Tuesday, January 29, 2008

How To Start Investing In The Stock Market

Learn how to start investing in the stock market.

Beginning investors tend to approach the stock market with great trepidation. It seems so complex. There is so much to learn. So much new terminology - dividend yield, price earnings ratio, net tangible asset backing, short selling, bull market, bear market and the list goes on.

But you want to get started. The guy next door doubled his money in a couple of months. A colleague at work doubled her money in less than a week. Everybody's making money and you feel like you're being left behind.

So where do you start? Well, first I would suggest you make sure that direct stock market investing is for you. Some people just aren't suited to it. There's nothing wrong with that. There are plenty of other options which will give you exposure. Find a good mutual fund for example.

How do you know if you're well suited? I plan on writing a more thorough article on this in the near future (see Stock Market Investing - Is It For You?) but you could start by asking yourself some of these questions. Are you willing to put in the time? Are you comfortable with the volatility you will undoubtedly experience? What is your time-frame (the longer the better)?

Once you've answered these questions and assuming you still want to proceed here are the steps I suggest you follow.

Get Educated In Investment Fundamentals:

If you're going to manage your own portfolio, even with the assistance of a professional, you will need to understand what you are doing. Read some books. Read the financial press - but don't worry too much about what the market is doing from day to day. There are some great resources available on the internet as well. Start noticing the companies around you. Where do you shop? What are you buying for Christmas? Peter Lynch (a very successful fund manager and author of a number of investment books) is a great advocate of this. Apparently a number of his best investing ideas came from observing consumer trends at the grass roots level.

Don't get me wrong - there is no substitute for actually getting in there and doing it. But the more background information you have the better prepared you will be. And this education should be ongoing. There is always more to learn.

Find A Stock Market Mentor:

Find someone you trust who has some investing experience. This could be a friend or a relative or anyone else you feel comfortable with. A mentor can be a great resource. You can get a second opinion for some of your ideas. You may get confirmation that your reasoning is sound or you may get some feedback about things you hadn't considered. It will be a great benefit if you don't have to make your investment decisions in isolation.

Take A Long Term View:

Once you feel comfortable enough to make your first investment, start small and take a long term view. Don't bet the farm your first time out. Even if you've saved up a lump sum to invest, buy stocks a little at a time. This has a couple of advantages.

Firstly, you wont be putting all of your money into the market at the top. What does this mean? Over time the stock market will go up and go down. There are many reasons for this. Investor sentiment, the state of the economy and lots of other external factors all play their part. It's notoriously difficult to predict the direction that prices will take. Very few professionals get it right even the majority of the time so amateurs like us have no chance. But over time if we assume that the market will rise over the long term, which it has historically, then these short term gyrations shouldn't matter to us - provided we didn't put all of our money in at the top.

The other advantage to investing a little at a time is that we will make mistakes. And we will learn a lot from them. But we need to make sure that if we completely mess up our first foray into the market, we'll still have some capital in reserve so we can regroup and try again. Then over time we should build up a solid portfolio diversified not only by company and industry but also by the point in the market cycle at which we made our purchase.

I know this article hasn't covered yet any of the specifics of choosing a stock to invest in - I will cover that in upcoming articles - but hopefully it has given you some things to think about.

How to start investing in the stock market...

Wednesday, January 23, 2008

Privacy Policy

I recognize that the privacy of your personal information is important. The following statement describes what personal information is collected when you visit beginnersstockinvesting.blogspot.com and what happens to that information.

Log Files

Like most bloggers, I collect and use data contained in log files. The information in the log files include your IP (internet protocol) address, your ISP, the browser used to visit this site, the time you visited the site and which pages you visited throughout the site. The information is analyzed in aggregate form only and no personally identifiable information is tracked.

Cookies and Web Beacons

While I don't use cookies on this site, the provider of this platform (blogger.com) and any advertisers (currently Google Adsense) I choose to work with may use cookies. I can't access or control these cookies once the advertisers have set them. Please visit the advertiser's website for for more information on their privacy policies.

You can chose to disable or selectively turn off cookies in your browser settings.


Some of the links on this blog go to external websites. Please be aware that I am not responsible for the privacy practices of these websites.

Advertisers on beginnersstockinvesting.blogspot.com may collect and use information (but not your name, address, email address, or telephone number) about your visits to this and other websites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice or to find out more about your choices in not having this information used by these companies, you can visit Google's Advertising and Privacy page.

If you wish to opt out of Advertising companies tracking and tailoring advertisements to your surfing patterns you may do so at Network Advertising Initiative.

Google uses the Doubleclick DART cookie to serve ads across it's Adsense network and you can get further information regarding the DART cookie at Doubleclick as well as opt out options at Google's Privacy Center.

This privacy statement was last updated August 2009.

Tuesday, January 22, 2008

About Stock Market Investing For Beginners

What is Stock Market Investing For Beginners and why did I create it?

I started the Stock Market Investing For Beginners blog as a way of documenting everything I've learned about investing over the years. I will be writing articles covering a wide range of topics. Subjects I'll cover include fundamental and technical analysis, growth and value investing as well as the teachings of some of the finance world's greatest minds. People like Benjamin Graham, Warren Buffett, Peter Lynch and others.

And what about me? I'm an amateur investor managing my own portfolio. Although I studied finance theory formally many years ago, I have never worked in the industry. I am not a professional so take what you read here with a grain of salt. Having said that, hopefully beginners will be able to get a lot of useful information from this website.

If you have and questions or suggestions for improvement of Stock Market Investing For Beginners, you can contact me at australian(dot)investor(at)gmail(dot)com.