Monthly Archives: November 2013

How to Spot Penny Stock Scams

How To Spot Penny Stock Scams

Protect Yourself: Learn How To Spot Penny Stock Scams!

Knowing “How to Spot Penny Stock Scams is a good skill to have. And believe it or not, learning to spot penny stocks scams is actually quite easy when you know what to look for.

So while penny stock scams come in all varieties of pump-and-dump schemes… there are a few key things you can look for to help you spot a penny stock scam before you risk any money on these speculative stocks.

In this blog post I’ll show you the most common hallmarks of penny stock scams and how you can spot these nefarious schemes a mile away.

But if you’re starving for a penny stock trading service that can make a difference for you today, stick to the popular penny stock trading products like The Penny Stock Egghead.

Anatomy of a Pump and Dump – Hot to Spot Penny Stock Scams:

Learning how to spot penny stock scams is actually pretty easy once you understand how the scams work. That’s because most pump-and-dump, or newsletter penny stock scams work the same way.  It goes something like this…

Some newsletter promoter, boiler room chop shop or “penny stock guru” will slowly build up a position in a speculative penny stock. They will slowly buy a couple hundred or thousand shares a day for a month or two until they have a pretty significant supply of penny stock.

Next, they will start to promote the penny stock. This might be in the form of falsified research, skewed statistics or just a really aggressive sales pitch. Penny stock scam artists rely on people’s desire to make a quick buck. They make it seem like you can double or triple your money without any risk. Then…

After a flurry of penny stock promotion some of the people being pitched on the stock will start to buy it. Since these penny stocks are traded on such low volume, even modest buying can start to send the price up. Once the penny stock starts to go up in price other newsletter subscribers or guru followers being pitched on the stock will buy it as well, since they perceive the prophesy as being fulfilled.

As interest in the stock idea reaches a fever pitch, the guru or stock promoter will start to unload his or her shares of the penny stock. They will sell all or most of their shares to all of their loyal followers who are then left holding the bag. Typically since the penny stock scammer has built up such a supply it will cause the price of the penny stock to go back down. Without the fake interested being created, the volume of the stock evaporates and traders are left facing a very wide bid/ask spread with no sign of getting out of their positions even.

Once the penny stock scammer has sold all of their stock, they will move on to the next penny stock and try to burn a new group of followers. Wash, rinse and repeat. Penny stock scams are a dangerous game.

But…

Now that you know how penny stock scams typically unfold, here are two easy steps you can take to help you avoid danger:

How To Spot Penny Stock Scams – 2 Red Flags:

Since most penny stock scams work the same way it’s pretty easy to spot them. And there are a couple key indicators you can look for to determine if you are facing a penny stock scam or not.

(1) Low Volume Is A Danger Sign: You can learn how to spot most penny stock scams by watching the average volume of a stock. The reason people often get trapped in penny stock scams is because after the promoter dumps the stock or runs out of people to rope into the scam, the bid volume will dry up. Then you are literally left holding a penny stock that nobody wants. One way to avoid this is to use a hard and fast rule not to buy penny stocks that trade too thin. A rule of thumb I like to use to avoid penny stock scams is not to buy companies where my trading would make up more than one 1/1000 of the daily volume. For example: if I’m looking to buy 200 shares of a company I want to see the average daily volume for the last month be at least 200K shares. Make sense? When you keep an eye on average volume (not current volume) you are much more likely to be able to exit your penny stock position on your own terms. And that’s the first step to spotting expensive penny stock scams.

But to further reduce your risk…

(2) Check Your Speculation At The Door: Penny stock scams are notoriously speculative. And if you know how to do a little fundamental analysis you can easily avoid the most dangerous of the penny stock scams. Often times the promoter of the penny stock scam will be trying to sway you to buy the stock based on some new research, a breakthrough into a new market or a successful clinical trial result.  But all that is speculation, not investing. In these cases, you need to look at the valuation of the penny stock just like you would any other investment. You need to make sure you have a margin of safety and that you aren’t paying too much for pipe dreams of earnings growth. If you are going to speculate, at least make sure the stock is sufficiently liquid and define your stop-loss BEFORE initiating the trade.

And by the way, if you’re wondering how to keep a margin of safety in your penny stock trading, watch the short video below..

Stock Screener: How To Avoid Penny Stock Scams [VIDEO]:


Now that you know how to avoid penny stock scams, why not read about the best penny stocks to buy? To learn even more you can sign up for exclusive email updates and analysis below.

