Understanding Stock Classifications

     When reviewing companies on the stock market, the majority of the stocks may be broken down into three classifications.  These are size, industry, value.

Size
     A companies size to investors is often called its market capitalization.  Market capitalization is determined by how many outstanding shares the stock has.  Understand that as a company grows or expands they may offer new shares, split, or buy back shares, so the size of a company may always change.  Just for an understanding large companies have a market capitalization average of the mid-billions, medium size companies are in the low billions and small are in the very low billions to high millions.  About 70% of the current market are large companies.

Industry
     Industry simply refers to what a company does to make its money. Are they in real-estate, vehicle production, technology research or distribution.  There are many industries and various ways companies earn money.  It is important to note what industry a company is in and who their competitors are when looking at a stocks value.

Value
     What value does the company have?  Is it a growth company that is just starting or is it a value company that has been around for a while and has a foothold in a certain industry.  Analyzing this classification of the company will help determine what type of profit you may gain for investing.  Often the most looked at characteristics of a stock for value is if their is an increase of its sales and earnings per share.

Reader Questions #1

1. What stocks are you bullish on?

    I do have my favorites as readers of my blog are aware.  I am a very big fan of Yandex.  They have partnered recently with Google and have maintained being the dominant search engine in Russia and other Eastern countries even as other western search engines tried to move in.  They also have a very developed and complex code because of the Russian language.  Additionally, because of the situation in Crimea I think that the value of the stock is a steal right now.

  I am also bullish on Facebook.  They have had increased revenue growth since their IPO and I do not see it stopping anytime soon.  Even though Mark Zuckerberg said there will be no more acquisitions I do not think they will pas up any opportunity to expand into new tech sectors and reach new countries.  I also believe there are major gains to be made in the marijuana stocks, though most of them are penny stocks right now.  Many states will soon follow Colorado and Washington legalize marijuana just due to the fact that it is a major increase on tax opportunities.  Finally, my dark horse is Single Touch Systems (SITO).  Mobile is exploding right now and they are a company that creates geo-targeted apps and sales apps.  Additionally, they have multiple patents that have been violated by major companies such as Facebook and Google.  I believe that once the patents are recognized they will be acquired by a larger company and receive the recognition they deserve. 

2.  Why do you use Profit-Per-Day as a measurement?

  I use Profit-Per-Day (PPD) and Percent-Profit-Per-Day (PPPD) as a measurement because I believe that it is the most accurate way to determine my investment success.  Everyone always wants to find that stock that you can gain 100% or even 200% profit on, however what if that 100% profit takes 2 years.  Now what if I can get 10-20% profit in 1 week or 1 month.  My investment is working harder for me at during that time.  For example, if I invest $1000 dollars in a stock and the value increases 100% in a year, after 12 months I will have $2000.  Most would consider this a great success and your PPD was $2.37.  Now lets invest $1000 in a stock and assume we make 10% in a month for a small gain.  We will then take the full amount invest again for another month for 10% and continue until we have reach a 100% gain.  If we continue this trend it will take 8 months for us to gain over 100%.  Now looking at our PPD for the first month it will be $32.25.  Understand that you would not always earn 10%, maybe more maybe less, but you can see the value of how hard your investment is working for you.  Ultimately the point of using PPD is for investors to recognize the value of selling a small gain stock over a short period.

3. Why did you create a blog?

  The idea of Invest Like Me, began while I was offering advice to friends on investing.  Ultimately, beginner investors do not want to learn the technicals of a stock or do research on a company, they just want to know what stock to buy and when.  You see this on TV every day, just watch Jim Cramer.  Therefore I decided to share my ideas, my portfolio, and even my trades with everyone on a near real time basis.  Most investing blogs and TV shows tell the investor what company to buy, however they do not say when to buy or what price to buy.  I want to provide the investor this information and let them know that I am not just selling them the information as I am also taking my own advice with the same investments.

How To Define A Profit

     The ultimate goal of an investor is to earn a profit by investing their own money in a company which they believe will grow.  For many beginner investors though, the thought that always comes to mind is what do you consider a profit?  When should I sell?  Remember that any time you make money it is a profit.  I will say that again, any time you make money it is a profit.  Though it may be hard never kick yourself for selling early because once you sell for a profit you now have more money then when you started.  Below is a list of recommendations and advice to keep in mind when determining your acceptable profit.

