If you’re like most stock market investors you have struggled with finding the best stocks to invest in.

There are several ways to find the best stocks to invest in. But first you need to decide what method works best for you.

Basically there are two main types of stock market investing

1. Investing in growth stocks
2. Investing in value stocks

Growth stocks are companies that are growing fast in earnings. There are a lot of high tech and medical growth stocks.

Value stocks are stocks that are undervalued because they trade at a lower price compared to the company’s fundamentals (i.e. earnings, dividends, sales etc…)

Growth stocks generally will fatten your bank account faster but there is more risk whereas value stocks will generally grow at a slower more sustainable pace but probably won’t give you ulcers.

Here’s what some investors look for in a growth stock (based on my understanding of the National Association of Investors Corporation (NAIC) criteria):

1. Strong Earnings Growth – either quarter to quarter or year over year

2. Strong Forward Earnings Growth – analysts estimate what earnings will be for the next quarter or year, if they estimate growth that’s a plus.

3. Profit margins – you’d prefer the company to be making a considerable amount of profit to sustain further growth

4. Return On Equity (ROE) – look for growth in ROE or a stable ROE

5. Doubling in 5 years or less – you’d prefer the stock to double in 5 years – look at what the analysts estimate for price potential.

Also here’s what some value investors look for:

1. Shares price below intrinsic value

2. Low Price to Earnings (P/E) ratios

3. Price to Earnings Growth (PEG) ratio below 1 is good

4. Stock price is less than tangible book value

5. A debt to equity ratio below 1

6. The company’s assets should be more than the company’s liabilities by at least a factor of 2

7. Dividend Yield within 1/3 of the amount of the AAA bond yield

8. Earnings growth of at least 7% a year for the past 10 years

There are all sorts of other ways to find the best stock to invest in but this should give you a starting point.

Reed Floren runs a stock market forum where you can find answers to all your stock market questions register for your free membership at this stock market forum

The operatic fat lady is singing and she has many choruses to go. As you know an opera is a musical drama. Unfortunately the one we are watching has terrible screeching with discordant sounds. This opera is called The Market and the scene we are watching is called The Bear.

She started singing 3 years ago and is becoming worse and worse. Will she ever stop?

This act has followed a very long and pleasant act called The Bull. Everyone was beautifully dressed, lived in wonderful houses complete with giant TVs and 2 cars in every garage. The singer was on key and had a wonderful voice. From my experience with operas each Bull act is followed by a Bear act of equal length. I hope the fat lady will quit singing much sooner than that. Is there any way to escape that raucous sound?

Does the stock market follow the opera? Let’s look at the facts. From 1920 to 2000 there were 3 major bull markets that lasted about 16 years with each followed by a bear market that lasted about an equal length of time. Does it mean we have about 13 more years before the next bull move will occur? If you are a student of history and historic cycles the answer must be “Yes”. When you look within the economic and political machinations there doesn’t seem to be much hope for any kind of quick recovery.

Is the fat lady singing in other countries too? It seems she is. Of 34 countries only 6 had positive results for their market indexes that are similar to the New York Stock Exchange and none of these 6 were large countries. Many of the other 27 had losses greater than the U.S. In the chorus most of them were off key. In the stock market 96% of all stock mutual funds lost money during 2002. The opera is bad enough, but the stock market is worse because I am continuing to lose money. Is there anything I can do?

During the opera I can stuff cotton in my ears to stop the noise. Can I stop the losses in the market? Yes. And it is pretty easily done. On all stock you own whether it has a profit or a loss place an open stop loss order at the price you will sell it if it drops that low. Are you willing to lose as much again as you have lost so far?

Brokers will discourage you from doing this, but it isn’t their money. Ask them if they will guarantee it (in writing , of course). If they won’t, you will know what to do.

You may not be able to stop the fat lady from singing, but you can stop the noise (market losses) with a stop-loss order so you can sleep soundly once again.

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 2005

Are you considering investing in stocks? Many people have chosen stocks as their primary wealth building vehicle.

There are a ton of reasons for investing in stocks but I’ll leave you with the most beneficial reasons.

When you buy a stock you are actually a partial owner of the company and if you do your research you can own a very successful company that will reward you for years to come.

Stocks on average grow over 10% a year and that’s a lot more than a certificate of deposit (CD) at your local bank.

