Sunshine-Empire & EmMax

Today a lot of us are trying to find ways of earning extra cash for the future and one of the most popular ways of making extra money is with stock market investing. It is possible to make money on the stock market if you go about things in the right way. You should be aware that trading on the stock market does not work for everyone and you shouldn't look at it as a way to make a fortune quickly. Even so there is ways for you to make your money work for you but you must learn all you can about trading before beginning.

Once you invest in the shares of a particular company, you are actually becoming a part owner of the company and when dividends are paid out by the company, you will receive your share depending on how many shares you may have. Dividend income is the name for this type of income.

How to Get Started

Research is always the name of the game in regards to the stock market so you'll want to do yours before you get started. Decide on how much you want to invest and then think about how you're going to split your investment. High dividend yields and blue chip companies are the usual options for many people. Thinking about the products or services that you might use every day is the best way to manage your portfolio and this is something you need to do. By doing this, you can then start to learn concerning the companies that provide these services or products.

Selecting a Company

Once you might have identified companies that you think you might like to invest in, the next step is to take a look at their financial statements including their balance sheet and profit and loss statement. There are also other reports worth looking at that include the director's report or the cash in hand report. In addition, you need to check out if the performance of the company has improved by looking at their accounts throughout the last five years.

You should most likely consider going ahead with your investment if you are satisfied with the results. The best form of companies to look at is going to be those in the following industries: banking, insurance, pharmaceutical, oil, biotechnology, energy, IT, FMCG, gas and the service sector.

Your Stock Market Attitude

It's better to try and have shares in a company for about ten or twenty years if you need to get the best return. You might also want to consider option trading and if you do then think about putting about five percent of your investment fund aside for it. Provided you know what you are doing, you can make quite a lot of money from option trading.

The best way to make money from the stock market is to try and be clever about your investments. Devise a strategy and don't veer from this. You have to make sure that you do your research before you invest so that you can be assured that you don't lose your money.

If you wish to get more information regarding stocks and investing, why not visit our site at stock-trading-investing.com. You won't only find a plethora of tips, advice, information and reviews, you'll also find answers to more specific areas such as intraday trading.

Labels: Essentials, Investments, Market, Stock

I was recently asked this question by a visitor to my web site.

You may have seen the term "stock options" in the financial section while scanning the news. Or perhaps, you've encountered the term as an employee and were offered stock options in your company. So, what are stock options? Can these options be used to your advantage? Yes! There are two different types of stock options. Let me help you understand the difference.

Employee Stock Option (ESO)

An Employee Stock Option (ESO) is a type of non-cash compensation that is typically issued to management as part of an executive compensation package. Technically, an ESO is classified as a non-standardized option because it has several differences from an exchange traded option. The reason companies offer this type of compensation to management is because it provides management with incentive to run the business well. The stock of a well managed company with good growth potential is likely to rise, rewarding the management team.

Here are some differences between an ESO and an exchange traded option:

1) An ESO is may not be traded. That means that cannot be bought or sold in the open market on any kind of exchange. An ESO is strictly issued from the company to the employee.

2) The quantity of the ESO is determined by the company and is not standardized like an exchange traded option. The strike price or exercise price is usually the price of the company stock.

3) The duration of an ESO varies and it can be many years to expiration, unlike an exchange traded option that has a shorter life span to expiration.

Exchange Traded Option

An Exchange Traded Option is a standardized contract that is traded over the counter on a specific exchange. Standardized means that there is a standard set of rules governing the trading of that exchange traded option. These are the types of options that you will typically only have access to since they are traded on an exchange and available to the public.

1) Unlike an ESO, one standardized option contract represents one hundred shares. So if I bought one Apple (AAPL) option contract, I would actually control one hundred shares of that stock. If I decided to exercise that contract, then I would control one hundred shares of stock for every one option contract I exercised.

2) There are two types of standardized option contracts. You can be a buyer or a seller of an option and each gives you specific rights or obligations. To keep it simple in the example below, I will explain only the concept of buying the two types of options.

A call option gives you the right to buy the underlying asset (stock or future) at a set strike price. It is a right and not an obligation. You pay a premium or deposit for the option contract which gives you the right to own the stock at a set price on or before a set date. When you buy a call option, you expect the price of the underlying asset to go higher in order for the option contract to become profitable. What you have at risk is only the premium that you paid for the option contract. So, in the case of purchasing a home, you would put down a deposit to show the seller you were a serious buyer. If a few days later a tornado destroyed the house, you would lose only your deposit amount and not the full value of the home. I know there are probably ways to get your deposit back, but I wanted to give you a visual.

A put option gives you the right, but not the obligation, to sell the underlying asset (stock or future) at a set price on or before a set date. You pay a premium or deposit to own that right to sell. When you buy a put, you want the value of the underlying asset to go lower in order for you option to become profitable. Buying a put option is referred to as shorting the underlying asset. Many refer to put options as insurance. Recall the example above of the house destroyed by the tornado. If you were the seller of that house, then you would have paid an insurance premium to recoup the full value of the intact house and not the current, lower value of the destroyed house.
The cost to you of rebuilding the house to its former state is the insurance premium you paid and nothing more.

3) An option contract has a determined expiration date on which the option will expire. Option buyers need to exercise (or sell) the stock option before this date. An option which has a long time to expiration is more expensive than an option with a shorter expiration date.

4) An option contract has an agreed price which is called the strike price. The strike is the price at which buyers of call options can buy the stock prior to expiration. It is also the price at which buyers of put options can sell the stock.

