How Do I Pick A Stock To Buy That Can Make Me Money?

Mike R. writes...

"Jeff man. How r u? Got a question that's buggin me to no end. How do I pick a good stock to buy in the stock market? I keep getting stock picks from my co-workers and stuff, but I am scared to death that they may be scams. What advice can you give? Take care!"

Replies (5)
    •  

    Great topic!

    This one is personal to me since I enjoy trading stocks.

    One of the best books I read on the subject is "How To Make Money In Stocks" by William J. O'Neil.

    I also study stock chart patterns. Google it. I will try to add some sites/examples too.

    Personally, I am a member of Falcon Stocks. They help me find some up-n-coming gems.

    Below are some great tips and suggestions to help you.

    I invite other members to add their input as well!

    PS: If your co-workers are giving you stock tips, it usually means you are the last person to know about a recent stock run or hype. Unfortunately, the last person typically gets in on the last hurrah and gets hammered all the way down (since there are no more suckers buyers after you). You're buying in while everyone else is taking profits and getting out.

    • $0 Revenue.

      Look at their latest 10K (annual) or 10Q (quarterly) filings. If it says $0 revenue, don't buy it. Here is a link to EDGAR (SEC).

      It's either a developmental stage company or a worthless shell trying to sell you shares of a worthless stock.

      • Outstanding Share Count.

        Look at their past several 10Q's (quarterly financial reports) and write down the number of outstanding shares. If you see 450,000,000 shares then 1,100,000,000 shares then 1,900,000,000 shares then it means the company is selling shares (also called "diluting") to either stay afloat & pay their bills, or they may be pumping and dumping (pumping the stock up with awesome press releases while simultaneously dumping shares onto the open market).

        Steer clear. Don't buy.

        The more they dilute the share structure, the less each share of stock is worth.

        • The Company.

          What does the company do?
          What do they make?
          Is it unique?
          Is sales revenue improving each quarter?
          Is the company making a profit or a loss? If it's a loss, is the loss getting smaller (good) or larger (bad) each quarter? If it's a profit, are profits rising each quarter (good) or shrinking each quarter (bad)?

          • Message Boards.

            Do not believe 95% of what you read on message boards. While I do get some great nuggets on occasion, realize that there are MANY paid pumpers posting that this stock the best thing to happen since the invention of electricity (to persuade you to buy right now) and also MANY paid a**holes who will try to make you believe the sky is falling so you "better sell right now!"

            For small companies, I have had great success emailing the CEO or Investor Relations department and getting personal responses. If you have a question, contact the company.

            Do your own due diligence ("DD").

            • 2303
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