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TOP 5 Reasons To Invest In Penny Stocks

Penny stocks have been around since the beginning of the securities markets. They offer the best opportunity for the little guy to trade stocks and see massive gains in a market that isn’t controlled or manipulated by big hedge funds, large cap executive insider trading and mass media overhyping of stock. Today’s large cap stocks are seeing, in my opinion, dangerous speculative levels of 30x P/E ratios because of overhyping.  Go back and look at those ratio’s before September 2008.

That is not to say that penny stocks are without risk. All investments contain an element of risk. With the proper education that risk can be minimized compared to the crazy return penny stocks are known to payout.

It is much harder, as you know to bring a stock’s price from $100 to $200 giving it a 100% gain that it is bringing a stock price from $0.10 to $0.20 giving the same 100% gain! Even the lunch lady can figure that much out.


At we feel that the top 5 reasons to invest in penny stocks are:

Warren Buffet didn’t make billions investing in overpriced stock. His investing strategy has long been hailed as having the soundest investing concept. Not to be confused with trading, the buy low and hold approach is by far the most lucrative investing strategy. In today’s roaring stock market it is very difficult to find underpriced over even fair priced stock! The OTC Markets offer an ocean of companies who will become the next IBM(IBM), Google(GOOG), APPLE(APPL) Tesla (TSLA).
A balanced portfolio should always contain a swing stock. Any financial advisor will tell you the old adage don’t put all your eggs in the same basket. In our ever evolving economy you have a plethora of options to diversify your investment portfolio. Penny stocks offer you the potential to make double digit return’s year over year with minimal risk within a balanced portfolio of large cap stocks and treasury bonds
Monster Energy is just one example of a well-known stock with a globally recognized brand that has become a huge momentum stock. From its low of $.069 on Dec. 29, 1995, $1000 in Monster Energy would now be worth $101 000. Which means a gutsy investment of $10 000 would of made you a millionaire without lifting a finger! Of course this was couple with a the explosion of the energy drink sector and the OTC markets and penny stocks trade in all the future sectors such as 3D printing, Cannabis, Robotics, Environmental and Energy.
Triple Digit Gains are witnessed every day by stock traders in the OTC Markets. Throughout every sector that is exploding there a pure momentum plays to be made on a daily basis. It is not unheard of to see 15-20 stocks surge on double, triple even tenfold gains. This makes it easy to grow your investment portfolio and become a full time trader from the comfort of your home or office with little effort. Just open a trading account and get going!
Fast Profits! It’s what we all really want isn’t it? I mean we all want to pay off our mortgage faster, buy that new car we are dreaming of, maybe a new BBQ and a pool to go with it? The only way to make fast money trading is with penny stocks. No other market, no one on Wall Street can make you the kind of triple digit returns penny stocks on the OTCMarkets can make you. So go out there and trade some penny stocks and buy that new toy, pay off those student loans and get your life started!

Be sure you follow the proper informative sources, because as I mentioned before there are many, many wild gains to be made buying penny stocks in the OTC Markets and you need to make sure you stay ahead of the curve. The sooner you know, the quicker you buy the more you will gain.

Trade hard, play hard,

The 8 Most Important Penny Stock Tips to Remember

Looking to get into the penny stock market and want the best penny stock tips for success?  You’re in the right place.    Investing in penny stocks can be very lucrative if you know what you’re doing.  You can skip right to our best resource for penny stock investing here.

Penny stocks operate a little differently than common stocks.  People mistakenly think that due to their low entry price, penny stocks are the easiest stocks to invest in.  While it’s true you can play this market with a small amount of cash, these stocks are pretty risky if you don’t know what you’re doing.   That’s why you need  guidelines and you need to stick to them.  Read through these important penny stock tips to know what to do.

Got a hot tip?  Know where it came from.

Penny stocks are regulated by the SEC, but due to the nature of trading these stocks, the market is ripe for penny stock scams.  Be on the lookout for people who’s only interest is to take your money and run. Sometimes, but not always, free information is the most suspicious. This can be in the form of a free newsletter, chat room or forum.  The information is designed to grab your attention and get you to take action.   Good scammers are great marketers.

So before making any purchases, make sure the source of your tip is solid and legitimate.  Don’t fall for the once in a lifetime get rich quick hype.  This is the first filter that anyone looking to earn money from penny stocks should have.


High volumes generally equal higher quality.

