Beginner
Click to buy |
This handy fact-filled book initiates you
into the mysteries of the financial pages -- buying stocks, bonds,
mutual funds, futures and options, spotting trends and evaluating
companies. For those who are curious but intimidated by everyday
financial jargon, this guide offers a literate, forthright and
lively alternative. Recommended. |
If you are a beginning investor (it's OK, you can admit it),
you've come to the right place. Remember that every market expert
was once a beginner. We will walk you through the maze of the
investment world. Learning about any subject isn't easy,
and the stock market is a very large subject. If your goal
is to be an expert, then be prepared to spend lots of time playing
the market, trading, reading and surfing the web. You can
progress to what ever level you want. You must learn
the rules, strategies and risks. The stock market is exciting
when it's up and depressing when it's down, though you can make
money even when the market goes down. It is very easy to lose
money, a lot of it, and very quickly. Some people, reach
financial independence by playing the market. We actually know
a few. Our goal isn't to teach you everything about the
market. It's to teach you how to learn as much as you'd like. There's
an old saying, give a man a fish and he has a fish for a
day. Teach a man to fish and he has fish for his life.
Lets Go Fishing
- Get yourself a small pad and a good pencil or a small portable
tape recorder. From today on, you should write down or
record any words that you hear relating to the stock market which
you don't understand. Each day log onto the internet and
try to figure out what the term means. Go to our glossary
page to look up the terms that you don't understand. You can
also purchase an investment
dictionary so you don't have to logon every time you don't
know a word. You can also try a search engine like AskJeeves
, Google, Metacrawler
and ask it a question that you need the answer to. Now
you may still not understand what the term means but don't give
up. This is quite common. It takes time, repetition and
determination. If you spend a little time each day understanding
the market, you will eventually learn this stuff.
- Purchase a good book for beginners and read it. See
our book list here.
- If you don't understand, something don't give up. Determination
is the key to learning. There are many subjects in
the market that we first didn't understand, but through asking
questions, researching we've learned much about the market.
- Don't try to learn too quickly. Go slowly. Revisit topics
you still don't understand. It takes time to learn the
language and the rules. Be patient. If you stick with it, focus
your efforts, you will learn this stuff.
- Learn beginner topics first and then procedure to more difficult
topics.
- Use the AllExperts.com
service to get answers to questions you may have or email
us.
- The best advice to be given to a beginner is to put as much
money as you can into an IRA
or a 401K and do it as soon as you can.
Check out the difference it makes here.
If you were to start with $5,000 at age 25, invest 2,000 every
year and get a 12% return, you'd about $2 Million by the age
of 65. Not too shabby.
- Doing, making mistakes and teaching others is the best way
to learn about something.
Lets meet the players.
- First there is you the investor also known as the retail
investor
- Then you need a Broker
to make your trade
- Your broker can sell your stock for you to a Market
Maker
- Your trade can also be executed on an ECN
- Then there is the Institutional
investor consisting of Mutual Funds, Plan Sponsors
- We now have a new category called Day traders
or Active Traders
- There's your good friend Uncle
Sam, the tax man who rewards you for holding stocks for a
year by charging you less in taxes.
- CNBC,
a cable station, owned by GE, has become the main place to watch
the action.
- The Newspapers that cover the action are The Wall
Street Journal, Investor
Business Daily
- Mutual
Funds will invest your money for you. The theory is they
have these advanced degrees from fancy universities. But it turns
out that 80% of them don't do better than the S&P500
- The SEC,
Security and Exchange Commission are the rule makers and they
catch and throw into jail the rule breakers
- The NYSE,
New York Stock Exchange is where certain shares are traded, called
listed stocks.
- There are the Pundits,
whose words can turn the market around in a flash.
- There is the Fed
and it's chairman, Alan Greenspan.
- The Underwriters
- The other
investors
- The Hedge
funds.
- Investment
Clubs
- Stock
brokers
Lets Learn about some places these people hang out at
- The Stock Exchanges, Nasdaq
- The message
boards
- CNBC
Lets learn the rules.
- Don't use money you can't afford to lose.
- Day trading is gambling. The majority of day traders
lose money.
- If you want to gamble go to the casino
- Do your due
diligence (DD) before buying a stock. This means to find
out as much as you can about the stock and not just rely on the
word of others, including this web site.
- Don't buy on a tip.
- Don't buy penny
stocks, they are cheap for a reason.
- You can't time the market. (It's pretty difficult)
- Put as much money as you can in your IRA
or 401K
- Have a diversified portfolio to reduce your risk Don't put
all your eggs in one basket. Remember Enron.
- It costs money to trade, this is called commissions and it
varies by broker. There is also a hidden cost of the spread
and for thinly traded stocks Market
Impact.
- Don't buy stocks on margin.
If there are margin calls then you can lose a lot of money.
- If something sounds to good to be true it usually is. We
know you've heard this before, but it's very true.
- If you think you found an investment idea that know else
knows about, think again, it's very unlikely you have, but likely
you've made a mistake.
Lets get started
The best way to really learn something is to do it. To
truly learn about the stock market, you will have to at some point
plunge in a trade with real cash. Although to start, we
would recommend a technique called "paper trading."
Paper trading is making trades on paper. There is no money
at risk.
- Purchase a good beginners book
to help you understand the stock market
- Paper trade
- Find some money you can afford to lose
- Open up an account with a broker
- Pick
a stock to purchase
- Buy the stock and welcome to the world of investing
Links
Books
|