Your risk is minimal as long as you don’t put all your money in one stock or in companies that are similar. You’ll want to diversify some of your money into other companies.

You will be taking part in an American pastime and will be learning more and more about your finances.

You will be helping the economy when a company first sells their stock to the public they have what is called an Initial Public Offering (IPO) which brings money in for the company and helps them grow.

So you see investing your money in stocks is really a good thing and if you have some money you can afford to lose (yes stocks can go down) then you should seriously consider learning more about the stock market and investing some of your money in it.

Reed Floren runs a stock market forum where you can find answers to all your stock market questions register for your free membership at this stock market forum http://www.reedfloren.com/forums/index.php?act=Reg&CODE=00

If I could put my finger on the one solitary thing I dislike the most, it’s getting whipsawed. Nothing in this wild game we play bugs me as much as being up 50 cents or a buck one day, only to have to decide what to do the next day as the stock is back down to my buy in price. Do I let it wiggle lower? Should I hold tight to some imaginary stop? Will it shake me out, only to roar higher?

Yet it’s undeniable. It’s part of this game and it’s something each and every one of you are going to have to deal with at some point. If you get involved in any type of investing there are times when a stock is going to confound you like that. The big question is this: Do you stand on some silly principal, or do you take matters into your own hands and do something?

I think you have to move more times than not. Let me explain. Suppose you buy XYZ at 50.50 and it closes at 51.00. You feel good, things went your way. But the next day the futures are down because of excess dryer lint, locusts, floods, hurricanes, oil, hangnails, Martians, or what have you. So, your stock opens at 50.65 and looks to fall from there. Sure enough ten minutes later it’s at 50.50. Do you sell or hold????

My theory is that you look around the market. Nothing’s going to swim upstream unless it really has the momentum or some form of news to propel it. So, if the overall market is fading, chances are your stock is going to fade too. More times than not the best thing to do is bail out, and if you like the darned thing, go back in the next time it runs up over 50.50.

Sure you’re going to eat up commissions, but please don’t be foolish. Take the hit and move on with your life. I’d rather bail out flat five times, than take a 1 dollar hit on a 1000 shares of stock.

Now, if your stock is fading, but you see signs that the market is starting to perk up, maybe it’s worth holding on a bit. Maybe it’s worth holding to your stock right down to your stop, so that if the market turns everything higher, yours will turn with it.

The choice isn’t easy and you’re not going to get it right all the time. There are times you’ll sell flat, at the very low of the day and kick yourself. There are times you’ll hold to your stop, and realize you should have sold flat. But then again, there are times it all works and you feel like a million bucks because you didn’t get shook out and the stock recovered.

There is no easy answer to this and I don’t care what market guru tells you there is. I struggle with it daily, and you will too. Try and use your best judgment, don’t be afraid to pull out flat, and don’t be afraid to go right back in if you have to. It’s all part of trading a market, so don’t let it throw you. Yes it stinks, and usually a trend will develop. Hang in there.

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Are you looking to invest in the stock market but aren’t sure where to start?

If you’re like most stock market investors you’ve heard dozens of opinions on how to invest in stocks but it really boils down to just a few things.

You need to setup a brokerage account and then pick a strategy to use.

I use a broker called Scottrade http://www.scottrade.com/ and they seem to be fine for my purposes.

After you have setup a brokerage account you then need to pick an investing style.

The two main styles are:

Growth investing – where you buy stocks who’s earnings are growing faster than others.

Value investing – where you buy stocks that are undervalued because they are trading at a lower price than what the company is actually worth.

Growth stocks generally are high-tech and medical companies where when I think of a value stock I think of companies like Coca-Cola or Gillette which sell more everyday type items that aren’t as new or exciting.

You then need to decide which method is best for you and stick with it.

After choosing your method you need to research how to invest in that particular method. This is beyond the scope of this article and I recommend you do a search for “growth investing” or “value investing” on your favorite search engine.

Then research some companies and find which ones seem to be the best and invest some money in them, but only invest money you can afford to lose. I don’t want you to invest money in stocks if you might need that money to eat next week or pay the rent., stocks can go down.

Hopefully you have found that stock market investing can be a wonderful thing to learn more about and can be quite profitable.

Reed Floren runs a stock market forum where you can find answers to all your stock market questions register for your free membership at this stock market forum http://www.reedfloren.com/forums/index.php?act=Reg&CODE=00

Option trading is one method of trading that you can partake in. But, in order to take advantage of it, you need to find out just what it is and how it works. This will help you to make decisions that will affect you throughout your trading experience. Here is some basic information about option trading to help you.

