Beginner Investors Should Follow The Buy Side Institutions

The Buy Side Institutions control vast amounts of money on behalf of their fund holders. These are the savvy money managers in the business. They are the giant Mutual Funds and Pension Funds in the US and around the world. When the giant Buy Side institutions accumulate a stock, they use a very specific methodology. They buy into a stock incrementally over time often many months, which means they can be buying slowly and consistently as a stock platforms and then moves up again.

This type of price pattern is excellent for Binary options brokers, retail Investors and Position Traders, as it provides strong support and low risk entries. It wreaks havoc on Swing and Day Traders who are constantly whipsawed out of their trades, due to the tighter price action and smaller range that is not wide enough for a SARs or other trading range style strategies. Most of the time Retail Investors and Traders do not recognize the platform pattern or bottoming patterns, that indicate quiet accumulation by the Buy Side Institutions. These Institutions always are the ones who create the bottoms, so understanding how, where, and why they buy can help you buy in sooner and avoid losses. Identifying quiet accumulation helps investors and traders get into stocks before High Frequency Traders move price suddenly.

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Money Matters: What to Do When the Stock Market Soars?

Many investors find themselves with a terrible dilemma. Burned by a market crash, they sat on the sidelines as the market rose, vowing never to buy stocks again. Months later, they started to question that decision. Every day the market seems to hit a new high, and they reflect on all the gains they’re losing. Meanwhile, their bonds, certificates of deposit and other “safe” investments don’t even return enough to keep up with the cost of living.

They find themselves facing an agonizing choice: Get back in the market and possibly lose money again, or continue to watch from the sidelines as their bolder friends and neighbors rack up a fortune. Fortunately, there are some ways around this problem if you’re willing to do some research. Here are some of the best:

1) Realize that market timing is a fool’s game. The stock market is the greatest wealth-creation system that’s ever existed, but trying to invest at the very top or the very bottom is impossible, even for the so-called experts. If you have a long horizon (and you should not be in the market if you don’t) the ups and downs will eventually even out and leave you with a lot more than you started with.

2) Realize that a rising market doesn’t mean a total dearth of good investments. In nearly every market, there are stocks whose price is unreasonably low. Maybe the company was hit with a lawsuit or had a bad quarter and investors over-reacted. The trick is to do enough research to distinguish between the company that will bounce back and the one that’s going down the drain. Focus on finding the one or two bargains in a frothy market, and hold some of your funds back for a day when stocks are cheaper.

3) Take advantage of sector slumps. In spite of a crazy-hot market, investors recently had a chance to buy gold and gold stocks at the lowest prices in a long time. Within a day, however, prices started to bounce back. By being alert and buying what’s out of fashion, you can still make money in a hot market.

4) Take advantage of dollar-cost averaging and dip your toe into index funds. Dollar-cost averaging means buying a fixed dollar amount of stock at fixed intervals. By doing this, you automatically buy less when the price is high and more when it’s low. By combining this strategy with an investment into a low-cost index fund, you gain market participation with relatively little risk. Broad-based index funds tend to be less volatile than individual stocks or sectors, so you’re less likely to get clobbered in the event of a big drop. The key to making this strategy work is to grit your teeth and keep on investing when the inevitable drop comes. By doing that, you’ll accumulate lots of shares at low prices and be sitting pretty when the market starts to rise again.

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The 5 Secrets to Successful Stock Selection

Investing in stocks can be tricky and intimidating, especially if you’re new. This is why a lot of people advise hiring a financial advisor who can help you manage your portfolio.

The truth, though, is that there’s no one else who can understand your risk tolerance and your financial goals as accurately as you do. Add to that the fact that some advisors may be biased towards certain stocks because the benefits they can get, and you have a really good reason to just fly solo.

Cut out the middleman! You don’t need to get a financial advisor to help you find the most profitable stocks for your investment style. By the end of this article, you should be able to pick out the right stocks for your portfolio.

Here are five important tips to remember when selecting stocks:

Company Efficiency

In studying the technical values of stocks, t’s very easy to forget that these are actual companies. They are susceptible to the usual problems, such as weak management and creative stagnation. For example, even Apple’s stocks saw a minor decline, seeing as how many investors expected changes in the company after Steve Jobs’ demise.

In choosing your stocks, you also need to study the company, its workforce efficiency, and the strength of its upper management team. To do so, it’s a good idea to subscribe to financial news websites, magazines, or even just read the business section of your newspaper regularly.

Volatility

Choosing stocks really involves deciding on your comfort zone. If you think you’re not comfortable with high risk stocks, then there’s no one to force you into buying them. To check for a stock’s risk level, you need to look at price volatility.

Some companies have steady prices, while others have significantly obvious highs and lows. The higher the stock’s price volatility, the higher the risk involved. There are many sources to visit for stock information, like Forbes or CNN Money. Other options include E*TRADE and Google Finance. Finally, there’s also Thomson Reuters and Bloomberg.

Price to Earnings Ratio

The P/E Ratio is one of the most important numbers to look into when choosing your stocks. However, you have to be careful not to get carried away. See, stocks with high P/E mean they are valued by other brokers.

The problem is that sometimes the P/E can be speculative rather than accurate. This means that the value of the P/E is the result of future expectations rather than actual performance. What does this mean for you?

This means that you might not be getting a fair price. You might end up paying more for a stock that isn’t worth that much. When studying the P/E, you have to take other factors into consideration as well.

Return on Equity

The ROE or Return on Equity can best be described as the rate by which investors earn from their stocks. Warren Buffett puts much importance in a stock’s ROE before deciding.

See, companies with consistently good ROE perform better than their counterparts. This means that the company is worth looking into. Of course, the ROE is not the only factor. However, if you want to pick up Buffett’s investment style, looking at the ROE is one of the things you can do.

Company Debt

Debt-equity ratio is another factor to take into consideration. Obviously, no company can be completely without debt. However, if the ratio of debt to earnings is too high, this is indicative of poor fiscal health.

Definitely, you don’t want a company that spends more on paying off its debts than on development and growth.

So what are you waiting for? Start testing some of these research strategies now to identify the best stocks to invest in for your investing style; then you can follow the stocks which you identify to test and hone your strategy.

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