| Today's market can seem like an intimidating place. In | | | | to see its projected performance in the coming |
| times of a "Bear" market many seasoned investors | | | | years. Projected performance should be at least 10% |
| run for the hills. Any new investor has to ask himself | | | | in the next two years only then it can be termed as |
| whether this is the right time to invest or will they | | | | a safe investment. |
| lose everything simply because they couldn't wait for | | | | Another safe tip is that unless you have very strong |
| more prosperous times. There are techniques used | | | | reasons to buy or you have sufficient money at your |
| by successful investors however that can lead you | | | | disposal, never go for expensive stocks on the other |
| through the current economic downturn. Two | | | | hand people generally opt for cheaper stocks as they |
| qualifications are important here: first of all, bring your | | | | are available at cheaper rates that anyone can afford |
| common sense to the table. Second, don't invest in | | | | so people get to involve in impulse buying knowing |
| any stock that is downsizing and consult a | | | | that they have purchased stocks in a large quantity |
| professional financial advisor before you buy. | | | | whereas they generally don't know that these |
| When you are choosing your stocks, make sure to | | | | companies often disappear leaving a serious dent in |
| select only stocks that are at the top 3rd in its | | | | your pocket. |
| particular niche. For example, Google is near the top | | | | Next important consideration while buying stocks of |
| of tech stocks so would be a safer bet to invest in. | | | | any company is to look at its price to earning ratio, |
| As a matter of fact, Google was one of only stocks | | | | generally known as P/E ratio. While comparing P/E |
| that actually increased in value during last year's | | | | ratio of any company you should go for at least 5 |
| massive downturn. The safest bet is to find a stock | | | | years P/E ratio. Those who don't know it is the ratio |
| that has got a position in the top 10 or even 20 of | | | | calculated on the basis of stock's price divided by |
| its particular industry, so much the better! | | | | earning per share. So the lower this ratio, the better |
| Next you will need to check two of the stocks | | | | for you, simple! |
| ratings. The rating for timeliness of your selection | | | | Now comes an important point called share's upside |
| should be 1 or 2, and this rating should be rising at a | | | | down ratio. It should be anywhere between 3 to 1. |
| fairly steady rate rather than fluctuating up and | | | | However five to one is considered even better, but |
| down. You will also want to find a company who | | | | three to one is also acceptable. More upside down |
| debt is low, less than 33% of its assets. Companies | | | | ratio means price of the stock is bound to rise |
| with a large debt tend to make rasher decisions than | | | | instead of falling. |
| companies with smaller debt. Debt doesn't usually | | | | Last but not the least, you need to see complete |
| occur without bottom line growth without bad | | | | details about the stock and the company behind it. |
| decision making. This might not be a company that | | | | Remember if the people behind the company and |
| you want to trust our money with. Also check the | | | | their management are not worthy and experienced, |
| companies past sales and earnings. If it's been | | | | no matter how the stock is performing at the |
| growing for several years and forecasters expect | | | | moment, it is bound to fall one day. The |
| future growth of 10-15% it's a better bet. | | | | management, promoters and their staff should be |
| A stock's Beta measures how the stock's price | | | | experienced and competent enough to handle their |
| moves on the market. Basically it's a multiplier. Look | | | | company. |
| for stocks with a beta that is between 0.9 and1.0 at | | | | Now the caution part, no one can be successful |
| least. When the beta for stocks moves above 2, | | | | unless he or she doesn't apply his or her common |
| then stock is bound to get at least twice its market | | | | sense, good research and gut feeling. Buy only good |
| change shortly. In other words, with the market | | | | and reputed stocks from reputed companies. Putting |
| dropping around 50% your stock will lose 100% of its | | | | money in a company run by any Jack and Jill can put |
| value. Is it a good choice, I think probably not! | | | | a hole in your pocket. Apart from using your own |
| Next important point is to check the previous year's | | | | common sense and experience, always consult |
| sales and earnings of the stock for a company. If it's | | | | professionals and legal experts before you put your |
| been growing for the last couple of years say 3-5 | | | | hard money on stake. |
| years. Not just the past performance but you need | | | | |