STOCKS FOR DUMMIES …. So you think you can invest in stocks:

1) Only rich people buy stocks:

Anyone can buy stocks the only proven way to really give an educated decision as to which ne to buy is if you do your own research. Most stock market moguls think they can sense which stocks will go up or down . . . . however they tend to be very inaccurate. Your advantage is that most company information can be found via internet so make your own judgement.

2) BUY LOW… it will go up eventually:

Nothing is further from the truth for beginner investors. Which would you buy?

For example:

A) company BOO BOO made $70 per share last year however has decreased to $20 per share.

B) Company Baa Baa has recently gone from $2 dollars to $8 dollars per share

Most people would choose A) because they believe the stock will rise again. This is the number one mistake Beginner investors make. It is beneficial to buy a good company at a decent price.

3) Stock investing is the same as gambling:

Are you a gambler? What is the difference between stocks and gambling?

Well buying a share of a stock is essentially becoming a “part owner” of a company. It gives the “part owner” to claim a fraction of the profits the company produces. Most investors or financial gurus think of stocks as a means of TRADING ONLY. They tend to forget that when you buy a share it means you are a “part owner” of that company.

Stock prices fluctuate because stock investors are constantly trying to figure out what profit will be left over for their shareholders. People consider investing in stocks like gambling because you cannot predict the future profit of a company as the world is constantly changing.

Gambling is essentially giving your money away. You have no ownership money is taken from the loser and given to a random winner. When you invest in stocks you are investing in the business and helping that particular business create a better economy.

4) What goes up must come down:

This doesn’t usually apply to the stock market. Stock prices fluctuate as a result of the business of the company.

My point is simple: Don’t YOU wish you invested in Wal-Mart in 1997? What about Microsoft? If the business is good and is also managed well there is no reason for stock prices to go down, think about Martha Stewart, stock prices went up even after the fact she did time in prison.

5) Knowing all of the above information is enough to invest in the stock market:

If you know a little bit of something it is much better than knowing nothing at all. If you want to invest into the stock market you really have to research and do whatever it takes to succeed. If you don’t have enough knowledge you are setting yourself up for failure.

Don’t expect to make money quickly and don’t invest if you are not in it for a long term. Do you research, avoid getting caught in the hype of things that you do not understand and you will have a promising future.