Diversified Stock Investing

In this day and age of trying to plan for the future while making a quick buck it is important to diversify our investing into several different sectors so as to give ourselves the best chance for long term growth. Not all sectors always grow at the same times. Sometimes its banking and finance, sometimes its technology or retail, and other times its manufacturing or metals. I believe its best to dedicate our money in several different areas and do the due diligence necessary to pick the right stocks.

Penny and Sub-Penny stocks should never get more than 20% of my total money I have to invest. That is like my play money if I must play with fire. I like a breakdown of 30% in banking and finance, 30% in technology or retail and 40% in bio pharmaceutical stocks.

Banking and Finance:

After the 2008 crash, the government stepped in and started unprecedented banking and finance reform.
It is my opinion that based on those reforms given a similar crash, the federal government will not ever let a large major bank go bankrupt. So, my money would be in 2 larger banks or finance companies and I would do my due diligence and look at the long term growth projections in those banks. I would then sit on them through the highs and lows and get my continued growth in that sector. I am not going to throw out tickers or recommendations as I want you to do your homework and pick your own as that is what empowers you through your own hard work and dedication.

Technology:

Have you ever bought a piece of technology like a phone or television that is the best piece ever and then six months later see the new and improved model that makes yours like a dinosaur? I sure have.
The technology sector is always developing new and improved ideas of how to make our lives easier and lazier and in my opinion is a solid investment area if you are in the right companies. Again, do your due diligence and pick companies that you can relate to their products through your own personal everyday use. Then, pick a couple of companies and invest another 30% of the total money you have available between those couple of companies.

Bio-Pharmaceutical Companies:

This is personally my favorite sector. I like it because people are always sick and we are always looking for ways to cure and alleviate ailments and diseases so I see it as having unlimited growth potentials.                     Bio-Pharmaceutical companies are rich in information about the results of new tests and drugs therefore allowing me to position myself at the right times to maximize my gains and minimize my losses. Investing in these companies though does take a little more ongoing monitoring so I would only get in them if I have the time to watch them closely. Again, 40% of my available money to invest would be put in these stocks.

Happy trading and Good luck investing in YOUR future.


The opinions expressed in this blog are mine and mine only and are not intended to be recommendations. As always never invest money you cannot afford to lose and do your own Due Diligence.

Financial Reports

One of the very first things I do when I pick a stock symbol is look for the company's financial reports. Are they current in their filings? I like to use http://www.otcmarkets.com/stock/fofu/quote to get most of that information. While reading financial reports can be tedious, it is very necessary in order to find out the transparency of a company. Most publicly traded companies use SEC form 10Q to report their financial earnings or losses. What a company's financial condition plays a big part in whether I invest in it or not. I have seen traders just look to see if the company is current and never look in the report to see whats actually in there. Big mistake. Alot of times shell companies are current on their filings but have no revenues or actual products and the only place to find that out is in their "current" SEC 10 Q form. So, I urge you to be careful and take the time to read everything in those reports. Debt and liability that is not readily advertised to investors is often buried inside those financial reports. Even a polished piece of garbage stock (a company with a nice gleaming newsletter or press release), can be revealed to not be a good investment when you dig a little deeper. Tomorrow Ill talk about finding out who runs these companies and why it is important when you are trading their stock. Enjoy your Sunday. GO TEBOW

Paper trading and Getting out on a Friday.......

I mentioned paper trading and how it can help hone your trading skills in earlier entries, but today I wanted to  elaborate a little more on paper trading..  The number one thing paper trading does for me is gives me experience in trading without the pressure of using actual money. This gives me the ultimate environment to trade in, emotionally free. Often when we are trading with our money we get caught up in our want and desire to make money. This can cause us to make emotional and rash decisions and forget our game plan of limiting our losses or getting to a certain preset profit percentage on a stock. Fridays tend to be very erratic and unpredictable as other traders sell off to take either profits or losses for the week. Remember I usually dont hold a position through a weekend unless I know for sure a position I am holding is long term. I tend to like to try to sell by the end of day Thursday so as to avoid the mess that Fridays can become. If for some reason I am unable to sell on Thursday I will use the first hour of trading Friday and the increase in volume to move my stock. Make sense?  The more a stock moves the easier it is to buy or in this case sell it and start looking for my next ride. Setting stop losses allow me to limit the amount I lose and setting a specific profit percentage in my mind allows me to grow my money consistently rather than erratically. Give me 30% profit on my money on every trade and I will run all the way to the bank smiling my best smile. In conclusion I want to again say keep the emotions OUT of your trading and you will become a much better and more consistent trader and hopefully richer than if you trade on emotion. This weekend Ill be writing about the ways I read news on companies leading into next weeks topic...... In depth Due Diligence.

So you want to invest.......

Im gonna focus this week on the basics of investing money. This opens up the mother of all cans of worms. In the old days,you picked a stock, saw the recommendations of either buy,sell or hold and then followed that in your purchase decisions. Then came Sept 2008 and all hell broke loose. The broken system was revealed for what it really was....GARBAGE. I believe in Warren Buffets belief of find a company you like,preferably AMERICAN,do your due diligence and buy with only money you can afford to lose. What I mean by that is dont invest the rent or grocery money hoping to make it grow. 7 out of 10 stock plays lose. What I try to do is limit my losses to an acceptable loss percentage (20% in my book), and set a realistic gain percentage (30%) and stick to them. In the day of pump and dump hype plays it is very easy to get wrapped up in the hype and start dreaming of huge gains. Ill take 30% on my money every day and dance a jig all the way to the bank. As I write this week I will highlight my processes of finding stocks to invest in and how I determine my entry and exit prices as well as what times I buy and sell. Remember.... If it sounds too good to be true it for sure is.....