As a general rule, avoid thinly traded stocks, no matter how tempting the entry price might be.  If the volumes aren’t there, it’s usually an indication that something’s fishy.  Sure, the asking price might be really tempting, but if you can’t unload the stock, that great deal just turned into a dead fish.  Stick to stocks that are trading in higher volumes.

Think short term.

Penny stocks are different than traditional Wall Street stocks in terms of how long you hold on to them.  They are considered short term investments. As these stocks are generally more volatile, you can expect them to bounce around a lot more than traditional stocks. But the bouncing is what generates the profit.

The best strategy for penny stock investing is to get in and out quickly.  Once your stock hits a predicted, or desired price, sell it quickly, because chances are it won’t go up significantly more, and it could go down.  For penny stock recommendations, you will realize that making quick money is always the goal. Penny stocks are not a good investment strategy to fund your far off retirement, so don’t think long term.

What’s the hidden agenda?

Unfortunately, penny stock scams are easier today than ever before with internet.  Information can be manipulated to make a bad deal look good.  Protect yourself and your investments.  If you are seeking the advice of experts (which I recommend) ask yourself, what does this person (business, newsletter, program) have to gain if I make this purchase?  Sometimes, (not always), so called “experts” and “gurus” have a secret, hidden agenda.  Some are actually paid by the companies they are promoting.  That smacks of conflict of interest to me, yet incredibly, it’s not illegal.  So research any program or newsletter you buy to make sure the stocks are properly vetted, and the advisor has no ulterior motives.

Leave your ego at the door.

OK, just know that you will take a lot of losses investing in penny stocks.  The goal is to have more gains than losses, and steadily build your wealth.  You will be able to achieve that if you follow your plan.  So if you think you’re about to take a hit, don’t try to act with bravado, hanging onto the stock in an effort to ‘stave’ the storm and fight it off.  It’s not going to end well for you.

In fact, the best penny stock advice in this situation is to sell the stocks immediately.  Take the hit and move on.  If you are following your plan, you should overall still be profitable.

Limit orders limit your losses.

Market orders are not a good idea with penny stocks because they are already priced so low. If you end up doing a market order, you might end up paying a higher price for the stocks.   Realize that a stock that you buy with a market order for $2.20 is 10% higher than if you put a limit order in for $2.00.  That’s ten percent in profits.   Pennies really make a difference.

So in order to mitigate this potential loss of profits, just keep calm and put in a limit order.  Set the price you are willing to pay and see what happens.  If the stock doesn’t hit your limit, forget it and move on.   In case you didn’t get it the first few times I said it, make a plan and stick to it.

Above all else, remain calm.

Penny stock investing is not for the faint of heart and it’s not for the easily excitable.  It’s a mind game as much as a market game.

Those who stay calm are the best investors because they don’t act out of emotion, or react to market ups and downs.  Penny stocks are volatile, as we said earlier, but you have to establish a plan and then stick to it to have more wins than losses.  The only way to mitigate the losses is to have a cool, unemotional, detached attitude to the trading.

What’s the plan, man?

OK, so I mentioned several times that you have to have a plan and stick to it.  But how do you do that?  Well, you have to get educated.  You have to learn how to identify an undervalued stock from a sinking ship.  You have to understand how to research companies, and understand how the stock market works.  You have to know how to get in and out at the right times.  In other words, you have to know a bucket load of stuff.

Doesn’t sound too fun, does it.  That’s why there are lots of resources out there to help you. But how do you pick a resource, especially since some have this conflict of interest?  Not to worry.   I’ve looked at the top penny stock newsletters and programs and I’ve reviewed them and provided my penny stock program recommendation.  Happy investing.

Penny Stock Guide

When trading penny stocks, you need to be extremely cautious. You must know the market and be able to guess when a stock price would go up and down. You must know what a pump is and must always be watching the market. Penny stock trading is not like trading normal stocks. It is a lot more time consuming and intense. People say that you cannot make money trading penny stocks, but that is not true. It just takes a lot more work and knowledge. You will learn here about how to make the right decisions when trading penny stocks and stand out above the rest of the traders. It will require a lot of hard work and dedication so do not take this lightly.

You also need to have at least a decent knowledge about how the market works. In penny stocks, the market is very different from the usual stock market. There are many pump and dump schemes out there. This is either something that you can decide to worry about, or something that you can learn to take advantage of. When you see announcements out there in emails or advertisements that say a certain stock is going to hit it big, you may just look away and think nothing of it. You may even tell yourself that it is just a big scam. Well in a way it is, but it can also be something that you can profit off of. When you see these messages of a stock being pumped or advertised, the company that is advertising it may have already bought a lot of shares and the price of the stock may have already increased. When this happens, it may be best to lay low, but if you are the first one to hear about this, you now have an edge.


