Investing Tips - 4 Points To Ensure Your Money Never Sleep On Wall Street

By Earlvin Harris

Money never sleeps on wall street and you must make sure you never sleep on your money. I often tell clients this because often I am asked, "How long should I hold a stock?" A great deal of investors are told to buy stock and hold it for the long haul. I could never figure out the logic in telling everyone to hold a stock for the long haul since there are different investing strategies when it comes to preserving your money and growing your money.

Stock prices go up and down. The object of investing is to make a return on investment. To do that is to be in a stock when it goes up and out of it when going down. Unfortunately, mere news about a stock can drastically manipulate the price of a stock in a positive or negative way, causing even the seasoned investor to gain a fortune or lose a fortune in minutes.

I've always been taught to not listen at the news to base buying or selling decisions. A scene in the movie, Wall street Money Never Sleeps, attempts to illustrate the way in which rumors, even when people know they are not true, can drastically impact the price of a stock.

Here are a few tips to ensure your money never sleep on Wall Street.

1. Look for stocks that are undervalued:

In order to do this, you need to look at the current value of the stock in conjunction with the future prospects of the company. If you find a company with a high possibility of future success, buy their stock early, as its value will increase manifold in a few years.

2. Look for stocks that pay dividends:

Some stocks pay dividend yields of over 5%, some pay virtually nothing in dividends. If yours pays a dividend you will be paid (like a credit to your account) based on the number of shares you own.

3. Never fall in love with your stocks:

When they are overvalued from a steep rise and you have made some money, sell them unless you want to keep for long-term capital growth. Sell them also if the stocks fall below your 'set-point' price, I always set that at 7-10% below my buying price.

4. Minimize your losses:

If you find that you have invested in a company that has been doing badly for several years, analyze its activities to see if there is any possibility of recovery. If not, it would be best to sell out and cut your losses rather than lose more of your money in the future.

Money never sleeps. Even when you are asleep, money transactions are taking place on the other side of the globe. In the information age, news never sleep either. Never let news trigger a buying or selling decision based off your emotions from the news you received. All news is not true news.

Which reminds me of a scene in the movie, Wall Street: Money Never Sleeps, when the character Gordon Grekko was talking to his daughter's fiance. The fiance says, "It's about doing the right thing." Grekko says, "It's about the game."