Stock Tips

There are as many different stock tips as there are stock investing sites. Everyone seems to have the best strategies for you to decide which companies to buy shares in. The question is, what will be the best tips to use. I want to fill you in on some simple stock tips that you should consider in your trading system to help you make money with your investments.

The first tip is to flat out ignore the hot stock tips that are always coming your way. These are put out on the market by predators that are using what is known as a pump and dump strategy. They have inflated the price of the stock and within a few days of the hot tip mailing, they dump the stocks leaving those who jumped holding the bag.

Another tip is to keep it simple. The people who tend to trade too often do not focus on the important data points. They are merely following the latest piece of advice to try and predict the unpredictable. You should instead focus on companies with good solid foundations and be prepared for a long term time horizon.

You should act like an owner with your financial investments. After all, that is what you are. You shouldn't just buy stocks as a trader but buy based on the financial foundation. This means reading an analyzing the financial statements, weighing the strengths of the business and pay attention to future trends. Is the company making the correct decisions? How is their ability to maintain their earning power. Are they managing their debt and assets.

Another stock tip is to buy low and sell high. This of course seems like a no brainer but you would be surprised how many people simply do not follow this advice. They get excited about a stock that is going up and jump in at the top. With your trading system, you should only buy stock that the price has fallen. Of course it is difficult to know when the stock price has bottomed out, so you should watch a prospect for what looks like an upward trend. You may not hit the absolute bottom but do not worry about that. If you have done your homework in analyzing the financial stability of the company, even if the price goes down a little more, it is bound to come back up.

Realize that past trends usually continue. If a company has a good manager that makes winning strategies, chances are that manager will continue to make good decisions. If a company has a strong record of making wise acquisition choices, be aware of this and make this a consideration of your buying decisions.

Be aware that situations may proceed faster than you think. If a company is going down hill, the acceleration may happen faster than you might expect. Be wary of companies that look cheap but are generating little or no economic value. The reverse is true however. Companies that have solid competitive advantages will often exceed your expectations. You should also expect that surprises will repeat. This is true if the surprise is negative or positive.

Do not be stubborn. It is such a fine line between being stupid and being clever. The same holds true for investing in the stock market. The line between being stubborn and being patient is a thinner line. If a stock you have recently bought has fallen but the company still is making solid financial decisions patience will pay off but if you find yourself discounting bad news in the hope that things will turn around, you are setting yourself up for a bigger fall.

The last tip is to always buy with value. The difference between a good company and a great investment is the price you pay for the stock. Finding great companies is only half the equation in picking stocks, figuring out an appropriate price to pay for that stock is just as important for your investment success.