The trick is to find penny stocks that may be pumped in the near future. Stock promoters can bring any penny stock’s price way up if they so much as send out an email. If you find out what will be pumped before the email comes out, then you will be able to buy before the pump. This requires a lot of research and could take a long time, but the payout is huge. You will need to mainly look for any hint of big news. If you can find out that a company is going to release some big news soon and the stock price has not yet gone up, then that stock may be pumped.

This is not a flawless tactic and you may end up buying a stock that is worthless and will not be pumped so you should only try this with any expendable income and you must also know exactly what you are doing. For people that are just starting out with penny stocks, day trading may be your best option. People love making quick cash by day trading and it may be slow with the normal market, but with penny stocks, everything is fast paced. A trick to this is to find a stock that is just beginning to become pumped up. You need to buy that stock and sell it within minutes for a slightly higher price to make money. This is the most common and quickest method. The only problem with this is that you need to watch out that the stock isn’t at its peak; otherwise you may end up with nothing.

Volume is one thing that you need to pay very close attention to with penny stocks. A stock with low volume may be impossible to sell. Even if the price of a penny stock goes up a hundred percent, you will not be able to sell it off if it does not have good volume. The volume of a stock is usually shown as how many shares have been traded that day. A number over a million is usually a good sign, but watch the stock price as well. A volume of a million is not much if the shares cost a thousandth of a penny each. Volume is very important and you should always look at a stocks average volume before trading it.

When dealing with penny stocks, you need to look out for news. News and the anticipation of news, are the biggest price movers. A lot of “pinksheets” do not have to file a lot of paperwork like normal stocks do and it may be hard to tell where the company is a lot of the time. This is why when a penny stock releases news it immediately becomes a huge deal. Good news followed by a good pump, may shoot a stock price high into the air. When the stock price goes up, then it is a good time to sell. Penny stocks usually shoot up and go back down in a short amount of time so it is a bad idea to wait for too long. Find the peak, and sell as soon as possible.

Stock trading is risky business, especially penny stock trading. The more of a risk something is, the higher the reward. You need to only invest money into penny stocks that you know you can afford to lose. Do not invest your life savings or some obscene amount of cash. When you first start out, start small. Once you start to get the hang of investing in penny stocks, you may feel safe to invest a little more. Only then is it a good idea to do so. Penny stock trading can be extremely rewarding, but there is a lot to learn out there and it is vital that you learn from both your mistakes, and the mistakes of others. The market has no sympathy for those that lose money and you will not get any breaks. Make sure that you know what you are doing and do not blatantly buy a stock just because somebody tells you that it is the next big thing.

How To Trade Penny Stocks Using The Percentages

How To Trade Penny Stocks Using The Percentages

Although we offer trading course products such as the Paradigm Shift Trading System one of the main purposes of this website is to teach you how to successfully trade penny stocks. Our flagship product is called the Penny Stock Prophet. It is an advisory service that, based upon a study that I completed recently, actually has an 82.4% success rate across a 5-month period. That means that 82.4% of the trades were successful at the highest price, usually the first day, during the 3-day period that each recommendation was followed.

Penny And A Graph How To Trade Penny Stocks Using The Percentages

Making Money With Penny Stocks

While James Connelly, a.k.a. The Penny Stock Prophet, knows how to pick them, many beginners don’t know how to actually make money with his picks.  Because of that, they may be missing the profit opportunity of a lifetime.

Unfortunately, many beginners make all the beginner mistakes… They will “get in” too late and get out too early or wait way too long to sell and end up taking a loss.  It doesn’t have to be that way!

I’m going to lay out some rules that might be able to help you actually avoid some of the major pitfalls that beginners run into when trading penny stocks.


Please note that for all examples on this site, we neglect commissions.  This is because commissions are so variable that it is impossible to give you an accurate analysis of any trade if we include commissions.  Feel free to modify our numbers based upon the commissions that you actually pay.

The Percentages

It doesn’t matter how good your stock picking is, you are still going to take some losses.  The trick to making money in spite of the losses is to always have enough winners to offset all of the losses and still leave you with an acceptable profit.

Let’s say that I have $1,000 that I’m using to trade with and I have a reasonable expectation of making 20% each time I execute a successful trade (this is reasonable expectation, by the way, using the Penny Stock Prophet Advisory Service.  We actually did a study across 5 months of recommendations; see the article at “Does Penny Stock Prophet Make Members Money?”).  That means that for each successful trade I will make $200.

