By Ray Maratea —<\/p>\n
My last column covered the steps you needed to take to get set up with your stock brokerage account and banking arrangements. This column will give you tips for selecting stocks for your portfolio.<\/p>\n
My preferences for stocks are Consumer Staples, Healthcare, Utilities, and Communications, to name a few. Also, because I am a dip buyer (buying stocks when their price dips below what I first paid for them), I focus on the dividend yield of the stock, which is, simply put, when some companies pay their shareholders a small amount of the profit they make from selling the products they manufacture.<\/p>\n
At times, the market will experience severe moves up and down. These movements are called volatility. When volatility occurs and your stock loses some of its value, remember the reason you purchased the stock, because if you decide to be a dedicated dip buyer, it is at these moments you should consider purchasing more of the stock that has fallen in price.<\/p>\n
To begin your stock selection, imagine the Stock Market as the supermarket you shop in weekly. Most of the products are separated by categories, making it easy for you to find what you want. Well, the stock market is like a supermarket of stocks separated by categories, of which there are 11. In the stock market, they are called \u201csectors.\u201d<\/p>\n
Consumer Staples: products consumers use just about every day.<\/p>\n
Consumer Discretionary Items: consumers buy these items, but they are not necessities. Travel and leisure, fast food, automobiles, and jewelry, to name a few.<\/p>\n
Healthcare: provides medical services, insurance, and equipment.<\/p>\n
Utilities: provide gas, electricity, water, and wastewater management.<\/p>\n
Industrials: provide machinery and related goods, such as drill bits, drills, sandpaper, saw blades, etc.<\/p>\n
Real Estate: provides physical properties and the buying, selling, and management of properties.<\/p>\n
Information Technology: provides hardware, software, and operating systems.<\/p>\n
Financial: provides borrowing, saving, investing, credit cards, and financial planning. Banks, accounting, and auditing firms.<\/p>\n
Energy: companies that provide all forms of energy, to include electric, propane, natural gas, fuel oil, diesel fuel, etc.<\/p>\n
Communications: provide broadcasting, telephones, both hard-wired and wireless, satellite systems, etc.<\/p>\n
Materials: provide raw materials, wood pulp (for paper and packaging materials), and materials extracted from mining.<\/p>\n
As you can see, you have many investment options. However, you must focus on those stocks that are in line with the amount of money you have available to invest. Use the Google search engine to find stocks you can afford.<\/p>\n
For example, you can type in \u201cStocks under $25 per share,\u201d or whatever amount works for you. There is always a good chance that if you search for \u201cStock Rating Firms,\u201d such as Morningstar, they will offer stock recommendations as well.<\/p>\n
When you have made your first stock purchase, that purchase, known as a \u201cbuy,\u201d will be recorded on a page known as a position spreadsheet. These spreadsheets can be set up as you choose. A Schwab representative (or the representative of the firm you have chosen), will help you arrange the spreadsheet in an order that is easiest for you. I have shown the column titles I use on Schwab below, and there is a good chance these same titles will appear on another brokerage firm\u2019s spreadsheet.<\/p>\n
My spreadsheet headings from left to right: Symbol, Yield, Last Div, Qty, Price, Price Chng. (check by $), Cost\/Share, Cost Basis, Mkt Val., Ex. Div., Reinvest, Gain\/Loss, (select by %).<\/p>\n
If you have questions about these headings, I will respond to your email.<\/p>\n
When you first look at your positions spreadsheet, some of these columns will be missing. There is a way to include them, and your \u201crepresentative\u201d will be more than willing to show you how and where they are.<\/p>\n
The categories I have shown give me ways to grow my dividend yield. I can arrange my list of stocks by showing the highest yield at the top of my spreadsheet. The gain\/loss column allows me to select the stock that has fallen in value the most. This is important if you are a \u201cdip buyer,\u201d which is what I am interested in. Future articles will explain how a stock\u2019s yield increases when you continue to buy it while it is falling in price. You will need a strong will to resist selling.<\/p>\n