If you are keen to invest in the stock market, then there are few things which you would do well to bare in mind. Aside from understanding and being able to predict stock market trends, there are plenty of other aspects to stock investing which can help you to be successful in this field.

Firstly, it can be important that you do not always have to make a huge return on you initial investments – as long as you do not lose money, you can consider it a successful trade. It is often those who are continually chasing huge profits that can end up with considerable losses. While taking risks can often pay off in terms of trading stocks and shares, sometimes those risks needn’t be particularly big.

If you are serious about your stock investments, then it can also be advisable to take an interest in the companied in which you are investing. After all, the stocks which you have bought are representative of owning a part of the business. It can be in your interest to ensure that the businesses which you are helping to finance are abiding by the ASIC guidelines, for example, and to understand what their long-term goals might be. This will give you a a better understanding of how your investment is being used, and can be beneficial in helping you to make future decisions regarding the stocks which you own.

Lastly, patience can also be key. Although some stock investments might offer a quick profit, there are a great many that won’t. However, it is often easier to predict long-term changes in the market, and so being prepared to hold out for long-term period of time can often greater rewards for those who have invested.

A company like Proctor and Gamble, who sells necessary household items that will be bought no matter what, should not be too negatively affected by the economy.

A company like Apple on the other hand is more sensitive to the economy. People might opt to keep their old Ipod if they are low on funds instead of buying a new one or they might buy a cheaper, 600 dollar Dell laptop, rather than a more expensive 1400 dollar IMac.

Recession proof stocks obviously perform better than the market in rough economic periods and worse than the market when things are going well.

Here are my top 4 recession proof stocks:

1. Johnson and Johnson [Ticker symbol JNJ]: Johnson and Johnson is a well oiled machine, they are a huge company that simply makes money hand over fist. A recession might slow them down a little but they will still be churning out money left and right no matter what. The next time you think the economy might be in for a rough patch or two, invest in JNJ and reap the benefits.
2. General Mills [GIS]: This is another company that the average consumer should be very familiar with. People cut back on their spending during a recession but they will not cut out their cheerios and other cheap, healthy food options. General Mills has been around for hundreds of years and will be around hundreds of years from now.
3. Coca-Cola [KO]: Coca Cola is a great investment during periods of downturn in the economy for two reasons. The first is that Coke and coke products are one of the last things to be cut out of one’s budget. The second is that Coke is so diversified these days that it is basically like buying a mutual fund. Coke sells its product in almost every country in the world so you will be instantly diversified and safer by investing in Coke.
4. Potash [Ticker symbol POT]: Yes, the ticker symbol is funny, and no, it is not a joke. Neither is this recommendation. Potash sells high quality, cheap fertilizer’s to commercial farmers, a recession does nothing but strengthen their business.

Here are a few of his most famous quotes:

“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

This quote means the most to me personally.  I am young and not rich yet by any means, but I have always known that I am going to be rich.  It is in my blood.  I do not want to be rich out of greed, even though I certainly won’t mind the money, it is just something that I have always known will happen.

“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

This is another great quote by Warren Buffett.  You do not have to hit a grand slam every time you pick a stock when investing or a piece of property when it comes to real estate.  It is okay to hit singles, steal bases, and hit the occasional home run.  You should not expect 50% yearly returns in the stock market, but its okay, you will become rich over time if you get 10% returns every year year after year.

The two quotes above mean as much to me as anything. You need to realize that you are capable of becoming very wealthy. You do not need to do anything special to become rich, just consistently invest and put money away day after day.  Keep on hitting singles and in the end it will turn out to be something great.

It is absolutely possible to make a living day trading, but it is not easy or recommended. If you haven’t yet, read this article, day trading for dummies, to get an overview of what day trading is exactly.

To me day trading is much more like gambling and much less like investing, I simply do not know what the price of a company will do in the short term, but there are some out their talented enough to make a living doing it, more power to them!

Do not fall for scams out their that claim it is easy to make a living day trading. They likely want you to either subscribe to their newsletter or buy their product, either way they are trying to make money off of you and they have no intention of helping you with your quest to become a day trader.

The stock market is not meant to supply individuals with money quickly. People who get greedy usually get burned. If you want to day trade for a living, think twice about it. I’ll be content with my 10% returns year over year!

Stocks that are trading at a price so low are usually either going to be compelling bargains or companies that are falling apart.

