For those of you who have never invested into stocks before, this may come a surprise. Before you begin buying stocks you should learn the difference between what is investing and what is speculating. Most amateur investors are nothing more then speculators, they buy and sell stocks for irrational reasons. Before you buy any stock you should do your research, decide what the attractive characteristics are, calculate the earning potential and find out the fair value for each stock. You should never buy stocks blindly just because you love the name or because your buddy told you so.
If you don’t know what business the stock you bought is in, how the financial statements look or the growth potential of the firm you are nothing more then a speculator and will be lucky not to lose all your money. Do your homework, read the books we recommend, make rational decisions and you will eventually become a real investor.
For now if you have extra cash lying around that you want to invest into the stock market and have no idea what to invest in, the best advise I can give you is to invest into an index fund.
December 3rd, 2007 at 12:14 pm
I have not yet invested into the market buying stocks on my own. I do have a few mutual funds with my IRA/401k’s. I guess all I have been doing is speculating stocks with a mock portfolio on google.
My mock portfolio has been doing very well which might be some luck, it might not. I am in the technology field of work and as a hobbie. I picked my stocks based on how well I know the company is going to do in the next few years. I also picked stocks of companies that are dependant on each others success. I made my decisions before I knew what beta, EPS and P/E meant.
I would like to start a real portfolio soon, but would like to be investing as an Investor and not as a Speculator.
December 3rd, 2007 at 3:24 pm
I think that the best way to approach your dilemma would be to read some investment books. The little book series that I have recommended is great; it gives you an opportunity to learn about investing and gives you some guidelines of how to invest. A few words of caution: Tech stocks were a guy buy a few years ago, currently they are trading at insane multiples that we have only seen during the tech stock bubble. We all know how the bubble went, I wouldn’t be surprised if your tech stocks crashed and burned.
Book you should read:(There are links in the Book Section)
The Little Book That Beats the Market
Joel Greenblatt (Hardcover – Nov 19, 2005)
$13.57
The Little Book of Value Investing
Christopher H. Browne (Hardcover – Sep 22, 2006)
$13.57
The Little Book of Common Sense Investing: The Only Way to Guarantee Y…
John C. Bogle (Hardcover – Mar 5, 2007)
$11.97
May 24th, 2010 at 3:05 am
Investing is my way of earning money both online and offiline, right now i am into venture capital.-::
July 23rd, 2010 at 1:03 pm
investing will always be a part of get rich programs, sometimes you need to be a risk taker to succeed.*’;