Angel Investing Benefits
They know that they need to take a long-term view of their investment choices.
Because of the high probability of a profitable outcome, this allows Angel investors to take advantage of the extraordinary opportunity offered by investing in the stock market for profit.
Angel investors use their expertise to look for companies that are likely to experience continued success and financial expansion.
They are drawn to companies that demonstrate strong growth prospects, strong management, attractive product offerings, and unique, if not unique, business models.
Not Just A Short-Term Gain
Angel investors know they can realize a return on their investment over a long period of time. That is, not just a short-term gain. Angel investors typically do not view the stock market as a simple place to make quick money.
Rather, they see it as a long-term investment that requires patience.
Angel investors have no expectations of quick return, and they do not buy stocks simply for the sake of having something to sell. Instead, they view the stock market as a long-term investment.
Stock Prices Have An Endurance – Angel Investing Benefits
Angel investors understand that they are more likely to experience a lasting gain if they invest over a long period of time, and that stock prices have an endurance of 20 years.
They are unlikely to reap quick profits, nor will they see short-term gains.
Determining The Price
While it is true that stocks have a price history that reflects the amount of effort and time that went into determining the price, they are no more fixed over time than the prices of individual stocks.
Stock prices are not unchanging. Rather, they fluctuate based on a number of factors including supply and demand, political developments, and economic conditions.
Angel investors generally are not fixated on price charts.
Sustainable Stream Of Income
Angel Investing Benefits. They do not watch stocks and wait for a price to sell so they can turn a profit. Instead, they look for a stock that they believe will experience continued success, and that they believe will provide a sustainable stream of income.
That means they take some time to research a company, including studying company earnings and financial report information.
They look for a company that is well run, with a strong management team, a company that is well capitalized (meaning its business is supported by low debt compared to revenue), and a company that has a strong product lineup.
Ultimately, Angel Investing Benefits. Angel investors have some preferences, but they also accept that every stock has to match some criteria. Angel investors generally want a mix of large, mid-cap, and small-cap stocks.
They want stocks that have a good balance of debt and equity, revenue and assets, and so on. Overall, Angel investors want to invest in a diverse portfolio with a bit of debt on the balance sheet for safety's sake, just like any investor would.
The real secret of the Angel Investing Benefits is in their risk tolerance. It turns out that the types of stocks that generate the most interest are the ones that most people don't like. This is because they are the ones that are least familiar to most people.
The ones most people don't like, people don't jump into. The ones people do jump into, they don't stay for very long. So it's critical to get into the stocks that people aren't jumping into.
Angel Investing Benefits. You can't expect to pick out the best-performing stocks in the market without good background research. There is a lot of research that goes into Angel investing so that you can avoid the big pitfalls.
If you are going to play the market and you are going to pick stocks for Angel investing, you need to make sure you buy the stocks that meet the following criteria:
1. Most stocks have an earnings yield. This is a calculation that Angel investors look at to see if a particular stock will give them good yields.
This calculation takes into account future earnings projections.
Here's how it works: Current stock price x (1 – tax rate) / Earnings yield. A high earnings yield implies that the company's earnings are not being taxed away at the rate they are making. The lower the earnings yield, the lower the company's expected earnings should be for the future.
Angel Investing Benefits, For the stock's projected earnings to add up, the company's dividend should also be relatively high.
2. The stock's price is bid up by the investors as well. You are bidding up the price of a stock to take advantage of current earnings news, but there are many more people willing to pay up for that same earnings.
This results in stock being bid up at the same time as some investors are taking profits.
3. Some investors have been known to sell immediately when a stock's price is bid up. This is referred to as a “correction”. The stock immediately falls through its price range. It will be subject to additional selling if it regains its range again. So keeping a long position is always a risk.
What Is a “Correction” Anyway?
An immediate correction occurs when a particular stock's price hits the target for a particular day and then reverses to hit it again the next day.
A long correction is an example of this and some investors may even use the term “corrections” to describe them.
However, it is also possible to have a long correction and still hold on for the long term.
Most investors can buy an entire position in a particular stock for the short term without really understanding what they are doing.
Buying In Bulk
They just buy a whole lot of shares and put a “5” in the calendar when buying in bulk. They will not have a clue as to how many shares to buy as the calendar makes the number too small for them to see.
As an example, if you were doing a long correction on Wells Fargo, a single share of WFC would be 10,000. That is 10,000 shares of WFC, but only if you are doing a long correction.
So, let's say that today you bought 10,000 shares of WFC (the stock's ticker is WFC) at $26 each. As a result of buying all 10,000 shares today, the stock would move up $1.00 from $26 to $27.00. However, if you did not buy any shares and just put a “5” in the calendar, the stock would not move up at all.
It would continue to trade at $26.00 and no amount of 10,000 shares would move the price up at all.
In addition to buying a whole lot of shares in a single stock today, you might buy a half dozen or a hundred or a thousand shares at a time.
If you are doing a long correction, you could buy hundreds of shares at a time. It is entirely up to you. It is not necessary to get in on a single stock all at once as you would be buying at the rate of a hundred shares at a time.
The reason for buying shares at a rate of a hundred at a time is that it is better to have a little less than a lot of loss. It is better to have a little loss than a lot of gains.
In addition to buying 100,000 shares at a time, you could buy 150,000 shares at a time. It is up to you. The most you should do is 100,000 shares at a time. If you are going to buy 500,000 shares at a time, you could do that. It is not necessary to buy 500,000 shares at a time.
Buy The Trend
In the first part of this article, I explained how to do a “buy the trend”. But what if the stock trend is going up? If you are going to buy the trend, what do you do if it is in the process of going up? You can say goodbye to the stock. Or you could buy a “selling short”. But why not just buy the trend?