That’s nice, but what about losses?  If you look the numbers in the article I mentioned in the previous paragraph you will notice that 82.4% of the trades were in positive territory at the high on the first day of trading.  Unfortunately, there is no way that you can predict which of the stocks will not be profitable but you can be observant and manage your risk.

Risk Management Rules

I’m going to share some of my rules that I have learned through around 40 years of trading stocks and options.  If you use what I talk about and you take a loss, it is your responsibility, not mine.

Here are some rules that I think will help if you execute them as I intend for you to do…

  • Never buy if the recommended penny stock isn’t moving up on the open. You may miss a point or two of profit by delaying a minute or two to buy.  But, that may save you from a 10% or 15% loss or worse.
  • Have a preselected stop loss point.  I would actually put the stop loss order in… especially if you can’t sit and watch it. Penny stocks tend to move fast so make sure you make your stops tight enough (like 1% or 2%) so that you will get stopped out before it begins to accelerate to the down side.  I’ve gotten “trapped” in more positions than I care to admit to by not obeying this rule.
  •  Have a preselected sell point.  This should be a percentage.  For instance if you pay 10 cents per share a 20% sell point will be at 12 cents per share. If you have the luxury of being able to watch the stock move, you may want to let it go past that point for an even bigger profit.
  • If the stock reverses its price action (in other words suddenly begins to go down) or stops moving up before you reach your preselected sell point immediately sell your position.

If you want to actually start a successful penny stock trading career, I think you should try Penny Stock Prophet.  The advisory service has a track record which is something that most of the people who whine about the Penny Stock Prophet probably don’t have. It’s not about what they think about the advisory service…

… It’s about how much you will make.  I did a study on Penny Stock Prophet’s actual results… It’s Fact…

… The Penny Stock Prophet is successfully picking the stocks that are about to move up and based upon my study of his actual results he does so over 82% of the time.  Give it a try.  If you don’t think that it’s worth a one-time payment of $97 USD after you’ve tried it for a month, tell Click Bank (they handle the money) and you’ll get your money back…usually within 24 – 48 hours.

How To Diversify Your Penny Stock Portfolio

If you’re interested in diversifying your investment portfolio, it’s a given that you’re going to look for investment opportunities that will serve to enhance value while offering the safety of a range of vehicles, such that your risk of losing wealth should any portion of your overall portfolio go south is mitigated. Penny stocks might have a lower share price than other types of equities, but that’s the only difference when the subject is diversification: if you’re interested in diversifying your penny stock portfolio, you’ll be performing exactly the same exercise as you would if diversifying a portfolio made up of any other kind of investment products. The key is to seek portfolio enhancements over a range of companies and industries, spreading out your chances of earning significant gains while simultaneously minimizing your risk of loss, regardless of whether you’re investing for the short term or the long term, or whether you’re investing for growth or for value.

One proven method of portfolio diversification is to specifically seek out penny stocks in different industry segments, with different trajectories, and to purposefully place varying percentages of your available funds into each. It’s a good rule of thumb to try to limit your investment into any one stock to a maximum amount equal to 10% of your portfolio (some experts would argue that the cap should be at 5%), so that your risk profile remains as diverse as possible. Correspondingly, the companies into whose stock you invest your funds should be equally varied. Begin by researching businesses in industries which you understand, of which you have special knowledge or expertise or, at the very least, which hold a special interest for you, because the knowledge you have of the particular industry segment will be of great assistance in helping you to identify value when you find it. Regardless of the industry in which you begin to search for picks suitable for diversifying your portfolio, you should pay heightened attention toward identifying unpopular stocks that reflect this good value: when a stock is under-appreciated, regardless of its market capitalization or of which exchange it trades on, there’s extra room for growth in both share price and volume and thus, increased chances of trading for gains. Investing in under-appreciated gems is a prudent strategy for portfolio growth which you can literally bank on.


For those retail penny stock investors who lack specific industry knowledge of any kind, and who choose not to diversify their portfolio by investing in a mutual fund or ETF specializing in penny stocks, a solid guideline would be to seek to identify a target stock in each of a minimum of five separate business segments, being sure that the segments on which you focus your attention neither overlap, nor are highly seasonal. If you can further sub-diversify by finding stocks that individually are associated with differing degrees of risk,  then you’ll be well-positioned to diversify your penny stock portfolio on more than one level; further, if these businesses play out in varying geographic regions, then you’ve added even another level of diversification.

