The Best Stock

With all of the financial info flying at you - from the web, TV, investing magazines, financial newspapers, blogs, etc., how do you sort out which is the best stock for you?  Is it a value stock, a growth stock, a large cap, or a small cap, a high dividend, tech, or some other type of stock?

This hubpage will give you some basic pointers and tools that should help you find your way safely through the financial jungle that's known as the stock market.

Stock Investing - Why Do You Want To Do It?

Before you even think about what which stocks to buy, first decide what your reasons are for investing. Ask yourself these questions:

  • Time Horizon: Do I need the money I'm investing now or later?
  • If later, how many years before I'll need to use this money?
  • If now, how much of this money do I need for income? How long will I need this income?
  • What is the source of this money?  Is it a 401K that my employer also adds to?
  • Do I plan on adding to this investment money? Can I afford to do this with my current income and living expenses?
  • If yes, how often will I add to it?
  • Can I afford to lose any of this money?
  • Risk - How lousy will I feel if I lose a big % of this money?
  • Am I OK with being more aggressive in investing?

These are all questions that investment advisors ask new clients. You see, it's vital to know what your objectives are, before you invest, so that you choose the most appropriate stocks to invest in, and the best stock investing strategy for you. The answers to these questions will determine your investing profile.

Keep in mind that the answers to these questions aren't set in stone, and will certainly change over time. The idea here is just to be clear about what your financial goals are.

Choosing The Best Stock Investing Strategy - A Tale of 2 Investors

To illustrate this concept of investing profile, and how it should direct you toward the best stock investing strategy to meet your goals, let's look at 2 hypothetical investors, both with the same amount of money to start investing:

1. Tom is 45, hitting his peak earning years. He wants to start building his retirement nest egg more seriously. He has no dependents. He wants to retire at age 65.

2. Julia is a new widow, aged 59. She just received an insurance settlement from her late husband's passing. She has a job which pays her living expenses, and no dependents. She plans on retiring at age 62.

Because he's younger, Tom has a distinct advantage over Julia, due to the power of compound interest, which is explained by the "Rule of 72", a formula you can use to determine how many years it will take an investment to double your money, with compounding interest.

You simply divide the interest rate or dividend yield rate by 72, and this will tell you many years the investment will take to double in value. For example, if you own a stock that pays you 6% annually in dividends, divide 72 by 6, and you'll see that this investment will double in value in 12 years, if you reinvest the dividends.

Since Tom's time horizon is 20 years, he can probably afford to be more aggressive in his investing style, as he'll have more time to rebound if he suffers any losses. That being said, however, he's still going to have to do some thorough research, in order to find the right stocks to invest in.

Since he won't need this money for quite a while, he should absolutely reinvest the dividends on any stock he buys, as this will powerfully impact his portfolio's growth. An investment advisor would probably advise him to create a varied portfolio, with a mix of different styles and sizes of stocks - value and growth, large cap and small cap. In addition, Tom would probably be encouraged to invest in different industry sectors, which we'll discuss below.

Julia has totally different goals. She wants to begin living off of her investments in 3 years time, and can't afford to lose too much of her principal. Therefore, most advisors would probably steer her more toward fixed income investments, such as bonds, and steady dividend paying stocks.

The New York Stock Exchange Trading Floor
The New York Stock Exchange Trading Floor

How To Buy Stocks Online - What To look For In A Broker

There are many, many stock brokerage firms competing for your money these days - from the full-service brokers who'll make your trades for you, (and charge you dearly for it - often in excess of $100.00/trade), to the online discount brokers, such as Charles Schwab, who charge a much lower fee when you buy stocks online.

Again, your choice of broker depends on your goals and needs. If you want full control, and feel that you'll be able to place your own trades, then a discount online broker is probably your best bet.

