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Protect Yourself Against Identity Theft

Warren Buffett' likes to say that his first golden rule "don't lose money" his 2nd rule is "don'r forget the first rule".  There are other rules however such as don't let the bedbugs bite and don't let the crooks steal your identity.

Identity theft is when someone steals your personal information, e.g. name, credit card number, etc... without your permission, and committing fraud or creating credit card and bank accounts in your name.

The FTC reckons that up to 9 million Americans are victims of ID theft each year. The first you will know about it is when you receive an unpleasant credit report or statement and discover charges you didn’t make.

Thieves can steal your identity in many ways, on the Internet of course, but also outside your own home by "dumpster diving", which involves sifting through your trash to find the bills or statements that you throw away. It is essential therefore that you protect yourself against people getting hold of your trash, and that you shred any information, either by hand or using a home or office shredder.  Shredders  don't cost much - decent ones start at around $50

Once people get hold of your personal information they can do a number of things with it such as:-
open new credit card accounts in your name.
change the billing address on your credit card so you don't receive the bills, and then charge purchases to your account.
open a phone or wireless account in your name
use your name to get services such as electricity, heating, or cable TV.
create counterfeit checks in your name.
open a bank account and write bad checks.
clone your ATM or debit card and drain your accounts.
take out a loan in your name.
get a driver's license or official ID card issued in your name but with their picture.
use your name and Social Security number to get government benefits.
file a fraudulent tax return using your information.
get a job using your Social Security number.
rent a house in your name.
get medical services in your name
give your name to police during an arrest.

scary stuff, but easy enough to protect against - just destroy your statements, by hand or by burning them, or if you have a lot of statements then paper shredders  are the answer and they don't cost the earth

Successful Stock Trading

The stock market is theoretically a great place to make money, but in reality it is very difficult to know if the market is about to go up or to turn around and go back down. Beginners trying to make money on the stock market are well-advised to see what a sucessful trader does.

One successful trader in the UK is Robbie Burns. He has a site called the Naked Trader on which he lists his trades in his 'trading diary'. He has been a succesful trader for a number of years and was recently interviewed by the Motley Fool site.

In his 'trading diary' he lists his latest buys and sells, showing the buy price, target price for when he might sell and stop loss price. His sytem is easy to understand and is based on common sense. He makes a decent living from his stock trading, even if markets drop as they did in 2007 - 2008.

What is particularly useful for beginners is that he explains his method, which is simple enough. In essence it is a form of swing trading - he buys shares in companies that make a profit and have good prospects. He tends to avoid penny stocks and stocks that are falling and concentrates on stocks that are in an uptrend and regularly provide good company reports. He holds the stocks for a few weeks or months then sells if he thinks they have run their course. He also has a very simple system for deciding which companies not to invest in. If a company report uses the word 'challenging' in its report then he takes this as being code for 'trouble ahead' and so he look sfor something else. In addition if the company debts are more than 3 times their profits then he is not interested, he looks for a company without so much debt.

He also looks at a company's p.-e. ratio but in his own way.  He takes full year profits, multplies this number by ten, knocks off any net debt, and adds on net cash. He checks this figure against market capitalisation, and this tells him whether the share is cheap or not.  It's his own way of doing things but it works !

Robbie Burns is worth taking a look for a number of reasons a) he has many years experience b) he actually knows hot to make money stock trading c) his method is easy to follow although you would need to buy his book to see all the details d) he gives away a lot of information for free on his Naked Trader website. So whether you are a beginner or an old hand but are not making money from your stock trading then check him out.
 

What is Technical Analysis?
By Adva Jones

In investing, fundamental analysis is the analysis of the fundamentals of a company, i.e. whether its business is thriving or going down the pan. Technical analysis is ideal for stock trading for beginners. as it doesn't concern itself with company fundamentals, it attempts to predict the future price of a stock based on previous prices and charts. Stock charts are a reflection of price movements over time and the volumes of stocks traded.

According to technical analysis any news about a company can be seen in the charts first and if you are adept at reading the signs then you will see which way a stock price is headed before any news is announced by the company.
Technical analysis is based on the following assumptions - prices are determined by supply and demand, supply and demand is a result of both rational and irrational behaviors, prices move in trends and these trends are generally long-lasting, changes in supply and demand can be spotted by analyzing the way the stock price behaves.

Why bother with technical analysis?

It is easier than fundamental analysis and faster. It does not make us of company accounts and therefore cannot be manipulated by companies, it tells you what to buy and sell and when. Technical analysis based on the behavior of crowds, if people expect a certain thing to happen upon a certain signal, then they will react in a particular way when they see that signal. If enough people react in the same way then the expected outcome is achieved and the analysis becomes self-fulfilling i.e. a stock price goes up because enough people buy the stock because they expected it to go up. Many hundreds of expert analysts use technical analysis and thus influence stock prices by reacting to the same signals.

There are many indicators that are used in technical analysis, but one of the principal indicators is the 200 day moving average. If a stock falls below its 200 day moving average this is considered a bad signal and people tend to sell the stock. If a stock goes above its 200 day moving average this is generally considered a good sign and people tend to buy.

If 80% of stocks in the stock market are above their 200-day moving averages, this is considered to be overbought and so people tend to sell the market. If less than 20% of stocks are above their 200-day moving averages, this is considered to be oversold and a signal to buy.

There are many other indicators used in technical analysis such as the relative strength index, Bollinger bands etc... and any online stock trading site will allow you to include them automatically on any charts you may wish to look at, you don't need to work them out yourself. A study of all the different indicators is probably not necessary but if you are serious about investing or trading the stock market you will certainly need to learn about the main indicators.

Over twenty years' experience following the stock market through two booms and busts!

Online Stock Trading - Stocks and Shares

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