| Anybody that suggests that investing in the stock | | | | over regulated by the government. Over regulation |
| market is easy is probably trying to sell you something! | | | | almost always translates into lower profit and |
| The fact of the matter is, investing in the stock market | | | | depressed stock prices. <!-- BEGIN STANDARD |
| is tough. Make just one or two wrong moves and if | | | | TAG - 728 x 90 - Readbud.com: Run-of-site - DO |
| you're not careful you can wipe out years and years | | | | NOT MODIFY --><!-- END TAG --> |
| of careful savings and retirement safety in the blink of | | | | The fourth rule is to look for companies that have a |
| an eye. | | | | price to earnings ratio which is at least the same as or |
| But there are several things you can do to help stack | | | | lower than the S&P 500 index's price-to-earnings |
| the deck in your favor, and that's part of what I'm | | | | ratio. Sure, you may have a difficult time finding these |
| going to talk about in this article today. Mainly I'm going | | | | companies, but they're out there. |
| to focus on how to follow the rules for picking good | | | | The fifth rule is to search for companies that have an |
| common stocks. | | | | extended history of paying out dividends, but not just |
| The first rule is to try and buy the stock of a company | | | | paying them out; you are going to want to look for |
| that is a clear industry leader. If you can't afford the | | | | companies that have a history of increasing their |
| industry leader, at least try and get a hold of stock in a | | | | dividends over time. Dividends are a very nice signal |
| company that has a fairly important position within its | | | | for stock price. |
| specific industry. | | | | Finally, try to stay away from companies that are |
| The second rule is to try to find very specific industries | | | | highly leveraged and hold a lot of debt on their balance |
| that have limited amounts of competition. The less the | | | | sheet. Especially now in 2010, credit has dried up and |
| competition the stronger the companies within that | | | | the gravy train is over for many of these companies. |
| industry tend to be and the easier it is for them to | | | | Stock prices are beginning to reflect high debt burdens |
| make oversized profits year after year. | | | | adversely so you're going to want to stay away from |
| The third rule is to avoid industries, if at all possible, that | | | | these types of highly leveraged companies if at all |
| are visible figures within the consumer price index or | | | | possible. |
| large players within a countries GDP, or gross | | | | So there you have six easy-to-follow rules for picking |
| domestic product. I'm talking about the auto industry, or | | | | the best common stocks. As with any investment |
| the food industry, or the steel industry just to name a | | | | decision, be sure to do your own research and |
| few. | | | | fundamental analysis of the underlying company's |
| These high profile industries are usually the first to go | | | | performance before investing in any stock for the long |
| down during times of recession (by definition) and also | | | | run. |
| are the companies that have a higher chance of being | | | | |