Stocks vs. etfs, why use etfs?
Answers: The main reason is to reduce specific risk, which if you own fewer than about 10 stocks is significant and actually more than a pittenance at fewer than 20 stocks. Also one might have some difficultly in judging the fundamental value of individual stocks. With an etf all you really have to judge is which one of the more than hundreds to choose.
EFS's are groups of stocks, so they have less risk than individual stocks, so you can bet on a sector.
Cost of acquisition is low with ETF's.
Individual stocks are good if you have a small amount of money to invest and want to use DRIP's for dividend growth (most DRIP's reinvest the dividends), or if you have specific research on a single company. Reward can be higher on an individual stock if you pick right (think Research in Motion).
ETF's allow you to target a specific industry or market, but give you a great level of diversity for your money, as it would require a great deal of money and commissions to establish a portfolio that matches just one ETF. Therefore, you have less risk, and it requires less analysis, as you only have to select industries or markets that you like, rather than industries and then stocks in that industry. Basically, ETF's are great for people who do not have the desire to analyze individual stocks, but still want to achieve market-beating results by targeting what industries or markets they invest in. I personally use them when I like an industry, typically if there is a catalyst for share appreciation, but I have not had time to look into the industry to find the best stocks. I currently hold the XLF, an ETF that tracks the financial sector. I have done this as I believe the financial sector presents opportunity, but the risks are high, so this was the best way for me to reduce these risks through diversifying, and is much less costly to purchase one ETF than ten individual stocks. ETF's are like every other financial instrument, they have their benefits and drawbacks. Just some thoughts, I hope they help!
Best of luck!
Brendan Prewitt
What online brokerage will allow me to buy NYSE or Nasdaq down stocks on a foreign exchange such as London?
or Japan and sell them the subsequent day on the NYSE or Nasdaq surrounded by an effort to profit from up to that time market unseal or after market close yield anouncements?Answers: Interactive brokers allows you to trade on foreign exhanges. But I don't think you can buy a stock on a foreign exchange and supply it on a US exchange. The foreign and US stocks, even for the same company, enjoy different tickers. You could probably still do the arbitrage by buying on one exchange and selling short on the other, but trading fees would destroy your profits. The big brokerages own full time people doing the arbitrage basically as you describe, and they prevent any serious price discrepancies from arising.
I believe Interactive Brokers might, but you will have to check near them to make sure. They do allow trading on several European exchanges including London.
Here is the interconnect:
http://www.interactivebrokers.com/ibg/ma...
The penny sleuth?
does anyone know if the penny sleuth really works, because it says it can share me the top companies to invest in cheaplyAnswers: Sorry the lone sleuth I know is for radio trivia:
which is
Kangaroo---------------2/07
under
iPod Touch 16 GB
ET
I would be extremely wary about getting into something close to this. These stocks are often remarkably thinly traded. What habitually happens is, the minute a rec go out, the wannabe buyer buys at huge prices only to following find out that he is a bagholder.
If you want to find cheap companies to invest in, I would suggest looking at stockcharts and compare near what is happening next to a given conpany. In other words,do your own research.