Filed by sergik12 on December 3, 2007
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.
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Categories: Stocks