Why investing in stock

In terms of an asset class, stocks are hard to beat. Over time, they have higher returns than bonds or real estate. There are a few reasons stocks are such a great asset class, but stocks do have a few drawbacks as well:

Benefits of Stocks:

Returns: Over time, stocks outperform bonds, CDs (and other cash investments), and real estate. Stocks on average return about 10% a year, whereas these other investments generally return at about 5-7%.

Taxes: If you hold a stock for more than a year, your profits (when you choose to sell your stock) are taxed at long-term capital gains rate of 15% instead of your standard tax rate. Money you make from interest in a savings account or CD is taxed at your regular tax rate, which can be as high as 35%.

Diversification: Unlike real estate, it is easy to diversify your stocks. In fact, you can buy whole indexes of stocks, such as the S&P 500 or Wilshire 5000, by investing in ETFs that track those indexes. When you buy real estate, your returns are largely the result of how popular that area becomes. If you buy a house in an area that goes downhill, you will lose a lot of money on that house. For stocks, you can own a stock that literally goes to zero, but it's not a big deal provided you invested in a wide variety of stocks.

Disadvantages of Stocks:

Risk: The stock market can vary wildly. If you invest in a stock, your investment can literally go to zero if that company goes out of business. However, if you are properly diversified, the risks associated with the stock market are not that bad. Over the long run, the stock market goes up. Nevertheless, the risks with stocks will always be higher than a guaranteed return with a CD or government treasury.

Penny Stock Watch List - How To Pick The Right Stocks For Your List

When compiling your penny stock watch list, you only have two basic requirements to look out for. First, the penny stock must have sufficient trading volume of at least 50,000 shares since anything less than that can be a sign of too little interest on the stock under consideration. But you must also consider the factor of insider trading wherein just a few people are moving the penny stocks to make it seem that it has a high trading volume.
Second, the penny shares in your list must have a high degree of volatility. Basically, you are looking for penny stocks where traders can purchase the stocks at or near the support levels on one hand as well as sell at or near the resistance levels on the other hand. Look at the price level, which should allow any sensible penny stock trader to cash out and cash in on the profits.
Of course, these two basic requirements for inclusion in the penny share watch are just that - basic. You still have to consider other factors in the choosing especially as penny shares are high-risks albeit high-rewards investments of sorts. Also, we understand if it will take time, effort and, of course, money before your watch list for penny stock becomes reliable and profitable.
But before you can even compile your watch list, we recommend thinking things over in regard to your involvement as a penny share trader or investor. We cannot overemphasize the fact that these shares are not for every trader or investor, not even the savviest one in the bunch for many reasons.
For one thing, these shares are highly volatile securities that can rise and fall in mere seconds. Since it is not as highly regulated as the stocks of the blue chip companies, the risks for losses are higher. For another thing, effective monitoring of your stock holdings requires the proper mindset, attitude and approach, not to mention the time and effort on research necessary. Even your penny stock watch list today may not be applicable two days from now and, thus, it will require almost constant monitoring.
But if you have the time to monitor, evaluate and analyze the penny shares on an almost daily basis, then becoming a penny share investor or trader is the right path for your wealth-building activities. You have to possess a personal computer with an Internet access so as to be able to check the stock prices at a moment's notice, usually between 8 to 12 times daily depending on your stock holdings.
Aside from the prices, you also have to monitor the bid and ask lots, the market movements and the industry conditions, to name a few other factors. With such a fast-changing environment, it is no surprise that the watch list for penny shares changes fast, too.
The rewards for all your time, effort and money, fortunately, more than outweigh the costs. With the right stocks on your penny share watch list, you can proceed to buy and sell the stocks to your advantage - increasing your wealth a few thousand dollars at a time, that is. You might even be able to afford setting up your own micro-cap company and let others trade or invest in the penny stocks.

Unusual Options Activity - 4 Easy Tips to Track Options Activity

Whether you are an individual investor who wants to expand your horizon by moving past the fairly safer confines of the regular stocks, bonds and mutual funds portfolio and cross over to the more speculative and thrill-seeking even though riskier environment of options trading, or if you're the market analyst of a multi-national company looking to hedge the cost on one of your company's main raw materials, it is usually to your advantage to be as well-informed as possible before making that all-important decision whether to take the plunge into the high-reward but also high-risk gambit that is the options trading market.