Most of the big money that moves stocks is buying the trend. They buy the trend and they do it day in and day out. They are not going to buy the “flat/falling stock” just because it is in the process of going down. Why not just buy the trend?
It is just common sense that the stocks that are not going up are the most likely stocks to be bought by the big money. You are doing a long correction if you are going to buy a “flat” stock. Why not just go long the stock that is going down?
This is what I am going to call a “short correction”. And I will start with what I consider to be a basic set of rules because this is one area where the basic rules are just common sense. I will start by defining a short correction.
A short correction is a short break that occurs between the peaks in the price chart of a stock. A short correction may happen when a stock goes up for one day, and then goes down for the next day, and the investors think they are getting a break.
The opposite happens and then the investors are thinking they are on a short correction. This is very common.
Now I will define a short breakout. A short breakout is a breakout in a stock that happens after a long consolidation of a stock's price.
A stock is said to be in a “short consolidation” when it breaks above the high of a day, and then keeps heading up for a few days, and then breaks below the high of the next day and heads down.
These breaks are what I consider to be short corrections.
When A Stock Is Declining
They are not bullish because short corrections take place when a stock is declining. By definition, a stock must be declining before it breaks above the high of a day, and the stock must be declining before it breaks below the low of the next day.
Let's Look At An Example Of a Short Breakout
You bought ABC stock at $20 per share. ABC stock has been in a long consolidation pattern. ABC's daily high was $23 per share. ABC broke above the daily high, and then went down for two days, and broke below the daily low, and then went up again.
Now Let's See a Short Breakout Example Of a Stock That Is Going Up
You bought BIT stock at $10 per share. BIT has been in a long consolidation pattern. BIT's daily high was $11 per share. BIT broke above the daily high, and then went down for three days, and broke below the daily low, and then went up again.
These breaks are very common. In fact, these breaks are so common that I consider them to be basic rules.
The way I see it, I can either buy a “flat” stock at $20, or I can buy a “bullish” stock at $11. Why not buy a bullish stock at $11? Well, I see more upside potential if I buy at $11. This is because there is more chance of it continuing down than continuing up. By buying at $11, I also have more downside potential.
For example, you buy ABC at $20 per share. This means that you bought 20 shares of ABC at $20 per share. Now, let's say that ABC breaks down to $17 per share. You have now lost $5 per share because ABC broke down to $17. However, you now own 10 ABC shares at $17. Let's say that ABC goes to $15 per share. You now own 15 ABC shares. You now own 10 ABC shares at $15, and you now own 5 ABC shares at $10.
This gives you a net loss of $5, and a gain of $5.
Here, I am telling you that you are now going to lose and gain $5 per share. Now, I told you that there is a big difference between buying a stock and buying a stock after it has gone up.
I told you that there is a big difference between a flat stock and a bullish stock that is going up. The concept of buying a stock at $20 per share is not the same as buying a stock after it has gone up to $21 per share. You cannot short a stock, and you cannot buy a stock for $21 per share and then sell it a few weeks later at $20 per share.
When you buy a stock, you are committing to buy the shares. The shares are now yours to do with as you please. You are not committing to buy the stock at $21 per share. Now, the interesting part: You don't have to buy the stock at $21 per share if the stock goes to zero unless you want to.
Now, when you buy a stock, it doesn't necessarily mean you have to buy it at the same price it was when you bought it. Let's say that ABC breaks down to $16. Now, you are under a duty to buy the shares at $16, if it goes to $15. (I.e. you have the right, under the law, to buy the shares for $15). However, you don't HAVE TO BUY THE SHARES AT $16 if it goes to $15.
As I have stated above, you have the right to sell the shares at $15 per share, and then buy them back at $15. (Note: This is just a legal aspect of stock ownership).
You don't HAVE TO BUY THE SHARES AT $16, if it goes to $15. But, the question is: If you believe the stock is going to go down, or might do so, would you prefer to just buy the shares at $16, and keep them for some other situation, or would you like to just buy the shares at $16 and walk away?
(Again, this is a personal choice that is up to you). Some Angel Investing Benefits
The above example is just to get the point across. There are many possibilities with what happens with a broken-down stock. This is why you must have a good grasp on what the legalities of stock ownership are in order to make good decisions.
If you were a speculator and not a speculator, you would buy a stock and then set the price. At this point, you would have to be careful with where you buy the stock. I will not go into detail about how to buy stocks, as this is well known and well documented.
You may wish to ask your broker about doing this, and if it is within the rules.
You will get a non-committal answer, but you will know whether you are a speculator or not.
When you are an investor, you are not bound by the rules, not by law, and certainly not by any rules that govern brokers. They can break rules whenever they wish and incur no penalty.
Brokers love to tell you that they have your best interests at heart. They never prove it. All you have to do is look at the price of a stock that is not selling at par with their predictions. They always do just that, and many times better, to ensure their business continues to thrive. I say “fear not.”
What you have to do, and what I do, is know where I am coming from and what I stand for. Then make the decisions I feel are best for my portfolio and me.
I will leave you with this thought. If you are not comfortable with the decisions your broker makes on your behalf, find someone else.
Recommended Club – Angel Investing Benefits
And finally, for anyone that wants to do Angel investing the easy way with no stress and in a very safe environment I keep telling my fellow angels and have an account for my daughter, What I recommend is to join the VC Crowd.
They do all the leg work and due diligence for you and you will get shares every month added to your portfolio in some amazing startup companies, The amount of shares you get depends on the level that you join the club.
This is really available to anyone and you can get involved with all the weekly webinars or just site back and enjoy the ride and watch your portfolio grow.
The club has already had 3 IOPs for members.
So there is a lot of Angel Investing Benefits with the club
For more info visit the link below and here is a video of the CEO of the club