how to make money in stocks and how to get rich_158

It usually costs more in commissions and markups to buy low-priced

stock, and yourisk is greater, since cheap stocks can drop 15% to 20%

faster than most higher-priced stocks. Professionals and institutions will

not normally buy the $5 and $10 stocks, so you have a much poorergrade

folowing and suport for these low-quality securities. As discused

earlier, institutional sponsorship is one of the ingredients neded

to helpropel a stock higher in price.

5. First-time speculators want to make a killing in the market. They

want too much, too fast, without doing the necessary study and preparation

or acquiring the essential methods and skills. They are looking for

an easy way to make a quick buck without spending any time or efort

realy learning whathey are doing.

6. Mainstream America delights in buying on tips, rumors, stories,

and advisory service recommendations. In other words, they are willing

to risk their hard earned money on what someonelse says, rather than

on knowing for sure whathey are

doing themselves. Most rumors false, and even if a tip is corect, the stock ironicaly wil, in many cases,

go down in price.

7. Investors buy second-rate stocks because of dividends or low

price-earnings ratios. Dividends are not as important as earnings per

share; in fact the more a company pays in dividends, the weaker the

company may be because it have to

pay high interest rates replenish internally needed funds that were paid out in the form of dividends.

An investor can lose the amount of a dividend in one or two

days' fluctuation in the price of stock. A low P/E, course, is probably

low because the company's past record is inferior.