Market Analysis | Best Stocks to Trade For Tomorrow with logic 30-Nov | Episode 638

Open your Trading account in mintues with Zerodha

Have you always wanted to enjoy the sort of profit opportunities that are only possible from stock market investment – where the average long term gain has exceeded 10% a year for decades – but been put off by either the complexity or the cost? Or maybe you are already a shareholder and keen to reduce your risks and increase your returns? Either way, you should consider becoming involved with an investment club.

Typically when a company decides to buy another corporation, due to the prospect of growth and cutting cost and the possibility of a bidding war, the company that is desired buy another company will skyrocket in terms of price. Since the stock market is a rational expectations market, such information will be heeded immediately and positioned to bolster the price of a stock instantaneously. Now unless you happen to own that particular stock, typically when you do find about the prospective information, the potentially acquired stock price will already be inflated, discouraging buyers to get into the action. While such a process may be disappointing to investors looking for profits, as evidence shows, buying such a stock when a rumor or solidified information comes up may not be such a bad idea.

Do any of you remember, when people were selling Nokia Corp. like crazy? This happened about 2 years ago. The stock was at 22 and within 4 months it was down to 12. You were hearing in the news that Nokia was losing market share in Europe. Their style of hand phones was outdated. SELL, SELL.

Interestingly, many studies suggest that humans are naturally inclined to fail at trading. People are naturally inclined to break all of the time tested trading rules. Probably the biggest reason for not following the rules is that people generally do not like to lose.

Undoubtedly however, trading can be a taxing experience on your mental health. You are constantly faced with decisions that need to be made and can easily go through the swing of emotions described earlier.

Would you like to buy and sell shares but don’t know where to start? Don’t know your bid from your offer? This article will enlighten you on beginning to trade online.

For example, if you used a standard 10% stop, this would be a tighter stop (i.e. closer) for some securities than for others. If a security moves 5% a day on average, then a 10% stop would be tighter than for a security that only moves 1 ½% a day on average. Using ATR can alleviate this situation.

Gasoline sits near record highs, economic growth slows, real estate prices drop, interest rates are rising and cutting money supply and inflation is on the rise. Yet, many investors simply think stocks will stay high and this is forgetting the problems in Iraq and the huge crisis coming with Iran! You don’t think stocks are going to fall? Read on.

Historically once the company starts buying back, the prices of the shares rises as investors believe that the company has something in tank. Personally I believe that the range is on the lower side as Microsoft share is already been traded at $24 (1st August, 2006) and shareholders have a very low incentive to sell their holding in the company.

While some investors may argue that when dealing with equities it is important to diversify your portfolio in different sectors combating one another so you do not obtain high capital losses. While the statement may be true in times of volatility, during inflationary periods such as the one that is cautiously approaching and worrying the Federal Reserve, I would recommend avoiding such mutual fund tactics and encourage the purchasing of inelastic stocks.