Stock Investing 101
It's a no brainer that there is money to be made investing in stocks. But then it is just as likely you can lose money. The key is to pick stocks that will perform as you want. There are three terms that you may not have heard of and why they are important to you.
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
What does it mean for me for stock trading? Because no one can predict when a decline will reverse don't rush in. But it may provide you a window to make trading gains while the stock is in this pattern.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money.
DEAD CAT BOUNCE: This is when a stock price increases after a long and sustained downward movement, but the effect is only temporary and the stock reverts to its down ward trend. In many cases the increased price causes investors to buy again and then lose when the price drops again.
What does it mean for me for stock trading? Because no one can predict when a decline will reverse don't rush in. But it may provide you a window to make trading gains while the stock is in this pattern.
THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.
What does this mean for me? These types of stocks may not be attractive purchases in their own right; there may be little chance of growth realization. But they are stocks to watch when predicting where the market will go next. The biggest investors in these stocks tend to be the big institutional investors.
THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.
Why is this important? It has been shown in investigations that the January effect is real. However in recent years it has become more difficult to take advantage of. So it may be useful to watch for, but it is unlikely to be a reliable way to make money.