3 Reasons Why Stock Investors Sell Their Shares

One of the most frequently asked questions among stock market beginners is:

Why do stock investors sell their stock?

There are many reasons why investors sell their stock. Unfortunately, sometimes the sudden sell of stock may be the result of unethical or illegal activity. Nevertheless, for the most the part, investors will sell their stock because of:

Fear They are cash strapped. They want to take the profits and recoup their initial investment.

So let's take a closer look at these three reasons.

Fear

Selling out of fear is probably one of the worst things that you can do in stock investing, but many investors do it. There is a quote from Friedrich Durrenmatt that says, "Emotions have no place in business unless you do business with them." Most people would agree that the best decisions are made when emotions are not involved.

So where does this fear come from? The media is the blame for the most part. The media, especially in the USA, is extremely powerful and, unfortunately, has a major influence on the actions of many people. Then you have your family and friends, who most of the time do not know what the hell they are talking about, telling you what will happen if you do this or that. And like the media, what your family and friends think has a major influence on your decisions good or bad.

There was an article feature in the Yahoo finance section titled "6 Money Mistakes Everyone Makes". The article highlights how investors dumped stock in 2008 when the Dow dropped by 700 points. In total, all in a five month period, investors dumped $31 billion in stock during 2008. According to a study done by Vanguard, a well-respected financial institution, concluded that if those investors would have kept the $31 billion in the stock market it would be worth $63 billion today.

Cash Strapped

Some investors may be having a financial hardship and there only option is to sell their stock to raise cash. It has happened to me personally. I needed cash for something so I sold some stock that I had to raise the cash. It is similar to selling the extra car, pawning your stereo, or selling your old computer. On the contrary, investors may not be having a financial crisis at all, they just prefer to sell their stock and use the cash for a purchase. Remember that stock is considered an asset and can be easily converted into cash.

I Want My Profit Now

I consider myself to be a long-term investor. This means that I like to find a company to invest in, invest in that company, and hold that stock for 5 years or longer with no intentions to sell. Other investors, who may consider themselves long-term investors as well, will invest in a stock for the long-term but once that stock is profitable they sell some of the stock to reduce or recoup their initial investment. Or they want to recoup their initial investment plus enjoy a profit.

Example: An investor buys 10 shares at $60 of Apple Computer stock in 2002 which makes their initial investment is $600. In 2012 each share is worth $600 which makes their 10 shares worth $6000 ($600 per share times 10). The investor decides to sell 5 shares at $600 and hold the remaining 5 shares. So the investor would receive $3000 ($600 times 5 shares) for the sale. The investor will recoup their initial investment of $600 plus a profit of $2400.

Finally, it is important to understand the reasons that investors sell because buyers and sellers of stock, ultimately, determine the stock price.

Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board   

12 Simple Lessons to Learn From Warren Buffett

Here's a list of priceless lessons that one can learn from Warren Buffett. Every investor in stocks would do well to understand them and apply them.

1. Though there are good and bad companies, there is no such thing as good stock; there are only good stock prices, which come and go.

2. Stocks do well or poorly in future because the businesses behind them do well or poorly - nothing more, nothing less.

3. Market timing is a practical and emotional impossibility. Speculation may work once or twice but in the long run it generally leads to losses. Since you cannot predict the behavior of the markets, you must learn to predict and control your behavior.

4. An investor must guard himself against unjustified market fluctuations. He would, therefore, be spared of the mental anguish caused by other persons' mistakes of judgment if there were no daily market quotations available. Having built a portfolio, be patient - for years. Don't look at the stock ticker every day.

5. Risk is not in the stocks, it is in you. Risk is brewed from equal doses of Probabilities (realistically assess the probability of being right) and Consequences (how will you react to consequences of being wrong). In making decisions under uncertainty, consequences must dominate probabilities.

6. Asset allocation is not dependent on age, but on one's financial knowledge, experience and temperament. However, typically the asset allocation may vary between 75:25 and 25:75 with a general mean of 50:50. When markets are attractively valued, stocks should be increased and when they become overvalued, stocks should be decreased.

