How to Evaluate A Stock | Finding Stocks That Are Worth Buying

Stock Evaluation Intro Image Stock Chart and Businessman with Shopping Cart

Stock evaluation doesn’t have to be overwhelming. Many people shovel money into a brokerage firm and let them figure it out. But what if you want to get a bit more involved?

With a bit of research, you can take control of your money and choose some companies to invest in on your own. All it takes is a few basic factors, and you will be on your way to being a sharper investor.

So, let’s delve into the basics of stock evaluation so you can see what it’s all about.

The Two Types of Stock Analysis

We’ll start by looking at the two primary analysis types before investing in individual stocks.

Fundamental Analysis

This method of analysis assumes that a stock’s price doesn’t necessarily reflect the company’s actual value. You use other valuation metrics and information to determine if the current price is a bargain.

This strategy is excellent for long-term investors who want to hold a stock for ten years or more.

Technical Analysis

Technical analysis assumes that a stock’s price represents all available information and that it will move with trends. Reading charts and their patterns is essential in technical analysis.

Many investors use this analysis to predict which direction a company might go in short term.

How to Research Stocks

So, how do you get started? Here are the first things to consider as you dive into stock research. 

Find Your Focus

There are thousands of stocks out there and dozens of sectors. You can dive into finance, transportation, consumer goods, energy, big tech, textiles, etc.

You want to whittle things down to one or two sectors, which keeps you from being overwhelmed and helps you assess a company’s competition more quickly.

Use Qualitative Research Factors

Know the company. This mindset borrows from an old Warren Buffett adage, and it rings true if you want to become a shareholder in a business.

You should know what they do or produce and how they make money. It is also good to know who runs the company, their directors, leadership track record, and how they invest in the operation.

Use comparison charts to compare the company’s short- and long-term performance against the competition and the overall market. What causes dips and drives rallies?

Gather Data from Tools and Reports

There are quarterly reports, earnings figures, sector and market trends, and news from everywhere. You could spend your entire day trying to digest it all.

Luckily, this is the tech age, and all sorts of tools and apps can help you collect information on a company. A quick Google search for financials and news, paired with the dynamic stock charts in StockMarketEye, will get you started on the right foot.

How to Evaluate Stocks to Buy

There are a few critical indicators in picking a good stock. The following are some fundamental ratios to assess the value of a company and if it may be a good time to buy.

Price-To-Book (P/B) Ratio

The P/B ratio is essentially the assets of the company minus its liabilities. This one is the bare-bones indicator of a company’s worth and effectively represents its value if it gets sold today.

Anything of value goes into the price-to-book ratio, such as physical equipment, buildings, land, and other assets like stock holdings and bonds.

It is a helpful factor because companies in major industries may decrease in growth but are still valuable in terms of assets. A low price-to-book may mean the stock is undervalued and worth a second look.

Price-To-Earnings (P/E) Ratio

Investors and analysts give the P/E ratio a lot of attention as a good indicator of company value. The formula is simple; if a stock trades at $20 a share and has earnings of $2 a share, the P/E ratio is 10. That’s the share price divided by earnings per share.

There are trailing P/Es that experts use to compare past performance and forward P/Es to help project the future. Value investors like a low P/E ratio.

Price-to-Earnings Growth (PEG) Ratio

The PEG ratio considers the past growth rate of a company’s earnings. It is the P/E ratio from above divided by the year-over-year growth rate of earnings.

The PEG is an excellent way to compare competitors and a great way to assess low-priced or penny stocks. Analysts like a stock with a PEG ratio below 1.00 because of its growth potential. But it is very speculative since there are no guarantees.

Dividend Yield

Everyone likes a little money back on investments from time to time. Dividends are periodic payments companies make to stockholders to share their profits.

Some investors look for high dividends as a sign of a healthy company, but inconsistency could be a red flag. When looking at a prospective stock, check if the dividend payments have increased or decreased year over year.

Assigning Value to Stocks Helps You Choose What to Buy

If you take all of these factors into account, you’ll have a good idea of the value of a stock. This research aims to help you feel confident about your next investment decision. You may even get a picture of a stock’s future, but nothing is certain.

Can You Find A Sure-Fire Winner?

While this is stock research 101, we hope the above factors will give you a jumping-off point and help you build your portfolio.

Of course, you can still pay that broker to manage some of your investments. Still, maybe you’ll feel more confident buying an individual company with a bit of your budget.

With StockMarketEye, you can import the portfolio from your broker and track all your individually researched stock picks against it. Can you beat their average return?

Long-Term Investing vs. Day Trading | Which Is Better for You?

Investing vs Day Trading Business Man on Beach and Business Man Surfing the Stock Market on Coin

Long-term investing and day trading have similar goals but take different approaches. Both want to make money in the stock market – they’re just on opposite ends of the risk/reward spectrum.

Imagine two people at the beach. One person is surfing the massive breakers – a thrilling, dangerous, intense experience. Another person is just chilling on the beach, drink in hand, watching the tide roll in. Same sand, same sun, same ocean. Both people are having a great day at the beach – but their experiences are very different.

So, if you plan to risk real money in the stock market, you first need to decide which strategy you will use. Are you an investor lying back with a drink in your hand? Or, are you a day trader catching waves and riding the adrenaline?

Answering that question requires you to understand some things about the market and yourself. This article will break down the concepts of investing and day trading, analyze the differences, and offer some recommendations.