Market Wizards (Book Review)

Market Wizards Book Review

Find out why Market Wizards by Jack Schwager is a must-read

Market Wizards by Jack Schwager is a classic trading book, featuring interviews with the worlds top traders and money managers.

So is Market Wizards really worth all the buzz? Well, I actually just finished reading Market Wizards so let me share the best and worst parts of this stock trading book so you can determine if Market Wizards is worth a spot on your reading list. And if you didn’t know…

Market Wizards was first published in 1988 and gives an insiders view into how the top traders in the world see the stock, option and futures markets. A number of legendary traders from Paul Tudor Jones, to Jim Rogers to Martin Schwartz are all interviewed in this fast moving trading book.

Why Market Wizards is a Must Read:

Market Wizards is an amalgamation of some of the best trading brains on the planet. So for that reason alone, I feel good declaring Market Wizards a must read for anyone who is interested in trading the stock market full time.

Market Wizards contains a plethora of information that can help you not only understand the stock market, but also take advantage of it. The book interviews futures traders, options traders and long term investors who sometimes act like stock traders.

Market Wizards is also easy to understand. While there is a glossary at the back of the book, you probably won’t need it. Schwager does a good job always keeping the discussion grounded in easy to understand terms. Even if you aren’t familiar with trading terminology the book is quite easy to read. If you are intimidated by long books don’t worry either! Since the whole book is a series of interviews it actually moves very quickly. The book is about 500 pages but each page doesn’t have that much writing on it because it is in Q&A format. So if you’re not an avid reader don’t worry, Market Wizards is easy to digest.

And that leads me to the next point I want to share with you..

The Best Part about “Market Wizards”:

Market Wizards is very focused on education throughout the whole book, and this is one of the things I like about it most. When Jack Schwager set out to write this book and interview all the top traders in the world, he did so primarily for his own education. I actually saw him admit this in a TV interview. But I think this “selfish” focus on education serves the reader very well. That’s because…

Market Wizards has an introduction at the beginning of each chapter that explains why the trader was selected for the book. Then after the interview Schwager writes a couple of pages debriefing the interview and noting what he thought were the most important takeaways. It is this focus on actionable information that really makes the book valuable for the trader who is hoping to improve their alpha.

One thing worth mentioning that is congruent with the educational approach of the book is the way Schwager truly tries to absorb and digest everything everyone says. He doesn’t brush anything off. I especially liked how he makes comparison between different traders when two people overlap or disagree about an aspect of trading. Schwager never criticizes anyone and is careful to try and integrate a myriad of different approaches to trading in the markets.

Another cool aspect of Market Wizards is that the updated version (shown in the picture above) has an afterword chapter that was written in 2010. Schwager uses this short chapter to recap what he thinks the most valuable trading lessons are. It’s amazing to see how so much of the Market Wizard advice is applicable 22 years after publishing.

And in fact, Market Wizards was so well received that Schwager has now published multiple books in the series. But before we get too excited I should remind you that Market Wizards is not a secret silver bullet solution to improve your trading…

What Market Wizards Leaves Out:

Don’t buy Market Wizards for the wrong reasons. You should know that the scope of this investing book is not about how to execute trades or the exact systems used by top traders. Instead, the book is more about the psychology of trading and what it behavioural traits it takes to be ultra-successful as a trader.

This might sound fluffy, but keep in mind everyone interviewed in Market Wizards manages hundred of millions or billions of dollars. So the lessons are actually incredibly valuable and it’s even more interesting to see the overlap between what different traders say.

And actually, I’m happy that Market Wizards doesn’t focus exclusively on trading systems, signals and indicators – because if it did, the book would probably be irrelevant by now. But like some of the best classic investing books, Market Wizards focuses primarily on the psychology of trading and how human nature permeates markets. And because of that focus on personality and emotions the book is as relevant today as it was when it was written.

So now that you’ve read Market Wizards, should you rush out to order it online?

Market Wizards – The Final Word:

Market Wizards is a fantastic trading book that gives you an inside look at some of the best traders of all time. Jack Schwager asks a ton of in-depth questions to get these mysterious masters of the universe to open up.  And by the way…

I had been meaning to read Market Wizards for a few years. But I kept forgetting or not getting around to it. Finally one of my impatient friends brought it over to my house and made me read it. And to be honest with you I’m actually very happy he did! The book helped me internalize some important lessons about stock trading best practice and what it really means to be an expert investor. That’s why I recommend you buy Market Wizards on Amazon right now!