Here are a few key points to consider when choosing an online broker:

  • Account Insurance - How much will they insure your account for? Just like banks, brokers insure accounts against fraud and other events
  • Ease of online stock trading platform - You can usually take a tour of the online trading platform. If it looks too complex or convoluted for your needs, move on.
  • Monthly Account Statements - Paper or only Electronic? I'd love to support going paperless, but my experience with it thus far hasn't been that good. The other issue is that, with paperless accounting, you'll have to remember to print out your statements and tax documents. Compare brokers' monthly statement formats, which can vary from unnecessarily complicated, (TD Ameritrade), to "spartan".
  • Dividend Reinvestment - Some firms will not let you automatically reinvest the dividends. Instead, they charge you their usual brokerage fee, and you must use your dividend money to buy new shares of the company. This can be very annoying, since it's easy to forget to do this yourself. When it's automatic, you should also get an ongoing record of the dividend reinvestments, as they're made over time. (This is very important tax-wise, which I discuss in the paragraph below about taxes and stock investing.)
  • Brokerage Fees - This is the most highly competitive brokerage account feature, and it's always in the ads. Beware of firms charging low transaction fees, but only if you meet a certain minimum trading requirement or deposit balance each month.
  • New Account Minimum Requirements - This can cary widely, from as little as $25.00, up to $25,000.00, and higher, depending upon the firm.
  • Minimum Amount Per Trade - This can vary widely. If you're setting up an account that you'll add into in small $ amounts, this will be important. Fortunately, there are some online brokers, such as ShareBuilder, that have very low trade requirements.
  • Customer Support - Many of the stock investing magazines and newspapers, such as Barron's, Forbes, Kiplinger's, and others, annually rate brokerage companies on a variety of factors, customer support among them.

Online Stock Broker Comparison

(click column header to sort results)
BROKER  
COST/TRADE:STOCKS  
COST/TRADE: OPTIONS-Cost/Contract  
OTHER FEES: ACCOUNT INACTIVITY,ETC.  
MONTHLY MINIMUM ACCOUNT BALANCE  
NEW ACCOUNT MINIMUM  
PAPER/PAPERLESS  
INSURANCE  
DIVIDEND REINVESTMENT  
SoGoTrade
$3.00
$0.70
$0.00
$0.00
$500.00
PAPERLESS
$5 Million
?
ETrade
$12.99
$0.75
$40.00/QUARTER IF ACCT=UNDER $2,000.00
$2,000.00
$1000.00 for free trade promo
$2.00/PAPER STATEMENT, if account under $10,000.00
$250,000.00
YES
Interactive Brokers
$.005/SHARE + Exchange Fees
$.15-$.70/contract + exchange fees
$10.00/month, if less than $30.00 in commissions spent
$10,000.00
$10,000.00
PAPERLESS
$30 Million
NO
ScottTrade
$7.00
$1.25
$0.00
$0.00
$0.00
$2.00/PAPER STATEMENT
$25 Million/$1 Million Cash
?
TradeKing
$4.95
$4.95/Trade +$.65/Contract
$0.00
$0.00
$0.00
PAPERLESS
$25 Million/$900K Cash
YES
Zecco
$4.50
$4.50/Trade +$.50/Contract
$0.00
$0.00
$0.00
$2.00/PAPER STATEMENT & $1.50/Trade Confirm
$500,000/$100,000 Cash
YES
Schwab
$8.95-$12.95
$8.95 + $.75/Contract
$0.00
$0.00
$1,000.00
BOTH
$500,000-$150 Million/Cash $1 Million
YES
Sharebuilder-Basic Subscription Plan
$4.00
$9.95 + $1.50/Contract + $20.00 per assignment/early exercise
$0.00
$0.00
$0.00
PAPERLESS
$500,000/$100,000 Cash
YES
These brokers also run promos, where they'll give x amount of free trades for signing up. Most of these brokers also have a combo banking feature with checking available.

Stock Analysis: Different Strokes...

There are also many sources for stock investing advice, from straightforward stock analysis to complex trading systems. There are 2 basic schools of stock analysis: Fundamental and Technical.

