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Buy Stocks Tip

When buying stocks, you need to understand a lot of things. First you need to know what is stock.

Stock represents an ownership in a company. If a company have one million outstanding stocks and you have 500,000 then you have 50% of the company. If the company decided to give dividend (profit sharing), then you will get 50% of the dividend. You can profit from stock through dividend and rising stock price. There are two types of stock: common and preferred stock.

There is stated a dividend rate in preferred stock. Typically preferred stock have only limited rights to vote on corporate matters. Preferred stock has higher priority than common stock. Preferred stock provides a specific dividend that is paid before any dividends are paid to common stock holders. Prefer stock pays a fix dividend, but the company does not have to pay this if it doesn’t have the money to do so. Preferred stock also has higher priority in the event of liquidation. Preferred stock holders are paid first than common stock holder in the event of bankrupt. However, preferred stock does not have any voting rights like common stock holder.

Preferred stock are usually cumulative, the dividend will accrue even if they are not actually paid. Once the company has the ability to pay dividend again, shareholders must be paid for their accrued dividends.

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There has been many discussion about which strategy is better, fundamental analysis or tehcnical analysis. Technical aproach has been reinforced by trading software which can be used to predict price based on price simulation, where it uses models for each market without regard the underlying economy or fundamental which driven the market. Several recently developed programs help boil down the maze of economic and fundamental information into a form useful by traders who do not have formal training in economics. These programs help track the impact that economic indicators have on price in various markets. Such software gives traders an easy-to-understand link between fundamental data and price. The technical analysis is easier to use than fundamental. But when the market crash on October 1987, traders started to pay attention on the fundamentals, like unemployement figures, trade deficit, unemployment, and commodity supply/demand data . With the combination of two strategy, we will have quite a powerfull strategy. Technical analysis tells us when the price will likely move, while fundamental analysis tells us what stock is good. By combining the two strategy, we can have a good stock which the price will likely move. In this ebook, I want to combine the two stategy to make a new strategy, the combination on fundamental and technical analysis. A trading plan is needed to win the battle win other investor. You need to know how to choose a good stock, and how to choose a stock which will move in favor of us shortly. Learn more about stock strategy