There is no “easy button” to push for making money. Making money requires work – even in the stock market.
People that are successful investors study a variety of sources and ask a lot of questions.
How To Buy Stocks:
1- Shop for undervalued companies.
2- Find stocks that have price-earnings ratios significantly lower than those of their peer group.
3- Watch for bad news. Wall Street often overreacts to bad news such as missed earnings, which will drive a stock lower than it should go.
4- Pick the jockey, not the horse. Find out who is running the company and where the executives worked previously.
5- Look for strong balance sheets. Companies with low debt loads, positive cash flow and consistently good earnings are good prospects.
6- Check out the portfolios of successful mutual-fund companies. If they are getting great returns year after year, they are holding stocks you might want to buy.
7- Know when to cut your losses. You want to invest for the long term, but you don't want to stick with a consistent loser.
8- Work hard. Do research. Read financial news. Study quarterly and annual reports as well as registration statements, looking for trends and opportunities.
9- Grill your broker. If the broker is recommending XYZ stock, ask for a detailed explanation, with an eye to growth prospects and historical performance.
