “charts “that is the price and volume information only. It is just not limited to charting but it also considers price trends.

Technical analysts believe that the investors collectively repeat the behaviors of the investors who preceded them. While it will take long time for the technical analyst to be picked as the one to manage your trade, but certain financial institutions and banks are using them as tools.

CHAPTER 20

FAQ ‘S

If I buy, when should I sell?

Stock market is a creature in and of itself. When will the bull market is going to change to bear market is anyone’s guess. Hence, we should hold the shares which are stable and are moving up. When you see the company’s shares you have taken are dropping, dipping continuously, then I guess it is time to abandon the ship from those share, meaning it would be wise to sell those shares which are falling in price.

How many shares should I hold?

If they are fewer the better it is good to be diversified, but you should hold that many share that you can manage, and handle on your own. What is the point of holding 1000 shares and If you cannot know them all… instead it’s better to have 25- 30 which are manageable.

How can I buy and sell my shares tax efficiently?

You will be able to do this inside a self select Isa

Most of the brokers provide you with this facility where they give you an empty Isa wrapper. You have to fill it pound 7000 worth of shares and then trade tax free. All capital gains you make will be tax free.

What are Penny stocks?

There is no set accepted definition for the Penny Stock. Some define it as stock priced under 1$ and some say 5$. They are actually type of stock that generally trades at very low value and market capitalization. They are highly speculative and have high risk due to lack of liquidity. They are generally traded over the counter (OTC) and on pink sheets.

What is buying on margin?

A risky technique where in you are buying stocks with borrowed money from the broker. You can term it as a loan from the broker to buy the stocks. In this it allows the investor to be paid the fractional amount and the rest in borrowed from the broker. The broker sets a margin account with you and also charges you with brokerage on the loan and you have to pay interest as well. They can also hold the shares as collateral against the loan you have taken and can take the stocks, if you become a defaulter.

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Penny Stock Guide ch. 10-14

CHAPTER 10

INVESTING

PICKING Penny STOCKS AND PLANNING TRADES

Stock picking in many ways is as good as choosing a spouse for you. There are lots of options available to you if you have money. Once you have decided that you want to invest in shares, the biggest question which comes to the mind is how to I buy stocks? How do I plan my trades?

It is up to you to decide in which category of investors you want to be and which strategy you would follow

GROWTH INVESTING STRATEGY

IF you are kind of optimistic investor, then this strategy is good for you. Here the investor foresees the growth of the company’s earnings and invests in it. This type of strategy is considered to the best for beginners in the stock market.

VALUE INVESTING STRATEGY

Benjamin Graham and David Dodd both professors at Columbia Business School, and professors too many big investors, are known as FATHER of this strategy.

In this strategy, the investors tend to buy stocks whose price has recently fallen and are available at cheap prices. But you have to be careful, value investing does not mean “JUNK “.Investors has to do their homework on the companies, and distinguish between the value company and the companies with declining prices. The company should have its fundamentals healthy to prove its worth.

DIVIDEND INVESTING STRATEGY

In this strategy the investors, buys stocks which pay dividends regularly to them on quarterly or yearly basis… The choice of companies in this strategy should be sound and healthy. This strategy may not be the sexist strategy, but in the long run, this time tested investment strategy would definitely yield returns.

CREATING A STOCK TRADING PLAN

If you want to build your wealth, keep your wealth and grow your wealth you should have a solid Stock Trading Plan .A stock trading plan is a fixed set of rules and actions which formulate your trading strategy. Every trade you do should be governed by your trading plan.

Your trade plan is your road map to tell yourself and affirm yourself and reach your goals.

You will have to consider certain criteria for your plan like,

the timing Price of the stock Current news about the stock Liquidity of the stocks How long to keep the stock i.e. to hold them When to sell the stock What to do when the prices of the stock does not move. Etc

You can think of other aspects as well, but the above is the major point s you have to consider.

Once you have made a plan, mock run of the plan in the stock market which will help you to know if your plan is effective or it needs amendments.

CHAPTER 11

THE MECHANICS — PLACING THE ORDER

STEP 1

OPENING A SHARE DEALING ACCOUNT

Once you have decided that you want to deal in shares, you have to open a standard share dealing account, which usually is free. The basic share dealing account offers certain services for free , that means ” No ADVICE ” they would simply buy or sell as per instructions given. They allow you to trade over the phone or thru internet

If you have opened an account with your broker then you have to send them money stating which and how many shares you want to buy. They would charge you certain brokerage fees for their services. Also few of them charge trading fee, if there is no activity for a certain period of time as inactivity fee.

If you are trading through a web site, then it would ask for a username in which you want to open an account and then a password, that’s it and you are on. Once you put the  username and the password , it would ask you which companies shares you want to buy, how much you want to buy it would then give you a share quote , if acceptable to you .they get their research on the trading charts and

You can always think and come back again. If the quote is acceptable to you u confirms it and in return you will get an email confirmation by the broker and the deal is done.

Yes, it sounds a little tensed but you will get use to it over a period of time.

CHAPTER 12

RESEARCH STOCKS

STEP2

RESEARCH STOCKS

It is very important that you do proper research on the stock because the stock markets behave in weird ways and you should have proper knowledge to it. Never buy the stocks at random, as the market is not random and it works on lots of principles and attributes. If you want to succeed in the stock market you have to do proper research. Either you do the research on your own or you can hire someone to do it for you.