What Is Investing and Day Trading

Before choosing a strategy, we need to understand some basic concepts. Let’s take a look at investing and day trading in more detail.


Investing is a long-term wealth protection and growth strategy, usually part of a retirement plan. In practice, this means using capital to purchase stock or mutual fund shares, then waiting years or decades for those shares to grow in value.

For example, consider a person with a full-time job and a family. He doesn’t have much time to spend on his investments and doesn’t want to take a big risk with his hard-earned money.

His solution is to invest in an exchange-traded fund (ETF) that tracks the S&P 500, which historically returns 10% per year, on average. He sells the shares upon retirement.


Day trading is a short-term strategy with high risk and high reward. You try to profit by buying and selling stocks based on small market fluctuations. In practice, you are betting that stock prices will shift in your favor on any given day.

For example, consider a single person with a high salary. She has disposable income to open an online brokerage account.

After some research and analysis, she identifies a stock she expects will rise following an earnings report. She buys shares before the report and sells them later that day after the announcement.

Main Differences Between Investing and Trading

Let’s look at some of the key differences between investing and day trading. And remember, we are looking at opposite ends of a spectrum. In reality, traders can exist anywhere between these two extremes – and usually do.

FactorsInvestingDay Trading
Asset hold timeYears or decadesDays or weeks at most – the longer the hold, the greater the risk
Capital requirementsAny amountHigh – $25,000 minimum for making more than 4 trades per week
DiversificationHigh – reduces riskLow – must bet big on individual stocks
Buy & sell activityMonthly or yearly – an investor might buy at regular intervals, and sell only upon retirementDaily – sometimes multiple trades per day
Commission and feesLow – buys monthly at most and rarely sellsHigh – pays a commission on every daily buy and sell
Volatility exposureLow – unaffected by short-term market fluctuationsHigh – sudden fluctuations could be disastrous
Analysis typeFundamental – investors look for opportunities based on company fundamentalsTechnical – traders look for opportunities based on technical factors
Asset typeGrowth – investors seek stocks that will grow steadily over timeVolatile – traders seek out stocks with wild price swings
Withdraw fundsRarely – the funds are only needed upon retirementRegularly – funds might be needed for living expenses

Looking at Their Benefits and Drawbacks

Every strategy has strengths and weaknesses. The important thing is to choose the strategy that best aligns with your goals. Let’s take a closer look at the benefits and drawbacks of investing and day trading.



  • Market volatility protection: Long timelines and diverse portfolios protect against short-term fluctuations in stock prices.
  • Minimal time commitment: Once you invest, you don’t have to do anything else. Just sit back and watch your money compound and grow over time. Check your tracked portfolios less frequently.
  • Limited emotional decisions: If you know you’re in for the long haul, you are less likely to make short-sighted, emotional trades.


  • Extended timelines: While also a benefit, the long timeframes required for investment can dissuade some who want quicker returns.
  • Trader envy: It can be challenging to watch day traders make 1000% returns with quick trades while you wait seven years to double your money.

Day Trading


  • Big win potential: The main benefit of being a day trader is the potential for quick, huge returns. While an investor makes 10% per year, the trader could make 10% daily.
  • Work from home: Thanks to information technology, a day trader can work from anywhere on earth with nothing but a computer and an internet connection.


  • Significant risk: Day trading avoids all sound investment advice. Large amounts of capital are invested in single stocks while trying to predict an unpredictable market. Most day traders lose money.
  • Full-time job: When done correctly, day trading requires as much time commitment (or more) as any other job. It’s not a quick and easy way to get rich – or a way to avoid hard work.

When is Investing or Trading a Good Option?

Neither trading nor investing is inherently better or worse. The value of each strategy depends on the situation, personality, and goals of the person involved.

Questions to Ask Yourself

  • What is my tolerance for risk?
  • Can I afford to lose all the money I use to trade – financially and emotionally?
  • How much time can I commit to researching and analyzing stocks?
  • Do I have the discipline to stick to a trading plan?
  • How close am I to retirement?
  • What kind of profits do I want to gain?

Answering these questions will help you decide which strategy is most suitable for you.

You should invest if…

  • You have a low tolerance for risk
  • You can’t afford to lose your investment
  • You have a career that you love
  • You don’t have significant time to analyze stocks
  • You want to protect and grow your savings
  • You are content with modest profits

You should day trade if…

  • You have a high tolerance for risk
  • You have extra capital to gamble or lose
  • You want to be your own boss
  • You have strong market knowledge
  • You are not nearing retirement
  • You want big profits

Our Opinion: Investing Is the Better Option for 90% of People

For most people, investing is the strategy they should choose – at least in the beginning. First, set up a safe, diversified, long-term investment plan. As you learn more about how the stock market works, you can consider riskier trades with capital you can afford to lose.

No rule says you must choose one strategy or the other. The reality is that most people involved in the market use a combination strategy. Parts of their portfolio are composed of long-term positions, and other parts are reserved for short-term trades. The key is to understand the difference between both and trade wisely.

We hope you now have a better understanding of how investing and day trading are different and which approach might be best for you. If you are interested in more great content about personal finance, stay tuned to the Stock Market Eye blog.

Eight Companies We All Wish Would Go Public | Will They Ever IPO?

Some companies are like forbidden fruit to investors. They are out there doing great, but you can’t have any. You may have bought their product or used their service and thought, what an outstanding stock to buy. But, lo and behold, they aren’t even listed on the exchange because they are privately owned.

