Frequently Asked Questions

Stocks are a lot like sex in high school: Everyone pretends to know everything, few actually know anything, and nobody ever lets on about what they don't know. Here's what to look for, and how to build a stock portfolio that's right for you.

What is Stock and how it Operate? What is Stock Exchange and where and who that do the exchanges? What is Stock? What is your Investment Goal? How to Plan your Investment on Stock market? How to Choose your particular Company / Stock you want to buy? Should you make a 'research' regarding the particular Company? / Stock? How should you pay attention on your Stock? / Investment? How to 'weight' the Value of the Stock available on market? Where else to get firsthand help? How to be comfortable with your Stock choice? How to be safe in the market? How and When to Monitor your Stocks? Tips and Warning regarding making decision Buy or Sell Should you make (or Not) Day-Trade? How to Determine When to Buy Stocks How to Protect Yourself From Investment Scams? How to Decide When to Sell Stock? How to Create your Personal Investment Portfolio How to Manage your Stock Portfolio? How to Choose a Stockbroker - is SEEDLINK GLOBAL FINANCE your one stop shop? What is Stock and how it Operate? Understand how stocks operate. Stocks are a form of equity investing, because when you buy shares of stock you actually get partial ownership of that company. When a company does well, its value increases, and so does the value of the shares. Back to Top What is Stock Exchange and where and who that do the exchanges? Get to know the stock exchanges. Stocks are traded on three major exchanges in the United States: the New York Stock Exchange, which includes some of the biggest companies in the world; the American Stock Exchange; and the NASDAQ National Market System, an electronic exchange. Each exchange trades the stocks of different companies, so once you choose a company to invest in, find out which exchange it is traded on in order to monitor it. Singapore Exchange Limited (SGX) is Asia-Pacific's first demutualised and integrated securities and derivatives exchange. SGX was inaugurated on 1 December 1999, following the merger of two established and well-respected financial institutions - the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX). On 23 November 2000, SGX became the first exchange in Asia-Pacific to be listed via a public offer and a private placement. Listed on our own bourse, the SGX stock is a component of benchmark indices such as the MSCI Singapore Free Index and the Straits Times Index. Home to Singapore's leading listed companies, SGX is also at the forefront of exchanges globally in attracting international issuers and is rapidly emerging as Asia's offshore risk management centre for international derivatives. Back to Top What is Stock? Familiarize yourself with different types of stocks. Growth stocks are stocks in relatively inexpensive companies that have a good chance to increase in value. Income stocks have less growth potential but consistently produce high dividends. Value stocks, which are a variant of growth stocks. Cyclical stocks, which are tied to economic ups and downs. International stocks, which are stocks in foreign companies that may or may not be traded on particular market. Back to Top What is your Investment Goal? Clarify your investment goals. Do you need to stockpile funds for your retirement or are you looking to purchase a house within two years? Or are you looking for investments that produce income? As a general rule, the longer the investment time frame, the more aggressive you can afford to be. Back to Top How to Plan your Investment on Stock market? Determine how stocks fit into your overall portfolio. Stocks, like all investments, should take up a limited portion of your assets according to your master financial plan. Construct an asset allocation for your entire investment portfolio, decide how much of it should go to stocks, and stick to that percentage. As stocks gain and lose value, you may need to buy or sell to maintain your planned mix. Back to Top How to Choose your particular Company / Stock you want to buy? Start with simple parameters. Pick companies that you know and products that you're familiar with. Do you use them? Are they good? Back to Top Should you make a 'research' regarding the particular Company? / Stock? Understand the underlying fundamentals of the companies whose stock you buy. These include the markets they are in, their balance sheet (which shows assets and liabilities) and their competitors. Another indicator is the company's past and present earnings and how that relates to the number of shares the company has outstanding (known as earnings per share). This is a closely watched number among professional investors. Back to Top How should you pay attention on your Stock? / Investment? Review stock analyzes from research firms like Seedlink Global Finance (only for your advice, not guarantee accuracy - just like any other analysis) and any other resources. Daily Newspaper typically carry recent Stock Analysis and any other Financial Media. Back to Top How to 'weight' the Value of the Stock available on market? Calculate the stock's price-earnings (P/E) ratio. This ratio divides the price per share of the stock by its earnings per share. This shows you how expensive a stock price is when compared with the company's actual earnings. As a rule, the higher the P/E, the more the potential of the company may already be priced into the stock. Back to Top Where else to get firsthand help? Get professional help. The most traditional avenue is through a brokerage house, where you can get firsthand advice from a broker. visit www.seedlinkglobalfinance.com for reference; joint a CHAT room where professional gives tips or do's and don't. But all decision is yours alone. Back to Top How to be comfortable with your Stock choice? Match your stock to your needs and temperament: Invest in risky stocks only if you have the stomach and the time to ride out market fluctuations. Back to Top How to be safe in the market? Diversify for greater safety. When buying several stocks, mix things up. Buy stocks from different industries, and balance aggressive stocks with more conservative choices. Back to Top How and When to Monitor your Stocks? Step 1. Monitor your stocks' prices on a