The stock market can be broken down into sectors based on the types of stocks for sale, such as blue chip stocks, industrial stocks, technology stocks, or financial stocks. The financial sector is a popular area for investment, but as with all stock market investments, and indeed all of life, it is important to know what your are buying before you buy it. What that means for you is that you need to research the companies that you are interested in. All companies in the United States are required to send financial information to the Securities and Exchange Commission (SEC), which posts this information on its web site. By looking through the financial filings of companies, you find out a lot about them. Some things to look at are: how much the company owes, how much it makes per year, and how much it has paid out to investors in the past in the form of dividends. You can find out more about what to look for in these financial filings by going to your local library and checking out any book on the stock market.

There’s more to the stock market than just this, however. One thing that is hammered into the heads of all business school graduates is this: diversify, diversify, diversify. Think about it: if all of your money is tied up in one company, and that company goes belly-up, you have no hope. But if you have spread out your investments over many different companies in differnet sectors then you may only take only a small loss. Something else to watch out for is becoming too attached to your stocks. You should never put your emotions into your trades. Doing so will most likely cause you to not think clearly when trouble starts and the stock price falls. It’s better to take a small loss now than to wait until that “favorite” company is selling for pennies per share. There is much more to playing the stock market than just this, of course, but if you follow these few simple tricks, you’ll be well on your way to success.

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To figure out which dividend stock is giving the best yield, you need to know a few things first. Look at the company’s stock price and then look at the annual payout of the dividend. you divide the dividend payout by the stock’s price per share and that is what the dividend percentage is. As the stock price fluctuates, the yield will too. Stock price of XYZ is $100 per share and the annual dividend is $15.00. That would make the yield 15%. Typically the payouts are made on a quarterly basis, so every three months a share holder will receive $3.75 per share.

What I love about investing in stocks that pay a dividend is as you own the stock through each payout, it lowers the price you’ve already paid for the stock. If the stock never moves from it’s price of $100, you can figure your share price to actually drop from what you paid for it. Of course a stock price will never stay at any set price so you will be making money in two different ways (in a sense).

Be aware though that just because a company will payout a dividend, it doesn’t mean that it’s going to stay that way. As a company’s stock price falls you will see the dividend percentage rise. In many cases it’s a good thing for a share holder because it gives the investor a chance to buy more shares at a lower price. It will also help in the fact that you will be receiving a better yield. Just because the stock price falls doesn’t mean it a bad thing for the stock. All stocks rise and fall on a regular basis. Other investors will take profits after the price has risen so much, As long as the company is doing the right thing, the price will always come back and pass it’s recent high. If the company continues to go through a rough period for some time, it will be reflected in the stock price. at that point they will either lower or suspend the dividend to help get it back on the right track until the company is on solid ground again. If you see a dividend yield too high (above 15%) it’s a good indication of trouble ahead for the company. You want to stay with a company that has a percentage rate of anywhere between 4% – 10%.

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Just like when you hear that you haven’t taken a loss in a stock until you sell out of your position, the same goes for your profits. You didn’t make anything until you have sold the stocks.

After the DOW made some major drops and looked like it it had bottomed, I started to build up a position in some stocks that I’ve been watching for some time and know that they were solid companies with good fundamentals. The stocks gained in value by about 25% and from my experience, I sold out of about 50% to 75% of those positions. What I didn’t expect was that the stocks weren’t done gaining value. The DOW pretty much leveled off, but the companies that I invested in had some more momentum in them. I missed out on an extra 10% to 12% of gains that I could have had if I just hung in there and waited.

My point is that yes I could have made more money than I already did, but I could have lost a good portion of those gains too if the stocks fell. I’m just as happy with the 25%-30% gains since they are now in my account as cash. There’s a saying that I’ve heard Cramer say many times and I agree with him. Bulls make money, bears make money and hogs get slaughtered. As long as you continue to make money in the stock market, you’ll be able to continue trading and investing in stocks.

Being able to sell when you’re up is easy as long as you don’t get greedy. I’ve spoke about it before and I will talk about it again. Be happy with the gains you made instead of getting frustrated over the money you could have. The same thing goes when you’re looking at a stock to invest in and before you get the chance to build a position in the company, it makes a big jump in value. You missed the opportunity and there will always be another one as long as you are looking for them. I watched too many people try to “chase” a stock up only to get in it right before other trader start taking their profits.

Don’t get yourself bent out of shape if you miss a ride up on a stock and don’t get “hog-like” by staying in the stock too long. Following these rules will help make you a better investor or trader.

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