What To Do With Your Energy Stock Investments

About two years after the panic of 2008-2009, the price of oil (i.e. West Texas Intermediate crude oil) eventually recovered to a little over $100 per barrel. But since June of 2014, it has plummeted and it is currently selling at slightly under $ 50 per barrel. This fall has pushed down the prices of energy stocks, earnings, and dividends. This has compelled many investors to think over what they should now do with their energy investments and where to find the best oil stocks. Consequently, it is very instructive to understand the basics of oil and the oil industry.

Oil is incredibly difficult, time-consuming and costly to find. But once it’s found, it costs practically nothing to pump it from the ground. The price of any good or service that has huge fixed costs but low marginal costs is going to tend to be erratic.

Despite this, when the price of oil is trading near the low end of its price spectrum, there is no shortage of pessimists who believe this state of affairs will continue forever. They ignore the fact that the same forces that pushed oil to swing so dramatically in one direction will eventually make it swing dramatically in the other direction.

We are not saying the price of oil will make a roaring comeback any time soon. In fact, (despite the fact that oil is a “finite” resource) we believe the long-term price of oil will trend downward slightly. Furthermore, we still cannot find many individual oil companies that we like unabashedly.

But we are saying we are more sanguine about what is happening in the oil industry now than we were a few years ago. And these things always take years (not months) to sort out. It is always helpful to keep long-term fundamental principles in mind. And the most important fundamental principle about oil (and energy in general) that we would like individuals to keep in mind is the following.

Oil and energy are the backbone of development. Until a viable, cheap alternative is found, their demand will never end. And when a viable alternative energy is found, the best players in the oil industry will probably find it or at least assist in bringing it to market.

Therefore, you need not bail out of energy stocks. If you haven’t sold them yet, you probably should not sell them now. And keep an eye out for those very good energy stocks that get punished undeservedly just because they are in an industry that is currently out of favor. And if you would like to see the specific oil stocks we are highest on, go to our Best-Stocks-to-Buy-Now page.

What To Do With Your Energy Stock Investments

Ready To Invest in Stocks? Just Read This Before You Do.

Have you convinced yourself to invest in the stock market and have you decided to invest in the best performing stocks for this purpose? Recall the days just prior to March 2009 when the Dow Jones industrial average lost nearly half its value and reached its lowest point in more than a decade. Countless people lost their lifesavings because of that downdraft in the market.

However, this possibility is nothing to fear or dread. Market drops, panics and even routs can be navigated successfully. In fact, if you are investing properly, these seemingly bad times can be turned into opportunities.

For instance, though the ’08 meltdown was massive, many people successfully survived it. The people who did survive were individuals who had a proper investment strategy, and who thought ahead about how they would react if such an eventuality unfolded. It was these people who were able to keep everything in perspective and to not make any rash and foolish decisions.

In very simple terms, go slow, have a sensible and realistic investment plan, and then execute this plan faithfully and skillfully.

Now you may be thinking how you can develop such an investment plan.

Study is the best way to tackle this necessity. Study about the stock market, study about the investment principles, study about the investment process. There is no amount of study that is too much. The more you study, the more knowledge you will have at your disposal to construct a strategy and plan that is tailored to just your needs and preferences.

Start by utilizing the best stock research sites. They will provide much of this information. In addition, they will provide research on such things as the best performing stocks, the stocks that are suitable for long-term investment, and the stocks that are suitable for the short term only.

Now, with all this information, you will make investment decisions like an expert and you will be able to deal with any eventuality in the market.

And, incidentally, you will be amazed how enjoyable the “study” we have been speaking of is once you taste success.

Ready To Invest in Stocks? Just Read This Before You Do.

Best Stock Research Sites

The internet is a wonderful thing. It has freed investors from having to go to their library and slowly and laboriously sift through musty old books to find information that often had (at best) a glancing relevance to their subject matter of interest.

Now, with a few clicks of the mouse, investors can access reams-worth of information, and then parse and zero in on the most valuable and enlightening information quickly. It is always nice when you can achieve better results with less effort.

But this assumes you know what to look for (garbage in, garbage out). In other words, you still have to know what to look for, or the incredible power of the internet to lead you to the best stock research sites is wasted. When searching for the best stock research sites, look for the following qualities.

  • Look for a site that clearly explains the basic and unchanging nature of the stock market and the investing process.
  • Look for a site that provides essential reference material on how to analyze and search for stocks. Number one on this list is a description of the most important and enlightening financial ratios, what they mean, and how to use them.
  • Look for a site that demonstrates how to use this reference material, and in particular the financial ratios, on actual data.

The last point is the most important. Many investors have a frustratingly difficult time putting into practice suggested financial ratios because the devil is in the details. Exactly how an investor should apply financial ratios makes all the difference. And an actual demonstration is priceless.