Market Wizards Video Book Review:

You Might Also Enjoy:

Best Classic Investing Books

Best Classic Investing Books

Don’t miss the best classic investing books…

The Best Classic Investing Books can make all the difference in your stock trading. While there aren’t many investing books that have stood the test of time, these are the best of the classics.

So what should you expect from the best classic investing books?

The best classic investing books cover a wide variety of topics. But they all offer take home lessons that you can use to make more money trading or investing in the stock market.

So, here are (in my opinion) the best classic investing books…

List of The Best Classic Investing Books:

  • The Richest Man in Babylon: This is one of the best classic investing books of all time. It’s a very short book that you can read quickly. The Richest Man in Babylon is a series of simple parables that help you remember the time-tested principals of wealth creation. My dad got me this book a long time ago and I have read it many times since.
  • Think and Grow Rich: If you haven’t heard about this classic investing book, you should know the author, Napoleon Hill, compiled the content by interviewing the most successful business people of the late 19th century.  These lessons were then compiled into this classic investing book. It’s one of the best so you won’t want to miss it.
  • The Intelligent Investor: Benjamin Graham is the father of value investing and wrote this classic investment book to make his concepts and analysis a little more easy to understand.
  • Reminiscence of a Stock Operator: This classic investing book was first published in 1923! It’s the slightly-fictionalized account of one of the best stock traders who thrived in the frontier markets of the early 20th century. However although this classic investing book was published over 90 years ago, the lessons in this book are really about the nature of market participants (humans), which have stood the test of time.
  • How I Made $2,000,000 In The Stock MarketNicolas Darvas wrote this classic investing book in 1955 after he accumulated a fortune trading in the stock market. Amazingly, Darvas traveled the world as a dancer while trading stocks on the New York Exchange. He hardly looked at the quotes and communicated with his broker periodically by telegram. The reason I think Darvas wrote one of the best classic investing books is because he tells in step by step fashion exactly how he came up with this method for picking stocks. He shares a lot of his mistakes along the way and these classic lessons still apply today – making this one of the best stock market investing books of all time.

There are a lot more investing books that I can recommend. But these are the best of the classics. So if you’re looking for a book to read this holiday season, I suggest reading one of the above. By the way, you can click through on any of those links to read an in-depth book review of these classic investing books. Or watch this short video on classic investing books to learn more…

Best Classic Investing Books [VIDEO]:


So now that I’ve shared my favorite stock trading books, I want to hear from you…

What Do You Think Are The Best Classic Investing Books?

And By The Way: If you’re looking for more places to get stock ideas and refine your trading methodology, enter your email address below for exclusive analysis. 

Why Do Companies NOT Pay Dividends?

Why Companies Do Not Pay Dividends

Distributing cash to shareholders in a dividend doesn’t always make sense for a company

Why Do Companies NOT Pay Dividends? It’s a good question that new investors often ask me. And since high dividend yield companies are usually so sought after, there is a lot of value in learning when it makes sense for companies NOT to pay dividends.

So read this short blog post to discover the hidden costs of high dividends, as well as when it makes sense for companies not to issue a dividend to shareholders.

The Reason Companies Do Not Pay Dividends:

As we discussed in the stock buy back article, companies are always under pressure to find high return ways to deploy the cash they generate. Management is always looking to reinvest these operating profits to earn a high return. If management has many demands on the capital the company generates it may not make sense to issue a dividend for shareholders.

So basically the reason companies do not pay dividends is because they have other uses for their cash. By reinvesting their money into the company (instead of paying it out to you in a dividend) they can continue to grow the company and increase future earnings. In the long term, these reinvested (rather than distributed) earnings will add much more value to shareholders than a simple dividend.

On the other hand, when companies slow down their growth or they have matured to be market leaders, activist investors and shareholders might be more insistent on a dividend because as growth plateaus there are less cash requirements. AAPL is a contemporary example of a company that did not pay dividends until recently, in order to placate some antsy investors.

Cash Demands Stop Companies From Paying Dividends:

There are a wide variety of reasons companies do not pay a dividend. But all of them have to do with other demands on cash. Common reasons cited by management for not paying a dividend might be that the business is capital intensive and requires a lot of ongoing cash infusions to improve operating efficiencies and keep plant and equipment up to date. Or maybe the company does not want to pay a dividend because they need cash on hand for acquisitions.