5 VITAL ISSUES

Fundamentals about the company. How is the company doing, is it a profit making company and a sound company. What is the price history of the stocks of that company, i.e. how much are the investors paying for the stocks. Price target is also a vital factor; you have to see how much the investors would pay for the stocks in future. What catalysts would change the investor’s perception of the stock? The most important of all compare the stocks with others in the same industry.

So, to sum up we can say that it’s important that as an investor you should have understanding of wider markets trends, knowledge of individual sectors. Also you should be able to analyze the financial records. You should not be able to have access to rumors and upcoming deals. Last but the most important is No emotional bias, generally this last point is overlooked.

Research before buying the shares; this can be done in many ways,

Go through the TV SHOWS and the newspapers, they have all the details of the shares which are doing well. Take valuable tips from friends and family members who have the knowledge of the subject, Never take any decision in HASTE and do not ignore any ADVICE. Full service brokers also help to do the research, they hire the stock analysts and they in turn find out which would be the ideal stocks purchase for the client. They charge a specific fee for their services. Interviews of the owners, CEO’S, directors etc also are helpful as they normally give the correct synopsis of their company. In today’s world the internet technology has made the things easier for the investors to the research on their fingertips, they can research on trading charts and platforms. Some of these charts are available for free and some have costs attached to it.

It is of very important that you get all relevant and correct information on time so as to grow in the market and make maximum profits. You should be aware of that in the stock trading wrong and unreliable information is very dangerous.

CHAPTER 13

HOW TO READ QUOTES

HOW TO READ SHARE QUOTES IN NEWSPAPERS / INTERNET

Most of the people track their stock trades in the business sections of the newspaper or on the internet. The information provided on the stock table is the most current data available.

The stock table looks something like below

STEP1

Column 1 and 2 are the 52 WEEK High and Low — This is the highest and the lowest price paid for the single stock over the last 52 weeks i.e. one year.

STEP 2

Column 3 is the Companies name and the Type of stock — This column lists the name of the company. If there are no special letters or numbers following the name it is considered to be a common stock, but For example “pf” is return then it means the preferred stock, different symbols imply different types of stocks.

Step 3

Column 4 is the Ticker Symbol (SYM) — This is the unique alphabetic name which identifies the stock issued by the firm. If you are looking for the stocks quotes online you should search for the company by the Ticker Symbol.

STEP 4

Column 5 is the Dividend per Share — This indicated the annual dividend paid for each share, but if the space is blank then the company is not paying any dividends.

STEP5

Column 6 is the Dividend Yield –This is the percentage return on the dividend. Some companies do not pay dividends regularly; the Board of Directors decides how much to pay on quarterly basis calculated on annual dividend of the share divided by the price per share.

STEP 6

Column 7 is the Price/ Earnings Ratio –Mostly commonly known as P/E, this is calculated the current stocks prices by earnings per share from the last 4 quarters. The higher the P/E, the more investors are paying for the company’s potential.

STEP 7

Column 8 is the Trading Volume –The figures shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded add”00″ to the end of the numbers listed or multiply the number in the column by 100

STEP 8

Column 9 and 10 are the Days High and Low — This indicates the maximum and the minimum people have paid for the stock in a day

STEP 9

Column 11 is the Close — The close is the last trading price recorded at the end of the day, i.e. at market close.

STEP 10

Column is 12 is the Net Change — This is the dollar value change in the stock price then the last day’s closing price. If the + (positive) sign indicates rise and a – (negative) sign indicates a drop in the price.

CHAPTER 14

HOW TO BUY SHARES?

We have already discussed this before, but just to refresh it further, in ancient days dealing in trade market was only the privilege of the rich people, but now it is not so a common man is also a part of the trade market.

You can buy shares through any of the following ways

Stock broking through bank, custom stock brokers over the telephone or on line trading through internet.

If you have no idea how to go about investing and really need a lots of help then in that circumstances , you can go for ADVISORY SERVICE , where in the stock broker looks in to you individual account and advises you on buying and selling

But , if you wish to hand over the entire thing to someone else, then in that case you can go for DISCRETIONARY SERVICE, in this there is certain strategy between you and the broker which is agreed upon and the stock broker takes all the decisions of buying and selling on your behalf with your money. This type of service risk factor is more.

You can categorize the brokers in two major types,

Discount brokers – these brokers will collect a certain amount of annual fee form you and will only carry out what has been told to them, over the phone, in person or on the internet.  They would give ZERO advice to you.

Full Service brokers- these brokers give you recommendations and advices on which stocks are good to buy, which will yield profits and which stocks are overvalued. They provided these services with a little higher fees and sometimes even commissions

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Penny Stock Guide Ch. 5-9

CHAPTER 5

STOCKMARKETS

A stock market is a public for trading of the company stock at an agreed price. It is considered the fast way to get the money from an individual and give it to the company that needs it.

The concept of stock trading comes from way back in 1600 , when the East India Company was launched, it needed money from the people for their voyages, without any guarantee of return  .hence they approached the investors to whom they gave shares in return of the cash.

The idea was that the risk would be shared and divided among the investors, no fixed returns would be paid to them but if company progressed and did well then the investors will be benefited. The idea worked and the investors made profits and by the end of 17th century many more were entering the ball game of trade.