Let’s look at some of these highly coveted private companies that everyone wants to go public, their background, and whether or not there might someday be an IPO.

What is a Stock IPO?

An IPO is an initial public offering or when a company goes on the stock market. It is a bit of a gamble because once they hit the market, it’s up to the investors of the world to determine the value of a share.

It may seem like they are sharing their wealth, but usually, they go public to share the expense. In other words, they want to raise money to grow, and they know that crowdfunding from the stock market is an excellent way to do that.

Top 8 Companies Investors Want to See on the Stock Market

Here are eight high-flyers we wish would hit the market and let us all grow together. Remember, some companies may have already run their course in growth, so their shares could open at an inflated price.

Blue Origin Stock

Blue Origin Logo

This company is known for its high-profile excursions in the commercial spaceflight industry. It is also known for its founder and chief owner, former Amazon boss Jeff Bezos. In fact, Bezos used some of the billions from his Amazon stock sales to finance Blue Origin.

Blue Origin hopes to battle Elon Musk and SpaceX for control of the universe, and it is hard to tell if and when either will need public money to continue.

Bezos has ticket sales to help him out. It’ll cost you upwards of $200,000 to hop a ride into space on a Blue Origin flight. All that engineering expertise and materials for space exploration cost a lot, and Bezos may eventually need more outside funding to keep moving forward. Blue Origin is currently estimated to be worth around $3 billion

TikTok Stock

TikTok Logo

This Chinese-based video-sharing and social networking company has taken the world by storm in recent years. It now has more than a billion users. People love TikTok for its various categories of short, entertaining clips.

TikTok’s owner, ByteDance Ltd., already had plans to launch a standalone IPO. That idea got bogged down in the US-China data access wars.

Until those complicated issues are resolved, TikTok and ByteDance will remain private. TikTok generates nearly $20 billion annually through advertising and in-app sales of virtual coins.  

Publix Stock

Publix Logo

This supermarket chain has grown steadily since its founding in 1930, now operating nearly 1,300 stores in seven southeastern-US states. The wide variety of goods and unique services brings quarterly sales of about $13 billion

Publix is operated by the descendants of George W. Jenkins, who founded the company in Florida. They are the primary owners, but they do sell shares to their 230,000 workers. The stock is worth around $15 a share if you want to go to work there.

The Jenkins family does things their own way, the company carries little debt, and they buy or lease new properties with cash. Don’t look for Publix to go public, at least for another generation

Chick-Fil-A Stock

Chik-fil-A Logo

If you’ve ever cruised by a Chick-Fil-A during peak hours, you know about the traffic problems caused by the long lines at their drive-throughs. Why? People love fried chicken filets on a bun, and that’s the highlight of the relatively simple menu at this fast-food operation.

They have more than 2,800 restaurants and more than $11 billion in annual sales.

Chick-Fil-A is another family-owned business that has its own way of doing things. Before his death in 2014, founder S. Truett Cathy had his children sign a contract keeping it a privately-held company. So, don’t expect an IPO anytime soon.

Instagram Stock

Instagram Logo

This photo and video-sharing app platform has gained steam in social media since its founding in 2010 and now has more than a billion users. It was kickstarted with private funding and now carries ads as part of its revenue stream.

In its early years, Instagram grew so fast that in 2012 it flirted with becoming an IPO. But Facebook swept it up for $1 billion in cash and stock to quash that notion.

You can still buy stock in its owner, Meta Platforms, which is currently going for around $90 a share.

Subway Stock

Subway Logo

One of the biggest names in the fast-food business, Subway has had its ups and downs since its founding in Connecticut in 1965. It began franchising in the ’70s and, at its peak, had around 33,000 restaurants.

Profits fell and caused Subway to sell more than 10,000 restaurants. They still generate more than $1 billion a year in revenue.

Founder Fred DeLuca’s family owns The Subway Group. This complex operation has intellectual property, franchising, software, and advertising in smaller companies under the same umbrella. The DeLucas currently have no plans of putting Subway on the stock market.

Sephora Stock

Sephora Logo

Sephora is a retailer of personal care and beauty products that was established in France in 1970 but took flight in the 1990s with international expansion.

Sephora came to the US in 1998 and currently has more than 2,600 stores carrying around 340 brands, including their own line. It has an annual revenue of more than $10 billion.

Sephora is a subsidiary of the luxury goods conglomerate LVMH, which is a multinational holding company that trades on the over-the-counter (OTC) markets. That means you can invest, but you’ll have to go through a brokerage that trades internationally.    

IKEA Stock

Ikea Logo

IKEA is a Swedish home furnishings company that has grown into a retail beast with more than 400 stores in 50 countries. It is known for its ready-to-assemble furniture, kitchen appliances, home accessories, and, yes… those delicious meatballs.

They generate over $44 billion in annual sales through their outlets and a thriving website with more than two billion visitors yearly.  

The IKEA Group is owned by INGKA Holding B.V., another complicated, multi-faceted operation that remains private and consistently reinvests profits. Currently the world’s largest furniture retailer, IKEA plans to survive without the help of market investors. 

What Builds the Anticipation for IPOs?

When a company prepares to go public, it’s common knowledge. They have to go through a checklist with the Securities Exchange Commission (SEC) and hire lawyers and underwriters as part of the process. Plus, they generally gin up interest in the company through public relations or marketing.

