The stock ($TWTR) tested the declining 100-day moving average yesterday again, before reversing to the downside. This daily moving average line continues to be strong resistance as we have tested it every day since Wednesday but never
Tag: social media
Getting into a trade is perhaps the toughest part about investing because of the level of research it takes. You get tips and suggestions from so many people, coming from so many directions that it’s difficult not to get utterly confused. And if you are an amateur at finance, there are dozens of “technical-sounding” terms about stocks that are not easy to wrap your head around.
There’s TV news coming from the likes of CNBC and Bloomberg with dozens of analysts constantly talking about their favourite bets. There are thousands of business and finance websites – most of them reporting the same popular news. There are umpteen newsletters and then there are hundreds of tip-giving services.
There is no shortage of analysis for anyone interested in investing. A search for the term “stock market analysis” turned up 122 million hits on Google and well over 15 million hits each on Bing, and Yahoo. The majority of stock market analysis can be lumped into three broad groups: fundamental, technical, and sentimental. Here’s a close look at each.
The goal of fundamental analysis is to determine whether a company’s future value is accurately reflected in its current stock price. Fundamental analysis attempts to estimate the value of a particular stock based on a variety of factors, such as the current finances of the company and the prevailing economic environment. Fundamental analysis also may include speaking with a company’s management team and assessing how the company’s products are received in the marketplace.
In the last of couple of years you might have noticed multiple instances of people (mostly, media) talking about traders and trading houses making winning stock market bets based on what they read on Twitter or some discussion forum. While cases like these are few and far between, it is certainly a reality that you “cannot follow the stock market enough“!
Traditionally, investors have depended on analyst opinion, who, in-turn, often base their reports on technical analysis. But off-late the unpredictability of the market has amplified because of the reduced time-to-market of stock moving news & information. While deep-pocketed institutional investors have started making significant investments in technology to stay ahead of the social information and analysis curve, smaller traders and retail investors need to find innovative ways getting their hands on similar information, fast enough.
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Off-late, we have been getting many questions from young folks (especially students) on whether they should invest in stocks and how they can make informed calls as they go about doing it. With the presence of apps like Robinhood and stock diversification mechanisms such as Motif Investing it has become exponentially easier to invest in stock markets than it ever was. And we believe this is a good thing. Investing could give you extra cash in the short run so it’s obviously useful. But more importantly, it teaches you discipline, forces you to keep track of your finances and broadens your horizons.
Successful investing is a long-term game. Fortunes are rarely, if ever, made “overnight”. Most successful investors will tell you about how they had several good and several bad investments over time and how their good investments outnumbered their bad ones to give them nice returns. So in essence, one has to invest often and invest actively to get to their ROI targets. This, of course, does not hold for passive investors who put their money in tax saving investments for the sake of “saving money” and not for “making money” from the markets.
In this context, as a student interested in stock investing, you are at just the right age since you have enough time to make more good than bad investment decisions. But, your path is also paved with many pitfalls and risks that can be avoided by being extra careful and knowledgeable about what to do. Here are a few quick thoughts that could help you make fewer mistakes and hit some homeruns as you go about investing actively. Do take it with a pinch of salt and feel free to add more points in the comments section, based on your personal experience if you have any.
It’s great that you’re interested. Don’t let your interest linger for a few years. Do your research and start investing early. More time on your hands will mean more potential for growth and longer-lasting appetite for investing. Considering that interest earned gets compounded over time, even a small investment will go a long way into giving you hefty returns.
This cannot be stressed enough. Today, you have research tools in your hands that just didn’t exist a few years ago. From reading organized media research and opinion – WSJ, MorningStar, Benzinga et al – to surfing through StockTwits, Twitter, Estimize and SeekingAlpha you can understand your stocks really well. Thousands of traders and analysts are talking on these networks, you just have to develop a mechanism to filter out the noise – which you will if you keep observing for a couple of months.
Investing is turning social. While there have been concerns in the past about people sharing information for the sake of their vested interests only, gradually investing as a lifestyle has managed to turn social – much like everything else in life. You do have to be extra careful not to get influenced by malicious elements (‘coz there are some) but you can avoid that by broadening your “follwings” and listening to more people than less.
Also, once you identify some genuinely good investors it’s good to discuss, build a rapport and share. Much can be learned in the process. As you develop your optimal investing strategies, share with peers to fine-tune them and get more out.
Keep a tight leash on your finances. This is not to say that you should spend carefully. This just means that if you keep track of your moneies, you will know exactly how much or how little to put in your next investment. Active investing entails several small to large investments, so unless you’re super-rich already it’s imperative that you know your incoming and outgoing very well. If you are super-rich you still have to track, though, just that your byte sizes will be bigger!
Avoid margin trading
One deterrent for margin trading is, anyway, that small ticket investors find it difficult to get-in so that you should keep you protected. But in general, as a student you want investing to fun and rewarding and not burdensome. Taking on debt is never a good idea unless you are very experienced and sure of your methods.
So, there you go. Didn’t realize this will turn out to be a “5 points for X” post! Feel free to reach out to us at email@example.com or drop a note in comments in case you want to discuss investing.