Start by taking a closer look at penny stocks issued by companies which occupy space in growing sectors, such as technology, alternative energy and healthcare: such businesses suffer little to no seasonality and, depending on their specific niche within their category, shouldn’t be too dependent on any one particular customer or vendor for the on-going rolling out of their business strategy.  Other sectors to consider could be as varied as mining, transport/logistics and even entertainment. When diversification is the issue, the specific industry is less important than the overall mix of equities which you are bringing together in your one basket of investments.
You’ll have to roll up your sleeves and dig deep in order to sift through all of the noise and find the penny stock picks that will make the perfect additions to your portfolio. Focus on certain companies’ stock for value, and on others for growth (another level of diversification). You’ll have to read balance sheets and income statements, as well as a host of investor materials, in order to weed out the non-contenders in the industries which you’ve chosen. Then, once you’ve arrived at a shorter list of investment candidates, you’ll have to sharpen your focus to narrow things down to your optimal investment choice. Pay close attention to this methodology, because with the next industry you move on to, you’ll need to perform the same exercise again.

It’s of great importance to this process to ensure that your research and analytical skills are sharply honed. Take a very close look at your chosen picks’ stock history to make sure that you’ve gotten a meaningful feel for its normal rhythm and movements: without knowing what’s typical for the stock, there’s no way to recognize when the stock may be trending, or whether it even has prospects to do so. Plot the stock’s history over time on your charts (or access charts from your full service broker or an online finance site such as yahoo finance or free real time), and then plot its most recent movements, comparing the two; be sure to look for any recognizable patterns which may help you to evaluate the optimal time to buy in, or to classify the stock as a non-starter. Investigate market cap, volume, net asset value, P/E ratio and book value, and compare these to industry norms to see where the company is situated in the pack. If the trend for growth is evident and the stock appears to be undervalued, chances are good that you’ve found a keeper. To verify your hunch, then, spend just a little more time looking into company management to gauge whether they’re generally considered competent, and whether they’ve got the chops to lead the company over the threshold to the next level of success, and don’t forget to check with the SEC to read company filings, if any are available. If all looks good, place your order, and remember: while all forms of investing are associated with certain risks, the risks of penny stock trading are significantly lower than when trading in other types of equities simply because the costs of buying in are so much lower. Hold your position while continuing to monitor your shares closely: if your initial analysis proves correct and the shares move in the right direction, you then have the luxury of deciding whether to increase your holdings, or whether to simply bask in the satisfaction of knowing that you’ve added portfolio value and diversified at the same time. When you’re done patting yourself on the back for a job well done, get out there and do it again with another pick from another industry, reinvesting your gains to maximize portfolio growth. After all, isn’t that what it’s all about?

Four Stock Trading Tips That Can Make You Succeed

All traders can use sensible stock trading tips now and then. Those who are already expert traders can still use them as reminders when losses come marching in. Here are four pieces of advice you would do well to commit permanently to memory before executing trading systems.

#1- Loss is always a part of trades.

Clearly, stock trading is attractive to many individuals because there is a chance to gain a large amount of cash. Because of this main point of allure, people have left their jobs so they can concentrate on full time trading. Others still keep part time jobs but hope to soon quit working when trading profits start to improve. It is crucial for traders to know though that it isn’t always a bed of roses in the stock market. There will come a time when losses will come in. Even experts like Darvas and Dennis have had to bear losses at some point in their trading careers. One trading tip that you should therefore always remember is to recognize that loss is part of trading.

Stock Trade

#2- You can’t always blame chance.

A lot of people entertain the enduring belief that the stock market is all about chance or luck. This idea is what makes many individuals fearful of trading. They are afraid to invest because they think they can’t control how a trade will turn out no matter what they do or how extensively they analyze assets. It is of course true that the market can be highly unpredictable. You shouldn’t imagine though that there is nothing that you can control to increase your chances of achieving gains. Expert trade tips say that you can do nothing about unpredictable market movement but you can do something about making and following a trading plan. A system that gives policies on managing risk can cut down your losses.

#3- Hard work is part of the equation at all times.

There are some systems that let traders do very limited work. Sometimes, these plans just ask their users for a few data inputs and then let automated processes do the rest of the work. These are typically known as black box systems. Although some may have made profits with them, it is dangerous to believe that you don’t have to work hard to make a killing at the market. Reputable sources of stock trade tips will always tell you that you need to sweat it out to make a logical plan, test it and use it to make profits.

#4- You need to have realistic expectations.

