| Easy access to investing information and the | | | | newsletters, alerts and model portfolios.So, |
| availability of online trading has made life | | | | how can you structure a stock portfolio to |
| much more enjoyable and less costly for | | | | maximize your wealth, ensure your peace of |
| do-it-yourself investors. The Internet has | | | | mind, give you total control of your |
| brought the "trading" desk to millions of | | | | investments, be easy to manage and give |
| households and it is now possible to buy and | | | | satisfaction? |
| sell shares, options, warrants, interest rate | | | | |
| securities and managed funds from your own | | | | Here is a recommended strategy that has |
| home. All you need is a computer and an | | | | worked well for many do-it-yourself |
| internet connection. In addition, you can do | | | | investors:1. Subscribe to a well respected |
| your own research on a particular company or | | | | investment research website dedicated to |
| fund manager as well as finding out what some | | | | analyzing financial information for |
| stock brokers are recommending to their | | | | investors. They are independent from |
| clients. Much of this information is free or | | | | companies they list, do not receive |
| available at a reasonable cost and you can | | | | commissions or brokerage and rely solely on |
| save yourself hundreds, or even thousands of | | | | investor subscriptions for income. They have |
| dollars in fees and commissions every year | | | | to give their subscribers quality information |
| via the internet. Rather than go through a | | | | to maintain subscriber confidence.2. Look for |
| full service stockbroker or investment | | | | the model portfolios they have developed and |
| advisor, why not give it a try?When building | | | | study the methodology they have used to |
| your own stock portfolio, here are some | | | | create and maintain each portfolio.3. Read |
| pitfalls you need to avoid!While you can find | | | | the research reports supplied for each stock |
| a plethora of good information on stocks, you | | | | and study the graphs supplied for price |
| can also find very poor information. Each | | | | movements and trading volumes. Get a good |
| website claims to have the latest hot picks | | | | feel for both the long term and the short |
| or the "top ten" stock buys and often they | | | | term trends of the stock.4. Test each |
| contradict each other. Who do you believe and | | | | portfolio within a designated test period |
| what about the scams?You will undoubtedly | | | | i.e., one month, one quarter, one year etc. |
| come across websites and chat rooms that give | | | | Depending on the website, you can set up each |
| investment advice or tips about investments, | | | | of the model portfolios in a free portfolio |
| but many of these are not qualified to do so. | | | | manager provided on the website with |
| The information may be wrong or misleading | | | | unlimited stocks. Set a starting date for a |
| and some websites even repeat incorrect | | | | test period where you "buy" stocks listed in |
| rumors.There is overwhelming evidence that | | | | the model portfolio at the closing price for |
| you will not become rich by listening to the | | | | that day. Make sure you include brokerage as |
| advice of others. As an investor you need raw | | | | it is part of the cost base for the stock. |
| information, not recommendations. You would | | | | The website should either maintain up-to-date |
| not buy a car just by looking at it...nor | | | | or 20 minute delayed stock prices, so a |
| should you buy a company's stock without | | | | running balance can be maintained for the |
| doing significant research. There is no point | | | | profit/loss for each stock over the |
| trying to take control of your finances if | | | | designated period.5. Compare each portfolio's |
| you are going to rely solely on a "tip" from | | | | published results with the results that you |
| a newspaper or a broker or an internet chat | | | | have achieved in the portfolio manager. They |
| room. It is true that someone may know more | | | | should agree with each other when the same |
| about a particular company or stock than you, | | | | stocks are compared over the same time |
| but they could easily be wrong - so do your | | | | period. Your testing should develop a level |
| own homework!You need to be certain that you | | | | of confidence in the model portfolio.6. |
| have sound reasons for investing in a | | | | Determine the best model portfolio for you to |
| particular company. Does the company have an | | | | use. You can do this using the last the last |
| instantly recognizable name? Do you | | | | three months of stock price history or |
| understand what the company does? Do the | | | | perform a trial evaluation for the next three |
| products or services of the company stand a | | | | months of future prices. You can use one of |
| good chance of being in high demand in a 10, | | | | the existing model portfolios or create your |
| 20 or 30 year time frame? Does it have a | | | | own from the stocks selected.7. Subscribe to |
| management team that moves with the times and | | | | an online share broker website and begin |
| is innovative, yet keeps a firm grip on the | | | | trading.8. Monitor stocks daily and review |
| company's finances? Most of this information | | | | the performance of your actual portfolio |
| is available in a company's Annual Report, | | | | against the model quarterly.You should take |
| but make sure that you read it with a degree | | | | care to evaluate the methodology used by the |
| of skepticism...most reports are written to | | | | research website to develop the model |
| promote the company.In the Annual Report, the | | | | portfolios. These portfolios are designed by |
| financial statements, the balance sheet, the | | | | research firms to provide sensible |
| profit & loss statement and the cash flow | | | | medium-term portfolios that make it easy for |
| statements are very important. They are | | | | investors and financial planners to |
| important because they will help you assess | | | | replicate. You need to understand the |
| if the company is providing value for your | | | | research methodology and develop a level of |
| money. You are going to be buying stocks at a | | | | confidence in it rather than just blindly |
| certain price and you will want to make sure | | | | accepting the published results of each |
| that you are not paying an excessive amount. | | | | portfolio. You do not need to become an |
| The financial numbers give you a snapshot of | | | | expert in methodologies.Building a share |
| the financial structure, strength and growth | | | | portfolio that meets your investment |
| rate of the company. This type of analysis is | | | | objectives will substantially build your |
| often called fundamental analysis, and also | | | | wealth over a period of time. You can also |
| includes analysis of the economy and | | | | save money in commissions and fees, have |
| industries related to the company.Keep | | | | peace of mind, total control over your |
| in-mind that the historical and present | | | | investment and gain a real sense of |
| prices of a stock hold clues to the future | | | | satisfaction.As a final word of |
| price. In practice, most analysts use | | | | caution...nothing is for certain in this |
| fundamental analysis for short and long term | | | | world except for death and taxes. This also |
| buy/sell decisions and use technical analysis | | | | applies to the stock market. Be prepared for |
| to confirm the decision.Internet websites are | | | | some ups and downs and be ready to sell |
| a great place to collect information about | | | | stocks to cut losses. If the core of your |
| companies. Naturally, a company owned website | | | | portfolio is made up of stocks that have |
| will attempt to portray the company in the | | | | strong capital growth and a reasonable |
| most sympathetic light. Depending on how | | | | dividend you will do well overall. Have "at |
| serious you want to be about investing, it is | | | | it" and good investing!Eri Rahman is the |
| advisable to either visit or subscribe to | | | | owner of a fine resources for free training |
| investment research websites. Research | | | | and education in stock trading. He also |
| websites are valuable tools for any investor | | | | maintains a very useful resource for smart |
| and provide company reviews, give general | | | | traders.There is no doubt about his |
| investing information, market updates, stock | | | | experience in stock and options trading, |
| pickers, stock ratings, watch-lists, | | | | since he is a daily trader. |
| portfolio managers, charts, share indexes, | | | | |