In 1801 the LSE (LONDON STOCK EXCHANGE) was formulated, the systems were formulated and there was no looking back after that. LSE also runs AIM (Alternative investment Market) for the young companies as “starter market “

Today, along with Britain, LSE runs the biggest exchange with 1800 + companies, which is called the “main market “.

CHAPTER 6

STOCK EXCHANGES

WHY DO COMPANIES LIST ON THEM?

Stock Exchange is an organization or a corporation which helps in trading of stocks to investors and stock brokers. The main aim of listing the companies on stock exchange could be

Raising Capital for the businesses

Mobilizing Savings for further Investment and

Facilitating Companies Growth

NYSE

The biggest and the most prestigious stock exchange is the NYSE ( NEW YORK STOCK EXCHANGE) .NYSE came in existence way back in 1972 , when 24 New York stockbrokers and merchants  got together

Sign the Buttonwood Agreement.

NYSE is first exchange of its kind and trades in the open outcry system.  Each stock is traded by a specialist (who is the employee of NYSE) on a specific location on the trading floor. This specialist actually works as auctioneer between buyer and the seller in particular stock. This type of trading makes NYSE different from other exchanges which are totally dependent on electronic devices.

Today with changing times half of NYSE is also trading on electronic devices, and is come out of the Stone Age.

NASDAQ

The NASDAQ (NATIONAL ASSOCIATION of SECURITIES DEALERS AUTOMATED QUOTATION) is the second type of exchange and the largest electronic screen based trading market of United States of America. The exchange does not have central locations of specialist, neither do they floor trading. The entire trading is done through computers and telecommunications.

AMEX

The third largest exchange of America is the AMEX (AMERICAN STOCK EXCHANGE), which has been taken over by NASD (parent company of NASDAQ) in 1998.

OTHER EXCHANGES

There are many other stock exchanges around the world. Almost all countries have stock exchanges, with Americas stock exchange being undoubtedly be the largest.

List of other exchanges,

LONDON STOCK EXCHANGE

HONG KON GSTOCK EXCHANCE

MUMBAI STOCK EXCHANGE

JOHENSBURG SECURITIES EXCHANGE

And the list can go on…………

CHAPTER 7

WHAT ARE STOCK INDEXES

A stock market index is a method of measuring a section of stock market. Statistical indicator used in measurement and reporting changes in the market value of group of stocks. By measuring the performance of a one company based on the performance of other companies in the same type of business, which will help the investors to make best investment.

Major types of stock indices:-

There stock indices may classified in many ways.

GLOBAL market index includes all types of companies irrespective of where they are domiciled or traded. The 2 best examples of such index are MSCI WORLD and S&P GLOBAL 100.

NATION market index indicates the performance of a stock exchange of a nation and reflects the economy of the country. The examples of such index are the INDIAN SUNSEX and the JAPANESE NIKKEI 225

More specialized indices comprise of tracking the performance of the certain sector of the market, the example is MORGAN STANLEY BOITECH INDEX, it comprises of 36 American companies under biotechnology industry

Other indexes may track the companies from its size, or a certain type of management etc.

Weighting

The index can be also classified under the criteria as to how is it priced

PRICE WEIGHTED INDEX also known as equal dollar weighted index, each component stock contributes only to its price when determine the overall value. The size of the company or the volume in which its trading is not taken into considerations, hence evens a slight up or down in a single company highly influences the index

CAPITALIZED WEIGHTED INDEX also known as market value weighted index, whose components are weighted according to the total market value of their outstanding shares. The impact of the component’s price change is proportional to the issues overall market value.

CHAPTER 8

HOW DO I BUY AND SELL SHARES?

In ancient days buying and selling stocks/shares was the privilege of the rich , who with the help of certain share brokers use to buy and sell shares and among those few , the ones who had the inside information of the companies use to mint most money.

But the today’s internet age, the entire information is available to the common man, making him pretty much the part of this never ending market. As now most of the information is available on the internet, the stock brokers give their services with no frills attached , meaning you tell them which shares you want to buy or sell and they would do exactly the same , no advice given .

There are big stocks brokers like Barclays, Brennan etc who charge for the service their certain amount of commission for each deal, and also few brokers charge you yearly and quarterly fee just to keep your account open and do the dealing on your behalf.

Investors buy shares only for the purpose of income in forms of dividend, and then they should scrutinize properly and buy such shares that yield the most dividends.

Some investors are not interested in income but are more inclined towards capital growth, hence when the share price increases in anticipation that the company will yield more profits in future and which will affect the increase in the dividend payments… hence investors who are interested in capital growth, should invest in share that are expected to yield huge dividends in future.

CHAPTER 9

WHAT TYPE OF TRADER ARE YOU?

Each individual who is the stock market and is intending to make money has to identify himself from the various trader types he falls into and has to utilize that strategy.

The following are the types of traders,

POSITION TRADERS

Most investors fall in this category, as they buy stocks and hold them for months and years expecting to get more profits out of it. Institutional investors, mutual funds and investment banks are interested in such stocks which yield profits in long term. They concentrate more on the financial strength of the company and not in technicalities.

SWING TRADERS.

These are the traders who look for the fast movement in the market. Fast buying and selling , and in this short term of holding shares these types of traders make lots of wins and losses .They have the fast profit making mentality , they have high risk to reward ratio.

DAY TRADERS.

