Online stock trading, the blue-chip bumps.
Led to the holding of a hot high-tech stocks may be tempted
to invest, but it can still be very beneficial, as well as long-term
investments in quality stocks of other classes has better performance.
Historically, investing in stocks and generate a return over
time, you have to be aggressive on an annual basis is between 11 and 15
percent. Stocks outperform other investments because they take more risks.
Equity investors in the bottom of the corporate "food chain." First,
companies need to pay staff salaries and suppliers. Then they pay their
bondholders. It comes after the preferred shareholders. The first time these companies
have an obligation to all stakeholders to pay, and if there remains money to
shareholders through dividends are paid or retained earnings. Sometimes there
is a lot of money left over for stockholders, and in other cases there was not.
Thus, investing in stocks is risky because investors do not know exactly what
they are going to get for their investment.
What are the attractions of blue chip stocks? 1. Long-term
interest rates of the great return.
2. mutual funds, and relatively safe, unlike previous
long-term investment category, there is no ongoing fees.
3. The owner of the company are created.
A lot of the benefits - what about the risks? 1. Some
investors the risks associated with investing in the stock market and all of
the risks associated with investing in a single company can not afford. All
major stocks on an equal footing is not created.
2. If you have the time and skills to determine the quality
of a good company at a fair price do not invest directly if it is not. Instead,
you will need to consider a good mutual fund.
Choose the company's leadership is only part of the battle -
determining the appropriate price is the other. In theory, a stock's price
discount at a reasonable price is the discounted present value of all future
cash flows. However, like most theoretical answers, this does not fully explain
the reality. In fact, the offer and demand for securities determines the daily
value per share, and the shares increase or decrease based on the company's
expectations for the demand. Thus, the company's share price, more comfortable
and a better share price expectations are driven by investors' expectations. In
short, the stock market is a voting machine and they fear or greed of
investors, and the value on the basis of rational voting on the estimates are
not a lot. Stock prices can swing widely in the short term, but eventually
converge over the long term intrinsic value.
Investors have high expectations that are not yet included
in the stock price with the best companies should look.