Seven Little Secrets of Stock Ownership

Owning stock can be a wise investment if it is done correctly. These seven tips can help you significantly, having the potential to make you more successful as a both a buyer and owner of stock.

The first secret is to find, develop, and use a trading system. There are almost as many trading systems and strategies available as there are traders. Find a strategy or blend of strategies that you are comfortable with and that works for you. Once you have developed a strategy to use while trading, use it consistently. Do some research and look at some of the strategies used by other stock traders and owners. You may want to take components from several different strategies and combine them to make your own unique trading strategy and plan.

The second secret to stock ownership is to understand the markets, specifically which strategies work best with which markets. Some strategies may be great for a bull market, while others will work better with a bear market. You should have more than one trading strategy depending on your long-term objective and where the market is headed. Use the strategy that you are most comfortable with given the current condition of the market.

The third secret of stock ownership is to buy stocks to hold, not to turn over. Buy stocks that will become part of your long-term portfolio. This way, if the market slumps, you can ride it out and hold on to the stocks until you can sell for profit. Stick with the stocks you have chosen unless there has been a change in the stock’s underlying value, such as with a liability or bankruptcy issue. Being successful at stock ownership means being patient and understanding that there are times when the market will be volatile. Buying stocks to hold can help you accomplish this.

Another big secret is to keep commissions down when you are buying stocks. The most successful stock owners do not pay more than 1 or 2 percent on commissions. This secret will keep your stock buying costs and expenses down.

The fifth secret of stock ownership is to only invest money you can afford to lose; never borrow money to make an investment. Buy without leverage because although leverage can increase your returns when the market is good, it can significantly increase your losses when it's not.

Number six on the list of secrets to stock ownership is to buy quality stocks at low prices. Stocks that are priced to reflect significant discounts from net asset values that are readily ascertainable and that will see a net asset value increase of at least 10 percent each year, compounded, are good stocks to own.

The last secret to stock ownership is to only buy stocks with an understandable associated business, a strong financial position, and competent management. Without these three factors, a stock may look good, but in reality it may be empty and could lead to be a big loss. Be wary of any stocks that seem too good to be true. Remember the dot com companies when the bubble burst. Make sure the stocks you choose to own are solid, both on the outside and on the inside.

With these secrets to stock ownership, you will be able to become a more successful and profitable stock owner.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.