Investor's Code: Buying and Selling

Having a code is important in life. A personal code can help you determine what you yourself view as an easy moral choice and what you will help you sleep better at night. Whether this be a moral code that acts when you have to stand up to a bully who is taking advantage of you or someone you know or maybe it’s just returning a lost wallet that has a huge amount of cash inside, a moral code is a requirement in life.

Now, investing may not require as much of a moral code. I myself have a few investments in “sin stocks” that may be a little more against a moral code than others but my moral code isn’t what we’re talking about here. The reason I bring up having a code is that I believe that investors must have their own code that corresponds just with investing. It’s a code that defines what stocks are worthy of a buy and which are worthy of a sell. Without a code an investor can find himself in an awkward spot and without a direction.

Investment Essentials: Starting Your Portfolio

Now that you've gotten 90% done with the essentials, it's time to start thinking about starting your own portfolio. In order to start a portfolio, you will have to open a brokerage account with one of the many brokers that are available to you either at your bank, online, or at trading manager offices. The most popular however is the online brokerage because they are the least likely (in my opinion) to charge you various fees. They can also be best used through online management so you don't need to pay someone else to do any of your investing for you.

Investment Essentials: Fundamental Analysis

Now that we are making our way to the end of the investment essentials series, we can now get into the best part - picking stocks to purchase. One of the best ways to do so is by using a process that is referred to as fundamental analysis. It is probably one of the most widely accepted ways of evaluating a stock.

Investment Essentials: Stock Splits

Stock splits are something that I have been burned by in the past. That being said, I want to make sure to share what information I have about them so that all of you can learn what to look for when one is announced in a stock that you may own. Overlooking one could mean losing a large chunk of money in the future if you're not careful about what type of split is happening.

Investment Essentials: Diversification and Specialties

I have written about this many times in the blog before but I cannot state just how important diversification is and why it should also be taken with a grain of salt when you yourself have an expertise. Diversification, if you don't know, is the idea that you are better protected if you spread out your investments into many different areas. This could be diversification through different stocks, different sectors, or even different investments such as mutual funds, ETFs (exchange trade funds), or others.

Investment Essentials: Dividends

Income stocks are the bread and butter of any defensive investor's portfolio. When I talk about income stocks, I of course point towards dividend paying stocks. If you don't know what dividends are however, you may be a little confused.

Dividends are payments that are made to investors on behalf of the company they invest in. These payments are paid to the investor without the investor having to actually sell any part of their shares. By collecting these dividends, your portfolio can grow without having to worry about making capital gains. It can make gains just by the dividend payments that are issued.

Investment Essentials: Market Cap

Stock can be classified further than simply growth, value, etc. Most of the time, they are also classified by their market capitalization. It's a fancy term that means size. If you ever hear someone talking about a large cap or a mid-cap or even a small cap, this is what they are referring to.

A large-cap stock is a stock in a company that is worth over $10 billion. These are generally harder stocks to get a piece of for a value because they are generally stocks of well-known track record proven companies. Most believe that because a company has been around for a long time and because they are a large-cap, they are unsinkable. However, one only need remember the history of the Titanic to know that there is no such thing as unsinkable. I would however argue that they are harder to kill than a small-cap.

Investment Essentials: Stock Types

It is quite often that stocks will be categorized as either growth stocks, income stocks, or even value stocks. What these terms mean however can be quite confusing for someone who thinks that stocks are simply just stocks. That being said, let's go over what they are and how to use the terms if we want to use them in the future to describe prospective stocks.

A value stock is essentially a stock that is currently selling for far less than it is actually worth. Keep in mind however that this term can be used loosely as each stock is evaluated differently by each type of investor. What I may deem as a value stock may not necessarily be what another investor who has looked at the stock deems to be a value stock.

Investment Essentials: Market Directions

Bull market, bear market, sideways market - terms that are often referred to when investors are trying to describe what the market is doing. Like with all activities, terms that are unique to that specific activity are created over time. That is exactly where bull, bear, and sideways have sprung forth.

When someone says that the market is very bullish, they are stating that we are in a bull market. This generally means that prices are going up and "charging" forward like a bull. Investors are throwing more and more money into the market. By doing so, the market goes up and investments generally look really good. This is a great time to already have your investments in place because you can simply watch your money go up, seemingly with any investment. Even the bad investments can still see small upward mobility in a bull market.

Investment Essentials: Status of the Market

We know what the market is and we know that stocks are sold there but how does one actually gauge how the market is doing? And what are points? Aren't we trading dollars?

These are common questions for new investors. Just like anything else, there is a score kept on Wall Street. One just needs to know where to find it. For Wall Street, the easiest way to find your gauge of how the market is doing is to look towards the Dow Jones Industrial Average - often referred by the acronym DJIA. Or, if you don't like the DJIA, you can look towards the S&P 500 (which is what I like to use instead). The DJIA includes some of the most well known companies in the United States. There are 30 companies in the DJIA all together. It is a collection of these stocks that are brought together to tell investors how the market is doing on any given day as it is supposedly seen as an average.

Investment Essentials: The Stock Market

It has come to my attention through emails that were sent to me that my investing 101/102/103 "courses" that I put on the side of my page weren't quite basic enough for a starting investor to learn bit by bit. That being said, it appears that I really need to back up to square one - the basic of the basics. If you have absolutely no interest in knowing the basics step by step, I will label them as "investment essentials" when a post is going to be discussing them. I will also be removing the investing 101/102/103 series and replacing it with a much smaller link that will contain a page for investment education specifically.

**Note: please read the disclaimer listed before continuing**

Investment Essentials: The Stock Market

What is the stock market? The stock market for all intents and purposes is a place where traders and businesses buy and sell stocks and other forms of investments. Different stock of different companies are listed on the exchange under ticker symbols which are basically just short forms of the company name in most cases so that buyers can locate them. For example, General Electric trades under the ticker symbol of GE. If you were looking to buy a portion of GE stock, one only have to search GE on a stock exchange and place a bid for however many shares you want.