The underwriters set an IPO price, and then it is up to investors to research the company’s history, growth, competition, and other factors. The business may be established, like the companies we listed, or could be a newcomer with only a little history building hype with their product or exceptional innovation. 

Keeping an Eye On an IPO  

A good strategy is to keep your eye on new IPOs and let them settle. You have to assess factors that offer potential, and if you put money in right away, cross your fingers and hope. The price can fluctuate over the first few months as investors move in and out.

The best way to monitor a new stock is to feed it into StockMarketEye’s watchlist feature and let the software keep up with all the info you need to make a decision. Get started with a 30-day free trial now and know precisely when to pull the trigger on the next big IPO.

What is Volume in Stocks? How This Crucial Number Affects Your Trading

Stock Volume Bars With Blue Price Line

Volume is an essential part of stock trading analysis. It shows current trends, buyer and seller sentiment, and which company shares are more liquid than others. This number changes wildly as crucial information comes in and savvy traders analyze.

If you’ve been investing or have ever looked for a new company to get into, you’ve probably seen volume before. But what is “volume” in stocks, and how should it affect your decisions?

The Meaning of Stock Volume

In essence, stock volume is the total number of times a security has changed hands over a set amount of time. This number gets estimated throughout the day, sometimes hourly, and at the close of the market. The precise final number only gets reported the following day.

Since prices often change in correlation with higher volumes, many traders also keep track of the tick volume or how often the contract’s price changes. Ultimately, the volume gives investors a good look at a market’s overall activity and liquidity.

Higher trade volumes are attractive for investors. They indicate many people are buying and selling a specific company, so connecting a sale should be quick and easy. On the other hand, low volumes could be a sign of little interest, making buying or offloading a specific security somewhat cumbersome.

How Does Stock Volume Work?

The stock volume is quantified by how many shares are bought and sold between market open and market close. Many of the same shares may be traded back and forth on the same day at different prices, and each transaction gets counted towards the total volume.

Stock trading volume should not be confused with dollar volume, which represents the aggregate value of the traded shares. For example, if a particular stock has a stock volume of 100,000 shares at $5 per share, the dollar volume would be $500,000.

Volume Defines a Stock’s Liquidity

When researching a stock, you can use the volume to determine how difficult it may be to get rid of your shares should you decide to sell them.

Stocks with lower volumes tend to be harder to get rid of in large numbers. Sometimes transactions take longer to connect, or sellers end up letting shares go below market value at a discount. That can lead to a gap between the ask price (the price set by sellers) and the bid price (the amount buyers are willing to pay), which can increase volatility.

On the contrary, stocks with a higher volume tend to be easier and faster to sell at market value. Think of it like desired toys around the holidays flying off the shelves.

Using Stock Volume When Trading

Volume can be an excellent way to identify the strength of a market. Here are a few ways to utilize this number to your benefit:

Finding and Confirming Trends

Simply put, a rising market usually experiences rising volumes. In order to maintain the enthusiasm of prices moving upward, investors will be buying and selling shares in larger quantities.

Essentially, a drop or rise in price on little volume is not considered a strong indicator. If prices increase while volume decreases, this may indicate a reversal soon. However, this same price rise or drop in a large volume is a much stronger indicator that something noteworthy has changed.

Look at Volume History

The volume history of a stock is a key technical indicator in the overall analysis of a stock. Analyzing the patterns of stock volumes over time can help to get a good feel for rises and drops in particular stocks and markets.

That may be especially true for options traders since volume is a strong indicator of current interest in a particular option contract.

Exhaustion Moves Show People’s Limits 

In a declining market, you can see exhaustion moves. These are typically sharp moves in price correlated with sharp volume increases, indicating the probable end of a trend.

If you get FOMO (fear of missing out) for action at the top, you may end up in a pool of exhausted buyers. Alternately, at the market bottom, the declining prices eventually force a fair amount of traders to sell, resulting in increased volatility and volume. There will usually be a decrease in volume after the initial spike in these scenarios.

Identifying Bullish or Bearish Signals Through Volume

It gets a bit tricky, but you can use stock trading volume to identify bullish and bearish signs.

For example, say volume increases on a price decline. Afterward, the price moves higher but is followed by another dip. If the volume falls off and the price on that second dip doesn’t fall below the first dip, it is typically regarded as a bullish sign.

Early Indication of Reversals

After a longer price move in one direction, you might see the volume buildup, and the price change starts to slow down. This pattern may indicate that a reversal is on the horizon, and prices could change their direction.

Tracking Stock Volumes With Stock Market Eye

StockMarketEye allows you to track your investments and watch lists in one place. You can save time navigating the day’s trades and finding important metrics at the click of a button.

Our software allows you to track unlimited portfolios and stress test different scenarios. Stock volume and even historical changes are shown clearly. The red and green bars on our charts are easy to understand at a glance and help you make valuable decisions.

Ready to accurately track your investments in a single portfolio?

Join the thousands of users that visualize and efficiently manage their portfolios in minutes.

No credit card or email is required. Just download, install and run.

What Is Average Volume in Stocks?

The average volume of stocks is the sum of all daily volumes over a period of time divided by the number of days. Typically, this number gets calculated over six months to come up with a much more stable average, but let’s look at a simple example for a single week using the table below:

Day of the WeekXYZ Stock Volume

To find the average daily volume for this week, we would add the volumes for all five days together and divide the total by five days. That gives us an average daily volume of 7,530.