The stock market moves up and down every day and these types of traders make the most and capture the big portion of the move. He does not believe in keeping the stocks for more period of time like position and swing traders. He uses the stock market as source of income and not investment.

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Penny Stock Introduction Chapters 1-4

Penny Stocks introduction CHAPTER 1

 

Are you bored with the 9 to 5 job? Want something in your life to change instantly? Want your dreams come true. Your dream of relaxing in a big house and there is a flow of money in the form of dividend cheque. Imagine yourself an owner of a business and watch your company grow.

All of this and much more is now possible by owning penny stocks.

In today’s fast moving world , stocks which was always the ball game of the rich and wealthy people , with the trading technologies expanding itself , the market has opened its doors to each and all who wish to own stock.

If you wish to multiply your money and want build wealth then owning stock is the thing for you .But before you take the plunge in this deep sea of stock market ,its vital and important for you understand about the stocks and how they trade. Most people have heard about stocks from friends or often have overheard a conversation, like “oh Mr. Shah, did wonders on the stock market and now is starting a new firm “or “Mr. Patel lost  …XYZ amount in the stock market. Though being a very popular topic of discussion in most of the places, there is a lot of misconception about it. Everything in life is not free so even this money building financial tool also has risk factors in it.

The only way is to educate our self and protect our self by investing the money at the right place.

CHAPTER 2

WHAT ARE STOCKS AND SHARES?

To run a company or a business, you need funds. This capital can either be generated from within or one has to be borrowed from outside. Borrowing the money can always be a very expensive option , what companies do is give a unit of ownership interest in a corporation or a financial asset, which is called a  SHARE  and the person possessing the share is called  SHARE HOLDER.

It does not mean that if a person is SHAREHOLDER he/she gets to make decisions in the day to day operations of the business. They get the equal share in the profits of the business in the form of dividends.

STOCK signifies the ownership on the company’s assets and earnings. So in totality SHARES and STOCKS in today’s financial market mean the same thing.

Normally a layman would buy certain shares and keep it just to earn dividends, where as few investors who want to deal in the stock trading would buy and sell them. The prices of the shares keep on rising and falling, so you should d be prepared to lose your investment anytime.

There are investors in the stock market who have lost their fortune in it and few have billions.

So what is most important before entering into the big well of stock market is to educate yourself properly and learn in which shares to invest which can give you big returns.

CHAPTER 3

TYPES OF STOCKS

There are generally 2 types of Stocks.

COMMON STOCK: A common stock also known as Voting share or an Ordinary share gives the right to the shareholder to vote on the corporate matters .policy and to elect the Board Members. Mostly the companies issue Common stocks. The dividend paid on these stocks is not fixed and would vary. The return on the Common stocks is much higher than in any other investment, but this return are with cost as common stock involves maximum risks. If the company goes bankrupt or chooses to close down Common stock holders are only paid after the preferred shareholders, bondholders and the creditors are paid. The biggest benefit of a common stock is its can be converted in cash, that is can be liquidities very fast.

PREFERED STOCK : A Preferred stock is also known as known as Preference share or Preferred share, is a  higher ranking stock then the Common stock, and its terms are negotiated between the company and the investor. Preferred stock generally does not carry a voting rights but it does carry priority over the Common stock in payment of dividend and upon liquidation. A Preferred stockholder has option to convert his stock to common stock after predetermined dates, which are called CONVERTIBLE PREFERRED SHARES.

CHAPTER 4

WHAT MOVES STOCK PRICES.

Stock prices are directly related to the company’s earnings, but what exactly makes this prices move? There are no hard and fast rules to this. The news report of a specific company would make the investors have more stocks of it or the negative news can make the investors move out of those companies’ holdings by selling them.

The other reason for the market to sway is countries attempt to correct the inflation.  Generally changes the stock prices are affected if the If the country usually higher or lowers the interest rates

According to analyst, amateur investors also can be a reason to move the stock market up and down. Amateur investors out of inexperience normally make decisions on press releases or rumors

The day traders are also considered the major contributor for the ups and downs of the stocks, as they generally deal in huge numbers of stock which affect the stock.

If the companies are able to show that they have met or exceeded their profit margin , the stocks of the company will automatically go up, but if vice a versa .. If company falls short in meeting the profit margin the immediate reaction of the investors would be to sell the stock holdings of that company.

So to conclude, there is no exact reason for the stock prices to move up or down

Success in investing comes not with how and a dash of luck, but with analytical and cool mind.

MARKET TREND: BEAR OR BULL!!!!

Where these names do came from?  Remember bears are sluggish and bulls are forceful. The bull flairs its thorns up when tries to attack its prey and the bear swipes downs, this is metaphorically depicted in the stock market. When the market has trend is upwards it’s said to be a Bull market and Bear market when the trend hits the downward graph.

BULL MARKET

A bull market trend is associated with increasing confidence of the investors, and anticipation of the future rise in the prices which would motivate the investors to buy the stocks. India’s Mumbai Stock Exchange Index, SUNSEX, was in the Bull Run for almost five years from 2003 to 2008.

BEAR MARKET

A Bear market is a steady drop in the stock market over a period of time. It is accompanied by pessimistic approach taken by the investors anticipating future downfall in the prices and hence starts selling the shares. No specific definition is available for the Bear market. But one generally accepted measure is a price decline of 15 % over a two month period of time.