What Is An Option?

Your basic question of what an option is can be answered like this. It is a contract that allows two parties to come to an agreement that the buyer will have the right to buy or sell a parcel of the shares. It is set at a predetermined price and at a predetermined date. The buyer does not have to take the option though. He has the right but not the obligation to do so. To get this right, the buyer will provide a premium to the seller.

Call Options

There are two types of option trading that you need to know about. In a call option, the buyer has the right to buy underlying shares of a stock. It is set at a predetermined price and also a predetermined date. Again, the buyer has the right but not the obligation to do this.

Put Option

The second type of option is the put option in option trading. In this type of option, the taker has the same fundamentals but is selling underlying shares. He has the same set up of having the right to do so but not the obligation to do it. Also, the same standards of the predetermined price and date also apply. The buyer of a put option is required to deliver the underlying shares only if they exercise the option.

If you would like to learn more about option trading, you simply need to contact your financial advisor and find out how it can serve your needs.

for more information please see http://www.option-trading-advice.co.uk

Metrics such as price/earnings ratio and dividend yield on the S&P 500 index, a commonly used proxy for the U.S. stock market, are hardly at bargain levels. This has lead several market pundits to predict single digit annual returns for domestic mutual funds over the next decade.

While pursuing the search for the best mutual fund, some mutual fund investors tend to focus exclusively on fees and expense ratios. The rationale is that by choosing mutual funds with low fees, investors will have more of their capital invested. Also, no load mutual funds with low expense ratios will pass on more of the returns they earn to their shareholders.

Is shopping for the lowest fees and expense ratios a smart way to select mutual funds? Not always. The answer depends on the type of mutual fund you are evaluating, the time you can devote to evaluating and managing your mutual funds investments, and the type of cost incurred.

Investing in the Best No Load Index Mutual Funds.

If you believe markets are generally efficient and prefer to invest in an index mutual fund to achieve an index-like return, shopping for the best index mutual fund based on low fees and a low expense ratio makes good sense. The portfolio manager of an index mutual fund endeavors to invest the fund’s assets to track the index as closely and cost-effectively as possible. Larger index funds have an advantage in that they can spread their operating costs over a larger asset base.

Some of the interesting index mutual fund options currently available include no load index mutual funds like E*Trade S&P 500 Index Fund (Nasdaq: ETSPX), Fidelity Spartan 500 Index Fund (Nasdaq: FSMKX), and Vanguard 500 Index Fund (Nasdaq: VFINX) with expense ratios of 0.09%, 0.10%, and 0.18%, respectively.

Investing in Actively Managed Mutual Funds and Strategies.

Mutual fund fees and expenses are just one of several important factors to consider if you believe portfolio managers can add value and out-perform the index through active management. The portfolio manager’s ability and investing style are just as important. Therefore, seeking out the best mutual fund based on just low fees and a low expense ratio may not always be the right approach. It may just be a case of being ‘penny-wise and pound-foolish’.

Legendary investor Peter Lynch, who managed the Fidelity Magellan Fund (Nasdaq: FMAGX) from 1977 to 1990, achieved returns well in excess of the market averages even after accounting for the fund’s fees and expenses.

So too has Bill Miller who currently manages the Legg Mason Value Trust (Nasdaq: LMVTX). Even after accounting for its relatively high 1.7% expense ratio, this no load mutual fund has achieved compound annual returns of 18.6% for the 10 year period ending in 2004, well in excess of 12.0% for the Vanguard 500 Index mutual fund.

Ensure Your Mutual Fund Puts Your Interest First.

Whether you prefer to index or take an active approach to managing your investments, ensuring that your mutual fund is putting your interests first is good investing practice.

Mutual funds charge different types of fees. By looking at some key factors pertaining to fees, you can get a sense of whether the mutual fund puts your interests first or merely seeks to line the mutual fund company’s pockets.

Serving the Interests of Long-Term Shareholders. Some mutual funds impose short-term trading fees to discourage frequent trading of mutual fund shares. Frequent trading disrupts efficient management of the mutual fund and increases operating expenses. A short-term trading fee can therefore actually be beneficial to long-term shareholders if the fee is rightly treated by the mutual fund company.

