Subscribe to usStock Investing Tips
Published Date: 2008-07-01 17:40:30 WorkOnInternet.com


Read More on Investment & Financial StrategyIt is also important to know what stadium you are playing in and what time the game starts. For instance, a football player would not show up at the swimming pool, nor would a golfer tee up the ball on a baseball field. In other words, each sport has its own playing field. The same is true in investing. The following tips will educate you on some of the intricacies of market index composition and weighting, sector timing, and sector-relative strength. Or said another way, they will let you know what stadium your game is in and if the playing field is level.

Once you know the stadium you�re playing in, the football game starts with a coin toss. This determines who will get possession of the football first, or said another way, whose offensive team will start the game. We use a top-down approach to investing; that is, we analyze the market and sector risk first, before moving to the stock itself.

This is the point at which in our game plan we determine whether you as an investor should be playing offense or defense. Just as the quarterback sits on the bench when the opposition has the ball, there are times when it is in your best interest as an investor to sit on the sidelines. These tips will teach you the benefits of placing great focus on your market and sector analysis in an attempt to score against your opponent, the stock market.

The cause of price movement in any given stock is predominantly a function of market and sector risk. More specifically, 80 percent of the risk in any given stock is attributable to the market and sector. Yet the typical time allocation for researching a stock is 80 percent to the actual stock and only 20 percent to the market and sector.

This study by the University of Chicago plainly points out the need for technical analysis. The fundamental analyst is looking at only 20 percent of the pie! Fundamental analysts are just trying to pick out the best stock in their group. But they are not telling you if their group is going to perform well, and that is where the majority of risk lies. Therefore, you must use the fundamentals to tell you what to buy, and you must use the technical picture to tell you when to buy.

There are times when the market or a given sector dictates defense. And just as vegetables go in and out of season, so do sectors. So when evaluating a given stock, be sure to first determine if the market and its given sector suggest a bullish environment.

Articles on stock market trading, finance, share tips and many more stock trading related information. If you want to make money out of this visit http://www.5minutetrader.com/.

This article was published on WorkOnInternet.com
The URL for this article is : http://www.workoninternet.com/article_23938.html
The URL for the category of this article is : http://www.workoninternet.com/topic_15.html
Work On Internet : the small business and home business online resource center
List extensive information on building a successful small business or home business online by internet marketing.

Google
 
Web WorkOnInternet.com


Home | Submit Article| Article Topics | Article Archives | Newsletter | Business Directory | Contact US