Let’s be sure you know what an ETF is. It is an Exchange Traded Fund. They have not been around very long, but are catching on. More and more are being created. It is similar to a mini-mutual fund and has many of the same characteristics. A regular fund is composed of many stocks. There are index funds that have hundreds of stocks with the same equities as the S&P500. Almost all major funds have several index funds and there are ETFs with the same composition.

If the investor buys an index mutual fund he must wait until days end to have the entry price calculated. Not so with an ETF. It can be purchased during the day at any time and the buyer receives the prices of the stocks at that moment. Each mutual fund family has their own managed S&P500 index mutual fund whereas the SPY (the ETF of the S&P500) is the same for all brokerage companies. The only difference for the trader is the amount of commission charged that can be as low as $7.00 to as much as the brokerage company wants.

Expenses of a “good” fund are about 1.5% or less. Expenses for ETFs run about 2/10th of 1%. Big difference.

Brokers want you to buy a regular mutual fund because he has a trailing commission every year. It may only be 1%, but most people who buy mutual funds don’t trade so this is better than a poke in the eye. ETFs have no trailing commission. Brokers will tell you these commissions are bad, but when you figure it out you are way ahead.

Suppose you put$10,000 in an ETF. The total commission might range from $7.00 to $25, maybe a little more depending on the broker. It is a one time buying charge. Even if you buy a no-load fund other than an index fund there is still the 1.5% annual expense fee. That’s $150 every year. You don’t have to be a rocket scientist to see why he wants to switch you into a mutual fund.

You can’t put stop loss protection on a mutual fund, but brokerage houses will accept Good Till Cancelled stops on ETFs. Never rely on any broker to “watch your account”. He won’t. Never invest without stop loss protection.

The majority of mutual funds have adopted redemption fees. These are extra fees to discourage the investor from selling. They may be as short as 30 days or as long as one year with a fee as high as 2%. There is no solid reason for this. That fee goes in the fund manager’s pocket. He wants to keep your money because he gets paid on the amount of money in his fund and not on performance. Whether you win or lose he makes money.

The mutual fund industry has a serious and progressive case of Alzheimers. They are chasing customers away in droves with excess charges and high commissions.

It is time to look into ETFs.

Al Thomas’ book, "If It Doesn’t Go Up, Don’t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know. Copyright 2006 All rights reserved.

A stock’s P/E ratio can be a nice guideline as to the financial condition of a company, but how valuable is that information? To determine that, we need to evaluate exactly what a P/E ratio is. In simple terms it is the stock’s current price divided by the previous 12 months earnings per share. However, if you examine the components of the ratio more closely, fundamental flaws will appear.

For starters, the ratio uses historical data (previous earnings) in conjunction with dynamic current data (the price of the stock). Historical value is just that: History. While a company’s future earnings may be similar to previous earnings it can be difficult to determine for several reasons. For example, the company may have gone through reorganization so it had poor earnings last year, or maybe the company released a new product last year so it had higher profits than it can expect this year. Worse yet, maybe the company had to borrow more money so it has higher interest payments reducing profits, or maybe the company issued more stock making it less profitable per share. There are literally hundreds of factors like these that can devalue the importance of the P/E ratio.

To offer more current information many websites have a forward P/E ratio in addition to the standard P/E ratio. The forward P/E ratio is the average earnings estimates provided by analysts divided into the current price. While there may be some value to this number, unforeseen events happen all the time changing the projected earnings of the company. Furthermore, only the large companies have enough analysts following their stock to offer useful projections. Many smaller companies only have 1 or 2, if any, analysts following their stock.

So am I telling you that the P/E ratio is useless? Absolutely not, it is a very good starting point when researching a stock. However, it is only a number to start with. Dig deeper into the number to find out what is really going on with the company. Just because a book has a pretty cover it doesn’t mean it is worth reading. A stock may have an attractive P/E ratio, but that number may be hiding something else. Find out for yourself.

