Seven Questions

CNBC suggests that before jumping into investments from the latest tip, you should carefully consider some facts. The seven questions listed below separate news from noise, and will help you to make good investment decisions.

1.How does the company make money?

2.Where is the company’s growth coming from?

3.Who are the customers?

4.Who is the competition?

5.What do the suppliers and vendors say about the company?

6.Who is running the company?

7.How promising is the overall economic environment?

a proper market research is always helpful to look at the bigger picture. And if you are considering a big investment, its always a must.

Penny Stocks

Stocks which are trading at a value less than $5 are generally considered as penny stocks. Many new investors are lured to the appeal of a penny stock due to the low price and perceived potential of rapid growth. But many fall into the trap of pump and dump schemes and lose a huge amount of their savings. These are few wise suggestions you should consider before you invest in your first penny stock

1. Look at companies with market cap of less than $500 million

2. Better avoid bulletin board and pink sheets. Look at stocks traded in major exchanges

3. Very thinly traded stocks should be avoided

4. Look at the fundamental value when driving your decisions

5. keep it low. never more than 10% to 12 % of your total portfolio.

Happy investing!

Follow the Rules

The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions.

The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.

The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

Crucial to the SEC's effectiveness in each of these areas is its enforcement authority. Each year the SEC brings hundreds of civil enforcement actions against individuals and companies for violation of the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.

Okay, now what if I dont follow the rules? the answer is simple you land up where a good chunk of top financial managers are - US State Prison, no kidding, SEC is a tough cop. If you really want to taste its power and what insider trading can lead to watch the 1987, michael douglas starrer movie "Wall Street". That will give you a good view of what regulations are exactly.