The oracle of Omaha, Warren Buffet, referred to options as 'financial weapons of mass destruction'. Granting that the options market isn't meant for everybody, for that well-seasoned trader nevertheless, it offers advantages and safety outside the capabilities of other much more conventional securities that are often available in the securities market.

Having an access to a dearth of information that are readily obtainable from the internet at just the speed of thought, it has truly become very easy nowadays to access several applications, resources, charts, graphs along with other information associated to options trading. Do not be lulled into thinking that this is all you've got to do however, simply because for you to have gainful trades you should also have technical and fundamental analyses, together with an awareness of the pertinent developments regarding the underlying assets, like scheduled announcement of earnings, FDA meetings, purchaser conferences, mergers, takeovers, approaching dividend ex-dates, and so on.

But when you are new to the business and faced with a seemingly endless parade of organizations, ticker updates, profiles and interviews, as well as getting bombarded with all sorts of real-time as well as archived info, it will be understandable if in case you stop to ask your self: exactly where, do I start in the midst of all this overwhelming information?

Well, it would be a great idea to begin with a few options which are presently generating all of the chatter and activity within the marketplace. Those select few that for reasons still unknown to you, are presently turning in performances which are much more than their normal daily average. Make no mistake about it, they are certainly out there. It's just that they are not that easy to catch for an untrained eye.

So, how do you spot unusual options activity?

Following are some important guidelines to keep in mind if you would like to piggyback on that potential goldmine:

Options Volume

Your curiosity should be aroused if a particular company is presently trading at triple its typical every day volume with regards to either calls, puts, and also open interest, especially if the attention is concentrated on the shorter-term options and mostly to just one or two strike prices.

Keep a close eye on large blocks of contracts changing hands and note the time that they had been traded because this usually signifies that institutional investors are getting involved and not just your run of the mill retail investors. These big boys are synonymous with "smart money" because they usually possess powerful information which the rest of the players in the industry might not be aware of in the moment. You can ride the "smart money" as soon as you have confirmed that the transactions were not just components of a spread trade, a rollover, or some other complex method (which, most of the time just means that there's really nothing extraordinary happening).

Implied Volatility

Unlike stocks, which has a clearly defined number of shares, options possess a practically unlimited supply. But if buyers are prepared to shell out additional 10 or 20 cents premium on a $1 item even though there seems to be no considerable movement within the fundamental stock, then that suggests that there is a higher demand than willingness to sell for that specific contract and something is definitely brewing. You should immediately ask around and probe the market for the reason of this, after which make your move accordingly as soon as you have confirmed most likely catalyst for all this action.

Pending News, FDA Occasions Or Upcoming Catalyst

In spite of all the obtainable option trading software programs, resources, charts and graphs at our disposal, they are still not 100% dependable when it comes to accurately predicting the price movements of options contracts. The reason for this is really simple, the market is still being ran and controlled by human beings who by all accounts, are extremely emotional creatures. This creates a lot of room for a lot of erratic and unexplainable trends that we observe in the market from time to time.

So you have to be technically sound and fundamentally adept, but at the same time be continuously on the lookout for substantial information, events and developments regarding your underlying security such as mergers, takeovers, new management, earnings report, and so forth. These have the potential to create emotional reactions which could have a direct effect on the perceived worth of your security. Don't be caught with your guard down, you may just suddenly realize that a snowball has been formed and that it completely takes the market for a ride.

Look Over The Shoulders of Experts

Finally, modern day technology, in particular the internet, has made it really convenient for us to gain entry into vast quantities of helpful resources and information which may trick any wide-eyed new investor such as yourself into believing that you can tread the waters on your own, armed with just these collection of resources and information in hand. Be warned however, there is definitely more than meets the eye when trading overly complicated derivatives like options. Be very wary if you plan on using more than your risk-capital, because you can possibly lose everything that you have worked hard to build on if you're not careful.

Oftentimes, it is more advantageous for you to just let the experts deal with the complicated stuff, like understanding how to look for unusual options activity, and you can just concentrate on reaping the rewards of much better trade decisions as a result of competently analyzed and well-researched market information. You will find selected web sites that can help you with ideas, strategies, methods as well as trainings for much better and much more profitable trades.

Reference:-joshua belanger