daily basis, noting whether prices are heading up, down or fluctuating. Find your stocks in the newspaper or on the Internet. Step 2. Track performance by reading monthly statements from your broker. Use the Internet for up-to-the-minute tracking when needed. (You can create a portfolio of stocks on your personalized home page.) Step 3. Closely monitor each stock you are interested in (not just those you own, but those you might buy). Monitoring can help you make an immediate decision on whether to buy, sell or hold. Step 4. Add to stocks you like or those that are growing nicely when you have additional income to invest. Remember to diversify your investments. Step 5. Contact your broker by phone or the Internet to buy or sell a stock. Step 6. Specify the action you want to take and at what price you want to take it. Your broker will do the rest and provide you with a confirmation of your transaction when your order is executed. Back to Top Tips and Warning regarding making decision Buy or Sell # The stock market can be extremely volatile. It is advisable to keep a three-year horizon in mind. Day trading can be profitable, but requires sophistication and constant attention. # Read "The Wall Street Journal" or "Barrons" for Global Market and read or watch any daily news that informs you about your stocks and events that affect the stock market. # A stock's performance should be compared with others' in its group and evaluated over time - don't automatically sell your stock if you notice that it is declining in price. Back to Top Should you make (or Not) Day-Trade? For a while, it seemed that everyone was day-trading. And even though it sounds simple--buy a fast-moving stock and ride out its short-term price movement--it's a strategy that's fraught with risks. Not even professional money managers do it that often. But if skydiving is your style, at least be prepared before you take this leap. Step 1. Put day-trading in context with your entire financial picture. Individual equities are an asset class like any others. Construct an asset allocation for your entire investment portfolio, and decide how much of it should be allocated to day-traded stocks. Talk to a financial adviser; most will recommend allocating only a small portion of your assets to day-trading. Step 2. Learn what to look for. Some traders monitor price movement in the hopes of catching an uptick; others keep an eye out for quarterly or annual reports that may impact short-term prices. Step 3. Do your homework on stocks. Trade in a small number of securities and understand the fundamentals of their business. Stock prices are affected by many factors, so understand what drives the price for your specific stock. Get to know the companies well, and watch them like a hawk. Step 4. Know the pace and the risks. Day-trading goes against the very core values of long-term investing. Rather than holding them for the long run, day-traders opt for a hit-and-run approach, often buying and selling stocks the same day. Step 5. Sign up for online order execution, which is critical for speedy buys and sells. Most firms that offer this service charge a monthly fee for access, plus a per-trade charge. Step 6. Get a DSL line or other high-speed connection for your computer. Since day-trading truly trades on speed, you must have real-time access to data, which can cost anywhere from $75 to $300 a month for the service. Although you don't have to have a special software package, buying one can help you spot trends. Ask if you can operate from your broker's office, if access to the right equipment is something you currently lack. Some firms may be willing to set you up in return for a commitment to make a certain number of trades per week. Step 7. Set aside enough time. Successful day-trading requires constant attention. If you have a job or some other time-consuming responsibility, that sort of focus may be hard to come by. If you are serious, treat day-trading as a job. Step 8. Choose one to three trading techniques you'll use and stick to them, such as watching for a three- to five-day pullback on a particular stock's price after an event or trading technique. Don't go beyond your comfort zone or knowledge base. Step 9. Start slow. Try day-trading just one or two stocks using only a modest investment. Watch them closely, and see what drives their price movements. You'll gain experience, and it's a cheap education if things go badly. Step 10. Keep a journal detailing the trades you've made, what cycles you see in the market, when you were successful and when you failed. Review your journal every few weeks to spot trends and to learn from your mistakes. Back to Top How to Determine When to Buy Stocks Knowing when to buy stocks can be a challenging task. Following a few simple steps can make the process easier. Step 1. Determine what your goals are: How much do you wnat to invest? What type of return do you hope to get? How long do you want your money invested in stocks? Step 2. Research the industry, the companies and the products you are interested in. Trade magazies, newspapers and industry and company websites are particularly useful. In addition, Internet-based news services can provide you with up-to-the-minute information on teh companies and industries of your choosing. Step 3. Talk with a broker if you have one. Tell them what you are interested in and ask them to do the research for you. Step 4. In determining when to buy, it is important to ask questions such as the following: Is the industry prospering or declining? If it is prospering, how much higher will it go? If it is declining, how much farther will it fall? Will it rebound? Is this company profitable? What are it's products? Will these products continue to be big sellers or are new products on the way? When will this happen? Back to Top How to Protect Yourself From Investment Scams? With the stock market breaking record numbers these days, the time is right for con artists and scammers to take advantage of new investors. Beware. Step 1. Ignore unsolicited e-mails and Internet chat-room messages that urge you to buy a particular stock now. A con artist may be pumping up the stock price before dumping shares. Step 2. Avoid buying from sales people who promise high returns, demand an immediate response or press for personal financial information. Step 3. Ask for a prospectus