Stock Market Investments Article by Michael Dylan |
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Michael Dylan
Internet Entrepreneur and Businessman
Michael Dylan is a successful entrepreneur
and business enthusiast. He has owned
and managed several successful business
online and offline.
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Investing in Stocks - Article by Michael Dylan
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Although
I wouldn't call myself a professional stock
market investor, I do spend a lot of time
following the market and reading about the
ups and downs of companies. I've never been
interested in mutual funds or index funds
very much as I would much rather invest
in individual companies. My work allows
me plenty of time to indulge in my stock
market obsession though, so I understand
that not everyone can put in the hours of
research required to invest in individual
stocks.
Over the years I have made enough mistakes
and have had enough successes to learn enough
about investing in stocks to have developed
my own set of rules. These are general investing
tips that can easily be adapted to most
styles of investors.
Don't
pay any attention to HOT tips
As tempting as the hot stock market tips
may sound, don't risk your hard earned dollars
on them. Impulsive buys are no different
to gambling, so unless you can afford to
lose your money, buying just because a friend
says they have made a lot of money from
a company is no reason to race out and buy
it. If the hot stock tip is really worth
adding to your portfolio, it will still
be worth adding after a couple weeks of
research.
Learn
as much as you can about the stock before
investing in it
Each stock is actually a business, not just
a stock ticker symbol that goes up or down
each day. You wouldn't buy a business before
doing a lot of research into what the company
actually sells, what services they provide,
what the earnings have been, what earnings
are expected to be, and a whole lot more
about the business. The famous stock market
investor from Omaha, Warren
Buffett always refused to invest in
businesses that he never understood. He
avoided technology stocks as he knew very
little about the businesses behind the stocks,
which allowed him to miss both the boom
and bust of the tech bubble.
Learning about the industry the stock is
in can also be as important as learning
about the company.
Don't
pay too much for a stock
If a stock is getting a lot media attention
and everyone from your local butcher to
your taxi driver has been buying into it,
there's a good chance that the price of
the stock is inflated. Compare the company
data with similar stocks in the same industry.
If they don't compare, move with caution.
It may be that the company is a quality
stock in a strong, long term uptrend or
it could be that a bunch of sheep are simply
reacting to media hype. The challenge is
to work out which stock is the quality company
that demands a premium price and which is
the stock that will halve in value.
Admit
to your mistakes and don't be afraid to
sell a losing stock
No one likes to admit they are wrong, but
even the best investors make mistakes. Hoping
for your stock to turn around while it keeps
losing value month after month, year after
year is a no win situation. Some companies
will always underperform. Cut your losses
and put it into something that has some
hope of making you money.
Get
Help from a Professional Advisor
Even if you have a lot of spare time to
research the market and investing in stocks,
it is advisable to see a professional before
making any major financial decisions. The
tax implications and financial obligations
of individual investors may mean that it
wiser to pay off debts or invest in other
assets. If you are sure that stock market
investing is the right thing for you, it
is still good to seek professional advice.
With the abundance in financial data online
now and online brokers being so easy and
affordable to use there has been a massive
increase in individual investors entering
the markets for the first time. Don't ever
feel that you have to buy stocks in haste
though. Impatience will burn more people
than it will reward. Know the stock, the
company, and the industry it is in before
even thinking about logging into your internet
broker account!
"I think you have to learn that
there's a company behind every stock, and
that there's only one real reason why stocks
go up. Companies go from doing poorly to
doing well or small companies grow to large
companies." Peter
Lynch Quote
This article by Michael Dylan may not be
reproduced online in part or whole. Copyright
© Woopidoo.com
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