7. Stocks are highly volatile in the short run. Therefore an all-stocks portfolio is not recommended. If one is dependent on ones portfolio for regular income, one should guard against the unexpected and invest a suitable portion in bonds.

8. One has to have considerable will power to avoid getting into the bull market and getting out in the bear market.

9. An average individual who put his money in mutual funds has fared better than an average person who invested directly in shares. It is normally prudent to choose funds that have done comparatively better in the past 3-7 years.

10. Be wary of any advice. Use your judgment.

11. In the end what matters isn't crossing the finishing line before others, but making sure that you do cross it.

12. The only indisputable truth that the past teaches us is that the future will always surprise us - always!

Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board   

Some Information About Financial Spread Trading

Financial spread trading is a tool used for permitting stock traders for gaining from the increase and decrease movement of the stocks on different global markets like currencies, bonds, shares, stock and commodities like energy, crude oil and gold. This method of trading is different from any other method since profits earned here are completely free from any form of tax. It is a highly flexible since different markets can be traded through a single account. Therefore, this trading is versatile since the brokers are able to offer the trader a very wide variety of international markets to speculate on. Under this method, attaining profits from failing market or short selling is possible. Short selling is an attractive method to deal in the market. Traders can get the opportunity of gaining profit by betting on the entity on its reducing market value.

One of the key points about this trading market is that it functions round the clock and not only large traders, but also small traders are adapted as the smallest amount to bet is just $1, which would be of great use to traders who are new to the stock trading industry. For enabling, newbies to shine in stock markets, stock trading training programs are being offered by different firms.

Financial spread trading varies from fixed odds betting encouraged by high street bookies and the profits and loss are open-ended as well. In this method of trading, traders can bet on spread betting that allows them to speculate on various markets with various timescales. It is just like betting on the performance of the precious metal of gold over the following month or for a short period like betting up to lunchtime only.

With this method, a trader can get different quotes on the same commodity on different times like day trading and even weekly, monthly and quarterly betting. Since spread trading makes uses of leverage, slightly variant costs will be quoted due to the methods the bets are financed. It is when the trader puts a small amount of deposit generally 10% to control the value of an asset. In this case, a loan is not needed from the broker; rather he can charge the trader for the financing of their trade.

Any person, who wishes to get some knowledge about this method of trading, can take up stock trading training programs offered by some of the best firms with great experience in stock trading.

Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board   

What Is the Leading Stock Screening Software in Today's Market?

A staggering number of investors of the stock market today are turning to stock screening software to enable them to realize their financial independence through smarter trading. This is software which, as the title suggests, screens the stock market to look for high probability trading opportunities for you to invest your money in ahead of the curve.

By following the moves a good screener sends your way to the letter, you are trading without emotions and exclusively by how the market progresses and changes, making it the most reliable way to invest. It's also a great deal more cost effective than hiring a broker to do the same job for you but still lets you trade in your spare time without any experience in investing previously.

There are a number of things which make Best Penny Alerts the best stock screening software on the market today, so let's dissect them now.

First is in how Best Penny Alerts decides what is going to be a reliable high probable trading opportunity. It looks at well performing stocks of the past and specifically their behavior before they hit those trends, then it compares those factors to current stocks to find overlaps to further look into between the two. Once the program has identified what it believes as being a reliable trading opportunity, it notifies you so that you can trade accordingly.

Secondly is the high winning rate the users of BPA enjoy. Best Penny Alerts boasts the best winning rate of any stock screening software for one substantial reason: it limits its scope to penny stocks. As the name suggests, Best Penny Alerts solely targets cheaper, more volatile stock options. You can attribute the stock screening software's near perfect winning rate to the fact that it's a very different process anticipating behavior in cheaper stocks as opposed to greater priced, more static stocks which require a lot more influence to affect their prices. This difference in the analytical process makes means that BPA ignores greater priced stocks which gives it a huge leg up over its competitors which I have used which attempt to target stocks of all values and backgrounds.

If you're not convinced, the publishers of Best Penny Alerts offer a full money back guarantee on their software so that you can receive a handful of its picks without risking a dime of your own money beforehand to see their subsequent performances.

