Investing in the Stock Market

From the book 'The Stockopoly Plan' by the author Charles M. O'Melia

There are several factors an investor in the stock market should consider:

1. All stock purchases should be commission-free.

2. All stocks purchased should be from a company that has a history of raising their dividends every year.

3. The company should not only have a history of raising their dividend every year, but should also show price appreciation in the market place, on a year to year basis.

4. All dividends from the companies should be rolled-over into more shares of the company, until retirement. This should be done by the company, for the shareholder, commission- free.

5. The companies purchased should have staggered dividend pay-out dates so the income from 12 companies will provide the shareholder cash dividend income every week of the year. No more than 12 companies should be owned, otherwise, you're probably spreading your money too thin.

6. A systematic approach of dollar-cost averaging should be done on a quarterly basis. A savings plan should be adopted to add to your holdings every quarter, along with the dividend reinvestment.

7. Stocks purchased should pay a dividend yield of at least 2.0% or better. A low 2.0% dividend yield isn't necessarily bad because it means the company in question is using most of their profits too expand. In other words, it's a growth stock with business, profits and earnings growing. A growth stock makes up for the lower dividend yield because their stock prices will more than likely rise faster.

8. The company should have been in business at least eight years, showing dividend increases each year. This will eliminate the risk involved in putting money into a risky new start up company (the kind that is going to change the world - they are just too hard to find).

9. The company must have a stock dividend reinvestment plan (DRIP). If the dividend paid by the company is $2.63 for the quarter, all of that $2.63 will purchase a further percentage of shares (partial shares) and this should be done automatically for you by the company or their Transfer Agent.

10. The companies you purchase should be purchased with the intent of realizing ever-increasing cash dividends for you and your family for the rest of your lives.

Everything you would need to know to start an investment program which emphasizes the considerations above is explained to you in my book 'The Stockopoly Plan', soon to be published by American-Book Publishing.

Below is an excerpt from the book I would like to share with you!

Have you ever noticed how some words in the English language are so perfectly named for what they describe? And how some words seem to be, I guess you could say backwards? For instance, the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun from sunrise to sunset. And then there are those words in the English language where there meaning appears to be backward, so to speak - like parkway and driveway. When my car is parked at home, I would think it would be parked on, well, a parkway - and when I'm on the road driving somewhere, I would think I'd be driving on a - a driveway.

In the stock market world, I think the word analyst is a perfect word in the English language and stockbroker sounds right to me, too. And this leads me to what I call the 'brainwashing mantras' of Wall Street.

The brainwashing mantras of Wall Street may take the form of a number, such as a stock rating of 1, 2, 3 etc. Or the mantras may be a star, 1 star, 2 stars etc. The mantras may be a word or a group of words- attractive, unattractive, neutral, market perform, market out-perform, market under-perform, market under-weight, market equal weight, market over-weight, sector perform, strong buy, buy, sell, strong sell.

These mantras are so ingrained in Wall Street and investor's minds that they have created multi-billion dollar industries. There are other types of mantras, such as RSI (relative strength index - a trading volume indicator), Bollinger Bands (named after its creator John Bollinger (he use to be a regular on CNBC) and the bands deal with the channels a stock trades in, in relation to its 'moving average'- another mantra), Stochastics (used to tell if a stock is 75 % overbought - too many people have been buying) or 25% oversold (too many people have been selling), Momentum, MACD (Moving Average Convergence/Divergence ? price of the stock, up or down, in relation to its moving average), 50 day, 200 day moving averages, triple bottoms and tops, pendants, flags, bear and bull markets, head and shoulders formations, double bottoms, P/E ratios etc, etc, etc. All these mantras serve a purpose (and if you're inclined to trade in the market they are, I admit, useful tools) - they create commissions. And in my opinion, have no meaning what-so-ever for the long-term, dollar-cost averaging, buying investor of company's shares, free of commission charges, whose companies raise their dividend every year, with the investor's idea or purpose being to provide an 85% tax-free income, through ever-increasing dividends for the rest of their lives, no matter what the price of the stock at any given time in the market place may be. (Whew! What a sentence!)

For more excerpts from the book 'The Stockopoly Plan' visit http://www.thestockopolyplan.com

About The Author

Charles M. O'Melia - an individual investor with almost 40 years of experience and passion for the stock market. Author of the book 'The Stockopoly Plan', soon to be released by American-Book Publishing.

charles@thestockopolyplan.com

---

Your Trading Objective: Why is that so Important?

You've decided to try your luck at trading stocks or... Read More

Stock Trading Diversification

This is the continuing story of our two imaginary traders,... Read More

Stock Trading - Daddy, Why Arent We Rich?

One Saturday morning, while he was sitting at his computer... Read More

How to Maximize Your 401k Mutual Fund Returns

When it comes to 401k's there is an overabundance of... Read More

Trading Tips No 2: The Big Lie in the Stock Market

It is commonly reported that the stock market averages about... Read More

Price to Earnings Ratio - P/E

After finding the price of a particular stock, usually the... Read More

Two for the Money

Look back over the years and try to remember how... Read More

How To Be A Winner

Everyone who invests in the stock market wants to be... Read More

Evaluation II

As I said in Part I everyone in the insane... Read More

Making a Stock Watch List

I am taking the time to help others learn the... Read More

How to Find Value in No Load Mutual Fund Investing

What are you thinking when it comes to your no... Read More

How We Eluded The Bear Of 2000

The date October 13, 2000 will forever be embedded in... Read More

The POWER of a Proven Stock Investment Plan

When you invest in the stock market for ever-increasing cash... Read More

The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker

Last time we looked at the real performance of the... Read More

Trading vs Investing

I often hear from people, "I don't trade. I invest.... Read More

Why This Bear?

People are constantly asking me why is the stock market... Read More

Forces that Move Stock Prices

Among the largest forces that affect stock prices are inflation,... Read More

Discover the Retirement Breakthrough the Federal Government Created for You - The Roth IRA!

If you don't know what a Roth IRA is then... Read More

When?

When will the stock market stop going down and start... Read More

Exchange Traded Funds Primer

Exchange Traded Funds (ETFs) are a group of passive index... Read More

Paddle Your Canoe

At some time in your life you have been on... Read More

Performance Funds

Mutual funds are doing more and more to discourage investors... Read More

Enronization

Even if you don't own any of their stock or... Read More

Fake Money

Reach in your pocket and take out that big roll... Read More

Bad News is Good News

For weeks, no, months we have been bombarded with nothing... Read More

Pathways

During our travel down life's path we come to many... Read More

10 Tips For Creating Wealth From the Stock Market

1. Do not spread your money too thin.My friend has... Read More

Your Job

There are so many kinds of work that needs to... Read More

Index Fund Trading Using Technical Analysis and Swing Trading Strategies

Index Fund Trading can be one of the most profitable...or... Read More

Planning Your Dive and Diving Your Plan ? Trading!

A colleague of mine just returned from a scuba diving... Read More

Protectionism

First let's see what protectionism is. According to Mr. Webster... Read More

Market Success

Who are the successful investors?There are those who follow the... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More