And on that note…

Fast growing companies do not often pay dividends either, because they want to conserve their cash and reinvest it for future growth. In this case the company hopes that by spending on R&D, headcount, and other growth initiatives they will increase the earnings of the company which will grow the stock price. If the company is indeed growing and earning a strong return on shareholder equity, then a 2-4% dividend yield is not much of a factor because your capital gains will be much larger than that. Does that make sense?

Some Investors Do Not Want Companies To Pay Dividends:

There are literally thousands of companies you can invest in on public markets. So the thing about investing in stock ideas is that as long as you know what you’re looking for, you can usually find something that suits you. And while dividends receive a lot of hype, they are not the most important factor for everyone.

Companies who do not pay dividends may be more likely to attract younger investors, whereas blue chip dividend payers will attract older investors who are looking for some investment income to supplement their pension or social security. It’s understandable why the latter type of investors are interested in companies that pay dividends, and why they would be mad if a company stopped paying a dividend.

On the other hand, if you have years of investing a head of you, you might want to find some companies that do not pay a dividend but provide high growth opportunity. Your investing results are likely to be more volatile in the short term, but the chance for long term capital appreciation is compelling. Thus, whether or not dividend payments are best for you will depend on your personal investment situation.

So I hope this blog post has helped you understand why companies do NOT pay dividends, and what it means for you as a shareholder. So now let me ask you, what are your favourite non-dividend paying companies?

If you’re having trouble coming up with any ideas, just enter your name and email address in the form below. You’ll get free email updates and analysis on investing ideas that do and do not pay dividends.

 

Top Home Security Companies In US

Top Home Security Companies In US

Check out the Top Home Security Companies In the US to see which provider is best for you…

The Top Home Security Companies In The US present an interesting investing opportunity. There are a couple of publicly traded home security companies in the United States. And in this blog post we’ll look at three of the biggest home security companies operating in America.

If you’re looking for specific reviews of top home security companies in the US check out this top ten review of home security companies.

Otherwise, here are the top 3 home security companies operating all over America. If you want to browse the industry for your self you can check out the Security and Protection Services Industry on Finviz.com. When you’re browsing the security and protection industry just remember that a lot of defense companies and commercial security companies are also included. The US security companies listed below operate primarily in the home security market:

Top 3 Home Security Companies In The US:

ADT Corp (NYSE:ADT) is the largest home security company in the US, and it’s a name that rings familiar with many consumers. And with a market capitalization of around $8B it’s not a company to be ignored either. Unlike the larger (Switzerland-based) Tyco International, this American home security company actually has a negative year to date performance for 2013. ADT might be more vulnerable because it’s also less diversified, focusing more exclusively on the home alarm installation and monitoring business. Growth might face headwinds as cable and internet providers are seeking to enter the home monitoring space.

Ascent Capital Group Inc (NASDAQ:ASCMA) is a much smaller home security company operating in the US, but it still has a market cap of over $1B. You might never have heard of Ascent Capital Group, but they are the 100% owners of Monitronics, which is a home security company operating in the United States in Canada. Interestingly, while ADT is making money, it has been facing margin ASCMA is losing money but margins are improving. It will be interesting to watch this story develop. But I’m not ready to put money to work on this idea just yet.

Napco Security Technologies Inc (NASDAQ:NSSC) is a micro cap home security company in the US. The stock is very thinly traded so you’ll want to be careful buying this home security company on the open market. Use limit orders when trying to execute transactions with Napco Security. Your orders will take longer to get filled but you’ll save yourself a large spread. If you’re thinking of investing in this mini-home security company, you should be aware that it’s up 78% this year! I’m not sure if it’s responsible to chase this stock up after such an advance. But a run-up in share price like that makes this home security companies rank as one of the best in the US.

Top Home Security Companies In US [VIDEO]

In the same way that the best gun stocks are a bit of a hedge on the economy, you could also argue that the top home security companies will benefit. Of course you need to do lots more research of your own before trading in top home security companies, but hopefully this blog post will get you started on the right foot.

And By The Way: If you are looking for stock ideas other than the top American home security companies, sign up for exclusive stock ideas and analysis via email. 

Why Do Companies Buy Back Stock?

Why Do Companies Buy Back Stock

Why Do Companies Buy Back Stock? Read this post to find the truth…

Why Do Companies Buy Back Stock?” It’s a very good question, especially since there is so much confusion and misinformation around why companies do buy back stock.

So, read this short blog post to learn why companies buy back stock… as well as when it might signal a profitable investing idea… or when it indicates a dangerous decision by management.