The profit potential in stock trading is amazingly huge. You shouldn’t expect though to earn just as well as the experts do. Profits depend not on your decision to invest but on such factors as the size of your investment and the maximum losses that you are willing to incur among other things. In other words, the lower your risk level, the lower your profit potential. Take a good look at your risk levels to see what you can reasonable expect to earn.

These are essentially four basic trade tips. Surprisingly though, a lot of people neglect good trading advice when their thoughts of tremendous gains in stock trading get ahead of them. Follow these pieces of advice to limit your chances of meeting significant losses.

Buy and Hold Stocks for the Long-Term

It’s every investor’s favorite dream – buying into stocks and then relaxing as the stocks do what needs to be done without your losing precious sleep. Such stocks are fondly referred to as forever stocks, rightly conveying that you marry them, and the mutual love affair lasts your lifetime.

What makes these stocks tick is that their growth will be consistent throughout the year, year after year, and they will boost earnings without posing risks normally associated with lesser stocks. Far from being a daydream, such stocks do exist and they make you a decent pile of money.

Investors would do well to recollect the famous Oppenheimer survey that discovered that the S&P 500 had an unbroken run of success for two decades. This is not to imply that such stocks do not ever see declines, they do and when that happens you might just be tempted to let go of them to cover losses, but retaining these stocks would be the greater challenge presuming that your interests are spread out over the long term.

Banking Saving

The beauty of forever stocks is that they are tough and resilient and do a pretty good job of holding up even when the market is experiencing peak volatility.

Research the market (and the companies obviously) and carefully select the ten safest stocks that you would expect to record consistent growth through a decade or more of your life, and compare their past performance with the S&P 500. If your choice is correct you may notice that the listed stocks may have dropped appreciably lower than the S&P 500. That’s the sheer power of forever stocks.

The point is that the growth recorded by theses select stocks more than makes up for the losses that the market would otherwise force you to meekly accept. Just to cite one example, MasterCard experienced a spike in earnings in August this year that had share prices shooting by 13 percent, and that must have been cool comfort for happy investors when the Dow Jones Industrial Average crashed 500 points the following day.

If you thought that these spikes are dramatic you may have missed the growth spread over a longer period which is even more impressive registering 25-30 percent compared to nearly 10 percent of the S&P.

The forever stocks may sometimes flatter to deceive and seemingly reputed and hitherto financially sound companies have been known to bite the dust – Enron, WorldCom, General Motors – to name a few. In these instances forever got replaced by free-fall.

If you are wading in unfamiliar territory in identifying forever stocks, here’s the low down on zeroing in on them:

Such companies will be having a rock solid advantage over the competition in their sector or may even be a monopoly.

These companies will reward their investors with extremely generous dividends.

You will find these companies buying massive shares of their own, kind of like reinvesting in themselves.

Once you have such a company in your sight, you can rest assured that you will be well on course to making some serious money in the long term; your immediate priority would be to buy into these shares and to put them away for a couple of decades. Financially, your decision would be oozing with common sense because being strong companies you can expect them to take adequate care of your interests, and of course success breeds success over a longer time span.

To cite a valid example, there’s Philip Morris, the tobacco major with serious investments in at least fifteen global brands spread out over 180 nations. It might be awe-inspiring globally, but you won’t find a more shareholder centric company that has presided over dividend distribution exceeding 39 percent at the conclusion of 2014, and the company also repurchased shares exceeding 16 percent of its mammoth shareholding, thereby contributing to a quantum jump in 20 percent in its earnings per share.

As the wise investor may surmise, buying into this company assures a lock in of at least 4 percent, with further increases expected in the pipeline. As the company repurchases its shares more aggressively in the coming decade you can expect a healthy return on your investment. The product is also one which is high in demand which can be expected to increase its market penetration substantially in coming years. So the investor can visualize the kind of robustness and stability that ensures a good night’s sleep. This is not to imply that all forever stocks behave similarly, but the downturns will be rare and sporadic, not the norm.

The last word

If you invest in financially robust and strong companies you may have found the key to maintaining the stability of your amply diversified investment portfolio. These are companies that withstand global fluctuations easily and preserve their financial strengthen, and will even improve on their financial foundations as the years and decades roll by. In a vastly volatile stock market it would be a wise decision to track down and invest in companies that will not panic at the first sign of trouble. Our job is to create awareness in investors on what constitutes safe investment and identifying the investment that assures steady growth whatever the market risk, and forever stocks inspiringly lead the pack.