• Determine if your profit is decided by a percentage or monetary gain.
• Stocks on average shift 5% - 10% a week.  If you are looking for a short term gain use this as a goal.
• Your monetary gain is affected by how much you invest.  5% of a $1,000 investment is not equal to 5% of a $10,000 investment. 
• Determine if your profit gain is going to be reinvested or put aside.
• I do not sell for a loss because you should only invest with money in stocks that you are not afraid to loose, or will not require in a short time.
• Take advantage of a limit or stop limit sell to maximize a gain.  (Future post will cover limit sells)
• Maintain visibility on a group of stocks (20 max). Study, follow, and read-up on these stocks.  Follow their chart, know their average trading level and buy when it is low.

These are a few recommendations for deciding what your profit should be and how to maximize it.  If you have other suggestions post in the comments below.

    

18-March-2014 Market News

What You See And Don't See Buying Tesla
     With U.S. stocks grinding through the first quarter of 2014, many of the last year’s darlings have scuffled. One that hasn’t is up more than 50% year-to-date and trading at more than $236. In a note Tuesday Goldman Sachs analysts upped their price target to $200 but said the stock could be worth anywhere from $66 to $478.  Full Article

Yandex Buys KitLocate
     According to Yandex NV, the KitLocate’s technology can be used in mobile applications and is based on statistical analysis. The technology is useful in determining the right services for users at the right location and right time based on data regarding their movements.  Full Article

Citigroup Fined For Short Selling
     NEW YORK (MarketWatch) -- Citigroup Inc.'s U.S. based brokerage and securities arm Citigroup Global Markets Inc. has been ordered to pay $1.1 million by the Financial Industry Regulatory Authority and the BATS Exchange for alleged short selling securities ahead of participating in five public offerings.  Full Article

SunEdison Receives Latin American Solar Deal Of The Year
     BELMONT, Calif., March 17, 2014 /PRNewswire/ -- SunEdison, Inc., a leading solar technology manufacturer and provider of solar energy services, has been awarded ProjectFinance Magazine's prestigious "Latin America Solar Deal of the Year" award for its San Andres solar power plant in Chile.  Full Article

Walmart Enter Used Video Game Market
     Wal-Mart’s new program will see the video games traded in, sent to be refurbished, and then sold through its stores. This is similar to the service that GameStop currently offers, and subsequently GME stock was substantially in pre-market trading. WMT’s new program differs from GME’s, as WMT customers will have a wider variety of products to choose from when spending the video game’s trade-in value.  Full Article

U.S. Transfers Control Of Internet
     The decision was announced nonchalantly, in trademark Washington fashion on a Friday afternoon: The U.S. government will cede its last bit of control over the Internet.  The government has maintained that influence through contracts with the organization that administers the Internet, a Los Angeles-based nonprofit called the Internet Corporation for Assigned Names and Numbers, or ICANN. But a Commerce Department agency announced Friday that it would relinquish control over ICANN, presumably when its contract expires in September 2015. The office said it wants the group to next convene "global stakeholders" to come up with a transition plan -- a transition to what remains unknown.  Full Article

March Madness Bracket Challenges

     It is that time of year again, March Madness!  As an investor you should never turn down the opportunity for a free investment.  That is how I see this time of the month with millions of dollars up for grab.  Below is a list of websites offering rewards for a perfect or nearly perfect March Madness Bracket.

1.  Yahoo Sports   - $1 Billion for a perfect bracket, $100,000 for the top 20 brackets

2.  ESPN - $10,000 Best Buy gift card

3.  FOX Sports - $1 Million for perfect bracket, smaller prizes for 1-10th place

4. CBS Sports - Tickets to 2015 Final Four

5. Fantazzle - Multiple awards per rounds

6. NBC Sports -  $3,000 first place

7. Sports Illustrated - $1 Million for perfect bracket

8. Athlon Sports - $1 Million for perfect bracket, smaller prizes available

9. Liberty Tax - $1 Million for perfect, smaller prizes available

10. Reese's - Trip to final four in 2015

     If you know of any more free bracket challenges with prizes post them in the comments and I will update my list.

Pros and Cons of Green Companies

     Many investors are jumping on the marijuana boom that is sweeping the stock market due to recent trends of state laws.  This post will give you some pros and cons of the green revolution ignoring any moral beliefs that you may have.