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Tips for Trading in Nifty (NSE)

Trading in Nifty (NSE) can be challenging for some people considering the volatile nature of commodity and stock markets in India. Nevertheless, these markets have grown to a level of being the biggest in India with 95 percent equity derivatives and equities trading taking place on daily basis. This stock exchange market has also become a preference for derivatives traders in index options and futures. As such, almost everybody trading in Indian equities is also trading in NSE. This is why learning tips for trading in Nifty (NSE) becomes very important.

Important Nifty (NSE) trading tips

• Get sufficient and reliable information: Knowing what is happening in the market is one of the major moves that will ensure your success in NSE trading. You should always gather information on the trends of share markets and chart patterns. Be keen on what is being reported in the news to enable you predict future changes in the market trends. Reading the newspapers and following the news at all other levels is imperative.

• Analyze the information: Knowing how to analyze the information that you gather is very important. It enables you to understand technical patterns of share market. Therefore, you have to carry out daily research to keep up to date with what is happening in the market. This may call for efforts, expertise and experience.

• Seek professional services: Gathering information and analyzing it in a way that will enable you make informed and accurate decision is not easy. It calls for professionalism and experience which many traders may not have. Therefore, look for a professional or firm that has been operating in NSE for a long period. A broker who has been in these markets for long has the required knowledge to ensure that they deliver detailed and even accurate analysis. Thus, they will give share tips that will work for you.

• Track market trends: Succeeding in Nifty (NSE) trading requires one to keep track of market trends. You need a real toe analysis of trends to know what is happening and what is likely to happen in the future. With a good provider of NSE trading services, you will always be supplied with accurate information on market fluctuations since they spend their time in doing that. When you have professional and reliable services, you will receive share tips via SMS or other efficient means of communication.

• Reliable techniques: Nifty trading requires use of techniques that have been tested and proven to be effective. These should be trading means that have enabled individuals to achieve their trading goals even during challenging market trends. Therefore, consider the number of clients a firm has served in the past and how successful are the techniques used. The best firm should also be proud of its success. It should have retail traders and institutions that it has helped achieve their goals in the share market.

With Nifty (NSE) tips in mind, succeeding in these markets become easy. This is because you learn how to determine the best firm to get the best services from. This way, you will adopt techniques that will ensure that you always get the best call before anyone else in the market.

Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board   

Signs of Group Mentality in the Stock Market

"Hind sight is twenty-twenty" a phrase that best describes someone who has group remorse. Group remorse is the way we feel when we realize what we have done. It is always the same, "what was I thinking". The fact is we weren't thinking and it is who we are and we will do it again.

We can never truly avoid being lured into to do the bidding of a group, but what we can do is identify some signs of group mentality.

The following are some signs of group mentality:

1. Invincibility - When we are part of a group, we feel our actions have no consequence. We no longer have foresight. Foresight is a uniquely human trait that separates us from herding animals. To be able to see consequence is what prevents us from following the herd over a cliff. But when we are members of a group we become apart of the herd and we will follow it to the end without sight of the consequence. Groups take away our humanity.

2. Contagion - Groups spread like a wild fire. They infect towns, cities, states and continents. Signs of contagion are primarily seen in the mass media. Contagion is the fad that has people camp out in front of a store for days to buy a new electronic device. Contagion is what makes people pay twice the retail price of a game system instead of patiently waiting. Contagion in history is remembered as the madness of the crowd.

3. Hypnotic Spell - A simple question with no answer "Why". When we are under the hypnotic spell of a group, the question, "Why?" has no logical answer. This inability to understand why we are doing something is what leads us to group remorse. Wars and modern marvels are created under hypnotic spells.

The most important aspect of any group action lies in its natural limit. If soldiers are asked to march 50 miles and they are only humanly capable of going 45 miles, then they will collapse at the 45-mile mark and never reach the battle. Groups always attempt to push beyond their natural limits and this is where we see change.

Groups primarily move markets and to understand their natural limits would put us at an advantage in understanding when it cannot get any better (bear market) or any worse (bull market).

Considering the above discussion, when we are looking at the stock market we should be looking at the tape, but rather looking at the tape reader.

Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board