3 Investing Mistakes to Avoid

Everything Investments introduces readers to three common mistakes that Warren Buffet points out for investors to avoid. Those would be trying to time the market, trying to act like a high-frequency stock trader, and over spending on fees. The idea of building wealth through investing in stock is an idea that appeals to a lot of people. So lets explore these common mistakes of investment.

Mistake #1: Timing the Market

Warren Buffet points out that people think that they have control of the market, or that if they listen to certain people they will learn to control the market. The reality is that the market has a mind of its own and the freewill to roam where it will. People who try to figure out the movements, timing, or rhythm of the market are wasting their time. Buffet calls it a big mistake.


Mistake # 2: Acting like a High-Frequency Stock Trader

High frequency buyers buy and sell fast. It is a nickel and dime type of profiting. It takes a lot of time to work this strategy, and a lot of investment capital. Most amateur investors do not have the capital to risk high frequency buying. Buffet indicates that buying a stock and holding onto it for the long haul is more profitable because time is on your side.

Mistake # 3: Overspending on Fees

If we talk about costs, and there are a lot of costs to discuss, then focus on the fact that every penny that is associated with the cost of buying, selling or managing an investment pushes profitability that much farther away. For example, you buy a share of stock that costs you $100. You have to pay a fee to buy the stock. If that fee is $8, then the real cost of your stock is $108. That means that before you can even break even, the stock’s price must rise to $108. This example is also a good tool to see why frequent buying and selling does not work well. It costs too much.

Fees, management fees, etc. are all part of the cost structure for which investors need to come to terms. When you start to talk about managed funds, then you have to look at the management costs of each fund you consider as an investment. High costs dilute your earnings, reduce your investment capital, and they increase the risk of losing money on your investment. The longer you have to hold an investment before it becomes profitable, the longer your money is tied up with that investment. Everything Investments is not suggesting that you sell your investment as soon as they become profitable. It is usually much better to hold investments so that you can maximize the long-term earning potential of each investment.

You have to be the judge of how to manage your investments. A strategic investment plan is an awesome tool. It allows you to see the future, determine risk, and provide you with the guidelines of when to sell, and when to buy. Those are the things on which require your focus.

How to Use Limit Orders

When was the last time you went shopping and slapped the product on the counter and said, “charge me whatever!”  You’ve never done that and neither have I.  I don’t envision either of the two of us doing that any time in the foreseeable future either.  When buying a stock you must set your stock limit price via a limit order or you could be paying “whatever.”

The diligent way to purchase a stock is by using a limit order.  A limit order is exactly what it sounds like; you set the limit of what you’re willing to pay for a stock.  If you do not use limit orders you risk paying any price for a stock.  As an investor you want to get the best bargain for the company you’re investing in so you have to set a limit to sway the odds in your favor.  I know you would barter with a real estate agent to get the best possible price for a house so negotiating with the stock market should be done too.  Believe it or not, timing is everything in investing and using limit orders enables you to embrace this.

How do you place limit orders?  When you are placing a stock order with your brokerage firm via telephone just simply tell your broker the limit you are willing to pay for a stock.  If you are wanting to buy 100 shares of Disney then you’d say, “I want to buy to open 100 shares of Disney at a limit of $100.”  You are opening a position to go long a stock so that is why you say, “buy to open.”  When closing a position you are “selling to close” your position.

stock brokers

When placing a limit order online, just click limit and set your price.

In this order entry you would be buying 100 shares of Disney, stock ticker DIS, at a limit of $60.00.  You are telling Mr. Market that $60.00 is the most you are willing to pay per share.  If the stock price is $60.00 or lower than your brokerage firm will buy the stock for you.

You can take your limit order one step further and even limit your time frame.  The only time frames you really need to know are Day, GTC and GTD.  Day is self-explanatory: you are sending your order in and if your limit is hit by the end of the day then your order will be placed.  GTC stands for “good till cancelled” and the order will stand until you cancel it.  GTD is an acronym for good till day.  After selecting this you will select a day when your order will be cancelled.

If you do not use limit orders then you would be placing a market order.  With a market order you are telling your brokerage firm that you don’t care what price you pay for the stock.  Disney could be priced at $60.00 or $67.00 and your brokerage would still buy the stock for you if a market order was placed.  This is not the approach you want to take when investing or buying merchandise online. You always want to get the best deal for anything you buy, especially stocks, so always set your limits.

It is crucial that you use limit orders when placing stock orders.  This will guarantee you get the price you desire for an equity that you want to invest in.  This will further increase your return on investment and help you conquer investing.

