Frugal Framnett

Most money advisers will tell you, when investing, to go long and go long term. Here, long & long term mean two different things.

Going “long” is the easiest understood of investment strategies and that is to buy the item cheaply and sell it expensively.

However, I do not always go long term when I play the stock market. However, when you play the markets for short term gain you need to understand a few things. My long term investments are mutual funds (with one common stock in the pile) and I pay little attention to them.

However, when investing for the shorter term, I pay a lot more attention to the stock before I purchase and after I purchase. The biggest thing you can do is to set buy and sell targets before you invest. How do you know what reasonable targets are? This is not easy, but there are plenty of tools and information out there for that purpose. Look at the history of the stock, and not what its highs and lows are in comparison to its current price. If it is trading at historic highs than I would be leary of getting in. I am much more willing to get into a stock that is at its historic lows, but that can be hazardous too.

Why is the stock at all-time lows? Is the company not performing well? You need to check that out prior to investing, again the data is out there (Yahoo Finance, google it, request it from the company, etc). However, most companies stock prices are currently depressed through no fault of their own.

A lot of stocks are down now because most stocks are down now. That is to say an established company can be making profits, has a good supply of cash, has good credit, but still have a battered stock valuation. But unless you look you don’t know if a company stock price is generally market depressed or a specific statement on that company.