Guidelines for Beginning Stock Investors

Here are three guidelines that will help you make smart and profitable investments in the stock market.

Understand the Market

Context always helps. Even if you do not intend to speculate about the direction of the general market, it is always helpful to get at least a basic idea about what drives the market and what it all means.

You will discover that even if your understanding of the market at first is very superficial, over time this understanding will become more sophisticated, relevant, and useful in unexpected ways. You have to learn your ABCs before you can appreciate Shakespeare.

Try to understand the market whether you think it is important or not.

Form and Independent Opinion

Ultimately, investors do not buy “the market.” Ultimately investors must invest in stocks. And the best way to find stocks is to first form an opinion on your own.

As we will explain below, it is useful to read expert opinions on your stocks of interest. But it is also very important to form your own opinion independent of outside influences. And you can only do this before you read anybody else’s work.

Read news articles from reputable and impartial sources, financial reports, and any impartial information you can that tells the facts (and nothing but the facts) about your companies of interest.

You only get one chance to make a first impression; and you only have one chance to form an independent opinion before your opinion is influenced by everyone else’s opinion.

Read Expert Opinions

Though it is good to form an independent opinion, it is also possible to mislead yourself because of tunnel vision. We all have biases in favor or against sometimes silly things.

By reading the work and opinions of others, we can begin to get a feel for whether our conclusions are reasonable or not. Reading expert opinions is very beneficial, if for no other reason than to get a different perspective.

Furthermore, there are experts who do truly provide uncommon insight. This only makes expert opinion that much more valuable. And you can only determine the truly useful and insightful expert opinion from the fluff by reading as much of it as you can.

Search for, visit, and study the best stock research sites. They will provide valuable insight on which stocks to buy.

Guidelines for Beginning Stock Investors

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s