Investing In The Stock Market

While a lot of people are afraid of stock market investing today, many people are just now getting started. Whether you are new to investing or have been investing for a while, the stock market still provides one of the best opportunities to create wealth today. The real problem is the fact that we delegate the wealth creation to the so-called “professionals” who continue to use us instead of working for us. You really only have to look at the market’s most recent decline to know that most of them don’t know what they are doing. If they did, they would be a lot more proactive. I personally have family members who lost a fortune and stock brokers did not tell them to lock in their gains. All the while, the market took a nose dive and they lost nearly half of the value of their portfolio.

My question is this. If the professionals are so good at what they do, then how come they don’t tell us to lock in our gains?

The proverbial “buy and hold” stock market investing strategy is a myth and an easy out for Wall Street to never have to tell you when to sell. The simple fact is that all stocks regardless of how good they may appear to be, will eventually come down in value. The stock market is littered with stocks that traded at all time highs and now trade at all time lows. Why is this? Well, a stock’s price is a function of it’s supply and demand. The more demand for a stock, the higher the price and the lower the demand, the lower the price. You’d think that this demand would come from investor’s like you and me. But, our individual purchases are a drop in the bucket compared to where the real demand comes from — big institutional investors. When they decide to take a sizable position in a stock, they invest millions and increase demand for a stock substantially which in turn increases the price. And, when they sell this decreases the demand which in turn decreases the price. This is the key reason that even good stocks go down in value, the demand dries up and moves onto another stock.

When they want to unload their stock they need buyers — because they aren’t buying anymore — so the price doesn’t come down too fast and that’s when you, surprise, surprise, start hearing  about how great the stock is and are encouraged to buy it. This also tells me why your brokers don’t tell you when to sell as well. Who is their bigger customer, you or them? It’s simple economics. The big institutional money doesn’t follow their own advice. They actually pick a time to sell and do it while Wall Street tells you to buy and hold. This is so they can keep the price of particular stocks propped up. If they told you to lock in gains and sell with the big money, then they would be working against their best customers.

So what is a small investor supposed to do?

The first thing I would do if you are like people I knew who lost big money, is fire your broker. They’ve proven they are not up to par. The next thing I would do is start researching two specific investing strategies and pick one that you are most comfortable with and then run with it. The first book I would read is “The Intelligent Investor” by Benjamin Graham. He was a mentor to one of our most famous investors today and that is Warren Buffett. The other strategy I would check into is William O’Neil’s “How To Make Money In Stocks”. O’Neil is famous for being publisher of the Investor’s Business Daily. I personally prefer the CANSLIM strategy over being a value investor.

The thing is that if you want to be successful in the stock market, investing today provides you the opportunity to create wealth you never knew you could. The only thing is that you need to study the market and apply what you learn. No one is going to hand it to you. You are going to have to first pick a strategy and then next start applying it. Will you make mistakes? Yes, but do you think you can do as well as losing half of your money? I don’t have to tell you what I think.

The stock market for beginners.  Almost sounds a bit like bull riding for fifth graders…a disaster waiting to happen.  With all the bad news we here about the stock market today, it doesn’t really sound like the place anyone who terms themselves a “beginner.  However, if you let the current scary news chase you away, you are missing out on the amazing earning power that the stock market can bring you.

Think about it this way.  When you buy a share of stock, you are a part owner of that company.  Every single day, people are waking up in the morning, and working for that company to increase its value.  Your money is being grown by the labor of many people adding value to the economy every single day.  Of course, stocks do go down, and companies do lose their value, but when you look at stock market investing at this very fundamental level, it is a sound concept.  Unlike investments like gold or real estate, stocks grow through the power of human industry, which is the only real way to increase value.  Resources are finite, but the human power to create is infinite.

So, if you are a beginner, do not fear the market.  Learn the basics, but don’t let that stop you from getting started.  As with any type of investing, time is your friend when it comes to stocks.  The power of compounding growth will earn your far more returns than any genius stock picks you may or may not make.  However, to enjoy the benefits of this growth, you need to start as soon as possible.  Even if you have no idea what you are investing in, you can still buy a mutual fund today and get started with something.  I don’t advocate gambling, but as discussed above, the market is not gambling.

Beginners should also take care not to be swayed by fads, trends, and outright scams.  Use your common sense, and remember that get rich quick schemes almost never are.  Be boring has its benefits when it comes to investing, so just stick with the basics.  Following new, sexy investment options will almost never make you money.

These are just a few pieces of advice I have for stock market beginners.  Keep reading, keep learning, but don’t let your lack of knowledge deter you from taking that step and getting started.

Investment, for many, is always one of those “I’ll get to it when I’m older” type things. These people thing that they will invest when they have more money, or more time to learn the ins and outs of investing in the stock market. Whatever the reason, most feel that investing can just wait until later.

This is a dangerous attitude. When it comes to investing, time, not capital or cleverness, is your greatest asset. Someone who invests a small amount of money early on in their life in a basic market index fund can expect to earn a lot more than a financial genius who invests much more money later on in life. This is because of the power of compounding interest, which allows your money to grow to an extent that is beyond most peoples comprehensions.

Of course, this calls for a conservative approach to investing that is at odds with some of the more glamorous forms of trading we envision when we imagine people getting rich from the stock market. The reality is much more mundane, much less exciting. You don’t need to be glued to the stock market news everyday. Those who take things slow and steady will win the race, just as the old story tells us. While our desire might be to purchase some fancy trading system, get an online brokerage account with all the bells and whistles, the fact is most people will not make much under this approach.

So, be sure to get started investing today so that the power of compounding will start going to work for you. Regular contributions through time to your invests will snowball over time, giving you much more wealth than if you had simply kept your money in a savings account. If you’re looking for specific instructions on doing this, be sure to check out the article on how to get started investing in the stock market, and get started today. It doesn’t take long to go from owning nothing to owning your first share of the S&P 500, so get working at it today!

If you’re looking to get started with investing in the stock market, you might find the whole thing a little daunting.  There are so many things to learn, where can you even get started? How to I actually go about buying stocks?  Which ones do I buy?  This article will help answer some of those basic questions.

The first thing you need to know about the stock market is that you shouldn’t expect to get rich quick from it.  Rather, investment is all about buying shares of companies with real value, and watching that value grow over time.  Of course, there will always be dramatic ups and downs with the market over time, but on average, as countries and companies grow stronger, so do their markets, sharing the wealth with their investors. There are no guarantees in finance, but if you think long term, and avoid faddish trends, you will do well.

So, the firs thing you will need to get started actually investing in the stock market is a brokerage account.  Today, I would recommend that you start investing with a discount online broker.  These discount online stock brokers will allow you to buy and sell stocks online for very low commissions.  Of course, you won’t be getting any investment help like you would with a real live stock broker, but that can actually be a good thing, as your decision won’t be influenced by the directions of a commissions hungry stock broker.  An cheap online stock broker will allow you to get started investing without spending a penny more than you need on commissions and fees.

So, once you have this account, what should you buy?  For the beginning (and, in fact, most) investors, I recommend getting started investing in the stock market with index funds.  These funds make it nice and easy to buy the whole market, getting you instantly diversified, and allowing you a lot of room for future growth as markets expand.

So, there is quite a lot to learn about investing in todays stock market, but I hope that this has given you some idea of what you can do to get started today.  Since time literally is money, getting started investing in the market today is probably one of the best things you can do.  Good luck.