Investment article report

“5 Financial Keys to Investing in the Stock Market”

Presented to: Miss Tehseen Kausar Presented by : Shahzeb Anwar Sikander Ahmad

Diversification is important to successful investing. This general statement hardly ever is followed by the caveat, however, invest more in what one knows than what one does not know: If one is technologically savvy, find tech stocks making good products, with sound corporate governance and structure, and, perhaps, a future trend-setting product (ex., the company that makes the Blackberry, RIM, is a great stock because their product is pertinent to business world communications). Even if one knows the field real well, DO THE RESEARCH. Just because one believes in a product, internal problems might be causing the product maker to falter.

Find 3 good bond funds. No, these are not the stodgy old individual government bonds grandparents and/or parents would give kids for a holiday and/or birthday present. They are often found on the NYSE under symbols such as “RCS”, “AWF”, “TEI”. These and others often involve a mix of: domestic/international government bonds, municipal bonds, and corporate bonds. Downside: They lack rocketing-high numbers per share like stocks. Upside: More stable; often have great yields; and, much like many stocks, can pay dividends per share month after month.

Carrying the last point: Try to find stocks that pay dividends every month. A stock which pays dividends usually denotes a company which treats its investors and/or shareholders well. Many brokerages allow you to automatically reinvest those dividends back into the same stock to buy more shares; or you can just have an account where all the stock dividends collect into a money market account which gains interest while they sit there.

Learn from Warren Buffett. No, he is not Jimmy's brother. While so many cashed out, the Berkshire Hathaway head was pouring billions into companies such as Goldman Sachs and GE. He even bought the Northeast power conglomerate, Constellation Energy. Unlike many financial analysts and gurus, who value P/E (Price/Earnings ratio), Buffett looks for companies with another kind of value: P/B (Price/Book ratio). All that is needed to know here is that 2.0 is roughly the threshold for a good-valued stock; 2.0-1.0 is better; and, anything below 1.0 to about .5 is outstanding. The exception: technology, as it is hard to accurately measure intellectual property value. It is not necessarily bad to see a Defense-Tech stock with a 3.0 or higher.

Finally, if one's portfolio horizon – the period of time before s/he wants to liquidate investments – is less than 5 years, stay away from stocks. Many get the idea the stock market is like a casino: all one has to do is place all the chips on one number at precisely the right moment and one can retire a king or queen. Hoping to win on a stock and investing in stocks is the difference between winning $100 and learning how to make $100. Like any other endeavor which brings rewards, investing is about researching; making educated guesses;

learning the from mistakes; and KEEPING AT IT. Indeed, even after becoming experienced and wise in the business, one will make mistakes. But, they will be fewer and farther apart.

Conclusion: Current economic conditions have caused even the most stalwart of capitalists to want a TARP, pun intended. Times like these can be quite humbling to those with a 401k. For those not going along with this herd-like “selling off”, many outstanding investment opportunities are to be had. These 5 principles will go a long way to making the most of those opportunities.


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