Fundamental Analysis: Involves analyzing a company's financial statements and health, its management and competitive advantages, and its competitors and markets. Fundamental analysts seek to arrive at a stock's intrinsic value, thereby enabling them to make a price forecast for the stock. They compare this forecast to the stock's current price, to determine if the stock is under- or over-valued. When they find an undervalued stock, they tend to buy and hold it until it hits their price forecast.

Technical Analysis: Maintains that the stock price already reflects all relevant information, and doesn't care about the valuation of a company and its stock. Stock and market price trends and sentiment changes predate and predict longer-range trend changes. Investors' emotional responses to price movements lead to recognizable price chart patterns, such as "head and shoulders" and "cup and handle", which a technical stock trader will use to predict the stock's future movement. Technical price predictions are merely extrapolations from historical price patterns.

Many investors use both methods for picking stocks. Many fundamental investors use technicals for deciding entry and exit points, i.e., they look at a stock's chart before buying. Many technical investors also use fundamentals to focus only upon the price movements of financially sound companies.

There are other variations of these 2 schools of thought, including:

  • Momentum stock trader -Trades stocks that move in one clear direction, in heavy volume, getting in and out of positions very quickly. This type of investing is very labor intensive.
  • Swing stock trader - They focus on stocks that lack volatility, and swing back and forth within a narrow range, trying to buy a stock when it dips in price, and selling it when it spikes to the upper part of the band. Swing traders often use "Bollinger Bands" to determine a stock's probable future price range.
  • Algorythmic stock trader - A computer program that automatically generates orders when some pre-set parameters are met, with the intent to perform better than a specific benchmark. Algorithmic stock traders need real-time market data, and super-fast broadband access to markets. They build their own trading model adapted to their strategies or use a third-party provider to build it for them. The software picks up the market signal provided by real-time market data and spits out buy or sell orders, according to the pre-programmed algorithm.


Value Stocks vs. Growth Stocks & Trading Tools

As with stock analysis, stocks themselves also come in 2 basic flavors: Value stocks and Growth stocks.

Value stock investors normally rely on fundamental analysis to find stocks that they feel are historically and/or intrinsically undervalued. They can use many different metrics, including Price/Earnings (P/E), Price/Book (P/B), Price/Cash Flow (P/CF) or Price/Free Cash Flow (P/FCF). Warren Buffet is the most famous value investor, and actually studied under Benjamin Graham, one the founders of this style of investing.

Investors who favor growth stocks, such as Investor's business Daily founder William O'Neill, favor stocks that have shown high growth (e.g. in earnings) in the past and, it is hoped, will continue to grow, leading to good investor returns. Analysts compute ROE by taking the company's net income and dividing it by the company's equity. To be classified as a growth stock, analysts expect to see at least 15 percent return on equity.

Which style is better? It depends upon which time period you study. Here's a Wikipedia historic performance breakdown for Growth vs. Value Stocks for 1982-2007:

Since 1982, the growth stocks have beaten value stocks during:

  • 1982
  • 1985
  • 1987
  • 1989-91
  • 1995-99 (the dot.com era)
  • 2007

During the rest of the years, value stocks have done better. Note that the 5 years preceding the dot-com bubble burst, growth stocks did better than value, and that value stocks have generally done better after the dot.com bubble burst.

Some advisors advise investing half the portfolio using the value approach and the other half using the growth approach.

Personally, I've found it easier to profit from a value stock approach, than with the growth stock approach, but there are plenty of successful investors who trade stocks using the growth approach.

If you do use the value approach, here's a tip that can save you some money: Try to buy when the market and/or your stock is down. This is similar to buying something on sale, when it's marked down, as opposed to buying it when it's at the top price. Although you can never predict the bottom, you'll save yourself the agony of buying a stock just before it peaks in price. Iconic value investor Warren Buffet summed up this approach best: "Be greedy when others are fearful, and fearful when others are greedy".

