| Making money in the stock markets can be a | | | | industry, or industry sector. So if you wanted to |
| challenge but it can also be easy once you learn | | | | review stocks in the S & P utility index you |
| some of the rules to successful investing and | | | | would find electric utilities, gas utilities, water utilities |
| speculating. When I say that making money can be | | | | etc. If you only wanted to review electric utilities |
| easy it doesn't mean there is not an abundance of | | | | then you would look to a sector ETF or sector fund |
| work to be done before you might make it happen. | | | | which focused on electric utilities. This way you are |
| For the sake of this article I am going to assume you | | | | basically comparing apples to apples and not apples to |
| know what a stock, mutual fund, or ETF is and how | | | | oranges. There are times when electric utilities may |
| to buy and sell them online or through your broker if | | | | perform differently than water utilities or gas utilities |
| you prefer. | | | | and so you want your comparison's to be closely |
| Buying the best of breed in a stock, mutual fund, or | | | | similar so you can pick the strongest of the ones in |
| ETF is usually a wise choice if you plan on investing | | | | similar industries or sectors of those industries. If you |
| for the long term. The market melt downs beginning | | | | do not you cannot make a fair comparison. |
| in 2000 and 2007 teach you that even the best of | | | | You can compare one sector against another to |
| these issues will lose value in a declining market. Even | | | | determine which is stronger and that would be a |
| buying best of breed can cost you your money. | | | | relevant comparison. Do not do this with individual |
| Learn how to invest and you can buy the strongest | | | | stocks, in different sectors, as your results may be |
| stocks and exit when they show signs of weakness. | | | | flawed. |
| This article can help you begin your journey down | | | | This weekend I was updating my website and I was |
| this path if you are new to the markets or if you are | | | | reviewing stocks in the Dow Jones 30 industrial |
| an occasional participant. Even experienced investors | | | | average. Two stocks in this index also are in the |
| sometimes forget the basics of investing and need | | | | same sector of their respective industries and they |
| to be reminded of the simple tools of observation | | | | are VZ Verizon, and T AT&T. You probably |
| we sometimes take for granted. | | | | recognize both of them as telephone/cell phone |
| It is helpful to compare a stock to the activity of the | | | | providers. |
| market itself to see if it is stronger or weaker than | | | | I decided to post their charts on my site and provide |
| the market overall. This can be done in, numerous, | | | | a brief description of each stock issue and its trading |
| stock charting software packages available. Worden | | | | activity over the last 6 months or so. In their charts |
| Brothers TC2000 and Metastock by Equis are two | | | | you can see subtle and significant differences in their |
| such software packages that offer this feature. I | | | | behavior's that would give strong indication about |
| have personally used both and find them very helpful. | | | | which one you would have made more money |
| To compare two or more issues or indexes to each | | | | purchasing than the other. |
| other is easy. You create an overlay by adding | | | | Please visit my website and you can see the charts |
| additional symbols to the symbol template you are | | | | in the Jan 10, 10 newsletter just posted. The charts |
| viewing. Once you have done that you can graphically | | | | are at the bottom of the page as I reviewed them |
| see the correlations or lack of correlation between | | | | in alphabetical order. These charts are a helpful |
| various stock issues. | | | | reminder that to make money in the markets you |
| When you do this it becomes easy to see that some | | | | need to follow the money most of the time to do |
| stocks are rising faster than the index they are a | | | | so. |
| part of and that others rise slower than the index. It | | | | In looking at these two similar sector stocks you will |
| is also easy to see which issues are falling, perhaps, | | | | see differences in their price action over the same |
| when the market is rising or if it is falling faster than | | | | period of time. It is, easily, obvious that price is rising |
| the index. These are easy visual ways to see the | | | | faster and falling slower over this time span in one |
| strength or weakness of a particular stock issue. | | | | stock than the other. This comparison is not constant |
| Personally, I enjoy looking at stock charts and | | | | and varies in the two issues discussed here. The |
| exercising my skills of detection. To me this is a skill | | | | fluctuations in price that are evident, in the charts, |
| no one can take away from me and can always | | | | prove the value of comparison investing when it |
| serve me in my effort to create additional income. | | | | comes to buying stock issues. |
| Making a habit of reviewing stock chart patterns will | | | | Remember these price relationships change over time |
| make you wealthier over time. | | | | and it is important for you, as an investor, to |
| Watching a chart pattern rise and fall gives you key | | | | regularly review these comparisons to make sure you |
| clues as to what the future will hold for the stock | | | | are invested in the strongest possible stocks. If you |
| issue you are watching. Comparing the stock pattern | | | | do not take time to make these reviews you may |
| to the activity of other stocks in the same industry | | | | find your investment results lagging the markets. |
| can give you a significant upper hand in picking the | | | | Money flows from one industry and sector to |
| right investment choice. | | | | another. Regular reviews can help you to keep up |
| ETF's generally comprise stocks within a given index, | | | | with the strongest trends in the market. |