by Christopher Johnson

Created on: January 03, 2008

In the world of investing, knowledge is definitely power. It is important to remember that there are tons of different factors that go into analyzing a stock, bond, or fund for suitability. One of the most helpful to me, has always been MSN's deluxe stock screener, downloadable here

http://moneycentral.msn.com/investor/controls/fi nderpro.asp

This stock screener has many different factors that you can search by, like P/E (Price to Earnings) ratio, ROI (Return on Investment), Gross Profit, etc. One of the best tools, however, will always be a basic understanding of macroeconomics. Now-a-days, this is a global marketplace, where events in China can effect our markets here. There are many different things to look at that can show you trends in the global marketplace. If, for instance, there is a rise in concrete, wood, and carpentry sales, you may want to look for an increase in the housing markets, making mortgage secured instruments attractive. If there is a retail slump for a couple of quarters, look to bonds as stocks will likely fall. The GDP (Gross Domestic Product) can show a lot. If we are shipping more things to foreign countries, their markets may slump while ours will rise, and vice versa. Sharebuilder and Etrade all have stock screeners as well, but it's important to know what you are looking for. A good glossary of investing terms can be found at

http://www.investorwords.com/

This will help you to understand what the terms mean and why they are important. Lastly, I would like to mention the difference between technical and fundamental investing. The reason for my mentioning this is because there are several sites that promote technical investing and offer resources, and my opinion of this type of investing isn't very high. Technical investing focuses on looking at candlestick, and Pareto charts, and matching a stocks performance against esoteric concepts like the Golden Mean. Basically, you look at a chart that has patterns in the opening and closing prices over a period of time, and based on the patterns you attempt to divine the stocks future performance. The other side of this is fundamental investing. This approach follows the thought that if the company's financial and management team and principals are sound, and the numbers follow that, it's probably a good investment. One other technique that should be noted is also the Motley Fool's Dogs of the Dow system, which has produced good results. It is important to note, however, that the stocks used are all blue chips and are part of the Dow Jones Industrial Average.

You can look at the system and its performance here

http://www.fool.com/school/dowinvesting/dowinves ting.htm

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