Moving Averages And Their Use In Profitable Investing

Moving Averages are the most fundamental indicator of all stock analysis technical indicators.

In fact, performing any type of profitable investing activity would be extremely difficult without the use of moving averages.

When you look at a chart of stock prices the one thing that immediately jumps out at you is the seeming randomness of price movements.  Sometimes there doesn’t seem to be any trend in the way prices vary.  One extremely useful analysis technique is the use of moving averages of the price data.

Moving averages are named after the way they are constructed; moving averages – or MA’s – don’t move in the physical sense.  They move along with the price of the stock as time passes.

Their main help is to smooth the price data so it becomes easier to discern price trends.

Moving averages don’t predict price direction but they do project critical information about where prices have been.  And stock prices by their nature frequently move in trends – and that is the information you need for a profitable investment strategy.

This article will discuss how MA’s are developed, their uses in profitable investing, and will provide an example of their use on a real stock chart.

Profitable Investing

How moving averages are developed.

Moving averages are calculated by adding up the closing prices of the stock and dividing by the quantity of prices in the calculation – just like an average of any other variable.  The difference is that for MA’s the calculation drops the oldest closing price and adds the most recent closing price to the total before dividing.

So the moving average updates or provides fresh insight into stock prices as time goes by.

Lets look at the calculation of a 5 Day moving average with closing stock prices of: 11,12,13,14,15,16,17

First day of 5-day SMA: (11 + 12 + 13 + 14 + 15) / 5 = 13
Second day of 5-day SMA: (12 + 13 + 14 + 15 + 16) / 5 = 14  (drops the 11 and uses 16)
Third day of 5-day SMA: (13 + 14 + 15 + 16 + 17) / 5 = 15  (drops the 12 and uses 17)

So from this simple example you can see that the 5 Day moving average has moved up from 13 to 15 over a period of 3 days.  This is an example of a “simple” moving average.  There are other ways to perform the calculation such as applying more weight to more recent prices but for our profitable investing use the simple MA is quite effective.

As you probably realize, moving averages can be any length and for any time period of stock chart.

There can be any number of closing prices used, 5 as shown above, 10,20,50,200 etc. However, the most effective length for the profitable investing strategy is the 50 period MA.

It isn’t that the other lengths aren’t useful, its just that the 50 period MA is fast enough without being too fast, and slow enough without being too slow.  We want to get into a stock trend early enough to make a profit and get out when appropriate – and the 50 period moving average is just right for active stock investing.

Profitable investing makes us of the daily MA, the weekly MA, and sometimes the 15 minute MA when deciding when during the day to place an investing order.

How moving averages are used for profitable investing.

When moving averages are plotted on a stock chart they form a line on the same scale of the closing prices.  We can use this information (among other analysis techniques) to decide if the stock trend is in our favor or not.

As a general concept the following rules can apply when observing moving averages on a stock chart of any period.  For this type of analysis you need to picture an arrowhead on the last part of the moving average line.

If the MA is moving up you can expect stock prices to be in an uptrend, especially if prices are above the moving average.
If the MA is moving down you can expect stock prices to be in a downtrend, especially if prices are below the moving average.
If the price is relatively flat you can expect stock prices not be in a trend

As always there are exceptions to every rule, that’s why profitable investing advocates strict use of stop orders as outlined in how to sell stocks.

Moving Average example stock chart

GNC – Moving Average Example

Here is a stock chart of GNCs stock price performance during 2013.  GNC is the largest global specialty retailer of nutritional products and is headquartered in Pittsburgh PA.

This chart is a great example of how the 50 day moving average can help identify an uptrend and identify optimal buy points along the way.

In February of 2013 GNC turned around from a downtrend and started significantly outperforming the market.  The move up from the base in late February marked the top of the price channel that lasted through 2013.

At the time of the breakout, GNC moved above the 50D MA at just about the time the moving average started to point upwards.  A return from the high of the breakout to the support of the 50D MA was a first buy point and marked the lower channel line of the 2013 price increase.

During 2013 GNC created lower lows right at the support of the 50D MA and the lower channel trend line.  In fact, GNC came back to optimal buy areas near the 50D MA numerous times during the year.

Astute investors who recognized GNC as an outperforming stock early in 2013 could have taken advantage of a move up from about $30 to $60 – a doubling of an investment in less than a year!

This example shows how the 50 day moving average can not only help identify stocks in an uptrend but can also help identify optimal buy points that can lead to extremely profitable investing.

Read more on how to buy stocks, and how to sell stocks.