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How to Buy Cheap and Good Stocks – Guidelines to Investing in Institutional Quality Stocks Part 1 It is highly likely that like every common man you too suffer from the misconception that the money you make from a stock depends on the number of shares you own. Nothing, however, could be farther from the truth. Which do you think is more profitable- Buying 1,000 shares of a $1 stock or buying 20 shares of a $50 stock? The former, right? Wrong! Since you invest equal money in both the cases, all other parameters being the same, technically, both are equal bargains. That’s how it works. Furthermore, the obsession with a lot of cheap shares can be attributed to the recent dislocation in the credit market that you must be aware of. Let’s look at the yield on the 10-year U.S. Treasury bond, which six months ago stood at 4.63% and has dropped to a disastrous 3.85%. That should explain why investors prefer cheaper and safer stock. This ‘flight to safety’, as you will remember, was observed during past crises as well, inducing a strong affinity among investors for cheap stocks. What we are doing here is reminding you that such cheaper shares usually lack institutional sponsorship, which is, needless to say, a key to the excellence of stock market winners in the past. Buying cheap quality shares is a very rational approach to investing in stock, and a group of professional investors is doing just that. You’d like to know the tips and tricks they follow? Sure. We’ll guide you…Read on: The most important considerations that you should keep in mind are the following: 1. The ‘protective shield’ of the company-MOAT Many popular companies are observed to have that certain “something” which gives them a kind of insulation against other companies, eating up their market. This “something” varies from company to company and it is usually something deep-rooted in the minds of the customers-something that can never be copied, or even gauged by their rival contemporaries. For example, look at ‘Apple’. Can you, as one of the consumer-market, ever have second thoughts about the Apple logo? No. You have it literally etched in your memory. Apple is a brand name that stands alone, that makes it difficult, if not impossible competition for rivals. Such companies have their devoted followers who are immune to the allure of parallel brands.Another example of MOAT is the well-known concept of having a trade secret. If and when a company has a patent/trade secret, competition is made incredible difficult, to the extent of being impossible or even, illegal. In fact, it is very difficult to access the trade secrets of such companies (3M, for example) in the first place. Rivaling them is a far cry. It is, thus, advisable to invest in companies that have considerably good MOATs. Learn how to to safely make money investing in stocks by visiting http://www.onlinestocktradingsecrets.com – A popular online stock trading website that teaches you how to make money in stocks without taking unnecessary risks. Tags: Cheap, Guidelines, Institutional, Investing, Quality, Stocks View this post on my blog: http://stocktips.valuegov.com/how-to-buy-cheap-and-good-stocks-guidelines-to-investing-in-institutional-quality-stocks-part-1/