How To Buy Stocks
We all know the market goes up and the market goes down. Thousands of people will give you advice on what their favorite stock is. But there are no magic answers as to which stocks will make you money, and which won't. When you are looking at investing in stocks here are three theoretical terms that might give you something to think about.
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
What does it mean for me in stock trading? It is usually difficult to determine when a slide is going to turn around, so don't bank your house on a reversal. However for short term investors a dead cat bounce may present a selling opportunity.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important to me? While research shows the effect to be real, it is hard to turn these gains into profits. The chances have become less and less. However it is important to be aware of this phenomenon so that if an opportunity presents itself, you may be lucky to be able to take advantage of it. - 23208
DEAD CAT BOUNCE: This is the temporary recovery of a stock price during a general downward trend. Often it is caused by rumor or market talk ups. People believe the stock has reached its lowest price and begin buying. The dead cat bounce effect means the price will drop again and they are likely to lose money.
What does it mean for me in stock trading? It is usually difficult to determine when a slide is going to turn around, so don't bank your house on a reversal. However for short term investors a dead cat bounce may present a selling opportunity.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important to me? While research shows the effect to be real, it is hard to turn these gains into profits. The chances have become less and less. However it is important to be aware of this phenomenon so that if an opportunity presents itself, you may be lucky to be able to take advantage of it. - 23208
posted by X - Men @ 12:13 AM
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