Visit http://www.1stock1.com, a free information site all about investing. The site was created by Alan Reisch, a former investment representative with many years of investment experience.

Historically smaller stocks outperform larger stocks. However, at the same time many more smaller stocks have fallen by the wayside than the larger more established stocks. As a reference point, a small stock is considered any stock with a market cap under 1 billion while a larger stock is a stock with a market cap over 5 billion. A company’s market cap is (current stock price x current shares outstanding).

Investing in small cap stocks is a way to increase your investment return, but you should keep a few important factors in mind. One of the most important things to consider is liquidity. Many small companies do not trade very many shares each day. The drawback of this is that the stock will likely be very volatile and have a large bid-ask spread (the difference between what you can buy the stock for and what you can sell the stock for). Even if the stock is a great company it may be difficult to buy and sell shares without moving the stock price up or down against you. My rule of thumb is to look for stocks that are averaging at least 100,000 shares being traded each day.

Another factor to consider when buying a small stock is the risk of dilution. Dilution is when a company issues more shares to obtain cash for growth and operations. If done properly, issuing new shares can help a company’s growth and profitability. However, if shares are issued unnecessarily or too quickly it can literally cut profits in half. Let me give you an example: A company has 20 million shares outstanding and it is earning 20 million dollars a year. The earnings per share of this company is $1.00 per share ($20,000,000 / 20,000,000 shares). Ok, but the company is planning a big expansion and it now needs to issue 20 million more shares. The earnings per share is now $.50 per share ($20,000,000 / 40,000,000 shares). After issuing the new shares, the company has to double its profits just to get back to $1.00 per share earnings.

The third thing to watch for when trading small stocks is inside ownership. Inside owners are people that work for the company that also own stock in the company. If key people that work at a company do not have a lot of shares in the company, find out why. When a company’s key employees have a significant amount of shares in the company they are likely confident in the future growth of the company. In addition, it is in their best interests to help the company succeed. Keep an eye out for any insiders that sell a large portion of their shares. This can often be a very negative sign.

Finally, when investing in small companies make sure they are reporting financial statements in a timely matter, if they are reporting them at all. Don’t rely solely on news releases to find out about a company. If financial statements are not available it is easier for people to create news to manipulate a stock’s price. This is especially true of very low priced stocks as it is much easier to accumulate a lot of shares. Personally, I will not invest in a company that does not provide access to financial statements. While there may be other factors to consider, following these 4 suggestions when buying small cap stocks will greatly increase your chances of success.

Learn more about investing at http://www.1stock1.com, a free investment website. Alan Reisch has a degree in finance and has spent many years working with investments, both personally and profesionally.

When trading penny stocks, once you’ve had a big success, your first thought me be about cashing out in order to enjoy the fruits of your investment. Keep in mind however that taking all the money off the table in the middle of a good deal (such as buying a house or car) may not the best course of action. Of course these are the things you are hoping to buy with your earnings and if you let all of your money ride you risk loosing it all if the stock dives. So what’s an investor to do?

Savvy investors have developed a rather solid strategy of selling a portion (typically half once the stock has increased in value by 100%). This leaves you with the benefit of potential future increases while protecting the value of your initial investment.

If you’ve found another investment that you’re interested in you could take a one third approach. This means leaving one third where it is, cashing out a third, and investing a third in the other stock you are interested in. While each situation is different the method is solid and used by many successful investors, particularly those who invest in the volatile market of penny stocks.

While one big win often leaves you hungry for the taste of another, it may be a good idea to take some time off after a successful trade and before putting your gains back into the market. It is always better to be ruled by reason than emotion, particularly when dealing with money. Investing should be done with reason and rather boring instead of made as the result of emotions and a need for adrenaline.

Vegas has a term for players who are much more risky with their winnings than they tend to be with their own money. It’s called “playing with house money”. The reasoning on the part of the players is that this money wasn’t their money to begin with and it’s no big loss. These players are also often less upset once they’ve lost it all.

