Free Stock Market Investing Tips

For over 20 years, Morningstar is the recognized, trusted leader in providing current information on mutual funds. Before Morningstar was founded, in 1984, complete information about fund performance, management, and historical fund information was not widely available to the individual investor. Morningstar changed all this by providing essential mutual fund analysis and commentary that was simply unavailable to the individual investor before.

What started out as the quarterly published Mutual Fund Sourcebook in 1984 has evolved today into on online investment information portal serving over 5.2 million investors, 210,000 financial advisors, and 1700 institutions worldwide. Since its inception, Morningstar has operated on the adage that mutual funds were created for individual investors and that affordable analysis and commentary should be available so these investors can make educated decisions with their hard-earned dollars. Morningstar continues with this theme today. For $69, an individual can sign up for a 3 month trial subscription to Morningstar and receive detailed, comprehensive reports and analysis on the 1600 funds out of nearly 14,000 on the market that Morningstar feels are “worthy of your attention.”

Morningstar also offers “Self-Study Investing Workshops” with in-depth instruction on fund investment topics that can be difficult to understand. Topics include: Methods for Investing in Mutual Funds, Five Questions to Ask before Buying a Fund, When to Sell a Fund, and 7 Sins of Fund Investing. Each workshop is priced at only $24.95 – far less than other widely publicized investment seminars. Morningstar really does have the individual investor in mind.

Much of Morningstar’s information is available online for free – without the in-depth commentary and analysis that comes with a subscription. Morningstar regular publishes its ‘Best and Worst’ list of funds that is freely available. Other lists showing average fund manager tenure are also available at no cost. Morningstar famously rates funds from 1 to the coveted 5-star rating. The 5-star list is available here: http://www.morningstar.com/aspxsl/full/fundStarRatingList.html

“Red Flags” are often used to refer to a stock with potential problems. It, therefore, draws analysts’ attention. However, there is not a fixed standard for its identification, for that depends on the methodology of investment used. Thus, the same investment can be positive and negative at the same time, depending on the investor interested in it; for example, if you are looking for an undiscovered company, you will look for low institutional ownership, but the same type of ownership is considered negative to a pension fund that is looking for blue chips.

There are usually some important red flags that you, as an investor, should look for. Major among these is the “Material Adverse Effect” (MAE). This flag indicates that something is extremely wrong, such as a decline in profitability or even the bankruptcy of the firm/business.

Thus, although the SEC (Securities and Exchange Commission) and the legal boilerplates prefer to disclose as many problems as they can, red flags, especially the MAE, will provide investors with crucial information, helping him/her to avoid mistakes of investment.

These funds invest in real estate investment trusts (REITs) which are firms investing in real estate (equity) or mortgages on real estate (debt) or a combination of the two. A fund focused largely on equity would be valued on the property invested in and the rents received from the property. The valuation of property is not tied to interest rates. Funds focused on the debt side of real estate are valued based upon the ability of the financed to pay their mortgages. Interest rates can have a big impact on these REITs. As indexes, both types of funds seek to mimic the performance of the real estate market.

Much has been in the news lately about the American housing market slump and mortgage crunch. It would be easy to think that in today’s market, it would not be wise to invest in a real estate index fund. But the opposite is probably true. One of the most popular real estate index funds, Dow Jones U.S. Real Estate Index Fund (IYR) is down from its 52 week high of 94.99 at 72.65 on August 31, 2007. This shows a rebound from the 52 week low at 66 after the news about mortgage companies going bankrupt broke. IYR is still a bargain at the current price. It looks like the real estate bubble won’t burst any further for this well-established REIT.

The best known mortgage REIT, Annaly Mortgage Management (NLY), is similarly off its 52 week high of a little over 16 at the current price of 14.10 and is similarly making a rebound. This is another investment that is probably bargain priced. After all, mortgages don’t go away once the mortgage house goes under, but are bought and sold by different firms. When the fed meets in September to lower interest rates as speculation leads us to believe it will, that will only drive the stock price of funds like NLY up.

Stock market investing is a great way to make money. Buy shares at a low price, and sell at a higher price. What could be easier? Sadly, its not always that easy. However, understanding the markets and the terms used by traders can help to give you an advantage. While I wont cover them all here, below you will find a couple of examples to help you get started trading.
Read the rest of this entry »