Mon 2,500 + Tue 13,600 + Wed 3,000 + Thu 8,750 + Fri 9,800 = 37,650 total volume for the week
37,650 total volume / 5 days = 7,530 average daily volume

This number is an important metric used by traders because both high and low volumes attract various types of prospective investors. Most traders look for higher daily averages during their analysis since that makes getting in and out of positions easier down the road.

So, What’s a Good Average Daily Stock Volume?

A good average daily trading volume (ADTV) varies from person to person and company to company. The specific indicators you analyze will also determine what a good ADTV is and if the asset will be a good addition to your portfolio.

Higher sustained trading volume tends to be over 500,000 shares a day and equals more liquidity, which, as we’ve mentioned, most investors prefer. But perhaps the best ADTV is a stable one because when the number rises or falls sharply, it may indicate a noteworthy change in how investors value an asset.

If a breakout begins, an increase in volume can confirm that breakout. In contrast, a sudden lack of volume may indicate that the breakout will fail.

Most Popular Stock Volume Indicators

Have you ever heard of The Chaiken Money FlowKlinger Oscillator, and Money Flow Index? These volume indicators use various mathematical formulas to show something a little different about a stock volume.

These and other popular stock volume indicators can help clarify your final decision. Let’s take a look at the top three most common ones:

On Balance Indicator

On-balance volume (OBV) is an effective indicator where volume gets added when the market is higher or subtracted when the market finishes lower. The result is a running total that shows what stocks are being accumulated.

Often times this metric gets used for finding contrast. For example, the price may increase, but the volume increases slower than expected.

Accumulation and Distribution Indicator

The accumulation and distribution indicator uses volume and price to give insight into how weak or strong a trend is.

Suppose a stock price is rising, but the indicator is dropping. In that case, the buying volume (accumulation) might not be enough to support the inflated price, and a drop may be on the horizon.

Relative Strength Index (RSI)

The RSI is an indicator that measures momentum via the speed and magnitude of price changes.

It looks at overvalued and undervalued conditions and helps identify securities that can potentially be primed for reversals. Many investors look to this metric as a signal of when to buy or sell.

Start Monitoring The Volume of Companies on Your Watch List

Volume can be a fantastic way to study trends and find new liquid companies to buy. Depending on the depth of analysis you’re doing, indicators based on volume are significant to help you make your final decisions.

Though volume analysis is not an exact science, it can be a handy tool for savvy investors to analyze for more costly trades.

StockMarketEye software makes tracking volume straightforward with easy-to-read charts and graphs. There is no learning curve to overcome, allowing you to immediately begin analyzing stocks more accurately. Sign up for a trial today to get started!

StockMarketEye 5.6.0 Release

We are pleased to announce our latest release for Windows, MacOS and Linux. This release contains a couple of small bug fixes and new features to improve StockMarketEye’s usage.

What’s New?

The release includes the following updates/improvements:

  • A new Schwab CSV transaction type was added. If the user imports a Schwab CSV file with a “Special dividend” transaction type, SME will “read” it as a “Dividend” transaction type.
  • Schwab is removed from the brokerages’ list in Direct Connect. Now it’s by Advanced import only (the users can still import their transactions as CSV files as well)
  • The symbol chart naming issue was fixed. The name isn’t stuck anymore.
  • The issue with the auto-adjustment of Open-High-Low-Close (OHLC) comparison symbol was fixed. Now the symbol isn’t hidden when the tool-tip moves to the right.
  • The issue where Reports Transactions didn’t show the full transactions for the aggregate portfolio but it did in each portfolio, was fixed.

If you are running StockMarketEye 5 and have an active license, please update at your earliest convenience through the auto-update feature. Alternatively, you may also update by downloading and installing the most recent StockMarketEye version from our website.

Savings Account or Stocks | Where To Put Your Money

Savings Account or Investing Featured Image

Investing in stocks of some kind and building up a robust liquid saving account is crucial for good financial health. Though they are both necessary elements of a proper portfolio, they are not identical. Knowing the difference between the two is essential, as is knowing when it’s best to choose one over the other.

There are more than a few disparities between savings and stock accounts, one of which is the risk factor. A savings account is essentially risk-free, although it has a much lower return rate than stocks, which offer high returns with increased risk.

Your goals are also important. Stocks tend to cater towards more long-term goals, while a savings account has much more fluidity, ranging from short to long-term goals.

Differences Between a Savings Account and Investing in Stocks

When saving money, you’re obviously not spending it, but more importantly, you’re putting it somewhere accessible for future use. That can be a savings account, a CD (certificate of deposit), or even physically storing it in a shoe box under your bed.

Investing money requires using capital to buy specific assets, such as stocks, bonds, or real estate. The goal is to grow your money and earn profits over time.

Though many people use the words “saving” and “investing” interchangeably, there are some key differences between the two:

  • Risk and Return: Perhaps the most significant difference between the two is their risk and return. Savings accounts earn a bit of interest (very tiny), but FDIC-insured accounts carry zero risk. Investments can make you much more over time, but they can also lose you money if the market turns south.
  • Time Horizons: Savings accounts are essentially liquid money that you can access anytime in the near future. Investing in the stock market is often a goal that will transcend years or even decades.
  • Products: Saved money goes into savings accounts at the bank or sometimes money market accounts and CDs. You can invest money in various products such as stocks, mutual funds, bonds, art, houses, jewelry, and ETFs.
  • Hedge Against Inflation: The super-small interest rate on most savings accounts can’t keep up with inflation. So, in a way, you’re slowly losing a bit to the increasing cost of living. Properly structured investments have a much better chance of outpacing inflation and earning you money.