This mentality often takes over with stock market investing. Rather than seeing that money as theirs, investors see it as house money they can play with and are willing to take investments that they would have otherwise passed on in hopes of another big win. Rather than relying on the pain staking hours of research and agonizing over the decision to purchase for your last win, you invest foolishly and loose it all. Taking a little time in between investments is often a good strategy for keeping your head in the game and money in your pocket.

Cashing out after a big rush on a stock is also a good idea. Especially if you are confident in the potential of that stock, this allows you to sell your stock then buy back after the initial rush when prices have gone down. Most of the time you can buy it for far less than you sold it.

There’s only one thing that is worse than selling too early when investing in stocks and that is selling too late. Do not try to pick the absolute top and sell at that price. It is much better to sell on the way up, than on the way down and it is nearly impossible to predict at exactly which point stocks will peak. Have a cut off point, once you’ve reached that point and made an acceptable profit, then it’s time to sell. Don’t look back at what you didn’t make either, be content with you much you’ve made and move on to the next stock. If you begin obsessing over every penny you could have made, perhaps this is not the best investment option for you. If you can walk away clean you can enjoy the exhilaration of the greatest game on earth.

Interested in "buying penny stocks? Find out the best way to invest in penny stocks to avoid losing your money. VIsit http://www.1source4stocks.com

The movements of the stock market can be very dynamic and swift or very steady and methodical. This often depends on the time frame you are referencing. The shorter the time reference, the more choppy and irrational stock movements appear. The longer the time frame the more smooth a stock’s price movement becomes. The reason for this is that over time stocks tend to perform in line with their financial condition. If a stock has had consistent and steady growth, the stock’s price will usually follow as time passes. However, in the short term a stock may perform much differently.

To find out why, let’s look at what determines a stock’s price. A stock price at any given time is simply the equilibrium price at which someone is willing to buy a stock for and at which someone else is willing to sell the stock for. Human emotion plays a critical role in a stock price, especially in the short term. The two primary emotions that cause a person to act in the stock market are fear and greed.

If a stock is going up, more people are likely to buy it because they are afraid of missing out on an opportunity. Conversely, if a stock is declining, people are more likely to sell because they are afraid of losing more money. However, there are also some opposing forces such as people are often afraid to sell a stock because the stock might go back up and they don’t want to miss out. Similarly, a person might be afraid to buy a stock as it is going up because it might go back down and they will lose money. While all of these are natural thoughts and emotions in the short term, in the long run the market becomes more rational and less dictated by emotional bias. Therefore, in the short term stocks can move in directions that seem opposite of its financial success or failure. As time passes, emotional price movements will subside to movements based on the financial condition of the company.

In conclusion, if you are buying a stock based on financial information, don’t be too concerned with day to day price movements. Instead, continue to evaluate the financial condition of the company and base your decision to buy, sell, or hold on that information. If you are going to trade stock in the short term, be prepared to learn how to evaluate what people are thinking and how they are likely to act based on those thoughts. This is a difficult thing to do, but stock charts and indicators are often used as a gauge as to what the people in the market are "thinking" and doing.

Learn more about investing at http://www.1stock1.com, a free investment website. Alan Reisch has a degree in finance and has spent many years working with investments, both personally and professionally.

When it comes to the stock market, buying is easier than selling. One of the hardest things to do is know when you should sell.

No matter what, you need to know what you are looking for in your investments. There is a lot that goes on in the stock market. You have to not only consider how much you are making or losing, but the tax ramifications as well.

This is why investing for the long term seems to be the least stressful and most beneficial investment technique. You already know that the market works in cycles, what goes up will go down and then go up and then go down. You simply are hoping that the ups are greater than the downs over time. In most cases, if you are investing for the long term and still have a decade or two to see growth, you should probably stay where you are. Consider moving some of your investments around, but the stock market may still be the place for you to be.

