Much is being said about the use, or mis-use, of necessary funds put into unsafe stocks. Know first of all that NO stock is safe. The only safe place is the bank, at 2%interest per year. But that IS unsatisfactory to most, hence the tremendous increase in interest in the stock market in the past 15 years. I started investing in utilities, and did quite well until deregulation came to the horizon, & that market went crazy. I profitted, but I watched a lot of my portfolio shrink. NO stock is safe.
I play the penny stocks, but only with what I call my "Mad Money". This is money that I can afford to loose. I hate to loose it, but I would not be out on the street, or out of school, if I lost it all.
My husband put himself through an Ivy League school in the late '60's by playing the gold stocks. His parents gave him only what they could, & he had to come up with the rest. This was the ONLY way he met his tuition bill. So it can be done, but it must be done shrewdly. He did not buy "One day wonders". He put what he had at the start of the 4 years into researched picks, and pealed off what he needed each semester, letting the rest of his portfolio continue to grow. Those were different economic times -- high inflation, war, etc. --- gold stocks were a sound investment at that time. Todays economy probably needs a different analysis.
I have devised several trading rules, which I have learned the hard way:
1) If it's a small cap stock & it's doubled in the past week, you've already missed it. 10% of the time it will double again. 90% of the time you are buying the top. If its a large cap & has doubled in the past year, you've missed it.
2) Use stops. It's tough to loose a couple hundred, its a bitch to loose a couple thousand.
3) Do your own research. If something is ticking up, find out why. If there is no formal news, it might be this thread, rumors, etc. Don't buy it until you know why. If it's a good investment, it will be a good investment tomorrow.
4) If it goes up hyperbolically, it comes down the same way. Herd mentality, remember.
5) Pick your profit level & put your sale price in the day after you buy the stock. You may not have free time to sit & watch the market the day this baby decides to take off. It may be years before you get that chance again.
6) Don't count your profits until you have sold the stock. They do not do what you wish they do. They do what the market makes them do. I think it's a jinx to do so.
I'm rambling, but I hope this helps.
P. Webster |
