Investment Stock Report high school dropouts

Forecast Stock?

If the prediction is dangerous in the stock market as an investor can time your purchase and sale of stock? The simple answer is to ignore the level of prices, to buy shares whenever he has savings to invest, and not to sell unless you must. And he must also possess U.S. dollar fixed-term deposits, because it opens the possibility to buy shares at lower than average prices and selling at more than average, with no prediction.

The Investment Ratio.

Momentarily ignoring the question of timing of share purchases, suppose A has $ 1,000 of savings for new investment on the first day of each month. With half of this purchase ordinary shares, and the other half puts it in a savings deposit. His savings are always divided equally between stocks and cash reserves. During the first year he deposits $ 6,000 in bank savings and pay $ 6,000 per share, the purchase of 120 shares, an average of 10 parts per month, at an average price of $ 50 per share. (For a simple illustration buying and selling of stocks, including investment income, are excluded.)

Now let's look at a market or surrender values. On 1 January of the year, the current value of its savings deposit, neglecting the interests, is the same as its cost. But the market value per share of its shares fell to $ 40, giving her 120 shares worth $ 4,800, or $ 1,200 less than its savings deposit. With this decline in prices, buying his usual $ 500 a month to pay for 12 shares, compared to its previous average of 10 shares per month.

At this point, A decides he wants the market value of its stock to match his savings deposit, and would have to adjust your purchase to accomplish this. So on January 1 does not make any savings deposit, but puts his monthly savings of $ 1,000 in shares, thus increasing the total stock of $ 5,800, compared to $ 6,000 in savings deposit. With $ 1,000 you buy 25 shares, 2.5 times as his previous monthly average. Later, when a price increase causes its stock price to exceed its savings deposit, he compensates for this by putting all or most of his savings in new savings deposit.

Action Plan.

Now we expand the action in a plan. First, an investor chooses a standard report that will be maintained between the market value of its common stock and its cash deposit. The idea can be applied to any report of an investor prefers.

To maintain a stable lifestyle for the family, some say $ 5,000 additional reserves would be needed for emergencies outside of personal investment portfolio. The way to save $ 1,000 a month, you could adopt a standard ratio of Stock $ 800 to $ 200 dollars of fixed-term deposit, but not counting the $ 5000 in emergency reserve. For the first 5 months all his savings to go into this special reserve, thus completing its goal for emergencies. In the sixth month, observing its standard report, put $ 200 in cash deposit and $ 800 in stock.

After choosing a normal relationship, should not allow the current stock market conditions to get him to change the report. If you adopt a relationship when stock prices are falling, and changes to another relationship when prices are rising, it is slipping in anticipation. A standard report has no chance of success unless, after an investor who adopts, parked outside her emotions.

The purchase under a standard report goes like this: When an investor has available to new savings before placing them discover what are the current values ​​of its total stock, and his bank deposit total, not counting the emergency reserve . He puts his savings in the new one which is low in value compared to its standard value, as it did with the savings of $ 1,000 monthly.

No Saving New Situation.

When a new investor has little or no savings, you can get the benefit of the standard-ratio plane by applying the same ratio for both sell and buy stocks. Suppose that the annual cost of B is exactly equal to its income, so he has no new savings, nor any capital spending. Its standard ratio is 1 to 1, and the current value of its capital is in agreement with this, 2,000 shares at $ 10 a share totaling $ 20,000 and $ 20,000 in a savings deposit.

Then the value of a share drops to $ 8, making its total value of stock $ 16,000. To restore its values ​​to an agreement with its standard report, withdraws $ 2,000 savings deposit and buys 250 shares of stock. This cuts the reserve at $ 18,000, and also raises the value of the stock for $ 18,000.

Thereafter, the value rises to $ 10 per share, the same original figure, and his 2,250 shares have a current value of $ 22,500. Also in this case act to restore its values ​​in its standard ratio, sells 225 of actions for $ 2,250, and adds it to its savings deposit. This leaves him with 2,025 shares, worth $ 20,250 and $ 20,250 in bank deposits, its total capital is over $ 500 at the beginning. (For the record, the cost of purchase and sale should be subtracted from this income.)

Stock Movement Value and Value Gap.

A switch between the old capital stock and the bank deposit should not be up to the value of the shares has moved far enough from the standard report to justify the expense and hassle of changing. In the above example, B bought shares when its stock price was 20 percent below its reserve. And do not sell the stock until its share price was 25 percent above its value as a bank deposit. The desired gap can be provided automatically by setting a standard ratio for the sale archive that is different from the ratio of purchase.

System ratio requires discipline.

It helps you decide when the stock price goes down, how many shares to buy in your store, drawing from his bank deposit available. Also required during the stock surge months, how many shares to sell in order to meet the initially set.

This reporting system should be followed standard Invest with discipline in order to achieve the winning objectives. The buy low and sell high is obviously in use here as you see your inventory and storage combined value of the bank grows over time .......