Many investors will tell you how tough it is to do that. I specifically recall early October 10, 2008, a few weeks after the Lehmann Bros. collapse, when the market was literally falling apart, due to hedge funds having to dump shares indiscriminately to raise cash. That day was one of the best days ever for buying stocks, as the prices of most companies were severely depressed. It happened again in late November, 2008, and again in early March, 2009.

For investors still standing and trading stocks, these 3 periods were perhaps the buying opportunities of a lifetime. Take a look at the chart of the S&P 500: you'll see 3 big dips, with the biggest one coming around March 9th, 2009. Compare that to the chart of Intel, which also hit historic lows in during these periods, falling to $11.86 in March. Intel closed recently at $18.81, almost 59% higher than its March price. This is what value investing is all about - buying cheap, undervalued stocks, and holding onto them until they've reached their price targets.

That being said, it pays to watch the overall trend of the market. If it looks like the whole market is headed down, you want to be cautious, and not jump in all at once. Many investors use "Dollar cost averaging" for this reason, as it allows them to smooth out their returns. I've listed below some reliable research tools that you can use to gauge which way the market is headed. Just keep in mind, this is a subject that's endlessly debated day in, day out, by investors the world over.

Volume is another important factor to watch when analyzing when to buy a stock. If the stock has been either rising or falling, but with low volume, its movement is said to "lack conviction". A rise on small volume may just be relatively few investors chasing the stock, or, conversely, a dip in price on low volume could be a buying opportunity.

Market Breadth measures how widespread the overall market's price movements are. The main metrics for breadth are advancers vs. decliners, and buying power vs. selling power, and the related up volume vs. down volume.

Advancers vs. Decliners: This is listed every day on various finance sites, such as Yahoo. It states the number of advancing stocks, declining stocks, and unchanged stocks, and gives you an insight into how widespread the market's direction was that day. Days where advancing issues outnumber declining ones by 9 to 1 are said to be a confirmation of an ongoing rally, whereas, when decliners outnumber advancers by 9 to 1, it's said to be a "distribution" day, which will often cause investors to question the strength of a rally, and perhaps to think that a longer downturn is forming.

Up Volume vs. Down Volume: A measure of the dollar volume for stocks that advanced, (up volume), and those that declined, (down volume). This can give you some insight into the relative price level of the types of stocks that might be leading a rally. For example, in certain weeks during the current mid-2009 rally, advancing stocks outnumbered decliners, but down volume was bigger than up volume. Why? Because cheap, beaten down stocks were leading this rally at that time.

The related "Buying Power" vs. "Selling Pressure" is tabulated by Lowry's Research, who maintain an index for this metric, which basically shows how the bulls and bears are doing, i.e., is there more bullish buying power, or more bearish selling pressure.

Moving Averages: Technical traders relying on a stock's price chart movements to predict future movements, pay close attention to a stock's 10-day, 50-day, 200-day averages, among others. A moving average below a stock's current price is called a "support level", and a moving average above a stock's current price is called a "line of resistance". Technical traders feel it's very important when a stock either breaks through resistance, or falls through support.

MACD (Moving Averages Convergence/Divergence): This is used by chartists to help determine if a stock is "overbought" or "oversold". It charts various 3 moving average time periods, and shows their convergence or divergence as a line which moves upward or downward across a "signal" line. A move upward across the line signals a buy, and a move downward through it signals a sell.

When the shorter moving average pulls away from the longer one, it signals an "overbought" condition, (and vice versa), evidenced by the moving line being at either the top or bottom of the chart.

There are many other technical measurements that investors use to predict future price movements. Among these are Relative Strength, PSAR (Parabolic Stop & Reverse), Williams % R, the Chaikin Oscillator, and many more. The idea here is to find a combination of complementary indicators that help illuminate the market for you. It's very easy to get overwhelmed by too much data, which can give you contradictory signals.

S & P 500 and Intel Charts - 2008-2009 Bottoms

Large & Small Cap Stocks - Style & Size

Size does matter... when it comes to stocks.

