The internet has a created a much more vast array of knowledge available for all people at the touch of their fingertips. Though there is so much information out on the web, how can anyone expect to find the valuable sources and interesting websites that are available throughout all the clutter? Well, one helpful tool that has recently been created is known as Diigo. It is an online website that holds a user's bookmarked websites available for everyone to see. So, if a visitor searches the site for a certain topic and finds another user with similar interests as their own, the visitor is able to see all the sites the other person has bookmarked allowing the visitor to visit these websites, which most likely have already been filtered through all the clutter. In my experiences with Diigo, I have found a couple users that have similar investing interests and there is one user I would like to share with everyone reading this blog. The user's name is Ashishgup and the user is interested in investing, wealth, books, writing, and several other topics that pertain to my own research.
Ashisgup's bookmarks are tag with many different subject listings, but I am going to focus on his investing tag due to the content of my blog. If anyone would like to visit this user's bookmarks, they may visit the link here. This user has fifteen bookmarked sites under his investing tag, in order of appearance; "This Stock Is Cheap -- Or Is It?" [Fool.com] February 13, 2007, "The Sleepwalking Millionaire" [Fool.com] February, "Why the stock market is volatile", "Do and don'ts for stock market investments", http://www.completeinvestor.com, "The Personal Finance Weblog: Investing", "The Indian Investor's Blog: Sticky: Shenoy's Investment Fundas", "The Simple Dollar » Jim Cramer's Real Money: Building A Ten Stock Portfolio", "The Simple Dollar » Jim Cramer's Real Money: Advice to Beginning Investors", "The Simple Dollar » Jim Cramer's Real Money: General Trading Advice", "The Simple Dollar » Jim Cramer's Real Money: Overview", "The Indian Investor's Blog: Are you saving or investing?", "Equitymaster.com: Numbers jungle unfurled", "Make Your Fortune in the Market" [Fool.com] February 08, 2007, and "Stock Market India". These are a mix of sites that can be beneficial to a variety of people. Some of these sites may not help a visitor, but I am sure there is one that holds some valuable information for each and every investor.
Of these fifteen sites, the three I like the best are "This Stock Is Cheap – Or is it?", "The Simple Dollar » Jim Cramer's Real Money: Building A Ten Stock Portfolio", and "The Simple Dollar » Jim Cramer's Real Money: General Trading Advice." I enjoyed a couple of his other bookmarked sites, but felt these three would benefit anyone who has just a little bit of time to read a couple of articles. The Simple Dollar site is a very interesting site that has summarized 52 financial sources in 52 weeks. Ashisgup mainly focuses on Jim Cramer's book, but there are other fine articles that an investor may want to look at. The other article appears on The Motley Fool, which is a site that reviews many different areas, but has a surprising amount of informative financial articles that many investors already read and any new investor should look at. In addition, several of Ashisgup's bookmarked sites seem to cover the international markets, primarily India and China, which I am not too familiar with, but do give some insight maybe too much speculation into those markets.
The Motley Fool article "This Stock Is Cheap – Or is it?" is written by Tim Hanson and Brian Richards. The article examines some small cap and low price stocks and shares some investing tips that many normal investors normally do not realize. They showcase several low price stocks namely Microsoft and Oracle who were both price around $.55 (adjusted for splits and dividends) in 1990 and are now trading north of $60, both with gains of 5,441% and 2,718%, respectively. Though, these stocks traded very low and are now high, Hanson and Richards point out a very good investor tips.
- Lower-priced stocks do not go up any faster than higher-priced stocks.
- Lower-priced stocks are not necessarily cheaper than higher-priced stocks.
- Lower-priced stocks are not necessarily smaller than higher-priced stocks.
These tips are elementary, but people are often afraid of investing in high priced stocks. Furthermore, Hanson and Richard express the need for investors to invest in companies that have cheap valuations compared to their cash flow, managers that own significant shares of the company, and a growing operation in a successful industry. So, if the price is $1 or $100 it should not matter because if the company is growing and is valued low in its industry then the price will soar no matter what price an investor buys in at. Therefore, the myth that high priced stocks will not go higher is truly a myth and that there are many key factors that need to be looked at besides the price of the stock.
The article on The Simple Dollar entitled "Jim Cramer's Real Money: Advice to Beginning Investors" is written by Trent. The article is a summary of a section of Jim Cramer's book Real Money. Trent summarizes ten investment tips in Cramer's book that every investor should use when building researching and maintaining their stock portfolio. The ten investment advices are 1) do your homework, 2) be willing to speculate, 3) be conservative with your retirement, 4) diversify, 5) don't blindly follow analysts, 6) never trade at market value – use limit orders instead, 7) every company and industry has a key metric, 8) when comparing stock prices within the same sector, ignore actual price and compare the price to earnings ratio, 9) use earnings growth as a second comparison between two stocks in the same sector, and 10) You only need $2,500 to start.
In summary, these tips underline the importance of understanding and evaluating an investor's portfolio and help the beginning investor. A beginning investor should always do at least an hour of homework each week on each stock they own to relate themselves to the industry and know the recent news. Any person can and should start investing if they have $2500 and invest in a variety of industries. The investments should be in strong companies, but all people should invest a small portion of their portfolio into speculative stocks. An investor should purchase on limit orders, so they can control the purchase price. Furthermore, investors want to research these companies and not just follow analyst's opinions. In researching the market, compare like companies P/E ratio and not their trading price and look into their earnings growth to make a valid judgment. Lastly, depending on your age investors can be more risky, but always be conservative for retirement by investing in mutual funds and bonds.
The article on The Simple Dollar entitled "Jim Cramer's Real Money: Building a Ten Stock Portfolio" is written by Trent. The article is list of the ten industries Cramer would build a portfolio around written in his book Real Money. Jim Cramer is well known for his declaration of having a diversified portfolio. Cramer suggests an investor starts with a company in their own neighborhood, an oil stock, a brand name blue chip that sells at a 2.5% yield or greater, a financial institution, and something very risky. This diversifies an investor's portfolio, so a bubble within any industry would not destroy all your earnings. The company within your neighbor is usually a company where you know people work at and really know the business well. An oil company is suggested because oil companies are usually strong and always in demand. The reason for a blue-chip is Cramer feels that a company with a healthy yield will not fall out and normal have good returns. A financial is important because banking services are always increasing and have good cash flow. The last stock to finish off an investors starting portfolio is a risky stock that is speculative because this is where a tremendous amount of gains can be made and if speculation does not pay off it would not devastate an investor's portfolio.
In addition, the article further suggests five stocks that can be considered when expanding a portfolio. Jim Cramer advises a soft goods secular growth stock, a cyclical stock, a technology company, a regional retailer that is expanding nationally, and a "hope for the future" nontech stock, like a biotech company. The secular growth stock is a large company that has stable product sells and won't fall off the map, but is currently in a down time and is more than likely going to rebound. A cyclical stock is a company that has phases throughout economic changes, such as a construction stock is declining due to the failing housing market, but will increase dramatically when the housing market fortifies. The technology stock is pretty simple, just research and evaluate a technology company and buy into it. The retailer is straight forward, just look for an expanding franchise, research the company and purchase the stock if the company sounds solid. Lastly, look into a company that may have promise in the future. Many biotech companies are good starts because biotechs are always in clinical and developmental stages and when the product releases the stock jumps incredible and can provide substantial returns for years.