It seems, on average you would have to have about €500,000 invested to get €20,000 in dividends per year and then you have to take into account inflation and taxes. Tax on portfolio income is 15% in the US (much better than earned income).

It could take us quite a long time to invest enough to get a reasonable cash flow but as they say, inch by inch – anything is a cinch. We can start to build it as another income stream.

I moved a little money to my brokerage account to make our first dividend stock purchase but before taking the plunge I decided to do some research. Another good saying to respect: Work as hard investing your money as you do making it.

I picked up this audiobook - The Little Book of Big Dividends by Charles B Carlson (I love the instant gratification of downloading audiobooks!) and started listening to it today at the gym.

I already picked up some good tips like – don’t look for the highest paying dividends as they are usually difficult for companies to maintain and could mean trouble is in the horizon. That was actually the first thing I looked at when I started researching.

I’ll share some more great advice from this book in the next post.

As Warren Buffett says, people always buy and sell on the good news, bad news phenomenon and you always have to look at the underlying value and long term prospects of the company.

I guess investors are concerned about the cost of the cleanup which can run into the billions as well as environmental issues and even criminal charges. There has also been mention of their tarnished reputation.

Nevertheless this is a company that earns nearly $20 billion per year. Even if the cleanup costs them $40 billion, they would make it back in 2 years.

Also if we take into account what the company does, the produce and sell oil, a very important commodity, it’s an even more attractive buy. I think oil and energy will become more and more important as we go on with China and India consuming more and more as their standard of living grows.

BP also hands out dividends. Last year they paid out 4 dividends, each on was 84 cents on the share. I’m seriously considering buying some shares to add to my very tiny stock portfolio.

You should know a lot about the company you are investing in. Do you understand the business? Do you know:

• What products do they sell?
• What are the prospects for future growth and profits?
• How much debt does the company have?

You have to be able to analyze financial statements, corporate strategy and competitive position in the marketplace. Basically this is what Warren Buffet does and he is a genius at it. That’s how he became so wealthy.

While most people buy and sell on good news or bad news  successful investors like Buffett hold on to stocks of solid companies. You have to have the stomach to hold on to your stock when the price is plummeting if you believe it’s a solid company.

Most people just pick famous stocks they’ve heard about like Google or Apple. That’s not investing, that’s called gambling.

I haven’t really invested in individual stocks because I don’t think I would have an easy time analyzing financial statements. Maybe I would if the company was in a business that I understood really well.

A warrant is a security that allows an investor to buy a stock at a specific price which is different than the actual price, be it higher or lower.

It sounds very similar to a stock option, so what’s the difference? Here are somemain differences:

• Stock options are contracts between persons, one who wants to sell a stock and the other who wants to buy a stock at a specific price. Warrants, in turn, are contracts between investors and the financial entities who issue the warrants on behalf of the company the warrants are based on.
• Stock options have fixed structures (standardized) while warrants are highly customizable and tak emany different shapes and forms.
• Stock options can be produced by anyone by shorting the market because it’s a contract between investors. Warrants are issued by financial institutions and cannot be shorted.

There are more detailed differences between these 2 financial instruments that go beyond the scope of this blog post. Personally, warrants sound a bit complex for my mathematically challenged brain. Other types of investments would probably suit me better.

Since our stock in TRMPq is now retaining its original value, when previously on the verge of becoming worthless,  I’d hate to see any bankruptcy exit decisions reversed.

Word on the street is that Ivanka is going to be playing an important role in getting the casinos back on their feet, not just as a manager and decision maker, but also using her image as a branding tool.

After seeing Ivanka on the apprentice and just recently reading her book I’m anxious to see how she does in this new role. She seems to work as hard or almost as hard as her dad (At least I know she works on Sundays) so maybe she can really turn the company around. Let’s go Ivanka, make us some money!

So shortly after buying around 1600 shares at 24 cents per share the faltering company entered in Chapter 11 bankruptcy. The company was kicked off the Nasdaq and went the Pink Sheets.

There were several plans to restructure debt and there was a battle in the courts. In the meantime the stock continued to drop to become almost worthless, I think it was down to 4 cents at one point.

I was following it for a while but eventually kind of forgot about it. Recently I was watching some episodes of the apprentice and remembered we had the stock so I looked it up to see what was happening.

In the end Trump and Ivanka setup a plan with the bondholders and the judged ruled in their favor, in determent to another wealthy Tycoon, Carl Icahn, who bought much of the companies dent and was trying to take over. So apparently, now the stockholders are safe, or at least the stock is still being held, whereas depending on the bankruptcy ruling they could have become worthless.

So after checking yesterday, the stock was way up as compared to last time I checked it, now at 34 cents, we bought at 24 cents so we are currently making a little profit!

With the restructuring Ivanka seems to be a central figure in the business and marketing aspects of the casinos. She seems pretty smart but she has a really tough job ahead, especially in the future and coming economic conditions.

Research by virtue of fundamental analysis

Research based on fundamental analysis examines a company in great depth, and scrutinizes the financial statement to determine the fair value of the share prices of the company. Te research involves studying the Balance Sheet and the Profit and Loss Account of the company, as well as evaluating judgments based on the Auditor’s reports. Besides, the economic environment of the industry in which the company is operating, the government policies, goals of the company and expertise of the top management, etc. are taken into consideration. The researchers here try to find undervalued companies and buy shares in those companies, so that they can earn a huge sum of money when the company attains its fair value in the long run.

