It was a regular Thursday afternoon when my husband called me up; what would otherwise be a normal chit chat this call was to tell me I had $2000 in my kitty and I needed to research and buy a suitable stock. I am a newbie to stock market and still really learning and this sent me into a tizzy. Well I had an option of 4 stocks to chose from, which was better than having to find a new stock altogether which would have been like finding a needle in a haystack.
Homework (1 p.m.): Out of the four stocks I zeroed down on 2 stocks (lets call them Stock A and Stock B) I thought would be good buy.
1st: They were at their lowest price in the last 3-4months
2nd: It meant they were good option for us to average out of our price on these stocks (Read the article on the Concept of Cost Averaging in Stocks here)
3rd: The last quarter 2009 report for these companies is due in this week of February and looking at their performance so far they are bound to do well (I have my fingers crossed.. Does this help in stock market??)
Decision (3:00 p.m.): My equity analytical homework said Stock A was our best bet because our holding on this would return a 15 – 20 % profit sooner than Stock B; we were looking at short term gains on these stocks due to the recent market crash Feb, 2010. Also Stock A gives a dividend whereas Stock B doesn’t, so if we landed up keeping these for more than a month Stock A was always a better option.
The curve ball (3:15 p.m.): Before I could call up my husband to share my decision, he pronounced I buy Stock C. I didn’t even get a chance to explain myself and thinking what a newbie would know in front of someone trading for last few years, so I caved in.
The story doesn’t end (Later that evening): On the dinner table table out of my curiosity I queried why we finally landed up buying Stock C. Stock C has a big market cap and is heavy on volume along with regular dividends. I wanted my husband to know what went through my head that afternoon and so I argued that Stock A was any day a better idea since we were looking for short term gains. And you know what… I won the discussion he was convinced that Stock A would have been a better option short term.. YIPEEE!!!!
End of this episode: Voice your thoughts and gain wealth. Even if you are a stock market newbie have faith in your stock homework, there is always a chance to win.
For the readers who spent time reading this article, Thank you and here are some more details:
Stock A: NASDAQ:SYNT (Syntel, Inc.)
Stock B: NASDAQ:GHDX (Genomic Health, Inc.)
Stock C: NYSE:GE (General Electric Company)
Tags: Stock Analysis, Stock Average, Stock Homework, SYNT