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Chapter 1: How to Make Money Trading Stocks
If you have read one of my previous hubs, you will know that I am a new stock investor. I have to say that by some miracle I actually have managed to avoid many pitfalls that some new inexperienced stock investors fall into.
I do not know if it is my luck or intelligence, however, I have decided to actually do my research before investing in any stock. I am currently long BRCM. If any of you have read the recent news, this stock is currently down in the toilet and the stock price is trading below its 52 week low point at approximately $24 per share.
Now I know this recent sell off is enough to make any newbie run for the hills. However, having done a fair share of research about how the stock market works, I have decided to stick it out and be patient. I am in this for the long term. BRCM is a fortune 500 company that is just having some bad months. I do not think that the share price will stay this low for a long time. Once the new I- phone comes out I definitely think that the microchips business will pick up. In any event, something has to give. The share price is just way too low.
At this point BRCM is a sell according to Zacks.com. This is a fairly reliable investment analysis website that I like to use just to gage where the stock is in its low to high cycle. Now according to Zacks, Broadcom is a sell. However, the one thing that I have learned while testing the different trading advise from a variety of firms over the years is that whenever you are dealing with a good company that happens to be currently in the toilet you should actually do the opposite of the investment advice given and stay in the trade until the price goes up. If you sell at this low price you will just end up losing money.
Somehow, I get the feeling that all of these investment analysts are in on this. I think they are all recommending to buy stocks at their highest points and to sell them when they go down. As an intelligent investor I believe you should be doing just the opposite. I get the feeling that these folks are being paid by these companies to give false information and to mislead the general public. This way the company can make money off of the shares. I mean they sold the shares to us at a high price and than bough them back at a low price. So where did the money go? I know! It went right into the fat pockets of the company that sold us these shares to begin with!