Make Money In Stocks

Investing in the stock market is a lot of fun but it also takes a lot of skill. Investing in the over the counter stock market is another beast entirely! Over the counter stocks are generally companies that are much much smaller than a regular publicly traded company on the NASDAQ or the New York Stock Exchange. These companies are very thinly traded, meaning you may not be able to buy or sell the quantity you want on any given day.

Because of this, large sways in prices, both up and down can be completely normal and if you aren’t willing or able to handle the psychological effect this may have on you, you’ve got to seriously reconsider investing in this market. But if you think this is the place for you, I’ve got a few tips to help you evaluate over the counter stocks and I’m going to share them with you in this article today.

First of all, the growth potential of the company is the most important consideration you will ever have, single-handedly. The earnings increases for the company should be at least 10% a year on average for the past six years or else you should stay away from the issue.

Next look at the cash, investments, and accounts receivable as well as the materials and inventories for the company. These things should normally be at least twice the size of the liabilities that are due within the next year for the company. This is because smaller companies need a larger cushion to weather all storms.

Next take a look at working capital per share. For over the counter companies the working capital per share should be larger than the market value of the stock. For instance, a $12 stock should be backed by a good solid $14 per share in working capital; at least.

Next, the company should be owned by at least 10 institutional investors as reported in the S&P Stock guide. This may be hard for many OTC stocks but it is important nonetheless.

Next look at the balance sheet for the company. It shouldn’t show any deferred operating expenses at all.

Next look at who also owns the stock. You want to look for public ownership that is between 500,000 and 1 million shares of stock. A good indicator is that no more than 10% of the company is controlled by a single individual or institution.

Next look at recent dividends or at recent stock splits. What happened after the dividends were issued? Did the price of the stock continued to increase or did it drop? Increase suggests that the company is financially solid and it’s investors feel strongly about it. A decrease suggests that insiders are cashing out and running away… which is a horrible sign and a clear indicator to stay away.

Finding a good over the counter stock can be a lot of work but at the same time it can be incredibly rewarding because all it takes is a few of these gems to be uncovered in order to make you a lot of money very quickly!

The ideal way of securing your future is through investments for your future needs and desires. Investing in equity is the most desired way of investments as there is no asset class which can offer you better returns than the equity market. Investments can be made anywhere ranging from simple savings plans or real estate or stocks or other securities. Shares have always proved to be all the more volatile investments as compared to bank savings accounts; points can fall and may also increase, there are evidences which prove that over the long term, the stocks have continuously outperformed most other classes of assets. Hence, financial trading through stocks is a much desired mode of investment for many, though it is linked with greater risk.

There are several methods of investing in stocks. They can range from penny stocks to unit trusts or to buying individual shares. But it is very vital to know the basics of investing in stocks before you invest. You should have an understanding, regarding the stock trading and other investment vehicles. You must learn how to invest your money to acquire the greatest possible profits while decreasing the connected risks in the stock market. Investment in stocks requires great research and planning. Great care and caution should be taken while investing in stocks. Before investing in stocks of any company you should examine three financial statements, which are – income statement, balance sheet and the cash flow statement of that particular company.

Investments in stocks can be done through the following four chief ways:

• 401k plan or, in case you work for non-profit then, a 403b plan.
• Traditional IRA, Roth IRA, Simple IRA or SEP-IRA account.
• Brokerage account
• Direct stock purchase plan or dividend reinvestment plan (DRIP)

In case you plan to invest in stocks then, you should follow the below mentioned tips to increase your chances of profit and lower your risks of loss.

• In case you are new to the stock market, or if you already have investments but would like to decrease your costs, then you should select a broker.
• Acquire sufficient knowledge regarding stocks and the market. Attend a seminar or class on basics of investing.
• Review various online financial sites.
• Create financial goals and an investing plan, before you get started.
• Before investing, you must read annual or quarterly reports and also other documents with the Securities and Exchange Commission and research individual stocks.
• Always invest in the stocks which you know. You must consider investing in the stocks of local companies which you are well versed with, and in which you have trust.
• The holdings of few successful mutual fund companies should be examined.
• You must diversify your investments in stock. Refrain from investing money in just one or two stocks.
• To save commissions, you can utilize a discount brokerage to purchase stocks, in case you are confident in your investment skills.
• You should purchase stocks which you are comfortable holding for three to five years.
• Avoid dumping a stock the moment its prices drop by some points. You should have patience to wait for the points of the share to further increase.
• Prior to the investment in stocks you must always judge the risk that you can bear.
• In case you can’t research and review stocks regularly then you must invest in mutual funds.
• You must invest for long terms to generate greater profits.

Hence, investing in stocks is not to be done in haste and under any influence. You need to analyze the details of the company thoroughly before investing in the shares of that particular company.