Pros

1.  20 states have legalized medical marijuana and 2 of those have legalized recreational use

2.  Many states have decriminalized cannabis laws and a suspected 4 more states are to vote on legalizing in upcoming elections

3.  Colorado made $2 million from taxes in January off of recreational cannabis and is expected to earn $200 million in 2014

4.  The U.S. government said it will not enforce marijuana laws in states that legalize it as long as the state keeps it under control

5. Current stock prices are low compared to the profit and expansion potential

6. Canada's Medical Marijuana Purposes Regulations (MMPR) programs rolls out April 1st


Cons

1.  As more states legalize cannabis expect governments to take more from taxes and possible regulations

2.  Currently there are strict rules on the growth of cannabis that limit companies impact such as Colorado requires 75% of the cannabis sold to be grown in state

3.  There are many penny stocks have joined the market in an attempt to cash in on this boom

4.  High risk as many companies are entering the market and may saturate prices as more states legalize cannabis

5.  At any time the federal government may force states to reverse laws or take away funding to federal programs


If you are interested in green stocks here are some companies to look into.  PHOT, ATTBF, ENRT, MCIG.

A Step-By-Step Guide To Getting Into Stocks

     Many beginner investors want to invest in stocks because they have some extra cash in their account or they hear about a new company or product that is being released and are hoping to make some money off of it.  Many beginner investors have these ideas of investing but do not know where to start.  If you are one of these many people just follow the steps below and you will become a stock investor.

1. Decide How Much Money To Invest - Before you pick a stock or talk to a brokerage or financial firm you must first decide how much money you are willing to invest.  It is important to discuss this with your significant other as there is a possibility you may loose all of this money.  Once you have decided on a value stick with it.  You may ask yourself what is the minimum that I can invest to learn about stocks before I get fully involved?  I would suggest $1000.  I suggest that because if you make a %10 profit on the stock that is a gain of $100 dollars.  However keep in mind that the financial firm will take some of your investment and gain as a service fee, so you may end up with $85 profit.

2. Pick A Bank Or Financial Firm - If you have a bank that you are currently a member and like I always suggest choosing them.  You can also choose Financial Firms that are only dedicated to investing such as E-Trade or Ameritrade.  I prefer using a bank because I know that they will provide customer service because I use them for other purposes such as everyday use.  I also have the ability to look at all of my accounts in one location.  Additionally, banks have increased their investment capabilities as they now provide stock analysis, charting, and other services that originally made trading firms so popular.

3.  Set Up An Investment Account - Once you have decided how much money to invest and what bank/firm you are going to invest with call them.  Though almost every financial institution will allow you to set up an account online I always suggest calling to ensure you are receiving accurate information as to the rules for the account, trading fees, and other options.  Most banks/firms will have a flat charge of $5 - $10 per transaction, and that is for when you buy a stock AND sell the stock.  Some bank/firms offer bonus cash when opening an account and offer X number of days of free trading.  It is also important to see if their is a minimum balance required on the account, or if there is a discount on the transaction fee if you make a certain amount in a month.  Though it sounds difficult whatever establishment you choose can walk you through the process easily and transfer your money that day.

4.  Invest In A Stock - So you know have an individual investment account with funds available for trading and want to buy a stock.  After you have done your research (tips are in previous posts), on the website select buy stock.  Most sites are the same at this point, you will input the ticker (short code) for the stock and how many shares you wish to purchase.  Next you will be asked what type of buy you want, market, limit, stop limit, stop.  I always suggest to buy limit as a beginner investment.  A limit buy will place the trade if the price of the stock is below your limit value.  Such as if your limit is $10.00, if the stock is below that value you will purchase it.  Once you have selected limit and set your price you will be asked if the purchase is for day only, or good until cancelled.  Choose good until cancelled if you are waiting for a stock price to drop before purchasing, but if you want to purchase at that exact time then choose day.  Depending on the number of shares you will get the option to pick all or none.  Choose all or none and also select do not reduce if available.

5. You Purchased A Stock - Congratulations, if you have followed the steps above you have purchase your first stock.  Visit the site daily for stock updates, tips and guides for investing, and feel free to ask questions in the comments and follow me on twitter @blogilm to see what stocks I am investing in.  Also make sure to check my current portfolio to see what I am currently invested in.