and other written information before you agree to buy stocks. Step 4. Beware the Ponzi scheme. Early investors in such scams are repaid with money from later investors, who ultimately lose their money. Step 5. Watch out for multilevel marketing scams. In these scams, distributors or sales agents make fees for recruiting other distributors or agents, who pay fees for their jobs. Step 6. Know what you are buying. If you don't know much about oil and gas wells, for instance, research the industry and particular companies in it before you invest. Step 7. Be careful when buying stocks in companies that you haven't read about in respected publications and whose stocks aren't listed on major exchanges. Back to Top How to Decide When to Sell Stock? Evaluate a number of factors before you decide it's time to get out of a stock. Step 1. Consider selling if the price has dropped substantially or remained stagnant for several months. Step 2. Think about selling if the price has risen to or beyond a target that you established when you bought the stock. Step 3. Note whether the company's fundamentals remain strong. You can get the information you need from the Securities and Exchange Commission, which makes corporate filings available for free. Step 4. Evaluate earnings trends, management changes, revenue growth and other basics to determine whether fundamentals are sound. Even if the stock price is sluggish or, for that matter, has hit new highs, you might want to hang on to the stock if fundamentals remain sound and growth prospects look good. Step 5. Research on the Internet Online and Visit your public library's business reference section and review financial reports. Do they project no price appreciation for the stock? Step 6. Consider changes in the competition. If an effective new player or several hot new players have entered the market, your stock's growth prospects could be in jeopardy. Step 7. Think about the company's product line. If the company depends on one product alone and has no plans of broadening its base, perhaps you should think about selling. Back to Top How to Create your Personal Investment Portfolio A high-performing portfolio is every investor's goal. First, you'll need to develop your own objectives and strategies. Step 1. Determine what items or events you're saving for. These can be retirement, a new home, your children's education or anything else you choose. Step 2. Determine when you want to retire, purchase a home or send your children to college, to help you decide what percentage return you need to earn on your initial investment. Step 3. Decide how much money to invest. Invest what you can comfortably afford now, keeping in mind that you can change that amount later. Step 4. Determine how much risk you are willing to take. Many investments generate high returns and are riskier than others. Step 5. Once you decide the amount you are willing to invest, the returns you want to achieve, when you need the money and how much risk you are willing to accept, put together your investment portfolio. Step 6. An investment counselor or stockbroker is a good source of advice. Tell these advisers your objectives and ask them to suggest how to allocate your money. Step 7. Reevaluate your portfolio at least annually. Analyze each investment. Ads by Google Back to Top How to Manage your Stock Portfolio? Consider hiring a professional investment adviser to help you establish goals, assess your holdings and develop a strategy for reaching your goals. Alternatively, follow these steps to make smart decisions about your portfolio. Step 1. Keep your goals in mind as you buy and sell, changing tactics as necessary to meet your goals. Step 2. Diversify. Put your money in a variety of stocks and industries, recognizing that some investments will be cyclical, others will be slow-growing and others will be highly risky. Step 3. Resist the temptation to focus on the short term. As much as you reasonably can, leave your stocks alone. Step 4. Invest in what you know. If you don't know much about a particular industry or company, conduct some preliminary research. Step 5. Make higher-risk investments only after you have established a sound and diversified portfolio. Step 6. Study the companies in which you have invested. Read quarterly and annual reports, proxy statements, registration statements and news reports. The better informed you are, the better your decisions will be. Step 7. Admit mistakes. Although you want to invest for the long term, there will come a time when you must dump a losing stock. Back to Top How to Choose a Stockbroker - is SEEDLINK GLOBAL FINANCE your one stop shop? Plenty of investors buy stocks on their own. But if you prefer not to fly solo, it pays to know what sort of broker best fits your needs. You may want someone to actively plan your investments, or you may prefer someone who's available only if you need advice. Step 1. Determine the services you're looking for and your investment goals. Brokers offer varying degrees of services: Some may focus purely on investing, while others may place a greater emphasis on investor education and financial planning. See How to Choose a Financial Planner, too. Step 2. Compare discount and full-service firms. Discount brokers make securities purchases and sales at a lower commission, but offer little or no advice; full-service brokers will work with you on an investment strategy, but you'll pay more. Step 3. Ask friends and colleagues for referrals. Try to interview at least three candidates before making a choice. Step 4. Meet the prospective brokers in their offices and inquire about their investment philosophy and how they handle clients. Have them give you details about any special training or designations they may have. Ask how long they've been in business, and if they've ever been disciplined. Step 5. Discuss compensation. Find out what the fee structures and minimum purchase requirements are. Ask about any special commission they might get for certain brands of mutual funds. Step 6. Find out how often your broker checks in with clients. If you only want to hear from a broker every few weeks, don't choose someone who prefers to strategize at every shift of the market. Step 7. Ask a broker for referrals to clients whose background and goals match your own. If the broker balks, look for someone else. Back to Top