Fidelity Spartan Total Market Index Fund (Nasdaq: FSTMX), for example, follows the practice of returning short-term trading fees collected on shares held less than 90 days to the mutual fund itself rather than passing on the benefit to the mutual fund company. By having this short-term trading fee structure, this no load mutual fund seeks to contain its operating expenses. Such fees are therefore aligned with the interests of long-term shareholders of this mutual fund.

Passing on Savings from Scale Economies. The operating expenses incurred by a mutual fund are a combination of fixed and variable costs. As the asset of a mutual fund increases, the fixed cost gets spread over a larger asset base. Therefore, the expenses incurred to operate the mutual fund as a percentage of the fund’s assets should trend lower.

A mutual fund that places the interest of shareholders first must pass on the savings from scale economies to the shareholders. The trend in a mutual fund’s expense ratio therefore serves as a metric of how seriously a fund takes its fiduciary responsibility.

Key Points.

1. If you are searching for the best no load index mutual fund, shopping for one with low fees and expenses makes perfect sense.

2. If active management of investments appeals to you, fees and expenses are just one of several important factors to consider. The ability and investing style of the portfolio manager are at least just as important as fees.

3. The types of fees a mutual fund charges and how the fund uses the fees provides clues as to how seriously a mutual fund takes its fiduciary responsibility. Mutual funds that impose fees to contain operating expenses and return fees to the mutual fund help protect the interests of long-term shareholders.

4. Mutual funds that put the shareholders’ interests first typically pass on savings from scale economies to the shareholders.

Notes: This report is for information purposes only. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. This report does not have regard to the specific investment objectives, financial situation, and particular needs of any specific person who may receive this report. The information contained in this report is obtained from various sources believed to be accurate and is provided without warranties of any kind. AlphaProfit Investments, LLC does not represent that this information, including any third party information, is accurate or complete and it should not be relied upon as such. AlphaProfit Investments, LLC is not responsible for any errors or omissions herein. Opinions expressed herein reflect the opinion of AlphaProfit Investments, LLC and are subject to change without notice. AlphaProfit Investments, LLC disclaims any liability for any direct or incidental loss incurred by applying any of the information in this report. The third-party trademarks or service marks appearing within this report are the property of their respective owners. All other trademarks appearing herein are the property of AlphaProfit Investments, LLC. Owners and employees of AlphaProfit Investments, LLC for their own accounts invest in the Fidelity Mutual Funds included in the AlphaProfit Core and Focus model portfolios. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from Fidelity Investments or other mutual fund companies mentioned in this report. Past performance is neither an indication of nor a guarantee for future results. This document may be reproduced only in its entirety including the author’s bio and hyperlinks to AlphaProfit’s web site. Copyright © 2005 AlphaProfit Investments, LLC. All rights reserved.

Sam Subramanian, PhD, MBA is Managing Principal of AlphaProfit Investments, LLC. He edits the AlphaProfit Sector Investors’ Newsletter™, a publication that discusses Fidelity funds. For the 1 year period ending August 30, 2005, the AlphaProfit Focus model portfolio gained 44% and was rated #1 among all mutual fund portfolios tracked by Hulbert Financial Digest. Learn more about the AlphaProfit model portfolio performance .

Stock research is the investment of time in learning more about the stock that is in question. You realize that you need to know basics about a stock but how can you make a decision based on the stock if you have not done your research on it? You can not. Because stock research is so vitally important to predicting whether or not they will do well, it may make sense to you to invest in someone else doing the research you need. If you are not the right person for the job, you can always find someone else out there to do it.

But, What If I Research Stock?

What things do you need to know about a stock before you invest in it? Of course, you want to know if it is going to sore soon, but beyond that, you want to know the who, the what, the where and the why to really get an inside look at what you should invest in and what you shouldn’t.

Here are some guidelines to stock research:

• What does the company do? It is important to know what kind of company it is. You will also want to research enough to find out if the company is financially sound as well. These things will give you a fundamental understanding of the company itself. You will also want to know if the company is growing. You can see the benefits like this.

• Consider what everyone else is doing. How much have others paid to invest in this stock? This will give you a good viewpoint from where you are standing now.

• On the flip side, what do you think that investors will likely pay for it down the line?

• Then, your next step in stock research is to figure out how the stock compares to other companies in the same category/industry.

• Lastly, consider what catalysts will help to change the company as well as the perceptions of the stock. What could affect the stock?

