As the US economy continues its downtrend, the US dollar remains weak against other currencies. Citizens are reeling from the effects of a down economy and wonder how to protect their investments and their income. They are constantly on the lookout for alternative sources of income that will help them secure a brighter future for their family given the current scenario. Investing in stocks is an option that is open to anyone who would like to take advantage of the fact that stock prices are down and can be bought for less than usual.
Prospectors are very happy about this as they have the chance to invest in companies which are projected to do well despite the recession. The stock market is still very volatile and it can unnerve someone who is not knowledgeable in how the stock market works. Several stocks are available now since most investors are unloading some of their common stocks. Common stocks are those that are regularly circulated and bought by interested shareholders. It gives the investors partial ownership of a company and gets a portion of the company profits through dividends. When the economy is on the upswing, these common stocks are usually chased by more investors even if the value per share is higher. With the recession, and more investors unloading their common stocks, it is flooding the market and some are sold at a loss as investors want to cash in their investments for fear of losing more. And for others, this is the time to grab common stocks that are a lot cheaper due to the weak dollar. Here are tips on how to invest in cheap dollar stocks.
- Review your finances and set aside the spare cash that you would like to use to invest in stocks. Be conservative in your approach. You do not want to use more than you can afford. Buying stocks can be very profitable but there are also risks involve because of the market uncertainty.
- Follow the movements of the stock market closely. You have to learn everything that you can about this business and see the trend that unfolds everyday. This will help you identify the movers in the stock exchange. The research that you do today will help you greatly as you build your stock portfolio. You also have to be familiar with the terms used in the stock market and those used by stockbrokers.
- Identify the businesses that interest you. Follow their movements closely for about a week or two before you start buying. Currently the most interesting companies are those which are based in the US but have multinational operations. Even if the US market is weak, their earnings overseas, that should be reported in dollars will still make them very profitable. Look also for small and medium size US exporters. There are several companies such as those in the pharmaceutical industry, IT, fiber optics and cables, construction, mining and drilling industries and manufacturers of restaurant and fast food chain equipment which are doing very well in the European, Middle East and Asian markets.
- Check out those stocks that are undervalued. The way to do this is to check the price versus earning ratio or simply P/E ratio. This equation measures the price of the stock over the company earnings. If the P/E stock is higher this means that more people are buying stocks from this company to boost its growth.
- While you continue your research on the stock market, look for stock market newsletters from well known stock analysts. This will give you a fair idea of trends in stock investments and where to go.
- Sign up with a stockbroker who will charge a low commission. You can look them up on the web by searching for online discount stockbroker. These brokers charge a few dollars and a low minimum investment. You can check out Scottrade which charges about seven dollars in commission. There are others that you can check at Consumer Search. These professionals can help you make a sound decision on which stocks are good investment prospects.
- Regularly monitor your investments. You do not have to check them everyday but make it a point to check them regularly. As you sign up with a stockbroker you will be updated on what is happening but it always pays to check things on your own.
Continue to watch the stock market trending and be on the look out for other investment opportunities as you gain more insight on how the stock market works. With the cheap dollar you can make every cent count with wise investments with the help of your own research and the assistance of professionals.