A sight that explains, theoretically, how to use financial ratios, but then does not apply these ratios to actual data (in a sense) is leading investors out to the woods and abandoning them there. A website that does this is not providing useful guidance. Theory without practice is worthless.

Because applying these ratios to actual data successfully is so difficult to do, it is often the feature most often absent from stock research sites. Be skeptical of any stock research website that explains, theoretically, the features of the market and the investing process, but does not back that theory up. The best stock research websites eat their own cooking.

Best Stock Research Sites

Why Make Investments in the Best Dividend Paying Stocks

Though an investment in the stock market is regarded as one of the most risky investments, it is regarded as one of the most profitable one as well. Disregarding the risks, and believing in the famous adage ‘no risk, no reward’, many people make investments in the stock market. Those who do proper homework before putting even a penny in the market often succeed to avoid loss and enjoy mainly profits, as they already have a plan regarding what they would do when the prices of the shares are down.

Since investment in the share market is really good option to make additional income, you must also think about this if you have ignored this because of the risk factors involving in this investment. However, before this, do proper homework following the smart investors.

One key element of this plan is simply to do your homework. In grade school, the smart students did their homework. In the stock market, the smart investors do their homework as well. This homework will allow you to understand the risks and identify the options to deal with those risks.

The best place to start this homework is with the best stock research sites. The best research sites will explain the market, explain the risk factors, and help you to identify the best dividend paying stocks.

Here, in this blog, I will let you some know some benefits of investing in the best dividend paying stocks. They are as following-

  • Dividends are real and unequivocal. Therefore, requiring that a firm pays a dividend is a constraint that can limit your upside as an investor, but it limits your downside as well. A dividend-centric approach is a low-risk approach.
  • Dividends are one of the things that are easiest to forecast and the best long-term dividend stocks are some of the easiest stocks to identify. Therefore, a strategy emphasizing the best dividend paying stocks is low-risk in a different way. Accuracy of forecasting goes up with a dividend-centric approach.
  • Despite the common misperception, the best dividend paying stocks can be quite lucrative. You may not become a millionaire over night with an approach that favors the best long term dividend stocks. But it is amazing how a little bit of outperformance achieved consistently can blossom into a small fortune.

Once you start your homework using the best research sites, you will discover many more reasons why you should invest in the best long-term dividend stocks.

Why Make Investments in the Best Dividend Paying Stocks

Why You Need A Comprehensive Investment Plan

Volatility of the market is not hidden from anyone. Even smart investors are not immune from volatility. However, smart investors make their investments with a proper strategy – they know what they will do if the shares they have invested in fall. Therefore, they do not flinch, panicking when they notice a sudden and unexpected fall in the prices of their shares. On the other hand, such sudden changes frighten those who do not have any investment plan. These unprepared investors make unreasonable decisions which result in financial loss.

If somewhere in your mind a plan to make an investment in the stock market is nurturing, I will advise not to not give up your hard-earned savings until you are sure you have the right investment strategy.

How can you form your investment strategy if you are new to the market? Many times, the more difficult the question is, the easier its answer is. You will just need the right approach. Instead of wandering here and there and talking to people who may or may not know, systematically search for the best stock research sites. These sites will provide you comprehensive information about the stock market and insightful information on such things as the highest paying dividend stocks. That information will enable you to form a proper investment strategy.

That is not to say that it is not useful to talk to a real professional who can give you expert advice about the opportunities and dangers inherent in the stock market. But ultimately, you will make your investment decisions by yourself and you will have to do much of your research by yourself as well.

With this comprehensive investment plan, you can invest your money in a smarter way, and in a way that will bring great return on your investment. Rounding up the blog, I would say just one thing. Not only investing, but also everything in life should be done in a planned way, as plans make our life quite easeful.

Why You Need A Comprehensive Investment Plan

Guidelines for being an Effective Long-Term Investor Part-1

Though it is true that there are no set rules for good stocks to invest in, there are some rules that are uncontestable and that are adhered to by most successful long-term investors. Let us review some general principles to help investors understand how they can be successful long-term investors.

Get Rid of Losers (Don’t try to “get back to even”) –

Many investors are accustomed to selling those shares that are doing well in order to lock in some profit and holding on to the shares that have experienced a fall in their prices. With these losers, they want to “get back to even.”

This is foolish. Your criteria for deciding whether to sell a stock or to continue to hold onto it should be whether it is currently trading above or below its true value. If, after purchasing a stock, you discover that it is not what you thought and you suddenly realize you own a stock that is selling above its true value, then sell it before you lose even more.

It is impossible to invest and not make some mistakes. When this occurs, it is foolish to not acknowledge these mistakes, learn from them, and move on.

The market tends to go up, and even underperforming stocks can make a profit. Therefore it is possible to “get back to even.” But this does not change the fact that hanging on to an overpriced mistake just because you want to “get back to even” will only hurt your relative profits in the end.

