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