So, Which Should You Put Your Money Into First?

Putting money into a savings account first is a great way to build your portfolio. Build up an emergency fund or “nest egg” to have stability and easy access to funds should an unexpected expense arise. Once your savings account gets established, you can begin investing some of your money.

When to Put Your Money Into a Savings Account

Many experts agree that having savings for unexpected emergencies should be the first reason you set extra money aside. Keep saving until your emergency fund covers at least three months’ expenses. However, some experts advise up to 6 months’ worth. 

Not everyone has the extra cash to set aside a massive nest egg. The act of “fast saving” is how many people streamline their budgets. An example of this would be putting money into an account for a specific purpose each month, like paying your mortgage or making a rent payment.

Short-term saving is also typical if you plan on using the money within a set amount of time, typically a few years. Examples include saving for a down payment on a house or saving up to pay for a wedding. 

When is it Better to Save Money in a Savings Account?

The best time to use a savings account is when you’ll need short-term access to the money. Whether for a car, patio furniture, or a kid’s college tuition, you’ll want access to all the money you’ve been putting aside when the time comes.

While it could have grown with an investment, there’s always a chance that the market is lower when you go to use the money, and the amount you have access to is smaller than anticipated.

When to Invest Your Money on Stocks

When investing in the stock market, you usually seek long-term growth. Maybe you’re planning to retire, or you want to build up your assets over a longer time horizon and increase your net worth, so you have something to leave your family.

Stocks, bonds, and even real estate can be volatile in the short term but historically pan out in the long run. So, to get the return you want, the investment horizon needs to be inherently further out.

Many people invest in the stock market for retirement through a 401(k) or a Roth IRA. This type of investment can span decades and continually grow as the interest gets reinvested and compounded over the years.

A Few Things to Do Before Investing in Stocks

Investing and saving simultaneously is ideal, although it does not always play out this way. If you are not doing both and are wondering if it’s the right time to invest, ensure you have a few things in order first.

  1. Make sure that your emergency fund has an adequate amount in it so you can handle any unexpected expenses.
  2. Pay off high-interest debt. This type of debt can destroy credit and have harmful consequences. Make sure it gets paid down as much as possible before investing. A good rule of thumb is: if the debt’s interest rate is lower than whatever the return rate of the investment is, then the investment would likely be the better option.
  3. Have an investment goal. This step is often overlooked but is crucial and must be done in advance, alone or with an advisor. Are you saving for retirement? How long is your investment horizon? What is your risk tolerance? All these are questions you need to go over and have an answer for before you begin to invest. Otherwise, you will be building your portfolio without a sense of direction or an end goal.

When is it Better to Invest in Stocks?

Yes, you should try to get your emergency fund filled out first. However, there is one instance where it is wise to invest before you have that in place.

You should always aim to maximize your 401(k) or Roth retirement accounts if your employer matches your contributions to any degree. Many companies match 2, 4, or even 6% on retirement accounts. The match is free money; unless you are genuinely in dire circumstances, you should make this contribution at all costs.

Savings Account Vs. Stocks: Pros and Cons

Below we’ll look at some of the pros and cons of each type of savings to give you a better idea of which is correct for you right now.

Savings Account Pros

  • Saving is simple to do. There is no upfront cost or learning curve.
  • Bank accounts are very liquid, so you will have no issue getting funds if you need them quickly.
  • You will know upfront what interest you will accrue on your savings account.
  • The FDIC guarantees any account up to $250,000, ensuring you will not lose any money.

Stock Investing Pros

  • Investing in stocks can have significantly higher returns than savings accounts. Over time the S&P 500 stock index has returned 10% annually.
  • Bonds, mutual funds, and stocks are pretty liquid and can usually get cashed out when the market is open on most weekdays.
  • A diversified and well-structured portfolio of stocks can beat inflation and increase your purchasing power over time.

Savings Account Cons

  • Returns on investment will be low.
  • Inflation will reduce the power of your dollar.
  • Some banks put monthly management fees on savings accounts.
  • A federal law called Regulation D states you can only withdraw or transfer funds a maximum of six times per month.

Stock Investing Cons

  • Investing can be complex and may require an advisor for guidance, which will cost a fee.
  • Your investments can go down in value.
  • Stock market investing typically has a longer investment horizon, meaning you may have to keep funds in the account for several years without access to them.

So, Should You Put More Money Into Your Savings or Stocks?

Both investing and saving are going to be critical parts of building a solid financial portfolio, so one is not fundamentally better than the other. However, each one serves a different role throughout your wealth development.

Investing is going to build up in the long run. However, it is of paramount importance to make sure you are ready to invest beforehand, otherwise, you will be setting yourself up for drawbacks. When high-interest debt is snowballing, or you are one emergency away from financial hardship, you’re not ready to start investing.

Building an emergency nest egg in a savings account gives you security and peace of mind. Those things will allow you to start building wealth in other ways.

Other Questions About Savings Accounts or Stocks

Below are some other questions that we hear our users ask about saving and investing for the future.

Are stocks a good way to save money?