My Tips

1) A stock option is usually bought at a significantly lower price than the actual price of the underlying asset, so you don't have to put up as much money to control the same amount of shares as if you were buying the underlying asset. This is one of the reasons why I use options than the underlying asset.

2) Because of the tremendous amount of leverage and the amount of shares you can control with options, you have to be extra careful. There are many components to the pricing of options. Keep in mind that over ninety percent of option contracts expire worthless so if you are thinking of putting your entire account in one option contract, then you might not have an account in the future.

3) The market trend will usually dictate which type of stock option to buy. If the market is in an uptrend, you would look to buy calls. Alternatively, if the market is in a downtrend, then you would look to buy puts.

Trading stock options may sound complicated, but it is much easier than it seems once you master some basic terminology and techniques. All the actual paperwork of the option contract is handled through brokers and stock exchanges. All you have to do is to consult with your financial advisor on whether it's a good time to buy or to sell stock options. It is important that you understand how the system works, so that you manage your risk and don't incur great losses.

I hope this information has helped to answer the question, "what are stock options?"

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Labels: Options, Stock

Most of you have likely never heard of Claude Rosenberg but he certainly left his philosophical imprint on the investing world. Rosenberg founded money management firm Rosenberg Capital Management, grew assets under management to $40 billion, and made a fortune. Now, Mr. Rosenberg made a lot of money because he was a very disciplined investor and closely adhered to his investing philosophy through thick and thin.

So with that introduction, let me give you Mr. Rosenberg's eight commandments on how to successfully invest.

#1 Do not be concerned with where a stock has already been - instead, be concerned with where it is going. The important thing is what lies ahead, not what has already transpired...

Focus on a company's future - its earning, growth potential. Then make a well-researched judgment on whether you're paying the right price today for its future earnings stream. If a stock is pricier than its future growth potential, do not buy it.

#2 Do not concern yourself as much with the market in general as with the outlook for your individual stocks---and this is key for today's market.

Most investors base their buying and selling on overall market sentiment. Mr. Rosenberg believes this is a fallacy. He believed in buying good value as it appears and do not let the general market sentiment alter your decision.

#3 Remember... the public is generally wrong. He said: The masses are not well informed about investments and the stock market. They have not disciplined themselves correctly to make the right choices in the right industries at the right prices. They are moved mainly by their emotions, and history has proved them to be wrong consistently.

#4 Do not make hasty, emotional decisions about buying and selling stocks.

In fact, if you've heard my commentaries on this show, you'll know that I keep insisting that you have peace of mind through all sorts of market gyrations, and always sleep well at night. It is very easy to get caught in the trap of emotions amidst media noise and peer pressure... build your discipline so you are emotionally detached from the market, and stay focused and attached to your long-term investment strategy, and you will do well.

#5 Stocks always look worst at the bottom of a bear market when everything is the most gloomy and always look best at the top of a bull market (when everybody is optimistic).

Again, as many of my listeners know, I recently said Bad Markets Make Good Friends, and this is exactly Mr. Rosenberg's point - the best time to buy is when markets are beaten up and no one else is buying. In the man's own words: Have strength and buy when things do look bleak and sell when they look too good to be true.

#6 Remember too, that you'll seldom-if ever-buy stocks right at the bottom or sell them right at the top.
Not words you want to hear, for sure, but there is a lot of experience, truth and wisdom in them. As I've said in the past, never try and overly finesse the market's every turn. Buy when stocks generally appear underpriced without looking for new bottoms, and sell when stocks reach or exceed your expectation of fair value.

#7 Beware of following stock market "fads." (biotech, internet, emerging markets)

As he says..."the stock market occasionally develops fads for certain industries. In almost all cases a sudden rush to buy the fad stocks pushes them to price levels which are totally unwarranted. When you buy at the height of popularity you almost always pay prices which have little relationship to value..." Most recently, Real Estate fit this description. Is it Gold the new fad of the day?

#8 Concentrate on quality.

Three simple words with a lot of depth. You've heard me say this too, many times; so this time, let's hear it from the master himself:

"While big profits are often made through buying and selling poor quality common stocks, your success in the stock market is far, far more assured if you emphasize quality in your stock selections. Too many investors shy away from the top-notch companies in search of rags-to-riches performers. These low-grade issues are certainly no foundation for a good portfolio; instead, the fine, well-managed companies should form the backbone.... fabulous fortunes have been made over the years in such high quality, non-speculative stocks as Carnation, Procter and Gamble, and others. "

In fact, as many of you know, I have a similar philosophy and, notwithstanding the risk of getting repetitive and boring - I will keep telling you to stay on the road through highs and lows, to ignore the noise, to not abandon stocks when they are down, and so on. I wanted to share Mr. Rosenberg's investing guidelines with you today, partly as a reminder on sound investing principals in confusing times such as these, and partly as a validation of everything we have been discussing over the years on my show and now my blog.

Visit http://onthemoneyradio.org/ for weekly commentary and money advice that covers the entire financial spectrum which also airs on my weekly radio show, "On The Money!"

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Steven L. Pomeranz, CFP is a 29 year investment management veteran and host of "On The Money!" which airs on NPR station, WXEL in South Florida. He concentrates on serving high net-worth individuals and has been named one of the Top 100 Wealth Advisors 2007, by Worth magazine (October 2007 Issue), honoring America's premier financial and wealth strategists.

Labels: Commandments, Eight, Market, Rosenbergs, Stock, Success