Prosper Newsletter: February 2007 > Stock

You understand that the following information is educational in nature and is not intended to be legal, accounting, or tax advice. You are responsible for your own financial decisions and should consult your own legal, accounting, and tax advisors before making your financial decisions.

Learning Curve Shortened

I was/am an old guy (56), self-employed, working out of my house, and making an okay income. For certain reasons (travel, kids, retirement) I decided I wanted to be wealthy and so I had to change my thinking, my mind-set. After considering real estate and the stock market, I decided on the stock market. I bumped into Prosper after making this decision and thought they could shorten my education. My coach has helped me learn in a few short weeks what would certainly have taken a year or more. He has also provided an insight that I may never have picked up on my own. He does not know it, but I have made a few trades with my real money and have turned my $2,500 account into $3,067 in a month's time. This includes paying commissions and a couple of losing trades. My new financial goal is to double my money every 4 months, this seems plausible at this time. A second goal is to buy back some property my family used to own, for the benefit of my family and my community.

My coach has helped me focus my time and helped me interpret what I am seeing. I now spend hours studying, which means finding stocks worthy of my investing in them, and then deciding how to execute the trade. This time makes me feel productive, makes me feel like my goals are obtainable, and keeps me in a positive mind-set around my family.

- Lex P.


Tip of the Month

Market Upside

The markets continued to rise during the holidays with very little sell off. Usually, December is a time when investors will take profits for the year. That did not happen last year. People held on to their positions believing that the market still has an upside to it. With this said, there will be a correction in the market this year. There always is. It's just profit taking and keeps the market healthy. We don't know when it will happen but be ready to make your move when it does. We are still very bullish on the market for the overall year of 2007.

Apple computer (AAPL) and IBM in the tech sector continue to perform well with an upside potential for the next quarter. Apple recently announced the arrival of its new I-phone to go on sale in June. Oil prices have been falling which has led the airline stocks to some of the top performers in the market. The energy stocks have faced a large pull back based on the falling oil prices.

This is a time to be watching the market closely. Earnings season has just begun. Alcoa (AA), which is the first big company that reports, has just announced great earnings, beating the estimates. The market expects another great earnings season overall this quarter, which could lead to even more gains. However the Feds have said that inflation is still a concern for them. This statement alone has caused a weak market since the first of the year. Watch this earnings season closely, stay up on the expectations of what the Feds will likely do with interest rates and plan your trades accordingly.

Happy Trading!

Article

Paper Trading

Many people find it difficult to jump into the stock market and begin investing. They feel inexperienced and apprehensive at the thought of investing their money for the first time. To gain experience without the risk of losing real capital you have the option of trying paper trading which is also referred to as virtual trading.

When discussing paper trading you will often hear the term Monopoly Money used. This is because these trades are only tracked on paper; no money is exchanged. Paper trading allows you to apply trading theories to test their effectiveness.

When beginning your paper trading investments you should treat them just as you would if you were investing your own money. Some of the experience you can gain by paper trading includes:

Paper trading allows new investors to get their feet wet while eliminating the risks involved as a novice investor. Paper trading can also be an invaluable asset down the road when considering new investment strategies.

Another benefit of paper trading is that it allows you to learn the stock market without being tied to emotions. By taking notes in your journal and writing down what happened to your trades, you may be able to eliminate a lot of the emotion that many new investors face.

In the past many investors found paper trading to be a tedious and difficult process. Trying to track and evaluate the performance of stocks and calculate the different numbers often became a hassle to the point that many traders did not take advantage of this service.

However, since trading has become commonplace over the Internet, paper trading has become a much more effective tool for investors. Since paper trading is done on the computer you can receive your calculations much more efficiently. You can easily track your progress.

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