Research Before Investing

If you don’t want to sweat the details, then mutual funds are probably a better use of your money, because you’ll have a professional making the choices for you.

To truly understand whether a company is a good bet,

• check out its balance sheet.

• See how much debt the company carries, and

• whether it pays good dividends often.

• Look for big companies that show about 10 to 15 percent growth per year, and

• Look for small ones that show 25 to 30 percent.

• look at their earnings

• Investigate what the company does with its profit.

Note: when the company goes public; that is, it makes its initial public offering, before you buy, wait a few weeks or months until the initial excitement dies down and prices fall. Young companies have rapid growth spurts, but they can also fail, especially in competitive economies.

The Federal Reserve System, known as the Fed, increases and decreases the flow of money to the system to keep it at an ideal temperature.

Corporate lifecycles(Birth and Death) don’t exist in a vacuum. They happen in certain economic climates. There are different kinds of climates:

• a hot climate, is booming. That means that people want more things, driving up prices.

• When things eventually become unaffordable, the economy slides into a cold climate – also known as a recession.

When stocks climb, that’s a bull market – prices are rising and everyone wants to buy.

• If stock prices fall 10 percent from their most recent peak, that’s known as a correction.

• If they fall 25 percent, it’s a bear market.

When it comes to the stock market, patience and an iron will, will lead you to worthwhile rewards.