That depends. For specific purposes, such as saving for a down payment on a house or a wedding, a savings account will be a much better option. As an investment, stocks tend to do better than cash over the long term, but their volatile nature means you could end up with less when you need it in the short term.

Are there stock savings accounts?

You can use a brokerage or money market account like a stock savings account by buying stocks, bonds, mutual funds, and ETFs and letting the money sit there for a while. Just remember the time horizon needs to be further out to see stable results.

What about the stock market vs. a 401K? Which is better?

Investing of any kind is excellent and gives you a substantial leg up when it comes to building wealth. There are an incredible amount of individual stocks, bonds, and other publicly traded assets on the stock market, each with a slightly different roll of the dice on their projected gains.

If your employer offers a 401(k) plan, especially one that they match, you should invest in that immediately. An employer-matched 401(k) is guaranteed free money in whatever percentage they match. Plus, your 401(k) will be catered towards your retirement and will come with unique benefits upon retirement.

Are CDs better than investing in stocks?

When it comes to investments, everything comes down to risk tolerance. CDs are considered low-risk investments and have a fixed rate that you’ll earn. Stocks have a much broader range of risk profiles and are generally regarded as a higher-risk investment.

One is not better than the other. Your risk tolerance and investing goals will determine which is better suited to your needs.

Are CDs better than using a savings account?

CDs offer a fixed interest rate if you don’t touch your money for a specified time. A savings account will allow more flexibility to withdraw funds whenever needed.

Generally speaking, the best option depends on how frequently you intend to touch the money and how long you are willing to leave it in the account.

Bull vs. Bear Market | Defining Both With Everything You Need to Know

In finance, you will often hear the names “bull” and “bear” describe certain market conditions. For example, you may have heard that the U.S. has been in the bear market territory for most of 2022. But what do these large animals have to do with investing, and how often do they rear their heads?

Let’s look at bull markets vs. bear markets and see what kind of impact they can have on your investment portfolio.

What is a Bull Market?

When a market is “bullish,” it is typically either rising or expected to shortly. Generally speaking, market observers will call it a bull market when markets rise and continue to without falling more than 20% from a previous 52-week high.

What is a Bear Market?

A “bearish” market is one that is in the process of consistently falling for an extended period. A market is officially a bear when conditions are falling or expected to fall by 20% or more from its previous 12-month peak.

Factors That Define Bear and Bull Markets

The first part of 2022 has been a US market bear, and it doesn’t seem like there will be much reprieve in the near future. Some experts are even predicting that there will officially be a recession within the first two quarters of 2023.

Several things determine whether or not a market is heading into bullish or bearish territory. Everything from supply and demand, sharp changes in economic activities, and investors’ psychology and emotions will directly affect the market’s direction. Take a closer look at some common factors that affect the market below.

Market Bubbles

A bubble is the rapid increase of market value immediately followed by a sharp drop in value, often referred to as a “crash” or “the bubble popping.” Bubbles are often surges in asset prices, typically driven by erratic market behavior.

Assets are typically traded at far higher price ranges than usual during a bubble, far exceeding their actual inherent value. Bubbles are usually only identified after they burst and a massive price drop occurs.

Tulip mania in Holland from 1634-1637 is one notable example of a bubble bursting. A more recent example is the 2008 housing crisis.


Production costs, supply and demand, and monetary policies all affect the price of goods. Inflation is when prices rise. There is some expected and average inflation over time, but sharp increases can be problematic.

Price inflation influences both bull and bear markets and vice versa. During a bull market, when the economy thrives, production might increase, and people could buy more or have extra money to spend, slowly driving prices to creep upward.

Consumers tend to dial back spending in a bear market and get a bit more conservative. Shrinking demand can cause rapid deflation in extreme cases.


According to a 2015 Swiss Finance Institute study, in cases with a well-known “prewar phase,” any increase in the likelihood of war tends to decrease stock prices. However, if a war breaks out, their price will increase. On the contrary, when war erupts as a surprise, the initial outbreak decreases stock prices.

This phenomenon is “the war puzzle,” and there is no apparent reason for the behavior. Overall, U.S. markets tend to stay steady during wars. From 1939 to 1945, during World War II, the Dow was up more than 7% per year and 50% in total.

World Events

World events such as natural disasters, terrorism, and civil unrest can affect markets. 9/11 had a direct effect, as many investors chose to trade less and choose more conservative investments.

Indirect influence also regularly happens in markets in response to world events. For example, in response to military actions abroad or civil unrest, the stock prices of military equipment and weapons manufacturers will likely rise due to defense contracts.

Current Interest Rates

Lower interest rates are typically associated with bull markets, while the opposite is true about bear markets. Higher interest rates slow companies’ expansion and growth, putting less money in investors’ pockets. On the other hand, lower interest rates make it more affordable for businesses to borrow money and increase their production and growth strategies.

Overall Sentiment or Emotion

Human psychology plays a significant role in the price of stocks, with investor sentiment and emotion being a sizable factor in the market’s overall direction.

In bull markets, investors are much more eager to participate in trading and take more risks to earn a profit. People will buy new technology, make stock gamble plays, and hold positions longer during upward trends.

In a bear market, when the sentiment is less optimistic, investors tend to transfer their money from equities to fixed-income securities as they wait out the downturn. These downturns in stock prices cause hesitation and doubt, leading investors to pull their money from the market, which causes a general price decline.