  • Large cap stocks: market capitalizations over $1 billion
  • Small cap stocks: market capitalizations under $1 billion

Institutional investors, such as mutual fund managers, often have specific rules that they must follow in regards to the size of the companies that they invest in. This is one reason why some investors spend their time ferreting out very small companies, known as micro caps, because they feel that, since the bug money managers can't invest in them, these overlooked companies may represent a valuation opportunity.

Many financial advisors will tweak their clients' portfolios periodically, adjusting the mix of small and large caps, to reflect where they think the market is going. In general, small caps are often the first leaders in new bull markets and rallies, and "small cap value has markedly outperformed growth in the early periods of economic expansion," according to Russell Investments.

A look at the current 2009 rally would tend to confirm this: the Russell Small Cap index has outpaced the Dow, NASDAQ, and S&P 500, rising over 66% since the start of the March 9th rally.

How To Invest In Stocks By Industry Sector and Economic Cycle

Any discussion of how to invest in stocks inevitably must include a discussion of industry sectors. This is a metric that investment professionals follow closely. Why? Because of "sector rotation".

Just as small cap stocks sometimes outperform large cap stocks, and value stocks sometimes outperform growth stocks, and vice versa, certain industry sectors fall in and out of favor, shifting with investors' perceptions of each sectors' growth opportunities in relation to the general economy.

Here's a current breakdown of the 9 major industry sectors and how they've fared year-to-date in 2009:

Basic Materials/Energy: + 26.5%

 

Technology: + 24.7%

Financial: + 20.3%

Consumer Goods: + 19.0%

Services: + 16.9%

Industrial Goods: + 14.7%

Healthcare: + 8.0%

Utilities: + 7.8%

Conglomerates: + 3.6%

As you can see, Healthcare, Utilities,and Conglomerates haven't appreciated nearly as much as the other sectors, which is why value investors are probably looking real hard for bargains in these sectors currently.

Healthcare is a good example of a promising sector that's currently depressed because of uncertainty, i.e., the U.S. government's current struggle with health care reform. If there's one thing the market hates, it's uncertainty.

Each of these sectors has its own broad investing characteristics that you should become aware of. For example, Utilities are used by many income investors almost as a bond, since most utility stocks pay steady dividends, and aren't very volatile, whereas Tech stocks don't pay dividends as frequently, (although this is changing), and are often more volatile. In addition, the Tech sector is known for having many high growth stocks.

Basic Materials and Energy stocks can often be fertile ground for finding high dividends, as this sector has many MLP's in it.

Financial stocks were also great dividend payers, before the credit crisis, after which, many were forced to cut their dividends.

The Consumer Goods sector has 2 main sub-sectors: Consumer Staples stocks, such as Procter & Gamble, (PG), and Consumer Discretionary stocks, such as Jones NY, (JNY).

Consumer Staples stocks are often used by investors as bastions of safety in market downturns, since they sell basic items that consumers will use in any economy.Conversely, Consumer Discretionary stocks usually suffer in economic downturns, since their products aren't considered necessities.

Stocks are also classifed broadly as being "Cyclical" and "Non-Cyclical". Companies that are highly sensitive to the economy are said to be cyclical stocks. Chemical companies, such as Dow and DuPont, auto companies, paper companies, and steel companies are all examples of cyclical stocks.

This is why these stocks' prices often decline when investors feel that bad times are ahead, and then rebound ahead of non-cyclical stocks, as the market anticipates an economic recovery, as it has been doing recently in 2009. It's said that the market is generally a leading indicator, rebounding in advance of most economic recoveries.

Diversification and Portfolio Management

Diversification and portfolio management are key to long-term investing success. This can be challenging for beginning investors, since it requires more capital to buy shares of many different companies. This is one of the main reasons that mutual funds and ETF's have become so popular. We discuss these 2 investment vehicles later in this article.

Boiled down to its simplest theme, diversification theory holds that rational investors will only take on more risk if promised a higher return. Normally, a "risk-free" asset, such as US T-bills is used as a baseline to compare investments to.