Companies Buy Back Stock To Increase Share Price

The main reason companies buy back their stock is because they want to increase their share price. Whether or not this works might be a different story. But remember…

Stock markets work based on simple economics. When a company buys up all of it’s shares that means there are fewer shares available in the float for everyone else. Less supply means more relative demand, so stock prices should go up. Make sense?

Great. So here’s where corporate stock buy backs get a little more fuzzy… you see… While buying back stock makes sense for companies some of the time (see below), it’s not always the best choice. Why’s that?

Try to keep in mind (1) Business is about generating cash-flow and (2) Management is always under pressure from shareholders to reinvest that cash flow into the business and create more shareholder value. Buying back stocks is simply one way to do this. High dividends are another approach companies use to distribute free cash.

But when companies buy back their stock how do you know it’s the best use of that hard-earned cash?

When Companies’ Buying Back Stocks Is a Good Thing:

Believe it or not, sometimes companies buying back their stock can be a great use of free cash. The main reason for this is that despite all the hype about efficient market theory, the stock market is inefficient in the short term. Sometimes (especially after harsh bear markets) a lot of stocks become undervalued. This is a prime opportunity for companies to buy back their stock.

Here’s why companies should buy back their stock after sell-offs:

If management feels strongly that the shares of the company are very undervalued by the public markets, relative to the intrinsic value of the business then they should use excess free cash to buy stocks. For example, if a stock has been languishing at 52 week lows and trading significantly below the net assets of the company/share — then management might initiate a stock buyback to shake things up. This buyback is a good investment for the company because while the stock market might be undervaluing the company, the company can redeem these shares at a discounted price to their true value. As the company continues to execute on its growth objectives and meet earnings targets the stock will go up in price. As the market cap of the company increases the per share value will go up even more as their are less shares outstanding since management gobbled up the extras in a buyback.

You might need to read the above paragraph again to truly understand when it’s a good time for companies to buy back their own stock. But the logic isn’t too tricky. One hint can be that often times you will see famous value investors buying stock alongside company stock buy backs. In these cases, you may want to buy the stock of the company along with insiders. That’s because the corporate buying puts a floor in the stock price. When a company announces a share buy back they are basically announcing extra demand for the stock. This announcement of a share repurchase itself can be enough to get the stock moving.

But companies aren’t always doing the right thing when they buy back their stock. So now that you know why a stock buyback can be a good thing, here’s why you need to be careful of companies buying back their shares…

When Stock Buy Backs Don’t Help a Company:

Companies buying back their stock might be pursuing a diligent use of extra free cash flow. But you need to be careful because sometimes nefarious executives will try to issue stock buybacks when it might not be in the best interest of the company. There are two main circumstances that come to mind when stock buy backs are a bad idea for companies…

(1) Companies buy back their stock because they’re lazy: As you learned above, companies buy back their stock because they are under pressure from shareholders to redeploy cash. In fast growing or capital intensive industries there is usually enough demand for capital from the business itself that management needn’t worry too much. For example in those cases management might need to invest in growing the company’s salesforce or repairing and maintaining plant and equipment… so there is lots of use for cash. But in non-growing, less-capital intensive businesses, management might have trouble finding high return uses for the cash flows. In this case, they might issue a buy back of stock because they don’t have a better idea. While this might be a reasonable idea in the short term, slashing R&D budgets often deteriorates the long term growth prospects of most companies. And that brings us to the next point…

(2) Corporate Objectives Are Not Always Aligned With Shareholders: Sometimes companies buy back their stock because it is in the interest of management. And while management should be obligated to maximize shareholder value, that doesn’t always play out as planned. For example, if executives have short term options that expire in the next couple of years, they may be under pressure to get the quarterly earnings numbers up. Instead of pursuing risky new growth objectives or striking new distribution deals, management might just choose to buy back stock. If they buy back stock without consideration for the intrinsic value of the business (but to pump earnings and exercise their options in the money) then this is not in the longterm interest of the shareholders and you may want to inquire about the executive compensation happening at your company in question.

Of course there are other answers to the question, “Why Do Companies Buy Back Stock?” But this should give you enough information to start sniffing around when companies announce share repurchases and determine for yourself if it will benefit shareholders (read: you) or not…

How Do you Calculate Intrinsic Value In Share Buy Backs?

So you’ve learned companies buy back shares because they want to raise the price of their stock. And you’ve learned when buying stock back is a good thing and when it is a bad thing. So only one question really remains… how do you actually figure out if the intrinsic value of the company supports the decision to purchase shares?

