Financial Zip

Because I am seriously pursuing becoming a full-time professional investor in the next year or so. I though it would be important to point out the steps to creating their own stock portfolio. I have already written on how to go out and find the stocks and using resources like the Investors Business Daily to pick them. I wanted to review here how a casual or even not so casual investor can start a stock portfolio.

1. Set it Up

The beautiful thing about the information age is that brokerages are online and offer very completive trading prices. E-trade, Scottrade, Optionsxpress and more. These are some good starting points for you to start an account. They are free to set up and have a lot of features. Right now I trade through Scottrade and Optionsxpress.

Once you have got your stocks in your portfolio it is important to track them. This basically means creating watch lists. Most of the brokerages have a watch list feature. However, Marketwatch.com in my humble opinion has the best. You are able to create multiple watch lists and it will show you the stock performance that day, the news relating to that stock. The coolest feature is you can enter in an amount and base and it will track the performance of the stock over a period of time.

Yahoo Finance, Moneycental, and Marketwatch all have features that will email you on the news of your stock. All of these require you to set up free accounts in order to get the email.

2. Track It

As most people have noticed in the last 8 months the stock market has been bouncing all over the place. The news can have a big impact on the stock price that day, but overall it really has no relevance over the long term. It is more important to understand how the stock price moves overtime.

Now, here is the trick for following the stock price. You want at look at prices in a number of different situations. How does it perform in a bull or bear market. Is it up or down in relation to it. Measure it compared to benchmark indexes. The most common one being the S&P 500 (SPX) Again here you are looking for patterns is it doing better or worse compared to the index.

A number of sites offer some great tools to follow the movement of your stock. Bigcharts.com and Stockcharts.com are probably the most comprehensive. You can use Moneycentral but it is very basic. Stockcharts.com is probably the most useful. You can use all kinds of tracking features and comparative features, like PerfCharts where you can compare up to ten stocks at one time.

3. Research the Company

Investor information from a company is very important to you as an investor. It will tell you a lot about the character and the business of the stock that you have invested in. All companies that are traded companies will have investor information news, historical facts, financial sheets and much more, the are required to do so by the Securities and Exchange Commission (SEC).

Earnings are a huge part of a company it will basically tell you how well the company is doing. If you spend some time trying to understand the earnings of the company it will give you valuable insight whether or not the company is worth investing in. It will also help you understand the movement of the stock.

Some places that you can go to research earnings other than the companies themselves is Moneycentral.com and Earnings.com. Moneycentral is great because it not only has earnings but, the financials and the website link, and a lot of other information to help you research the company. Earnings.com will tell you when companies are announcing earnings and what they have reported, which can be a very helpful in determining if you want to own the company.

4. Participate

As a share holder it is important to get active in the company. Since you are a part owner (even if it is a small portion) you are still entitled to participate in the direction of the company. If there are conference calls or meetings for shareholders it is good to get involved in those.

Another great way is to participate in investor communities. There are lots of online communities that you can share your opinion with other investors. What is nice as well is they may share information with you about companies that you may own. You do need to be a little weary abut some information shared but on the whole it can be very helpful. To excellent places with communities is Clearstation.com and Marketwatch.com

Related Articles

Use Investors Business Daily
Understanding the Stock Market
Compound Interest: The Seventh Wonder of the World