Investing in the stock market is easy as long as you have a strong stomach and the ability to ignore everything that is going on. Many people focus on momentum, following the dictum "the trend is you friend." If you are active and nimble, you can catch the moves up and down. But most individual investors miss the moves, buying high and selling low. A much better way to invest is to focus on valuation and sentiment. Over time, stocks sell based on valuation. If prices are low relative to earnings, cash flow, and alternative investments, stocks will move up. If prices are high, they will move down. This may sound simplistic, but most investors ignore valuation, preferring to keep betting on winners or chasing the market. Sentiment is also important, but to me it is a contrarian indicator. This means that I like to make long-term bets against the common view of the market. When most people are bullish, they have committed their money to stocks, so there is a little more money available to … [Read more...] about The best method for investing in the stock market is to focus on valuation and sentiment.
Wyckoff method of trading and investing in stocks
OPINION — Well, we’re back on the trade roller coaster this week — and as we’ve learned over the past year, it can be a bumpy ride that takes a strong stomach just to hang on. But here we are again, with the markets tanking on Monday as the Dow took a 2.4 percent hit and the Nasdaq, so dependent on big tech, dropped nearly 270 points, a 3.4 percent loss, raising new fears that stalled trade deals threaten to slow the country’s booming economy. As I write this on Tuesday, happily, the markets have recovered some of Monday’s losses. But this isn’t the first time investors have had to swallow hard. Last December, we went through a similarly unnerving experience. According to Fox Business, it was the worst December for stocks since 1931. But the first quarter of 2019 saw stocks gain back much of what they lost. More good jobs and GDP reports have also helped sustain public optimism about the economy. To investors, especially small investors, these … [Read more...] about Trump should say less on trade. The stock markets will thank him
Bank of America Corp. is expanding a perk for its loyalty-program members: free trades. The lender is broadening eligibility for commission-free trades on stocks and exchange-traded funds to more than 5.25 million clients who are enrolled in its Preferred Rewards program, it said Wednesday in a statement. That group of customers, which have combined banking and investment assets of more than $425 billion, can trade stocks for free on the Merrill Edge online platform. “It’s a massive number of our clients that have access and ability to leverage this program,” said Aron Levine, the firm’s head of consumer banking and Merrill Edge. He said the company aims to provide more benefits as customers increase their deposits and investments. The lender plans to spend $250 million over the next four years on its business catering to affluent customers, largely on digital technology, including financial-planning and advice tools, Levine said in a phone interview from … [Read more...] about BofA expands free trading in stocks, ETFs for rewards customers
PROVIDENCE – A Wall Street watchdog group wants to put a stop to so-called “algo trading” that it says is playing havoc with the stock market. The nonprofit public advocacy group Better Markets is calling for federal officials to get the Consolidated Audit Trail system launched to better police computer-driven algorithmic trading, also known as high-frequency electronic trading. The group says algo trading has been a major contributing factor to the recent steep drops and volatility in the stock market this year. Better Markets President and CEO Dennis Kelleher said the Consolidated Audit Trail, or CAT, is overdue and is needed to better monitor trading and stop “needless” algo trading. “Computer-driven, high-frequency algo trading has been driving market drops, swings and volatility for too long,” Kelleher said. “The damage to investors and our economy have been incalculable. Orderly U.S. markets have been transformed into the … [Read more...] about Wall Street watchdog blames ‘algo trading’ for stock market volatility
You like a company's prospects, but are nervous about buying its stock. You believe growth in a certain country is going to boom, but don't know how to buy in. Mutual funds have long been the preferred choice for such investors. They're the tried and true way of spreading your dollars broadly - or more narrowly, for example, in biotech or Russian stocks or corporations that pay big dividends, without choosing a single stock. But the past few years, the number of ways Americans could invest this way has boomed. Money held in exchange-traded funds - which are similar to mutual funds but trade moment to moment, like stocks - will likely pass $500 billion this year. The first American exchange-traded fund was launched in 1993 and tracked the S&P 500. ETFs, as they're called, were not an immediate hit. Two years later, only two portfolios were available in the U.S. What changed? New companies entered the field and started marketing a slew of narrow, specialty portfolios. The … [Read more...] about Funds that trade like stocks