Research by virtue of technical analysis

In this method, no great study of the financial statements is made. Instead, the price movements of the scrip concerned is monitored by using charting and other software. The patterns of the share price movements are studied, and this form of research is normally done by traders who swear by patterns. They believe that markets follow a given trend, unless any contingent happening may break the trend and make it move the other way. They are very specific about their research and the scope of mistake is very little, as they need to be accurate in predicting the pattern, else they could stand to lose a substantial amount of their capital.

The three focus grouping and Technical analysis

While fundamental analysis helps to find out the worth of the share price of a company, technical analysis helps you to know the three kinds of focus grouping.

The first group states that the market does not move anywhere at will, and follows a definite trend on which research studies can be conducted. The second group moves in the opposite direction. They believe that the market moves anywhere at random. So rather than charting, they believe in learning the teaching of the gurus of the randomness theory. The third group belongs to the historians. They rely on the stock market history, and believe that history never fails to repeat itself. Much like the first group, they study the history and thereby make some reasonable conclusions about the future.

By placing a stop loss and the maximum loss they are willing to suffer on a script the investors can make use of these two figures for determining the number of shares they can buy. The calculation is pretty simple. Divide the maximum loss by the size of the stop loss, and the resultant figure would be the number of shares they can buy. The stop loss size is the difference between the buying price and the determined stop loss price of the trader. To cite an instance, if a trader had $10 to invest, and he placed $8 as the stop loss, then the stop loss size is $2. So if a trader uses this formula, he can take care of not overbuying shares, which can help him minimize his losses.

Let’ consider a real-life example. Suppose a trader enters the stock market with $1,000, with a risk bearing capacity of 5%, i.e., $50. So the maximum loss becomes $50 in this case. Suppose the price of a share is $5, and the trader exercises a stop loss of $4.50 in it, then using the formula, we can easily find out the number of shares he can buy without exceeding the maximum loss amount. So using the formula, we divide $50 by $0.50, so we get the result as 100. So the trader can buy 100 shares of the company without exceeding the maximum loss.

It is also possible to include brokerage in the maximum loss. In such a case, the brokerage needs to be deducted from the maximum loss. In the above example, suppose the brokerage was $10, then the number of shares according to the formula could be worked out as: ($50-$10)/$0.50 = 80 shares.
Restricting losses to the minimum is very important in trading, and position sizing helps you maintain your losses to a certain level. The article clearly lays down the benefits of position sizing, which should always be kept in kind by every trader and even the investors in the sock market.

One can describe the NYSE as a kind of an auction place. Calling it an auction would be very accurate since if a company is listed on the bourses, then they do have a prominent place at the Wall Street where an auctioneer, appointed specially for this purpose, takes care of the entire bidding process. This was a good system to maintain a proper check on the demand and supply forces so that it could facilitate easy calculation of the share prices.

The internet is the best place to learn the nuances of buying stocks after their proper evaluation. You will find a huge chunk of information on the internet as far as selecting stocks to invest in, and taking the first step in investment goes. Apart from the internet, there are many good books available by experienced investors which you can consult when you are new to the stock market.

It cannot be denied that internet has hugely benefited the investors, whether new or the experienced ones. The internet negates the need of a stock broker to transact on your behalf, and thus saves a lot of time in making a good decision, and saves you from the inconvenience of calling up the broker and asking him to transact on your behalf. If you have the basic knowledge of how to select a stock to invest in it, you need not even leave your house to make an investment.

There are many brokers today who offer their online services for you to trade in securities in the stock market. Their services are similar to those offered by traditional stock brokers. But you will be required to do some research work on the selected company, to make sure that it is a reputed one, since it can result in huge financial losses otherwise. Most of the online brokers have real time tickers to monitor stock prices every instant, and even provide sufficient information about the company, like details of the management, past records, stock price movements, etc.
The low cost charged by an online broker is another reason why you should go for it. They also come up with detailed reports on analysis of stock prices regularly, which can help you learn how to buy stocks.

The economy refers to the general economy of the country. For example, the national economy of the United States will undoubtedly have a huge impact on the stock market as well. But in the stock market, the topic of discussion may also be the kind of economy the world in general is witnessing. There are many factors which influence the economy of the United States. Some of them are the trade deficit or surplus, level at which the inflation is, interest rates decision by the federal, the political scenario, etc. The overall condition of the economy determines the stock market trend. It gives the market players a fair idea about how much money people have to invest in the stock market. For instance, if inflation is at a higher level, consumption of people on consumer goods may increase, and savings may decrease. So people will have less investible funds, and it will indicate a clear downtrend in the stock market levels.

Mutual funds are distinctly related to the stock market. In fact, mutual funds comprise of many companies shares which are floated in the stock market. For instance, a mutual fund based on infrastructure may have holdings in many infrastructure companies of the stock market, which diversifies the investors’ portfolio and reduces his risk, since even if one company fails to make money, the other company can cover up for it. Some mutual funds may be growth oriented, so they may have significant holdings in blue-chip companies. The biggest advantage of mutual funds is that the variety of stocks in a single fund, which, mind you, are selected and monitored by expert fund managers, reduces your risk to a great level. The only disadvantage is that most of the mutual funds have a very high entry and exit load, which eats up a chunk of the profit that you make. But still, if you are a new investor and are yet to learn the nuances of the stock market, then it is best to take shelter in mutual funds. When the markets fall like a pack of cards, then mutual funds may be a good place to hide in. Even though you may incur losses here as well, your losses will be lesser than the general fall in the market, or say, in a particular script.