Buying Stocks and Shares For The First Time - Some Hints

Buying stocks and shares can be a very lucrative occupation. But if you don't take care, you could also lose money. Follow these hints to avoid mistakes.

Some Time

(1) When looking at stocks to buy, make sure you investigate the company carefully. See who is running the company and who they worked for before joining the company. What are their past records? Were the companies they worked for successful? Try to find out the circumstances under which they left. If you find satisfactory answers to these questions, then the company may be worth further investigation.

This article is about Some Time

(2) Make sure to dig into the portfolios of successful mutual fund companies. These companies invest in a number of stocks using funds from many different individuals or companies. If the mutual fund company you're investigating is getting good returns year after year, then you should look a little more closely at the companies they are investing in.

(3) Look for stocks that have a Price-Earnings Ratio - P/E Ratio that is lower than those of similar stocks.

What is the Price - Earnings Ratio?

The 'price' part refers to a company's share price at the moment.

The 'earnings' part refers to earnings per share over a certain period.

It is calculated by dividing the Current Price by the Earnings per Share over a certain length of time.

For example, if a company is currently trading at £58.36 per share and the earnings during the previous year had been £2.45 per share, then the Price - Earnings Ratio or P/E Ratio is £58.36/£2.45, i.e. 23.82.

(4) Don't forget to get all the information you can out of your broker. If, for example, your broker is recommending 'Any Old Company' stock at £25 per share, ask him why? What is the likelihood of an increase in share price and what is the share's history?

(5) Search for companies which are undervalued. This is where your broker can help you again. Give him specific criteria to investigate about stock which is undervalued and then do your own investigations into the companies he suggests.

(6) Ask for a company's balance sheets. If you can see that it has low debts, a positive cash flow and consistently good earnings, then you are probably onto a winner. Remember, however, that past performance doesn't necessarily guarantee future performance.

(7) Keep an eye out for any bad news about a company. Stock markets tend to be cautious and try to overcompensate for any bad news by driving a stock to a level lower than it should be at. You may be able to take advantage.

Above all, work hard by reading the financial news, looking for trends and opportunities should they arise. And make sure you know when to sell if prices are going against you. Yes, investing is a long term activity and you should be aware that you'll have ups and downs, but don't stay with a stock that is consistently losing. Otherwise, you'll soon be broke!

Buying Stocks and Shares For The First Time - Some Hints People search Some Time and look in this page

Visit : washer and dryer in one what to invest in 2011 fireclay sinks shop buy onsale