Stock Preacher

Professional market players sell on good news, while most non-professionals jump in to buy on the news believing they will sell out at a good price.

The fact is while the pros are selling the non pros are buying, and the stocks is likely to dip!

Remember, it’s TRENCH WAREFARE out there! Professionals play by their own rules, and it’s important to keep up!

This market rule “buy the rumor, sell the news” is one of many! Use it wisely, and play like a pro!

DID YOU KNOW…? The StockPreacher News Letter is full of tips and tricks just like the one above and also has the best updates on Micro-Cap companies you will find ANYWHERE on the net!

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I once had a string of ten Small cap Stocks that I cut losses on. But the very next one emerged just as the market came out of correction (downtrend) and more than tripled in price. I have often thought: “What would have happened if I had gotten discouraged and quite because the previous ten stocks I bought didn’t work?”

The tricky part is getting rid of the emotion attached to making decisions, like cutting losses. It doesn’t fell comfortable to sell some thing you may have purchased only a few weeks ago because it’s now down 8% below your cost. Emotions take over. We try to defend our original decision to buy and justify holding the stock even though we are now in the negative.

But you can’t go through life looking in the rear-view mirror. You can get yourself in a lot of trouble with the “could’ves,” “would’ves” and “should’ves.”

When you bought the stock, that was last week or last month - not today. Today is a whole different situation, and you have got to protect yourself from serious losses - which could happen to anyone - so you can still invest tomorrow.

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Russell 3000 Index

The Russell 3000 Index is a great example of an index that seeks more comprehensive inclusion of U.S. Companies. It includes the 3000 largest publicly traded companies (nearly 98 percent of publicly traded stocks). The Russel 3000 is important because it includes many mid-cap and small-cap stocks. Most companies covered in the Russell 3000 have an average market value of a billion dollars or less.

The Frank Russell Company created the Russell 3000 Index and actually computes a series of indexes such as the Russell 1000 and the Russell 2000. The Russell 2000, for example contains the smallest 2000 companies from the Russell 3000, while the Russell 1000 contains the largest 1000 companies. The Russell indexes don’t cover micro cap stocks (companies with a market capitalization under $250 million).

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Standard & Poor’s 500

The Standard & Poor’s 500 (S&P 500) tracks the 500 largest (measured by market value) publicly trade companies. The publishing firm Standard & Poor’s created this index. (I bet you could have guess that.) Because it contains 500 companies, the S&P 500 represents overall market performance better than the DJIA’s 30 companies. Money managers and financial advisors actually watch the S&P 500 stock index more closely than the DJIA. Most mutual funds especially like to measure their performance against the S&P 500 rather than against any other index. Mutual funds that concentrate on small-cap stocks usally prefer on index that has more small-cap stock in it, such as the Russell 2000.

The S&P 500 doesn’t attempt to cover the 500 “biggest” companies. Instead, it includes companies that are widely held and widely followed. The companies are also industry leaders in variety of industries, including energy, technology, healthcare, and finance. It’s a maket value weighted index.

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Tax Risk on Small-cap Stocks

Tax (such as income tax or capital gains tax) don’t affect your stock investment directly. Taxes can obviously affect how much of your money you get to keep. Because the entire point of penny stock investing is to build wealth, you need to understand that taxes take away a portion of the wealth that you are trying to build. Taxes can be risky because if you make the wrong move with your stocks (selling them at the wrong time, for example), you can end up paying higher taxes than you need to. Because tax laws change so frequently, tax risk is part of the risk-versus-return equation as well.

It pays to gain knowledge about how taxes can impact your wealth-building program before you make your investment decisions.

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