Stock research that is thorough, whether done by you or by a professional should look at all aspects of the stock to determine its potential.

for more information please see http://www.stock-research-info.co.uk

In the stock market, there is an old Wall Street adage to "Sell in May and go away." It refers to the market’s tendency to perform much better during the six month period beginning on November 1st and ending on April 30th than during the period of the same length beginning on May 1st and ending on October 31st. It’s also known as the Halloween Indicator.

According to the 2005 edition of the Stock Trader’s Almanac, the six month period beginning in November gained 10,599.68 Dow Jones Industrial Average points in 54 years. The remaining six months, from the beginning of May through the end of October, lost 588.44 points. The S&P 500 index gained 1089.23 points in the November-April period and gained just 62.09 points during the May-October period.

A $10,000 investment in the Dow made in 1950 and ending in 2003 would have grown to $483,060 during the November-April period and lost $328 during the May-October period. That’s the origin of the saying to "Sell in May and go away."

So, on the surface, it seems like a no-brainer. Just invest in the stock market during the best six months of the year and do something else with your money during the rest of the year. In fact, there are quite a few investment strategies based on doing just that.

However, like anything else that seems too good to be true, on closer examination it’s not quite that simple. According to Mark Hulbert, editor of Market Watch, the Halloween Indicator has done much better since 1970 than during the years before.

Since 1970, the average six-month return during the November-April period is +8.39%, which on an annualized basis is more than 17%. And the return during the May-October period is -0.03%. But, before 1970, the return during the best six months is +3.62% and the return during the worse six months is +2.71% — a statistically insignificant difference.

So what’s the deal? Did something fundamentally change in 1970? It’s hard to say and that’s the problem. There have been attempts to explain what may have changed. According to a study done by the American Economic Review, the timing of summer vacations may have something to do with it. Before 1970, the timing and length of summer vacations was significantly different than in the last three or four decades.

Hmm… I’m not so sure about that. In fact, as far as I’m concerned it’s never been adequately explained why the stock market would do better during one six month period of time than another, no matter which years you’re talking about. But I know this — an indicator that can’t be explained on its merits should probably not be the basis for investing money — no matter what the historical return.

Larry Holmes invites you to visit http://www.smart-money-report.com/ Your common sense guide for financial and investment success.

Our investing journey revolves around finding the fair value of a common stock. If you can find stocks that are cheaper than its fair value, it is probably a buy. If your stock holding rises way above your calculated fair value, it is most likely a sell. This fair value is not constant, fluctuating due to several factors from interest rate movement and to commodity prices.

Previously, I stated that the fair value (selling price) of a stock is when its P/E hits 13.4. This gives investors a yield of 7.45%, which is 3% above the current yield of a 10 year treasury bond. We use 10 year treasury bond as our proxy for ‘free risk’ interest rate. Now, obviously, you have seen a lot more stocks valued at a P/E of more than 13.4, some as high as 30. Are they overvalued? Not necessarily since my P/E calculation assume a 0% growth.

As you may know, earnings does not stay constant all the time. Google did not exist a decade ago and it now rakes in billion of dollars of profit. So, how do we value company with a growing earning? Now, I don’t normally assume growth when calculating fair value, but I am going to take a stab at it today.

For now, let’s make things really simple. We’ll assume that EPS for the current year is $ 1.00 . Furthermore, earning growth will be 10% for the next 5 years and then stay constant afterwards. I think this is a realistic assumption. Predicting earning growth beyond the 5 years is like predicting who will be the next president 5 years in advance.

Now, our next step is to determine that constant EPS after 5 years of growth. With EPS of $ 1.00, 5 years from now, EPS will come in at $ 1.61. So, if we bring this back to the present, how much is this $ 1.61 worth? Please note that $ 1.61 now is more valuable than $ 1.61 five years from now. Using a 4.5% discount rate, that $ 1.61 of future earning is worth $ 1.29 per share today.

Therefore, in essence, the company will be earning $ 1.29 constantly with 0% growth. Using a P/E of 13.4, the company has a fair value of $ 17.32. At this price, the company is valued at 17.3 trailing P/E ratio. You can do similar exercise to other companies with higher growth rate. You’ll find out that some of them are valued at a P/E of 30 or more with the growth assumption built into it.

You can view other free investing idea by visiting our commentary section at http://www.noviceinvesting.com