Well, that’s a pretty complicated question. But one quick proxy you can use is book value. This is very quick and dirty in terms of calculations, but if the stock is trading below book value there might be value in having the company buy back stock. So make sure you take a quick look before you blindly follow companies who are buying back their stock. If you’re looking for where to find companies that are buying back their stock, just watch this short video below:

Companies Who Buy Back Their Stock [VIDEO]:


And by the way, if you’re looking for stock ideas to profit from and coming up blank, sign up for the exclusive email updates below. You’ll be filled with stock ideas in no time!

Why Companies Care About Share Price

why companies care about share price

Why do companies care about having a high share price?

Why Do Companies Care About Share Price?” Well let me tell you…

There are a number of reasons that share price is something companies care about. While the main focus of corporate executives and insiders should be operations and executing on strategic plans, the share price is a highly correlated secondary that also gets a lot of attention from companies.

Read this short blog post so you can learn why companies care so much about their stock price…

Share Price Denotes Market Capitalization

Companies care about their share price because at the end of the day the share price indicates the market capitalization of the company, (which is what their company is actually worth). Since share price is based on earnings, growth expectations and assets, share price is indicative of how the insiders and executives at the company are performing.  Additionally, people at the company usually have shares in the company, so the same way you are curious about the balance of your brokerage account, they want to know what the share price of their company is.

But that’s not the whole story…

In public markets, sometimes the stock of a company can be used as a currency. For example if a company wants to acquire a smaller company, they can issue shares as part of the takeover or buy-out to diminish the cash outlay required. Companies may want to do this if the price of their stock is perceived as overvalued. On the other hand, if companies think their share price is trading at a discount to the intrinsic value of the business they will want to make acquisitions in cash to avoid diluting their share pool. Make sense?

The thing to remember is that a high share price and strong stock performance often gives corporate executives more leverage and keeps options open for growth-focused companies. But you should know, there are some corporate suits who care more about company share price than the average employee…

Why Executives Care About Company Share Price

Companies care a lot about share price. And the people who hold high ranking jobs at those companies care a lot. And that’s often because they have a vested interest in the share price of the company. While this sounds great in theory, you need to be careful. That’s because a lot of the executive compensation is in the form of stock options. Usually these options are fairly short-term in their expiration. Think about this…

That means the earning power of the executives is tied directly to the earnings power of the company. When the share price of the company appreciates, the executive options become worth more. This can lead executives to manipulate earnings in a short time span of 2-5 years so that corporate earnings exceed expectations and the stock price goes up (making their options worth more). While this temporary pump of the share price might be good if you’re a trader, it’s often detrimental to long term buy-and-hold investors who would rather see earnings reinvested, rather than slashed R&D budgets).

Why do companies care about share price

Do Facebook executives care about their share price?

While it is important that management has incentive aligned with shareholders, these interests should be in the long term. For example:

Warren Buffett is the largest common stock shareholder in Berkshire Hathaway so he has a very long-term focus on building shareholder value – and I don’t think his companies’ meteoric rise in stock price is a coincidence. Regular equity or even much longer term dated contracts or warrants align executives with long term share price appreciation and growth better than short-dated options.

But corporate insiders aren’t the only people who care about the share price of their companies…

Why Institutional Investors Care About Share Price:

Just like you care about the share price of the companies in your brokerage or retirement account, institutional investors care about the share price of what they invest in. And remember, the share price of a company determines it’s market capitalization. So cheap stocks (like penny stocks) are often micro-cap companies with only 100 Million dollars or less of market value assigned to the company. So…

Because institutional investors manage massive sums of cash, they need to find big places to put their money. If you have a couple billion dollars, you just simply have too much to deal with small cap stocks. This lack of real interest by institutional investors can often make stocks under $5 or $10 unappealing to large investors. Without this large institutional support these small companies may have a bit more control over their share price. On the other hand…

Companies that have a high share price (and a corresponding multi-billion dollar market cap) are often influenced much more by activist and institutional investors who have a large stake and want to see a return on investment. In this way, private investment companies and investment banks can have a vested interest in the share price of the companies. They might advocate a stock buy-back if they think the company is undervalued, or a dividend if the company has excess cash and the business is not capital intensive.

So while companies always care about their own share price, it’s often good to be aware of other hedge funds and private investors who may have a stake in the share price of your company. Got it?

