https://www.bmoinvestorline.com/?BMO_VSC…
but i didn't get which stocks i would want to invest in and why. I was told RIM and TSX are good buy why is that true and what are there values?
Thanks in advance, i will try to give 10 pts to the best answer.
There are, in my opinion, two ways to answer your question.
The first option is to do technical research and run the numbers. In other words, do what mutual fund managers and financial planners do - look at the company, the value of assets, order backlog, P/E, future growth prospects, competition, etc. You can even also ignore the actual stock and company and just look at the moving averages, present price, etc. There are trendlines you can draw which can indicate when a stock will go up or down, etc. Entire volumes have been written on this subject, and you can buy computer programs (or subscribe to services) that will calculate these sorts of things and trend them for you. It is an entire science that you could spent a lifetime studying. Day traders do it - they buy and sell stocks just on the trends, without even considering what the company makes or its worth. For a general guide to running the earnings, etc., numbers for a particular company you can use Jim Cramer's books. (He's great on theory and explaining how to look at a balance sheet and evaluate a stock, however his stock picks usually aren't so hot.)
The second option, and the one I prefer, is the more lazy option in a way, but it works. Peter Lynch (who managed the Fidelity Magellan mutual fund to an outstanding rate of return, years ago) champeoned this method. Look around you. Go to the shopping mall, see what stores are doing a lot of business. See what people are wearing - do they all shop at WalMart or Nordstroms? Which store is busy? You want to buy stock in the busy one. But sometimes you have to consider other things - as to why is it busy? Is it busy because of the holidays, when everything is busy? Is everyone buying the new cell phone? Are cars on sale - is there a government rebate as an incentive?
I'll use RIMM as an example. It is considered a good buy. It is constantly mentioned on the MSNBC talk shows. It has a good product. If you check the stock on Yahoo Finance it has a present price in the upper $60s, but it has a one year price target of over $88 per share. It sounds like a good buy, and it might be, and it might do very well. However, the stock really hasn't moved much, and it has been a bit of a dog.
So, why hasn't it moved? Look at the competition - Apple, Palm. They make similar products, and competition is fierce. Palm only makes one product, which is considered superior, and the price of that stock is low, however if that product fails then Palm fails. This is a big risk, but if their product does well then you could make a big reward. Apple diversifies into many different areas - phones, iPods, computers, etc., and the stock price is high, but they are also opening Apple stores and diversifying into China. RIMM is somewhere in between the two. Always try to buy the market leader - the #1 company in any industry usually (but not always) has the greatest increase in stock price/rate of return. You can run the numbers (like I said in the first example, above) and that is a good idea. However, almost all technology stocks have had a good run lately, and technology stocks almost always trade at high P/E multiples. So, which company - Apple, RIMM, or Palm - do you think will do the best in the near future? Which one is mentioned the most on TV? Which one has had the best recent reported earnings, and which has the potential for the greatest future earnings? Apple may be good because they are diversifying into new markets and they have multiple products. If you check their recent earnings, plus see how much the stock has appreciated compared to the others, you can see that other people may think it is a good buy, also. Apple's price target has also been revised (higher) several times. But this is subjective, and sort of a common sense approach. However, I find it is better (and easier) than sitting there and running all the numbers, particularly since I'm competing with people who run numbers for a living and are far better at it than I am. So, from a common sense approach - which would you buy - Apple, RIMM, or Palm? Or should you buy all three (I wouldn't - it's probably better to diversify into other industries). It is a bit subjective, and it is something you'd have to decide since it's your money, but you have to think it through. My opinion (but you decide for yourself ) - Apple. The Chinese market could be huge, and the Apple stores don't face much similar competition.
Never buy on margin. You can lose your shirt. (Look up Chesapeake Energy if you want a good example - the president and founder of the company got caught up in margin calls.) You can do puts and calls, but in my opinion - why bother? You're just buying insurance. Some people like to have insurance so they can't lose too much. However, if you pick good stocks and watch them carefully and keep up with their current events and projections, then why spend money buying insurance? Yo
The answer below is partly correct: there are two ways to look at equity analysis (technical and fundamental), although I totally disagree with the conclusion that you should disregard fundamental analysis for technical! Technical analysis attempts to look for patterns, and uses algorithms for triggered trading. Stay far, far away from this crap. Read a book by Warren Buffett, or Morningstar to get a better idea of how to invest. Technical analysis is useless.
There are two approaches to buying stocks--the fundamental approach and the technical approach. We will dispense with the fundamental approach because it is too complicated for this forum at this time. Here is a link to finding stocks that meet the technical approach.
http://www.stockta.com/
http://www.vfmdirect.com
This will give you a Support Level and Resistance Level
http://www.aptistock.com
This is s a free software and it provides all types of charts and it will give a buy and sell signals too. Try this and have fun.
Try this page:
http://makingmoneyinvesting.blogspot.com…
Here is your answer for the two things you asked about 1)buying on call/margin, 2) put option.
1) Buying on margin involves borrowing money to buy a stock using the stock purchased as collateral. If you want to buy $10,000 worth of stock including commission costs, you deposit $5,000 n your brokerage account and the brokerage firm loans you the other $5,000 and you start out with an equity of 50%. If the stock goes up $1,000 including sale commissions and you sell, the $11,000 is applied against your $5,000 debit balance plus the margin interest accrued and your net is the remainder or $6,000 less the margin interest. If the stock goes down $1,000 including the sale commissions and you sell, the $9,000 is applied against your $5,000 debit balance plus the margin interest accrued and your net is the remainder of $4,000 less the margin interest. If you had not sold and your stock declines to a level where you have less than 25% equity, you would receive a margin call which you would have to meet with either cash dollar for dollar or marginable securities at two dollars for dollar.
2) American put options give the holder the right, but not the obligation to sell "put" an underlying investment at the stated price called the "strike" for a specific term which is referred to as the "expiration". American stock options typically expire the first Saturday after the third Friday of a month.