Do not Accept a Hot Tip

Don’t accept a “hot tip” from anybody, even from us. In fact, we never claim to have some critical information about a company’s future that cannot be found or calculated by studying the financial statements. Be skeptical and leery of anyone who does. Hot tips are either bogus (and as dangerous as snake oil), or they are real and illegal.

The greatest profits in stock investing come from developing a systematic method of identifying mispriced stocks and then employing that method diligently and patiently. You cannot count on a continuous stream of “hot tips” to beat the market unless you are doing something serious illegal.

Furthermore, hot tips are unnecessary. Beating the market is very possible by studying the easily accessible public information. If you doubt this, search for the best stock research sites on Google. Those few that display their complete performance as quickly and as prominently on their websites as possible are usually the excellent research firms that truly can beat the market and honestly help their subscribers to do the same. Start with the best stock research sites.

Ignore Price Changes

We said in the first point that if a stock has gone down, you should not be reluctant to sell it just because you want to get back to even. That is still true. However, you shouldn’t be reluctant to hold onto it either. You should not sell a stock just because it has gone down in price.

Sometimes, after a stock is pummeled, it is selling at a discount to its underlying true value (even if it’s true value is not as great as was first presumed).

The bigger point here is this. Do not make your decisions based on the change in the stock price. Focus on the fundamentals, and try (as much as possible) to ignore the price changes and price volatility. Use any significant change in price only as a catalyst to reconsider the underlying fundamentals.

Do Not Overemphasize the P/E Ratio

The P/E ratio is one of the most powerful and useful tools in stock analysis. A similar statement could be said about most of the other price multiples. Still, we feel most investors give the P/E ratio too much weight.

It is important to buy low-priced companies. But there are thousands of companies to choose from. It is possible to find low-priced companies without sacrificing quality too much.

There dozens of other variables available indicative of a firm’s quality. You should not let any of them go to waste. You should study them all and try to find companies that grade out well on as many as possible.

Favor the Top Dividend Paying Stocks-

Dividend-paying firms are generally low-risk firms, and therefore it is easy to see why they are favored by risk-averse investors. But many people do not realize that the dividend is one of the most powerful analytical tools available. Even investors who do not consider themselves risk-averse should have at least a slight bias for the top dividend-paying stocks. And long-term investors, who want companies that will excel over the long run, should have a definite bias in favor of the top dividend-paying stocks.

Guidelines for being an Effective Long-Term Investor Part-1

Invest in Dividend Paying Stocks

The single most powerful ratio is the dividend yield. Investors who want to find the best stocks buys can hardly go wrong by focusing on the highest dividend paying stocks.

But you can improve your performance even more if you utilize the treasure trove of other ratios and methods useful in rooting out excellent companies. You should remember that you do not just want high dividends, but steady and growing dividends as well. You do not just want the highest dividend paying stocks, but the top dividend paying stocks.

Below is a list of helpful characteristics to look for and ratios to calculate to identify the top dividend paying stocks.

  1. Favor consistent dividend raisers. Great companies do not become lousy companies over night. And lousy companies do not become great companies over night. One of the most effective ways to find companies that will consistently raise their dividend in the future is to simply look at which ones consistently raised their dividends in the past.


  1. Favor companies that pay a steady dividend. Well-run companies anticipate the future and profit from it. They never raise their dividend so generously that they eventually have to cut it (or even have to cut the rate at which they grow it). Consequently, the best run companies not only consistently raise their dividend, but they do so at a steady rate. The best run companies have low dividend volatility. A steady dividend is a sign of a well-run firm. Favor companies that have low dividend volatility.


  1. You can (and should) determine the health of the dividend by studying numbers other than the dividend. Perhaps the most important is the return-on-assets (ROA) ratio. The ROA ratio is the single best measure of firm quality available. And firms that have a healthy ROA can have both a high dividend yield and a high plow back ratio.


  1. The biggest bargains are in small cap stocks, but the biggest rip offs are too. If you are risk-averse, you should favor large cap stocks. Large cap stocks are usually more diversified geographically and in terms of the products they offer. One effective way to safeguard that the dividend is dependable is to favor large cap stocks.


  1. There are numerous other straightforward and powerful ratios that brilliantly illuminate the financial strength, operating efficiency, growth potential and other aspects of firm value that are critical components in determining if a firm will be able to pay a solid and steadily growing dividend. Do not let any of these go to waste. To see these in greater detail, go to our financial ratios document.


  1. Visit the best stock research sites. They will provide you critical information on the top dividend paying stocks. None of the above ratios or recommendations is foolproof. For instance, it is possible for many large cap stocks to have a shaky dividend and for many small cap stocks to have a solid dividend. You should become skilled at consolidating these various ratios and statistics into one, comprehensive rating. The best stock research sites can help you do this until you develop this skill on your own.


Invest in Dividend Paying Stocks