Free Stock Market Investing Tips

I had a good week in the markets this week. Treasuries were brutalized, while precious metals, especially silver, did well. I have been gradually pushing more portfolio in favor of commodities, especially silver, and betting against treasuries for a couple months now.

I believe politics and government will affect the economy significantly. With our current economic crisis and the people’s belief that the government must “do something,” I think we’ll see a lot of intervention.
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Almost all stock brokers offer margin trading, which is essentially borrowing money from them to purchase more stocks. Many investors do not understand margin trading or whether or not it is good for them.
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In order to understand the meaning of “asset allocation”, one should pay in mind that even the best performing asset differs from one year to the other and cannot be predicted easily. Thus, a safe mood is to invest in more than one asset class. Thus, by diversifying the overall risk (for you will be waiting for a variety of returns), you will have a more justified, fundamental asset allocation. Some critics describe this diversification as the “only free lunch found in the investment game”. Moreover, because of the problems associated with “active management” that have been discovered by academic research, many investors are drawn to the increasingly popular passive investment style.

Thus, to financially plan you asset allocation, you should start searching for the appropriate asset that reflects your abilities and the risks you expect.

Asset Classes Include:

- Bonds

- Cash

- Stocks

- Foreign currency

- Real estate

- Natural resources

- Luxury collectables (wine, cars, art, … etc)

- Precious metals

“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.