Hi All,
I hope u make some money from MUDAJAYA, POS, HSL, PROTON (drop -28 sen this evening), DRBHCOM and many more. This weekend let me share u common mistakes that we have done during trading. U can read this from William O'Neil's book How to Make Money In Stocks:
1) Most investors never past the starting gate because they do not use good selection criteria. They do not know what to look for to find a successful stock. Therefore, they buy fourth-rate "nothing to write home about" stocks that are not acting particularly well in the marketplace and are not real market leaders.
2) A good way to ensure miserable result is to buy on the way down in price; a declining stock seems a real bargain because it's cheaper than it was a few months earlier. for example,an acquaintance of mine bought International Harvester at $19 in March 1981 because it was down in price sharply and seem a great bargain. This was his first investment, and he made the classic tyro's mistake. he bought a stock near its low for the year. As it turned out, the company was in serious trouble and was headed, at the time, for possible bankruptcy.
3) An even worse habit is to average down in your buying, rather than up. If u buy a stock at $40 and then buy more at $30 and average out your cost at $35, you are following up your losers and mistakes by putting good money after bad. This amateur strategy can produce serious losses and weigh you down with a few big losers.
4) The public loves to buy cheap stocks selling at low prices per share. They incorrectly feel it's wiser to buy more shares of stock in round lots of 100 and 1,000 shares,and this makes them feel better, perhaps more important. You would be better off buying 30 or 50 shares of higher priced, sounder companies. You must think in terms of the number of dollars you are investing, not the number of shares you can buy. Buy the best merchandise available, not the poorest. The appeal of a $2,$5 or $10 stock seem irresistible. But most stocks selling for $10 or lower are there because the companies have either been inferior in the past or have had something wrong with them recently. Stocks are like anything else. You can't buy the best quality at the cheapest price!
it usually costs more in commissions and markups to buy low-priced stocks, and your risk is greater, since cheap stocks can drop 15 to 20 percent faster than most higher-priced stocks. Professionals and institutions will not normally buy the $5 and $10 stocks, so you have a much poorer grade following and support for these low-quality securities. Institutional sponsorship is one of the ingredients needed to help propel a stock higher in price.
5) First-time speculators want to make a killing in the market. They want too much, too fast, without doing necessary study and preparation or acquiring the essential methods and skills. They are looking for an easy way to make a quick buck without spending any time or time or effort really learning what they are doing.
6) Mainstream America delights in buying on tips, rumours, stories and advisory service recomendations. In other words, they are willing to risk their hard earned money on what someone else says, rather than on knowing for sure what they are doing themselves. Most rumors are false, and even if a tip is correct, the stock ironically will, in many cases, go down in price.
7) Investors buy second-rate stocks because of dividends or low price/earnings ratios. Dividends are not as important as earnings per share; in fact the more a company pays in dividends, the weaker the company may be because it may have to pay high interest rates to replenish internally needed funds that were paid out in the form of dividends. An investor can lose the amount of a dividend in one or two days's fluctuation in the price of the stock. A low P/E, of course, is probably low because the company's past record is inferior.
8) People buy company names they are familiar with, names they know. Just because you used to work for General Motors doesn't make General Motors necessarily a good stock to buy. Many of the best investments will be names you won't know very well but could and should know if you would do a little studying and research.
9) Most investors are not able ti find good information and advice. Many, if they had sound advice, would not recognize or follow it. The average friend, stockbroker, or advisory service could be a source of losing advice. It is always the exceedingly small minority of your friends, brokers, or advisory services that are successful enough in the market themselves that merit your consideration. Outstanding stockbrokers or advisory services are no more frequent than are outstanding doctors, lawyers or baseball players. Only one out of 9 baseball players that sign professional contracts ever nake it to the big leagues. And of course, the majority of ballplayers that graduate from college are not even enough to sign a professional contract.
Part 2 will follow this weekend. Maybe u want to read books that i have now. Go and buy my selection book on the left side of my homepage. Tq.
Happy Weekend!!!
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