Stock Investing for Dummies
Description : Should I invest in stocks or trade them? Stocks of profitable, well-run companies are great longterm investments. Think 5 years or longer as an investment timeline. Given that, it is not difficult to be successful over time with a smart investment strategy. On the other hand, trading stocks is a more short-term and speculative approach to the market. While you can make big gains quickly, it's also high risk and much easier to lose money...and fast! What is the difference between fundamental analysis and technical analysis and when do I use each? When you are investing, especially for the long term, you should do fundamental analysis. Fundamental analysis is how you look at the underlying company...its profits, sales, market share, etc. Technical analysis is about understanding the right time to invest in (or sell) a stock by examining market trends, volume, costs, etc. to determine the right entry or exit point. The 'fundamentals' helps you decide what to buy while the 'technicals' tell you when to buy. How does investing in a stock compare to speculating? Investing means you are looking at the underlying company and making sure it 'has the right stuff' to be in your long-term portfolio. Speculating is much riskier and requires investors to make a guess about how the company's stock might perform in the near term. What are the three most important things to consider before investing in a stock? Profit is the most important thing to look at when you are thinking about investing in a public company's stock. Ideally, the stock should be a consistent performer with at least three or more years of profitability. You should also make sure the company has rising sales. Finally, make sure the company is selling