If you investments aren’t for the long-term, you need to know ahead of time what would signal the end for you. Many people set a price point up and down that says sell. This is their risk area. Others look to the economy in general or their personal financial situations. Regardless, you have to have an out.

When you have stock investments, you have to keep your eye on the market. There are three factors that usually direct the movement of the stock market: interest rates, inflation and the stability and profitability of key companies. In general, when inflation goes up, so will interest rates and the stock market will slow. That is a generalization. We have recently seen that the economy is often unpredictable. And keep in mind, these changes rarely happen overnight. It takes up to six weeks for a trend to form.

In other words, there is no real way to predict what the market will do. There is history to consider though. And history generally says to watch inflation and interest rates.

If the market is strong, but you have a stock that isn’t performing well, you have to look at how much you are loosing. Will the stock go back up? Do you have an exit point already set. Many people will only allow a stock to go down by 7% and then they sell. Keep in mind that selling doesn’t mean you are giving up on that investment. There are plenty of stocks out there that are performing well. Just move over to one that fits your goals and your needs.

If your stock is performing well, you may be tempted to stick with it even after it hits your cap for selling. I don’t advise you to disregard your out. Eventually, there will come a time when you lose money by not selling when you said you would. Often, a stock will bounce up but come down even further than before. Sell on the up if at all possible. It is harder for a stock to go up than it is for it to go down.

There are so many factors in play here. You can look at your stock’s volume, earnings and splits. You have your gut telling you what to do. There are economists out there saying the economy is great, while others are warning of a train wreck.

The key is to avoid all the drama by simply setting yourself a cap on how high or how low you will go from the very beginning. Watch your investments and make your decisions. Then live with them. If you didn’t make as much as you could, remember that you could have lost. If you do lose some, remember that you can invest your money elsewhere. You aren’t finished. Just know when to leave.

Martin Lukac represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and San Diego loan portal http://www.LendingSanDiego.com

As my articles typically contain equities that both manufacture and obtain most of their earnings in the United States, by some careful examination, I have found an amazing investing opportunity north of the border that is too lucrative to pass up. By purchasing shares of this company, not only will you, as an investor, expect to receive long term growth appreciation to your capital, but solid short term returns as well.

To continue the suspense a little longer, it is clear that investment banks typically perform at amazing levels relative to any other sector for reasons obvious to many. Since they are the master chiefs who deal with IPOs, earning predictions, and overall high information which affect all the markets on a day-to-day basis, it should be expected that investing in a bank, regardless the price, is already an excellent investment. However, when looking at American based banks such as Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, and Bear Stearns, only Bear Stearns have accumulated the same amount of capital gains, percentage wise, when compared to banks situated in Canada. While looking at these Canadian based banks such as Canadian Imperial Bank of Commerce (CM), Toronto Dominion (TD), Royal Bank of Canada (RY), and Bank of Nova Scotia (BNS), each one of these firms have had close to 150% growth in terms of share price over the past five years.

Now you may ask if there is a difference between purchasing one stock over the other to obtain maximum gains. The answer to the question is more than likely no. To be honest each one has very similar fundamentals, and the process of choosing which one to purchase should rely on previous knowledge, preferences, or other information that can be valuable to the inclination of the share price. In terms of what I would purchase can be attributed to Canadian Imperial Bank of Commerce. I choose such a firm, not because it has significant advantages over TD or the Bank of Nova Scotia, but because of more nitpicky details. For example, while most all of the other banks have a P/E ratio in the 10-20 range, looking at CM, the P/E is at an amazing rate of only 1.47. There are not many other stocks in the market where you can find such a ratio in any industry. Thus, what this low ratio means is that CM constantly produces earnings at such a high number that it becomes undervalued in terms of share price of what it actually should be. When this happens, there is a strong possibility that this stock will skyrocket to become close to its estimated real value. In addition to that, CM supports pretty solid earnings as all banks typically do with a strong margin percentage growth from last year to now. While many analysts have labeled this stock as a sell more than a buy, I believe that’s because the stock is near its record high. However, if technical analysis does not fail us, then the upward trend that has been experienced throughout CM’s tenure should continue to provide optimistic results and a strong opportunity for strong capital gains.