Investors can reduce their risk by holding combinations of assets/financial instruments that aren't exactly correlated to each other. In other words, assets that tend to move in opposite directions.

Stocks and Bonds are 2 examples of this - bonds often tend to move lower when stocks go up, and vice versa. If the stock market has a large decline, many investors will flock to the bond market, in what's called a "flight to safety". This will cause bond prices to rise, which, in turn, causes bond yields to sink. (As a stock or any asset's price moves higher, its yield moves lower.)

Many advisors will tweak their clients' "asset allocation" as economic and market conditions change, in order to either generate higher returns, or reduce risk, or both. If they expect turbulent times ahead, advisors will often re-allocate into more cash, by selling off some of the more risky assets.

You can diversify your portfolio in many ways - via holding different sectors, a mix of large and small caps, cyclical and non-cyclical stocks, value stocks and growth stocks, fixed income and stocks, and foreign stocks mixed with U.S. stocks, just to mention a few possibilities.

There's some debate about how many stocks an investor should hold to achieve diversification. Some pros advise holding around 40, while others say only 15-20. One rule of thumb that's always helped me has been to avoid holding more than around 3% of my entire portfolio in any one stock. That way I can avoid a catastrophic loss of capital if one stock goes bad.

The tricky thing about maintaining portfolio diversification is that stock values are always changing, which makes the % mix of your portfolio change. Many investors will check their % mix every quarter, others do it more frequently, such as monthly.

With diversification, you may not hit as many home runs, but you'll at least get to play the game another day, if you strike out. This is the "all your eggs in one basket" adage put into dollars and cents.

Mutual Funds & ETF's

A mutual fund is a pool of funds collected from many investors, which is then used to invest in a specific type of asset or assets.  The main selling point for mutual funds is that small investors get the advantage of diversification, and professional management.

Investors can buy or sell a mutual fund's "units", (shares), which typically trade near their "net asset value", (NAV), per share.  Unlike stocks, you can't jump in and out of mutual funds throughout the trading day, as orders are generally executed after market close.

No-Load mutual funds don't charge you a transaction fee when you invest, which means that you get the advantage of all your money working for you

Load mutual funds charge an upfront fee, which is used to compensate a sales broker, etc., for picking out the fund for you.  However, research shows that load funds don't outperform no-load funds.

Mutual funds come in a myriad of varieties, since they attempt to reflect the vast array of investment possibilities in the stock and bond markets.  Their are mutual funds to reflect all of the factors we've discussed in this article - growth, value, sector, stock, bond, large cap, small cap, countries, regions, and many more.   

Morningstar is a mutual fund rating service that has been helpful to small investors, by maintaining performance ratings on the various funds.  They run a free rating service on their website, which also includes many other features.

One caveat about mutual funds: Always check out their holdings, particularly the % of whatever style/sector/size of stocks or bonds that that the fund's name projects.  Unfortunately, many mutual funds purport to be invested in a certain type of stock, but, when you look at their actual holdings, they may only be holding a small % of that type of stock.  Don't get fooled by marketing!

ETF's: ETF's are a relatively new investment vehicle, which has exploded in the past 5 years, and has siphoned off some of the money formerly invested in mutual funds.  One of the big reasons for their popularity is that, unlike mutual funds, you can trade ETF's just like stocks, when and as often as you like.

ETF's are supposed to be more transparent than mutual funds, particularly ETF's which are sold to investors as representing an index, or a commodity, or a country, etc.  However, due to SEC loopholes, this is increasingly not the case, and even professional investors my colleagues have spoken to have found it impossible to decipher how some ETF's actually work!

In particular, beware of the "inverse" ETF's, usually known as "Short", or "UltraShort" ETF's.  While these are supposed to move in the opposite direction to their target index, research has shown that they often don't.  This type of ETF requires constant monitoring, and you may find, like I have, that it's very hard to make money with them.