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Penny Stocks CRWE, SAFT, SWY, SGA

Crown Equity Holdings Inc. (CRWE.OB) is a consulting organization which provides and assists small business owners with the knowledge required in taking their company public, and has re-focused its primary vision with its aligned group of independent website divisions to providing media advertising services, as a worldwide online media advertising publisher, dedicated to the distribution of quality branding information, as well as search engine optimization for its clients.

CRWE recently reported that its sales this year have already surpassed $1,000,000.

In addition, CRWE announced that it has launched its crwenewswire.fr website to provide news in France’s native language. Crown Equity Holdings Inc. had previously launched its German website crwenewswire.de and is launching its Canadian website crwenewswire.cn shortly.

“The new website is one step in many towards the company goal of expanding its footprint internationally, ” commented Kenneth Bosket, President and CEO of Crown Equity Holdings Inc. “Our goal for 2010 is to have all CRWE’s clients’ press releases, articles and news content published in every major financial country’s native language, as well as within cities of every state of our country,” stated Mr. Bosket.

For more information about this company please visit http://www.crownequityholdings.com

Safety Insurance Group, Inc. (NASDAQ:SAFT) recently reported second quarter 2010 results. Net income for the quarter was $15.1 million, or $1.00 per diluted share, compared to $15.0 million, or $0.96 per diluted share, for the comparable 2009 period.

Net earned premiums for the quarter increased by $4.8 million, or 3.7%, to $136.1 million from $131.3 million for the comparable 2009 period. The 2010 increase was due to the factors that increased direct written premiums combined with decreases in earned premiums ceded to Commonwealth Automobile Reinsurers and partially offset by decreases in earned premiums assumed from CAR.

Safety Insurance Group, Inc. is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company which are Boston, MA, based writers of property and casualty insurance. Safety is a leading writer of personal automobile insurance in Massachusetts.

Safeway Inc. (NYSE:SWY) recently announced today that all Safeway pharmacies in the United States can now administer a new high-dose flu vaccine called Fluzone High-Dose which has been approved by the FDA for use in people 65 years of age and older.

Safeway pharmacies make it easy for everyone to protect themselves by offering flu vaccines on a “walk-in” basis at Safeway, Vons, Pavilions, Carrs, Dominick’s, Genuardi’s, Randalls and Tom Thumb pharmacies while supplies last. Stores that do not have a pharmacy will offer scheduled flu vaccine clinics.

Safeway Inc. is a Fortune 100 company and one of the largest food and drug retailers in North America, based on sales. The company operates 1,712 stores in the United States and western Canada and had annual sales of $40.8 billion in 2009. The company’s common stock is traded on the New York Stock Exchange under the symbol SWY.

Saga Communications, Inc. (NYSE Amex: SGA) recently reported the Company’s net income for the second quarter was $3.7 million ($.87 per fully diluted share) compared to $2.7 million ($0.63 per fully diluted share) for the same period last year.

The Company continues to maintain a solid balance sheet with $18.1 million in cash and certificate of deposit balances. Netting cash and certificate of deposits against outstanding debt, the ratio would be 2.9 times.

Saga Communications utilizes certain financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) to assess its financial performance. Such non-GAAP measures include free cash flow, trailing 12 month consolidated EBITDA, and leverage ratio.

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Penny stock Aluf Holdings, Inc. AHIX

Aluf Holdings, Inc. OTC Ticker symbol AHIX 

The company has market capital of $77,626 and the company focuses on acquisition of the software and technological platforms. This holding company operates with management, acquisition and development of proprietary software. The headquarters of the company are located in Hollywood (Florida). There is strong potential growth with the best business plan designed for the company’s increased stocks. The mission of the individual is to create the appropriate shareholder value by pursuing the new growth opportunities with improved profitability.

The company is committed to maintain dignity, integrity and excellence in the operations of business and professional ideologies. There are best ethics followed in the relationships with shareholders, employees and other providers.

The daily range of these penny stocks is $0.0001 – 0.0002 and average volume of 17,282,573 shares. AHIX began its services in 2017 and hence, the charts are not developed to see the progress. The plans offered by the company are very lucrative and the company has the champions involved in making a strong base.

The company is engaged in new mergers and acquisitions, which increases the scope for the stocks to grow. It even completed all the aspects with due diligence review and commits to carry forwards the activities in the decided time span. The collaboration with TC has average annual revenues of $12.5 million for previous three years. The closing stage was reached with the involvement of best techniques and hard work gathered with cooperation of the company members. The progress of this transaction can improve the ratings and stock price of the company and lead it towards a better level.

Aluf Holdings, Inc. (AHIX) has the major service driven approach for developing and selling the proprietary software. These applications are built for the clients in a customized way. The major strategy is to build up a diverse enterprise software company giving better growth in the business sectors. It has a strong potential for growth with the well organized business plan and a clubbing of the best people in the sector. You can check out the link www.alufinc.com to get all the information in detail.

The comprehensive quotes of AHIX will change with time and it is thought that there will be better scopes for these products in the coming future. The services of application software is required almost in every industry and hence, the scope of Aluf Holdings, Inc. has prospects to grow as well.

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Top Ten Penny Stocks NASDAQ PCYO

When it comes to utility stocks, very few are penny stocks. Most utility stocks are large firms with slow    growth and very little upside. However, not all utility stocks are like this, which is proven by the stock we’ll look at today. This company is involved in a resource we all need: water.