Ergo, while picking any of these Canadian banking stocks will yield excellent results, even compared to their American equivalents, I believe that the best of the best can be attributed to Canadian Imperial Bank of Commerce. Even if there is a slowdown in the share price growth over the next few months as the American economy goes into recession, that does not mean the Canadian economy will go through one of the same magnitude if any at all, and thus such evidence provides even more beneficial optimism to purchase any one of these stocks north of the border. Purchasing shares of CM, TD, or other Canadian banking stocks may not yield tremendous capital gains right away, but come another five years, you should definitely expect to see a wonderful rise in terms of share price.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at dbiray@gmail.com, or to view other articles written by him visit http://www.biraynetworks.co.nr

When it comes to investing money in the stock market, most people assume that they must have a professional handle it for them. This works for many people, while others are able to do a perfect job on their own.

But you have to realize that a financial advisor is there to help you manage your investments. He can take your investment money and put it in a wise place. But the overall picture won’t be served if you don’t tell the advisor about your overall financial situation.

You will find that most financial advisors will ask you about your debt, your job stability, your insurance, your wills or trusts. They do this for a reason. They understand that your investments can’t be optimized if you are at risk in some area. The management of finances doesn’t just focus on the stocks you hold, but the entire picture.

For example, if you have $20,000 to invest, but owe $15,000 in credit card debt, a good advisor will tell you to pay off your debt first. They would advise you have good life insurance, disability insurance and personal liability insurance.

Your financial goals will also play a role in the investment of your money in the stock market. Are you looking to make money in the long run or rather quickly? What is your risk level? Are you willing to gamble or do you like to play it safe?

Look for an advisor to ask you about your retirement plans and your sources of income. She may ask about your goals and dreams, how much you spend each year, questions about your family and your must haves.

This gives a financial advisor the accurate picture of your finances. Remember, one can’t just look at one category alone. Why invest your money and earn 10% over the long run when you are paying 18% in interest to a bank for credit card bills? You won’t be making money, you will be losing it.

There are many different types of financial advisors out there. Some are more qualified than others. Some create a financial plan for you and that’s it. Some help you implement the changes in your finances. Look for a certified financial planner professional that has a good reputation in your area. Take the time to interview and really consider if the person is someone you can open up to and trust.

Remember, when it comes to your investments, you are still the boss. Regardless of what an advisor think or knows, you still control your money. Don’t just give all of your financial well being over to someone else. Do the research and know what is going on with your money. Ask that you are contacted before changes are made in your account. Ask that things be explained so that you understand them. Ask to know each and every commission.

When it comes to investments, some people really benefit from the advice of experts. Many of us simply do not have the time to manage all the details on our own. Look at your finances, your goals and your family in deciding whether or not to use a financial advisor to help manage your investments.

Martin Lukac represents www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at www.1AmericanFinancial.com and San Diego loan portal www.LendingSanDiego.com

In order to get the most out of your returns, without paying a high fee, you need to be aware of the different classes of mutual fund stocks and their advantages and disadvantages. Mutual fund companies often charge a higher fee when you opt to invest in ‘high risk high return’ stocks. However, paying higher fees does not necessarily ensure high returns because stock prices fluctuate on a daily basis. This makes it difficult even for professional fund managers to predict the future course of a certain stock. Mutual fund classes show the type of stocks covered under each mutual fund and the fees charged. The most common mutual fund classes are A, B, and C.

