Practice, Patience, Perserverence

The Stock Market can be fun or tiring.  Before going head first into it, play with it without spending a dime.  The following website will let you create a portfolio where you can watch stocks.  Once you learn about the charts from the previous post, you can move on to watching stocks, for free at MSN Money Central.  Just on the 'Investing' tab, and then on its sub-tab entitled, 'Portfolio'.  Once you are there you can begin creating your virtual portfolio.  Don't know the stock symbol, no problem, use their search box in the upper left hand corner and type in the company name, from there it will help you find the stock symbol to enter into your virtual portfolio.  For the easiest way to keep the calculations simple, I would recommend entering in a count of 100 stocks.  It keeps the math simple and lets you see percentages in a way that is satisfying.

Here are a few hints when picking out a stock.  First of all, unless you are loaded, you might want to buy stocks that run under $50 each, I actually limit it to $25 and under because that is still a lot of money.  Next, the Average Daily Volume should be over 1 Million.  P/E (Price divided by Earnings) should be 20 or less, as well as the Forward P/E (Future P/E) also being under 20.  The growth rate total should be 10% or more and the Big Buisness ownership should be over 50%.  Now you may know how to go about finding these and you may not.  I will explain how to find each one in a later post.

Now there are thousand upon thousands of Stocks out there, so how do you go and find these stocks without feeling like you are drowing in numbers?  First of all, limit the number you will research say 20-40 stocks total.  You can always add and take away later.  Secondly, use a search engine like the following to help eliminate the Stocks you don't want to include in your descision.

http://www.finviz.com/

Click on the tab entitled 'Screener' and it will take you to a page that has filters to eliminate the stocks shown to ones that are more in the range you are looking for. 

Example:

Perhaps you only want to see the Stocks that are in the S&P 500 index, this would be in the filter entitled 'Index'.  In the 'Average Volume' tab you may want to click to see stocks that average over a million.  In the price filter, you may want to limit your stocks to being under $30 or so.  All of these are found in the first Filter called 'Discription'.  However, why stop there, they have several other filters you can use too, such as the 'Fundimental' filter.  There you can select your chosen P/E and Forward P/E.  There is also a Technical Filter if you decide to go that way and of course if you want to use them all, they so kindly placed an 'All' Filter.  Using filters will help you to cut down the choices significantly.  Doing that will take a lot of work out of the work.  Now, once everything looks good you will have a nice small list before you.  I placed a similar formula in the "All" filter and it took those thousands of stocks and gave me 17, that is when I chose to use only the Nasdaq Exchange, S&P 500 Index, keeping the price under $40, keeping the P/E and Forward P/E under 20, the volume over 1 million, and any country (although when choosing to do USA only, it had the same stocks.  Switching to New York Stock Exchange from Nasdaq bumped the choices up to 20. 

Now here is the fun part, compare the results with different exchanges and Indexes to see how compatible they are.  You may want to use them all, you may want to only start off with the ones they agree on, no matter how you decide to use it, you will find it a great way to elimate stocks that don't interest you.

Next, go back to the MSN MoneyCentral site and enter the stock code into the search box.  All you have done so far was to take out the stocks that don't interest you... yet.  For beginners this is the best way to start.  You may want to use all or just some of the results from your different searches.

Now you need to research the stock itself.  By entering the stock code into the search box you can then go to the stock's page.  I would recommend using this site for the most accurate information on stocks vs. the one you used to find them.  Here you will find the particulars about the stock.  This includes Large Company ownership (found in the left hand menu under 'Ownership' - then Institutional Ownership (%) which should be over 50.00.  This number is magical because it lets you know that many big buisnesses are interested in this stock and that is a very good sign.

Now nothing is definite.  I have only given you some basic guidelines on a process of elimination.  All in all, whatever stocks you end up choosing are your choice.  So, once all is said and done and you know what Stocks you want to watch, enter their codes into your test portfolio (you can title it whatever you like).

That's all for now.  Just take your stocks and watch them for a week or two and each day compare those stocks, not only to that week but also to how they have done in the past.  You may end up eliminating some, you may end up finding others to add.  Remember, right now, this is just a game.  No real money is at stake, so if things don't work out, there is no real loss.

Have Fun!!!!