Pure Cycle Corporation (NASDAQ/PCYO) is a company that serves the Denver area by operating and maintaining the water and waste systems. The firm provides many of the same functions as some utility stocks, by treating, storing and delivering water to customers. It’s quite rare to find penny stocks in the same arena as large utility stocks. The company has water rights from groundwater, surface water, and reclaimed water. This is in addition to wells, pipes, reservoirs, and treatment facilities.

One of the biggest areas to watch for in utility stocks over the next decade is the water sector. Water is going to be in demand and utility stocks that can help meet this need should do quite well. In this sector, there are few penny stocks that have the existing base of clients and infrastructure that Pure Cycle does. The company is quite small, with a market capitalization of just over $50.0 million, but it has no debt and trades at just over one times book. The company needs to start generating profits before the stock price can really move up. The initial steps have been made, now the execution needs to occur.

In addition to water reservoirs and pipes, the company owns over 17,000 acres of farmland in Colorado, which it to farmers. The growth of oil and natural gas production from fracturing of wells is also creating great demand for water. This demand for water will help profits for utility stocks across the U.S., as these new extraction technologies will put a strain on existing facilities. This means more companies are needed to clean the water, store it if need be, and ultimately find a way to get water to customers.

Chart courtesy of www.StockCharts.com

While many penny stocks have been down this year, Pure Cycle has held up well. Following the huge rise in January where the stock almost doubled, it was certainly due for a pullback. One worrisome area is the circled region on the chart. This broke the uptrend that started earlier this year and now the stock is having trouble moving above the 200-day moving average. I would keep this name on my watch list along with other penny stocks that are still not yet generating strong profits. When penny stocks turn the corner to profitability, this is the time to start accumulating. I would also look at the technicals, not just of this stock, but all penny stocks. With so much resistance on the way back up, I would wait until the road is clear before stepping into any penny stocks with this technical profile.

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Penny Stocks that offer dividends

There are many penny stocks that offer a good dividend yield with capital appreciation. The higher cash levels at companies, including penny stocks, will drive them to increase their dividend yield over the next decade. This combination of higher dividend yield and an economy that recovers will drive up the price of penny stocks over the next decade. Personally, I would rather put my money in growing penny stocks paying a higher dividend yield than a 10-year U.S. treasury bond paying only two percent with limited upside potential and a huge risk of capital losses.

A completely unique market in penny stocks that pays a dividend yield, outside of the banking and resource sector, is Deer Consumer Products, Inc. (NASDAQ/DEER). Deer makes and sells kitchen appliances. A Chinese design firm, it sells its products in China and overseas. This is an interesting play on the burgeoning Chinese domestic economy. Penny stocks that are in this space might offer significant upside capital appreciation, in addition to the dividend yield, if the Chinese domestic market continues to expand.

Deer also makes and sells products under the “Black & Decker” and “Betty Crocker Kitchen” brands, as well as other private label names. I do like it when penny stocks have multiple customers and are not heavily reliant on one big client. This allows some stability when it comes to earnings visibility and the predictability of the dividend yield. If the forward dividend yield is maintained as stated by the company, then the stock should pay out approximately 5.7%. Trading at 0.65 of book value with a 17.56% profit margin, these are decent fundamentals to begin further research in the stock.

Chart courtesy of www.StockCharts.com

The recent earnings release by the company showed that, for the year 2011, net income rose 31%. The company stated that higher prices and increased Chinese sales were a big part of the increase in income. Penny stocks that are increasing their sales and income are a good place to start, even if you are looking for a dividend yield. The stock did move up sharply following the earnings release, but it has since pulled back.

Deer had revenue of $226.7 million in 2011, compared to $175.8 million in 2010, up 29%. The firm had earnings of $39.8 million in 2011 ($1.18 per share), compared to $30.3 million ($0.90 per share) in the previous year. Approximately 68% of sales came from mainland China. The firm stated its expectations for 2012 of earning $1.37-$1.42 per share. The company expects this based off of $270 million to $290 million in revenue.

In a company press release, chairman and CEO Bill He said: “We believe China remains the world’s largest and fastest growing consumer retail market and has strong domestic demand for small household appliances.”

Penny stocks with exposure to China have been hurt recently, no doubt about it. Even firms that pay a good dividend yield, such as Deer, have been hurt. If we are to believe the CEO of the firm, there was no word of a decrease or suspension in the dividend yield. Obviously, no one can read minds or predict the future, and investing in penny stocks deals a lot with the trust in management.

I usually like investing in penny stocks with some momentum, as other investors signal their intentions in penny stocks with their money. If they like penny stocks, they buy them, and the price starts to form a base from which it moves up. Penny stocks continuing to decline does raise some worry, but if the fundamental results come in as the CEO states, then perhaps this might be a long-term stock worth looking further into. While I’m not advocating buying shares right now, I certainly would keep my eye on this stock.

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penny stocks- Rules for investing

Penny stocks are small companies stocks traded on stock exchange at very low price. Though penny, these stocks are risky too due to many reasons like low market capitalization, more prone to scams, chances of getting de- listed from the stock exchange and its low trading volumes  ensures high volatility in the stock price movement.