A History of Bull vs. Bear Markets in The USA

Both bull and bear markets are cyclical economic events that have happened many times throughout U.S. history. Analyzing their history can help to make better investment decisions, regardless of the current market trends.

US Bull Market History

Bull markets take up much more time than their bear counterparts and are much more robust. The average bear market decline has been 27%, while the average bull market gain has been 167%. Since World War II, there have been 13 bull-bear cycles in the U.S., with the average bull market lasting 1,630 days and the average bear market lasting only 419.

It has taken the economy an average of 26 months to recover from a bear market. However, it has historically recuperated just fine and has rebounded even stronger each time.

US Bear Market History

Bear markets are diverse, if anything, varying in severity, length, and impact. Between the end of World War II and April of 2022, there have officially been 14 bear markets. Based on historical Bloomberg data, their severity fluctuated from a 51.9% drop in the S&P 500 to a 20.6% decline.

Bear markets can occur broadly over entire markets or just in particular sectors. Economic activity is a cyclical series of bull and bear markets. Over the long term, bull markets have gone higher and lasted exponentially longer than bear markets.

How Frequent Are Bear Markets?

Famous examples of bear markets include the dotcom crash (2000-2002), the stock market crash of 1929, and the bear market following the housing market crash (2007-2009). A recession often accompanies these bear markets, although this is not always the case. Of the 25 bear markets in the U.S. since 1928, only 14 have seen recessions, while the other 11 did not.

S&P Bull and Bear Market Length in Days Since 1927

What Do Investors Do in Bull Markets vs. Bear Markets?

Savvy investors should seek to take advantage of the rising prices in a bull market by regularly purchasing stocks and selling them off to actualize their profits. Losses in a bull market should be less severe and fleeting, as investing in equities when the market is bullish should equate with a higher probability of profit.

It’s difficult to escape drops in your portfolio during a bear market. Losses will be more common, and timing the end of the bear market will likely be tricky. Because of this, short selling becomes a more attractive option. Although many investors simply elect to put their money in safer investments, such as bonds and other fixed-income securities.

Dividend Stocks Can Hedge Your Losses

Many investors also turn to dividend stocks, whose performance in the market is typically affected less by changing trends. These industries, often things like utilities, are designed to be excellent hedges against inflation and are stable in both bull and bear markets.

The Long Game Investors Don’t Deviate From the Plan

The market is ever-changing. It can be volatile or steady, and everything can change overnight. Because the market changes so much, plenty of stimuli may sway an investor’s choices, making them deviate from their plan.

Buy-and-hold investors have a set amount they invest on a schedule. They do not deviate from that plan, regardless of world events and how they affect the markets. These types of investors are playing the long game. They are looking at their investments for years and decades rather than the volatile daily or monthly life occurrences.

Don’t Navigate Bull or Bear Markets in the Dark

Investing takes time, knowledge, and experience. All of that can be costly, even for investors that have been following the markets for years.

StockMarketEye is a stellar way to follow your investments, regardless of the type of market. You can also stress-test your portfolio against potential market conditions and compare your standings against historic market numbers of the past. This design allows the software to tell you if you beat the average, fell short, or are about par for the course.

The longest bull market was from 2009 (after the housing collapse) until 2020 when the COVID-19 pandemic hit and tossed everything out of whack. Over those 11 years, a 30-year-old investor might have only experienced growth and profits since before they could order a drink in the bar.

Were you ready for the current bear? Do you have a plan in place for a possible upcoming recession?

StockMarketEye 5.5.9 Released

We are proud to announce the release of StockMarketEye 5.5.9 for Windows, MacOS and Linux.

This release contains a couple of small bug fixes and new features to improve the usage of StockMarketEye.

You’ll find the full list of additions and improvements in the 5.5.9 version of StockMarketEye below:

What’s New In StockMarketEye 5.5.9?

The 5.5.9 build includes the following updates:

  • The Open-High-Low-Close (OHLC) tooltip on the graph is configurable – you can now hide/show the tooltip, as well as move it to the right or left.
  • You now have columns to see the low/high price for 3/6/9 month periods in your portfolios and watchlists.

If you are running StockMarketEye 5 and have an active license, please update at your earliest convenience through the auto-update feature. Alternatively, you may also update by downloading and installing the most recent StockMarketEye version from our website.

StockMarketEye 5.5.8 Released

We are proud to announce the release of StockMarketEye 5.5.8 for Windows, MacOS and Linux.

This release contains an update to the Advanced Brokerage Import to support Open Banking connections in Yodlee from brokers such as Charles Schwab.

If you are running StockMarketEye 5 and have an active license, please update at your earliest convenience through the auto-update feature. Alternatively, you may also update by downloading and installing the most recent version from our website.

StockMarketEye 5.5.7 Released

We are proud to announce the release of StockMarketEye 5.5.7 for Windows, MacOS and Linux.

This release contains a couple of small bug fixes to improve the usage of StockMarketEye.

You’ll find the full list of additions and improvements in this version of StockMarketEye below.

What’s New In StockMarketEye 5.5.7?

  • Ensure that caches are cleared after updating from brokerage and rebuilding.
  • Fix for issue with display of multiple short lots in Prices view.
  • Add new transaction type for Schwab CSV import.

If you are running StockMarketEye 5 and have an active license, please update at your earliest convenience through the auto-update feature. Alternatively, you may also update by downloading and installing the most recent version from our website.

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