Thursday, January 12, 2012

Buy on the Dips Examples of Stock Market Conservative Investing

Stocks fluctuate during the trading day and over time. If investors look at the historical prices of almost any high volume stock, they will see that there is a reasonably substantial difference between the high and low for the day.

An even greater change is apparent when the 52 week high and low prices are reviewed. It is not uncommon to see that the 52 week low is half of the high, meaning that if an investor bought it at the right time he would have doubled his money. It also means if he bought and sold it at the exact wrong time, he would have lost half his investment.

Taking Advantage of Stock Price Moves

Buying any stock is a risk. Investors do not know where a particular stock is in the cycle. It can be at the high, low, or in between. Investors can reduce that risk by taking advantage and buying shares when a stock price goes down for reasons that are not related to the company.

For example, consider fictional stock XYZ. The opening price is $50, and from reviewing the historical data on financial websites, the stock high for the stock is often $1 higher than the low.

The investor could just buy at the open, but history shows that the price will often fluctuate during the day. The investor is better advised to wait for a dip, that is, a price decline sometime during the day, in order to secure a better price. There is no guarantee the price will decline. It may go up at the open and stay high, but if this happens, having missed an opportunity to buy is less damaging than buying early and watching the stock decline all day.

Conservative Investing and Averaging In

A patient investor can utilize this strategy over time. It may take time for the stock price to fall a significant amount, but it is likely worth the wait to get the right price.

Investors can also spread buys over several days. This will raise commissions, but the savings may be well worth it. For example, if the investor buys XYZ on Monday at $49.50, it may still decline later in the week. If it drops to $48, and the investor buys the same amount on Wednesday, his average price will be $48.75. He has averaged into the stock.

Buying on Dips over the Long Term

The real advantage in the buying on the dips strategy is over a long period of time. Very patient investors watch a stock they do not own in the hopes that the price will drop to a level worth buying.

If there is a sudden move in the stock price unrelated to the company, it will be an opportunity to buy. If the entire market drops because of a bad employment report, it is likely even a good stock like XYZ will drop in price. This is an excellent moment to buy on the dip in price.

Watching stocks closely for routine fluctuations or sudden drops in price can lead to great opportunities for stock market profits. No one wins all the time in stock picking, but patient, smart investors can increase the odds of finding winners when buying on the dips.

Monday, June 6, 2011

Oracle Message Boards

So, try to get a little information about Oracle from the Yahoo! Finance message boards. Go ahead and try. You can't. They are full of crap postings from wannabe politicos.

Obama did this, Bush did that. What a waste.

Just a few tidbits about Oracle stock, a major piece of the Naz 100 and software vendor extraordinare. Only bullish people are posting on the threads. For what little that is worth.

Good luck.

Sunday, June 5, 2011

The Cloud on Apple Stock

There are a couple of diverse opinions on Apple stock, which break down to these two alternatives:

1. Apple is already too big to move much.
2. Apple has been sitting at this level and is now "a coiled spring" ready to explode at the next positive news, whether it is an appearance by Steve Jobs or "the biggest earnings ever" for any company."

Thanks to the crowd at Yahoo! Finance, particularly redzombie85, ottoman2720 and asicsd.

That earnings report isn't going to come out until next month (July), so unless there is a big product announcement, which I hear is unlikely, we may be looking at number 1 above for the near term.

What is Cloud Investing?

The goal of this blog is to find out what is hot in the world of investment. We will seek to gauge the opinion of key investors by finding out what they think of individual stocks.

How do we do this? By posting questions on the Yahoo! Finance message boards, and posting the responses here. I reserve the right to edit responses and summarize. I will no doubt get a lot of crap and worthless posts, but the concept is that if enough people post, there will be some value.

I won't have any individual stake in the stocks that are reviewed here.

So, let's give it try.