Class ‘A’ Stocks

These types of stocks attract lower 12b-1 fees and are considered the best if you are planning to keep investment for two or more years. Investing in such stocks makes you eligible to receive discounts, every time your investment arrives at a certain amount. The amount is selected at the time of buying the mutual fund and is referred to as the ‘breakpoint’. Discounts are also offered when you express the intent of reaching the breakpoint within a specified period. However, in case you are unable to reach the breakpoint prior to the deadline, as mentioned in the ‘letter of intent’, you are required to pay the regular front-end fees.

Class B Stocks

These types of stocks are characterized by their contingent deferred sales charge and are appropriate for investors who have limited resources and are looking for long term investment. Small investors prefer these types of stocks because they are not required to pay front-end fees and the deferred sales charge keeps reducing. The other benefit is that these stocks are automatically converted into Class ‘A’ stocks, which have a lower yearly management expense ratio or MER. The only problem with Class ‘B’ stocks is that you are required to pay the deferred sales fees in case you withdraw the funds before the specified period. Another disadvantage is that you do not avail of discounts, since there are no provisions for a breakpoint. This means that you are not able to reduce investment costs even if you increase your investment.

Class C Stocks

These types of stocks work best for those planning to redeem the stocks within a short span of time. They are beneficial because you are not required to pay the front-end fees. The back-end load is less too, one percent in most cases. Even this one percent back-end load is eliminated if you keep the investment for more than a year. Some of the drawbacks of Class ‘C’ stocks include compulsory back-end load, higher MER, zero discounts and lack of provision for automatic conversions.

In order to benefit from your investments, you need to consider a number of factors, such as the time for which you plan to invest, the frequency of your investments and whether you are liable to withdraw the funds in the near future. The analysis of the benefits and drawbacks of each class of stocks will help you to select the most appropriate investment option, based on your specific needs and preferences.

Joe Kenny writes for the UK Loan Store and offer more information on UK debt consolidation loans and other loan topics available on site.
Visit Today: http://www.ukpersonalloanstore.co.uk

When the Ten Commandments were brought down from the mountain top, it was noted by several onlookers that they were engraved on stone tablets. Granted paper wasn’t in great supply nor were there any Bic pens on hand. It was also noted that these weren’t suggestions. They were commands from the almighty.

As a trader, I’ve learned a lot over the past 25 years. If the commandments were for all mankind, then why not have a few for traders as well. Here are my ten commandments of trading. We’ll look at the first 5 today and the other 5 in just a few days.

1. Discipline counts. As a former officer in the Marine Corps, the most likely place for me to start is with discipline. Pros have it – amateurs don’t. Traders who lack discipline are reckless and soon looking for another vocation. You must guard your trading capital as if your life depended on it – because it does.

2. Show no emotions. There’s no crying in baseball and there is no crying on the trading desk. Decisions are made based on “what is” not “what if”. Decisions made from the emotional point of view are flawed and you must steer clear of them at all costs.

3. Don’t follow the crowd. See what everyone else is doing and do the opposite. I like to be the first one at a party and the first one to leave. Why? The food is fresher and the idiots haven’t ruined it for everyone. What I want to do is to fade hope, buy despair and know where the exit is. It’s the first law of the jungle – if you don’t know who lunch is – it’s you.

4. Survival of the fittest. In other words, to survive, you must adapt. There is a time to be long and a time to be short. There’s a time to take risk and a time to avoid risk. Know which is which. Times and conditions change and you must do the same if you wish to survive to play another day.

5. Patience is a virtue. As a trader, you need patience. You don’t have to swing at every pitch, but when you get your pitch, you better swing. Be patient and pick your spots. The trades that are right for you will find you.

In my next article, we’ll at the next 5.

ABOUT THE AUTHOR: R.A. Christy is a professional stock trader and recognized authority on technical analysis. His web sites (long-short-trader.com and http://www.christyinvestments.com) contain a wealth of information, articles and resources on everything you’ll ever need to know about trading stocks. If you’re really serious about making money in the stock market, you need to learn to trade the way the “pros” do.