Although these are risky stocks, they remain to be liked by the investors and traders for both long and short term investment. These stocks tend to move irrespective of the stock market and investor/trader believes in stock’s individual growth story. Wherein big company shares or blue chip stocks move according to market and give nominal returns; the penny stocks have the ability to give multiple returns and that too in very short term to an investor, you can read rule of investment at http://matthew-lew.com/penny-stocks-rules-investing

This potential of generating high returns and certain other advantages makes an investor feel attracted towards investing into these small company penny stocks.

Below are some of the notable advantages trading into these penny stocks, these are:

  1. Higher profit Potential: As discussed, the biggest advantage for an investor to trade into penny stocks is its ability to provide higher profit compared to blue chip stocks. The penny stocks are small company stocks whose business is small and have good growth potential. A positive business growth can make stock price double or even triple also.Many penny stocks from past have become today’s blue chip stock and that is the power of penny stocks.
  1. Higher Profits in Short Term: It becomes more advantageous for an investor when huge profits are made and that too in very short term of investment and penny stocks are best example to this.These small companies have tremendous growth story compared to big companies. A business growth seen or even projected for future is enough for these penny stocks to go rocket to may even get double or triple in just a matter of few months.
  1. Quality Penny Stocks outperform Blue Chips: Over the decades, it has been seen that quality penny stocks outperform the blue chips. This is for a very simple reason that the penny stock’s small companies are small but growing and have potential to become a big company, but whereas blue chip’s big companies are matured and can only give nominal returns in business.
  1. Easy to Buy: The penny stocks are very easy to buy and sell as these are very common shares and are easily available in the market for general public. It’s low price ensure an investor to buy in huge quantity and also enables him to diversify his portfolio into other penny stocks without considering much about the investment cost.
  2. Capped Downward Risk & Unlimited Profits: An Investor or trader will feel much happy ad comfortable if he knows his maximum downward risk. Investment in penny stocks ensures investor about the risk as his downward risk is capped. A stock if get beaten down can maximum become zero but not negative and have no limit on upside.A penny stock trading at $3, caps a maximum loss of $3 per share to an investor but benefits with no limits on upside. It ensures limited risk and unlimited profits. Micro cap stocks are volatile, but still give profits to many people.
  1. Best penny Stocks are mostly Undervalued: If we analyze the blue chip stocks, most of the cases the current stock price will be trading more than its fair value or trading in multiples to its PE. But the best penny stocks trades at even less than its fair value or PE. This happen for just a reason that they lack investor interest and knowledge among of small investor. If analyzed, these undervalued penny stocks are future blue chips and gems for investors.
  1. No Long Term Investment: These penny stocks are volatile and tend to get multiply in just matter of few days or months. Short term growth ensures no longer term investment commitment for an investor into these stocks.
  1. Small Investment: Trading or investing in penny stocks doesn’t burden investor with huge funds requirement as in case of buying the blue chip stocks. Penny stocks are small priced stocks which require very less investment. Naturally, if the stock price is less, larger number of shares can be purchased and that too with small investment.
  1. Sweetest penny Stocks Fly under Radar: There is seldom any news seen on televisions or an analyst report on these penny stocks. These sweetest penny stocks fly under radar and go unnoticed to masses. A best pick of penny stock with good and quality analyses ensures buying at a low price and ultimately higher returns.

There are many paid research companies who have been recommending some quality penny stocks and have consistent history of picking the winners.

Penny Stocks – Rules for Investing

Penny stocks are the low priced stocks listed in the stock exchange. Unlike to blue chip stocks, they are small company stocks with lots of risk appetite for the traders and investors but alongside huge returns for them. As they are different in nature than the blue chip, they differ in their investing strategies too.

Here are some rules for traders and investors for trading into penny stocks. These are:

  1. Never invest more than what you can lose: Though the penny stocks have potential to provide huge profits but is coupled with huge risk too, as they are highly volatile and low traded stocks. These stocks can get delisted even and ruin whole investment. So, investors are advised to never invest more than what he can afford to lose.
  2. Track Everything Closely: Being unpopular stocks, the information is not easily available on news channels and nor there is any analyst report available. Your investment into these scary penny stocks needs cautious approach. Investor must track everything about financials, company’s business, promoter’s stake in company and its business guidance etc.
  3. Analyze Trading Volumes: Investor is advised to study and stock’s trading volumes and also to analyze its volume consistency. There can be instances like block deal in the stock on one day of week and other days there is no volume, so the average weekly volume will be comfortable but there is a huge risk as there is no consistency.
  4. Don’t listen to Promoters: Penny stocks promoters have a bad image of creating pumping and dumping schemes. Artificial positive news pumps up the stock price and dumps their holding at high price. It is advised that investor must get the promoter statement authenticated before investing. The investors should imply their own mind and experience to seek out for the most profitable solutions.