So in Summary:

What determines the share prices of a company’s stock is not always fair. A lot of the time the price of a company can be influenced by all kinds of outside news and unexpected events. But at the end of the day companies care about their share price for similar reasons you do. They are invested in their company and they want to profit from it. Does that make sense?

And By The Way: If you’re having trouble coming up with companies who care about their share price, subscribe to the exclusive email updates below for more stock idea analysis…


How To Invest Online Without A Lot of Money

What If You Could Buy Facebook Stock For only $50?

How do you invest online without a lot of money?” It’s a question I’m asked often. And just recently I discovered a solution. So keep reading this blog to learn how you can invest online without a lot of money.

The best thing about investing online without a lot of money is that you can get started quick. You don’t have to wait month after month while you save up thousands of dollars to open an online trading account.  Now let me tell you how you can get started investing online without a lot of money…

eToro: How To Invest Online Without A Lot Of Money

The easiest way to invest online without a lot of money is using a website called eToro. The reason this website is so unique is because it allows you to buy small fractions of popular stocks – so you don’t need a lot of money to get started.

For example…

Instead of saving up $500 to buy AAPL stock, you can go on eToro. and buy as little as $10 of AAPL stock at a time! eToro has a unique system that allows you to pool your money with others and buy small shares of publicly traded stocks — and that’s the secret to how you can invest online without a lot of money.

To further reduce the amount of money you need to trade online, there are no commissions when you trade on eToro – so your small purchases don’t get eroded by brokerage fees like they would if you opened a traditional online trading account. It seems like the entire eToro approach is designed to allow you to trade stocks online without a lot of money

But there are a few other neat features that make trading on eToro even more appealing.

Investing With The Crowd Doesn’t Cost A Lot of Money:

Investing online without a lot of money does not need to be a lonely affair. If you’ve ever used StockTwits, then you will appreciate the social platform built into eToro. Basically, for every stock on eToro you can see a stream of Twitter-style status updates that other people have posted about the stock.  You can also see who has been buying and who has been selling the stocks you are thinking of investing in. But the social benefits don’t stop there…

How to invest online without a lot of money

Buy Coca Cola On eToro for a fraction of the stock price…

eToro has an interesting feature that allows you to copy the trades of other stock traders on their online platform. You can also browse the performance of other traders so that you can just find the most successful people and follow their stocks. This can be especially useful if you are fundamentally interested in a stock but you need help using technical analysis to trade in and out of it. Do you know what I mean?

Well, either way, the bottom line is that eToro is the easiest way to invest online without requiring a lot of money.  But why don’t you see for yourself…

Investing Online Without A Lot of Money [VIDEO]:

As you can see in the video above, the eToro platform is very easy to use and you don’t need a lot of money to invest online with it. So why don’t you copy from the best traders – And join the largest online investment network!

And By The Way: If you’re coming up short on companies to invest in, sign up for the email newsletter below to get exclusive email analysis of stock and trading ideas not available anywhere else. And with eToro you don’t even need much money to get started trading stocks online…

Best Online Investment Sites

Best Online Investment Sites

Pull ahead of the pack with the best online investment sites.


The Best Online Investment Sites can help you get the information you need to make profitable stock trading decisions.

Without the right investing information, stock picking is hard and expensive. But with these excellent online investment sites you can stay oriented in even the most volatile of markets.

In this short blog post you’ll see some of the best online investment sites around. And one more thing..

I’d also love to hear what your favourite investment sites are. So please feel free to share where you get your trading tips and tactics in the comments below.

The Best Online Investment Sites:

Below are the online investing sites that I think are the best. I have found these sites over the years. Some are newer in the mix and others I have been reading for years now. I hope you’ll find them useful:

iBankCoin: This is one of my favourite finance blogs because there is so much content on it. iBankCoin is actually 5 online investment sites in one. The main blogs of The Fly, ChessNWine, The Option Addict, RaginCajun and Cain Thaler are incredibly informative. This online investment site truly has something for everyone, and that’s why I consider it one of the best!

StockTwits: I have been using StockTwits since it launched back in 2007 (I think). I really like the atmosphere and the information that comes across my Stocktwits stream. It’s definitely one of the best online investment sites because of the ability to curate live updates from your favourite traders and your tickers of interest.

Seeking Alpha: You probably know about Seeking Alpha already. I love that they have conference call transcripts for every company after earnings calls. This saves me a ton of time. Their portfolio dashboard is also a great interface for staying up to date on the stocks you like best. I don’t often recommend giving out your email address or signing up for online investment sites, but Seeking Alpha provides a lot of value – (even for the free account).