The other problem with certain commodity ETF's is that, due to their basic setup, they can add to market volatility, while not not truly reflecting their target, such as the USO "Oil" ETF, which most investors think tracks the price of crude oil.  It doesn't do this at all.  It merely invests in near-month crude oil futures, which can result in very poor correlation: West Texas Crude oil was up 50% into June, 2009, but the USO only rose 16.5%! 

An easier way to invest in crude oil, for example, would be to either buy shares of a leading oil stock, or invest in an ETF that truly does so.  Other commodity ETF's, such as the ETF, GLD, invest directly in the underlying commodity, and give investors a much better correlation.

Morningstar also covers ETF's.  In addition, you can research I-Shares, one of the leading groups of ETF's has its own website, where you can research performance, holdings, and read prospectuses for each ETF.

Looking For The Best Stock? - Dividends Matter

Any quest for finding the best stock will lead you to dividend paying stocks, because dividends are vital to long-term investing success. A study has shown that from 1926 - 2004: Dividends accounted for 35% of shareholder returns. However, when you add in the effect of compounding, dividends returned over 25 times more than price appreciation.

This isn't to say that you can't make money investing in stocks that don't pay a dividend.  Many investors have made money investing in tech companies that don't pay dividends, such Apple, or Cisco.  However, it's been statistically proven that dividends are a major long term factor in accumulating wealth via investing, and I feel that dividend stocks should play a part in any well-balanced portfolio.  In fact, even many tech firms have begun paying dividends, as they realized that dividend income will become increasingly important to the aging baby boomer generation. 

Their are many places to find good dividend paying stocks, some of which you can find in my High Dividend Stocks page.  in addition, this page will show you how to research these stocks, and what to look for.

Standard & Poors maintains a list of elite stocks which have increased their dividends every year for at least 25 years.  My hub page The Dividend Aristocrats, has the current list of them, with their dividend yields, and industry sectors.


 

Advice On Finding The Best Stocks To Buy - Advisors, Newsletters, Blogs, and More

When it comes to finding the best stocks to buy, there are a vast array of professionals and passionate investors on the web today, just aching to show you their approach. Here's a few tips about the investment advice field:

Investment Advisors: They typically charge 2% of your portfolio's value annually, whether it goes up or down. Believe me, many advisors got canned in 2008 and early 2009, after their clients got tired of paying 2%, on top of all of their other losses!

Newsletters: There are many newsletters out there, including my own, which is listed in the links below. Most newsletters will focus on a specific type of investing, such as dividend investing or, perhaps, a region. The fees for newsletters can vary widely, as do their results.

Investor Clubs: There are also investor clubs, and organizations, which pool their knowledge, in a "group think" approach, as members come up with investing ideas.

Investor blogs: The web has seen a huge surge in investor blogs over the past 3 years. Some, such as SeekingAlpha, where I'm an author, are collective forums which allow investors to share comments on author articles, while others are run by an individual.

Most investment newspapers and magazines have websites these days, where you can subscribe to get up-to-the-minute newsfeeds and articles. Barron's, Kiplingers, the Wall St. Journal, Smart Money, and Forbes are just a few of these sites.

Free Research Sites: Yahoo Finance and Google Finance are free sites where you can see current stock and option quotes, stock news, analysts' ratings/estimates, financial data, and key statistics about a stock. Clearstation is a good site for comparing a stock to its industry - they have a pull-down with "key ratios" that you can use.

Company Websites: Often the best place to begin researching a stock is the company's website. If you have trouble finding this, just go to Yahoo Finance, click "Profile", under "Company", and you'll see a synopsis about the company, plus a url to its website. Click on the url, and then look for "Investor Relations". Most firms have this feature on the web now.

Investing Glossaries: Many investing websites have an investing glossary where you can research investing terminology.

Comments 1 comment

yamanote profile image

yamanote 7 years ago from UK/Spain

personally I think ETF index fund are the way to go for the individual investor, or a no-load mutual fund, as long as the fees are thin

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