Penny Stocks – Rules for Investing (Part-2)

Few more rules for investing in penny stocks are as below:
  1. Get out of stock When it’s not trading your way: It is easy to understand this rule but very difficult to implement as no investor like to book loss on his investment. This rule says that investor or trader need to use stop loss till what he can bear easily as holding the stock for long in spite its continuous fall can ruin whole investment even.
  2. Able to go both long and Short: Going long is when you feel positive about stock and you buy the same and sell on rise. Short is opposite to it, where trader sell the stock first in anticipation of fall in stock price and later buy the same at lower price. The trader must have the ability to make money or profits by both shorting and going long on stock.
  3. Never Love the Stock: Another important rule is investor must not love the stock. Most of times investor fall love with stock which is giving him good profits and don’t sell the same even after getting his target price. These penny stocks have tendency to rise sharply and then can also fall more briskly, ruining whole profits of investor. So never love and hold the penny stock, but book your profit.
  4. Focus on risk Reward: It is advised to use stop loss while investing into these risky penny stocks.. It is advised to focus on risk reward for stop loss. For instance if an investor buys penny stock at 3$ per share and keeps a target sell price at 4$, so the stop loss should be at $2.8 in order to get favorable risk reward ratio of 5:1. It can be 4:1 or 3:1; in short the profit must be more than the risk involved. you can read Penny Stock investing rules part 1 by clicking here

Tips to Pick Penny Stocks Newsletter

Penny stocks are the low priced stocks with but with lot of risk involved for traders and investors. These are highly illiquid stocks with low capitalization, which result in high volatile movement in the stock price and ultimately risk the investor’s investment.

Alongside huge risk in penny stocks, the stock chosen wisely they also have potential to give huge returns to investor. Sometimes, the returns can be so massive that it can double or triple the investment in just a matter of few months.

The most important aspect in this is how to choose that profitable stock. On an average only one out of 100 penny stocks become a gem and rest just a nightmare for an investor.

 

An important source of material for analyzing penny stocks is the newsletter. But the same must be an authentic. Here are few tips to pick the best newsletter. These are as below:

  1. Previous years Performance: The newsletter should provide their past performance chart, indicating all the hits and misses with details like date of date of recommendation, recommended price with target and the result achievement. An investor must analyze its authenticity before evaluating.
  2. Reasons for choosing the stock: The newsletter instead of showing only the numbers but also the information that demonstrated their stock pick to be worthy of passing it to their members. Not only the profit and loss figure also information on important determinants need to be mentioned like Business, Promoters financials etc.
  3. No Vested Interest: It must be analyzed carefully that the newsletter owner or moderator must not have any vested interest into their stock tips. Penny stocks often are prone to pump and dumb schemes wherein these stocks are artificially brought into limelight of small investors for ultimately dumping the same at much higher levels.

Tips to Pick Penny Stocks Newsletter (Part 2)

There are few other imports tips to pick the best of available penny stocks penny newsletters.

These are as below:

  1. Monitoring the Portfolio: This is a very import aspect, wherein an investor wants that his portfolio must get monitored constantly. The newsletter must be efficient enough to back up the buying of an investor by constantly monitoring the stock price and advise accordingly. It is as important to know when to sell the stock as to know when to buy.
  2. Details on Subscription: The newsletter must let know the subscriber about details of subscription like they should tell how many picks they can expect to get over their subscription period and also about the timings of the same. It is important to know it as investor must be prepared for his investment.
  3. Customization: The newsletter must have a customization aspect. Subscriber must see that the newsletter should have information and efficient enough guide to all types of investors. It is also to know whether they have a customer support as penny stock movement is very precarious as investor need advices from time to time.
  4. Information on Brokers: Alongside guiding for stocks, newsletters should also give information on brokers. A choice of a right broker is also very important as that of choosing the right stock. Most of the investors do not have much start up investment and the newsletter guides in picking the right broker who provide low cost per trade and also gives fair trade to his client.
  5. Information on Buying Order: The newsletter should also guide about placing the order of the investor. They should guide him regarding the limit and market order. The penny stocks are too volatile and low traded stocks, lack of information and cautious on placing the order may end up investor to buy at premium and sell the same at a discount.you can read Tips to Pick Penny Stocks Newsletter part 1 by clicking here

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8point3 Energy Partners (NASDAQ:CAFD)

8point3 Energy Partners (NASDAQ:CAFD) cafd stock

8point3 Energy Partners is a Worth Watching Stock

8point3 Energy Partners (NASDAQ:CAFD) initiated a take after on stock offering after it declared its second from last quarter comes about a week ago. As measured with Cash Available For Distribution, or CAFD, and profits the Company exhibited to the market that it is executing admirably on its YieldCo procedure. (If you don’t mind take note of that the famous business acronym and the stock ticker image are indistinguishable and perusers should be aware of the setting in which the term is being utilized.)

The Company likewise declared increment in profit to $0.2406 a share – an expansion of 3.5% over Q2 levels.

On the drawback, the Company seems to have paid an above market rate for the latest drop-down of the Henrietta extend from SunPower (NASDAQ:SPWR). An installment of $134M for $10.9M CAFD demonstrates an arrival of around 8% when 8Point3 stock is yielding around 6.5% yield. Certainly, 8Point3 returns can be expanded by utilizing at a venture level or corporate level. While conceivably fundamentally accretive with great obligation terms, we trust this arrangement is more about sparing the support’s bacon than about conveying quality to 8Point3 shareholders. 8Point3 could have absolutely discovered less costly activities far from its backers.

Lamentably, the hidden irreconcilable situation is a known and unveiled confinement of the Sponsor/YieldCo model and we can anticipate that 8Point3 will continue making problematic buys to the detriment of its shareholders.

While this may seem like a vile ploy on the backers’ part to endeavor open shareholders, we trust this is a plan of action confinement that can be, and ought to be, altered by operational changes at the support/YieldCo level.

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