You can go here to check out all of the stocks that are at a 52 week low currently. At the moment, there are 199 companies that are at a 52 week high and just 5 companies that are at a 52 week low. It is very common for there to be a huge discrepancy in the number of companies on their 52 week high/low depending on how the broader stock market indices have faired over the past couple of weeks.

The Dow is nearing a 52 week high currently and as they say, a rising tide lifts all boats.

There are plenty of reasons to be interested in stocks that are at their 52 week lows, I am all about buying quality companies at cheap prices, but you need to shift through all of the “trash” to get to the quality companies. Stocks get to a 52 week low for a reason, it is important to keep that in mind.

The trailing price to earnings ratio is not as popular of a measure to evaluate a company but it is still important.

The only difference between the trailing price to earnings ratio and the normal price to earnings ratio is… you guessed it, the trailing price to earnings ratio uses the earnings from the previous year that the company had to calculate the number.

The trailing price to earnings ratio is a great complement to the price to earnings ratio of a company. You will be able to see how the earnings of a company in the past compares to the earnings the company is bringing in currently.

Here is an example of a reverse stock split: Company XYZ is trading at 1 dollar a share and wants to trade at 10 dollars a share so it can get more recognition and respect amongst investors. It has 100 million shares outstanding and is therefore worth 100 million dollars according to investors. It completes a 1 for 10 split which cuts the number of shares out available on the market from 100 million to 10 million but effectively raises the price per share from 1 dollar to 10 a share.

There is no increase or decrease in the actual value of a company in a stock split or a reverse stock split, these splits are just done in order to keep the price of a share of a company reasonable. Investors get weary when they see a company is trading at 30 cents a share or 3,500 dollars a share.

You should never buy or sell a company because of a split, it is important to understand what a reverse stock split is but is equally important to realize that they are meaningless as far as the impact they have on the investment is concerned.

I use Yahoo Finance to do the bulk of my fundamental research but all the major sites, google finance, cnbc… are pretty much the same so it does not matter too much.

I want to know exactly what a company does. It is not good enough for me to know that yahoo is a website. I want to know how they make their money [selling ads online...] and what environment would be the most conducive to their business.

I like to look at the past 10+ years for a company and make sure that their earnings have grown consistently. It is okay for there to be a few years of mediocre growth, 2008 and 2009 are two years that most companies did not grow, but if the company is not improving its business over the long haul you do not want to tie up any of your hard earned money in it.

I then check out a companies earnings per share and its growth ratio. I like to invest in companies that not only grow consistently, but companies that are fairly cheap compared to what they make yearly.

The number one thing I like to look at before investing in a stock is its balance sheet. Here you can see the companies assets and compare it to their liabilities. A companies balance sheet is even more important for a smaller company because it is still in its growth stage and will need capital to fuel its growth.

A company that has much more assets then liabilities, a company that is cash rich and low in debt, and a company that is growing its business consistently is a company I want to invest in for the long run!

Day trading for dummies: Here are the basics. Day trading is where someone attempts to make a profit in the stock market by rapidly buying and selling shares of a company or some other asset [An index fund, ETF, commodities, currency...].

Is day trading more like investing or gambling? Personally I think it is more like gambling. Investing is making a decision for the long haul. Investing is being okay with a down year or two and realizing over time your money will increase at a rate of 8-10% and compound interest will eventually do its wonders.

Gambling is making a calculated bet.  There  are a few people who play poker for a living but they are certainly in the minority. It is the same way with day trading.  A few will succeed but most are simply not cut out to do it.

If you are a day trading “dummy” do not sweat it, you are better off focusing your efforts into investing and personal finance.

Nevertheless March will be a very important month for the stock market. January and February have been up and down for the stock market. The Dow Jones began the year at 10,583 and is currently at 10,402. A drop of less than 200 points in almost two months means little. The stock market has been essentially flat this year so far. March is the month that will likely set the tone for the rest of the year. If March is a strong month with a 500+ point gain in the Dow Jones index then this year will be looking like a winner for investors. Also the opposite could happen and the Dow Jones could dip back to the 4 digit range and everyone could act like the sky was falling again.

The stock market has had a huge run up the last 12 months. In March of 2009 the Dow Jones index was in the 6 thousands, now the Dow is over 10,000. The stock market looked bleak a year ago but that ended up being the best time to buy for the long term. I think that the stock market is fairly valued at 10,500 currently but Wall Street does not always agree with me . March of 2010 will be a big month, buckle your seatbelts!