ForexKong: I don’t trade Forex. But being aware of the currency movements happening around the world add an entire new dimension to the puzzle of stock market analysis. I find the perspective of ForexKong to be enlightening and often unexpected. This forex investment site provides a very unique (and often contrarian look) at global financial markets.

MarketWatch: MarketWatch is a very robust financial news hub. But my favourite part of this online investment site is the financial section. You can find it by hitting the “financials” tab after you type in any stock ticker. They have a great interface for looking at historical financial statements. I really recommend you check it out.

To see the best features of these online investing sites, check out this short video below:

The Best Investment Sites Online [Video]:

So hopefully that helped you get a feel for why these online investment websites really stand out for me. Each of the sites adds value in it’s own unique way, and together these stock trading sites help give me a holistic view of markets.

One final note about finding the best online investing websites:

You might notice that I didn’t mention any financial news media websites. The reason for this is because I don’t really worry too much about the general headline news. I think markets are inefficient in the short term and it pays more to watch the price of stocks than the talking heads.

So…

I use Google Finance and Seeking Alpha alerts to stay on top of news items for my particular stocks of interest. But that’s the extent to which I actively follow investing news online. Now it’s your turn: What’s your must-read online investment site?

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Quality Gun Stocks

Quality Gun Stocks

Get a Feel For These Quality Gun Stocks…

Quality Gun Stocks make for very interesting investment ideas. And while some people feel that investing in gun stocks is immoral,  they can still be profitable. If you don’t believe me…

Take a quick look at the (2013) year to date out-performance of the arms and ammunitions industry, relative to the S&P-500.

So in this short blog post we’ll review some quality gun stock ideas that you can invest in today. Now let’s cut to the chase…

Three Top Quality Gun Stocks:

If you’re looking for quality gun stocks, look no further. The three stock ideas below are high quality gun companies that all have publicly traded stocks you can trade online through your brokerage account. Of course you should do your own research and due diligence, but this is a great starting point for top quality gun stocks…

Cabela’s Incorporated (NYSE:CAB): This direct-retailer of hunting and fishing equipment is a no-brainer when you think of quality gun stocks. CAB sells it’s outdoor gear through a network of 50 retail stores (as of November 12, 2013) as well as online. Headquartered in Nebraska this is an all-American company that might make a good long term investment as the fundamentals, (especially the sales) are looking strong. The P/E ratio is just north of 20 though so you may want to wait for a pullback before trying to buy this quality gun stock. Judging by the current chart pattern I’d bet you could get a cheaper entry in the weeks to come.

Smith & Wesson Holding Corp (NASDAQ:SWHC): This firearm company might be the epitome of quality gun stock. SWHC makes handguns, rifles and all kinds of other guns. This is a gun stock through and through. The company has twice as much cash as debt and at a current P/E under 10 it looks fairly valued relative to earnings.  If you’re an individual investor you might also appreciate that this stock is currently trading under $15, so you can buy lots of shares without breaking the bank.

Sterm, Ruger & Co. Inc. (NYSE:RGR) This quality gun stock makes firearms and casings. The firearms segment sells pistols, revolvers and shotguns. Sales of guns are done through independent retailer. By the way, RGR is the only quality gun stock with a dividend, currently yielding just over 3%. It’s also worth noting, RGR has the higher profit margin out of all the quality gun stocks mentioned here today and a large amount of institutional shareholders.

So there are three quality gun stocks that you can investigate further to see if they meet your investing or trading criteria. I hope you appreciated these stock ideas. With any luck this fire power can really help you round out your portfolio.

The Hidden Benefit of Quality Gun Stocks:

You might already know this, but one of the interesting quality gun stocks are so interesting to me is because they present a bit of a hedge on the economy. Of course gun manufacturers are dependent on good sales, but Americans might be more likely to buy guns in times of uncertainty and fear (such as when the economy is tanking).

With shows like Doomsday Preppers gaining popularity American demand for guns probably won’t dry up anytime soon. I guess at the end of the day if you aren’t secure in your finances, at least you can protect your physical assets, property and family with guns.

How To Find Quality Gun Stocks Online [VIDEO]

Some of the more sensitive investors are afraid to admit this (or don’t want to profit from it) but owning quality gun stocks can be a neat way to diversify your portfolio. What do you think?

Are you investing in any quality gun stocks?

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