Buying Stock, New Investor Question?

Question

I don't know anything about stocks. Where can I find more information about buying stocks and investing in the market? And what is the best way for a "newbie" to start?

Answer 1

Congratulations on getting started. It’ll help you more than you know!

Your first dollars should be spent on getting educated on investing. You don't have to train to trade them professionally, but we are talking about your future here. So the more you learn, the more it'll help you! So let's start there.

You ask a very broad question, so be prepared for a pretty long answer. Just take it in chunks!


How to invest depends on what you already know. We'll assume that you're beginning since you say you're a newbie!

A good primer is How to Make Money in Stocks by William O'Neil. You can get it cheap just about anywhere. It’s widely available new or used.

Another good one is one of Jim Cramer's books (he’s got a few).

But books will only get you so far. At some point, you'll also want to get at least a little training. There are some great education companies if you want to make the investment. Investools.com or optionetics.com are both very good companies as is tmitchell.com

For free, you can start by visiting thestreet.com and investopedia.com. That'll get you a pretty good primer so at least you'll understand what the markets are and what a stock is, etc.

If you get a chance, watch Mad Money on CNBC. Don't trade any of his picks until you track many of them over time. Just use the show to get you to understand some basics and get a feel for the market itself.

Next, subscribe to something like Investorsbusiness daily or something like that that can help you identify good stocks.

Once you understand stocks, go to 888options.com. It's a website that'll help you understand options (what they do, how they work, etc). You don't need to trade them, but the more you know, the more you'll see how options can really be the safest way to invest (once you're educated).

For discipline (which is crucial to successful trading), probably Trading in the Zone by Mark Douglas or Mastering the Trade by John Carter

I know that’s a LOT to absorb. Just take it one step at a time for now. Start with a book or two to give you an idea of where to begin. Take your time, and let it seep in.

As you get up to speed, you should papertrade to practice (highly recommended). This should help reduce your losses in the beginning as you get used to buying/selling.

You can practice for free on almost any reputable broker site (optionsxpress, scottrade, thinkorswim, etc).

Start slow, then as you figure things out, you can buy more shares.

Congrats again on getting started. If you have any questions, please let me know.

Hope this helps!

Answer 2

Your question is too general.

Everyone started with nothing. Your potential lies within you. Keep reading, studying, and testing your theories.

You need to do the work first, learn a few terms, read a few books, which you will have to do anyway. Go to the library, and browse through the row upon row of the subject. All of these questions will be answered as soon as you take the first step and read a beginners guide to investing.

Try to determine your time horizon. Short-term, long-term?

Take a look at charting and Technical Analysis for following trends in the markets. Why would you own a stock that is in an obvious decline, or a mutual fund that underperforms the idex it follows?

Realize right away there are two sides to the market, not just the upside. Not only can you short the weak ones while you go long the stronger ones, what goes up, eventually comes down at least part way. This is not a business of prediction, but rather knowing what to do if certain price points are reached, say at Support or Resistance levels, or Fibonacci retracement levels, or if a breakout to new highs or lows occurs.

Learn how to analyze risk, and make this your primary approach. We are not in the business of analyzing an unfounded theory of compounding profits and erroneously analyzing how much money you can make. For example, most traders don't make any money at all; more than 80% blow out.

Learn about money management techniques, and maybe you'll stick around awhile.

Try to find these books:
They say "Buy and Hold" for the long term is better, but that depends on when you get in, and what your definition of "long term" is. The phrase "Buy low and sell high" infers that you buy after a decline; but how much of a decline? If you had bought after a 1000 pt decline in the Dow in 2000, you would still be waiting to get back to even, six years later in most stocks.

How to start trading online:

http://www.bernanke.cn/stock-trade/......
http://www.stock-trading.jims-info.com/....
http://money.howstuffworks.com/.........
http://www.investopedia.com/
http://sharebuilder.com/
stockcharts.com

Beginner’s Books on Investing

"Which Is Better, Buy-and-Hold or Market Timing?"

"Do You Have What It Takes to Be a Market Timer

The Beginner's Bible in Technical Analysis is:
Edwards & McGee"Tech. Anal. Of Stock Trends"

Droke, ClifTechnical Analysis Simplified

Kahn, Michael N.Tech. Anal. Plain & Simple

Kamich, Bruce M.How Technical Analysis Works

Lefevre, EdwinReminiscences of a Stock Operator

Answer 3

1

Answer 4

Both are right, in a way. One side is called contrarian, which some folks confuse for the old "buy low, sell high" nonsense. When folks are selling off a good company because they want to move their money to the next fad, then some will see a bargain in the making. I've bought more shares of companies in decline in order to average-down my cost basis because I expect or expected an upturn. But, caution, sometimes the stock is going down for a reason--something may be horribly wrong and if you don't catch it, you will lose big time. I did that recently with an oil services company and a VOIP services shop. Some in the market knew things, or details, that I didn't spot. The other side is also sometimes misunderstood. Buying a stock when it is high is sometimes very prudent--simply because you have reasons to believe that it will go much higher! Just because you read in the paper that some XYZ company hit its 52-week high or low does not mean that is the stock's ceiling or floor. Buying Apple before the ipod came out would have seen the stock hitting ceiling after ceiling after ceiling. Ask folks about Enron, which essentially punched through both in the same year.

Answer 5

The best way is to get a book about investing. This is a book I give to all my clients.

Wall Street Journal Guide to Understanding Money and Investing

The book is nice and simple. Two pieces of advice. First don't treat your investments as a gambling casino and second don't be afraid to ask for help.

Answer 6

Read the book "Real Money" by Jim Cramer. He is wonderful when it comes to explaining what every person should or should not invest in. He also has a t.v. program called "Mad Money". He is pretty outspoken in his program and you need to get past that, but his tips are nearly perfect. Also, buyt stock in investment companies themselves. Who better to trust? I have made good money this way....via a great hint from my very wealthy employer! Good luck!

Answer 7

"The Wall Street Journal Guide to Understanding Money and Investing " is a very good book. Also check out: www.investopedia.com

Answer 8

Not sure where you are.
Australia Stock Exchange has very good material for first time investors.
Even you are not in Australia, those information also applies to you. They have seminars or online material to understand more about share market.

Answer 9

Look at the Motley Fool. They have a lot of information and it is free for most of it. Don't put all your money in one place. You may want to check out mutual funds.

Answer 10

Have a look at following website for comprehensive understanding:
http://moneycentral.msn.com/investor/home.asp

www.moneycontrol.com

www.cnnmoney.com

www.icicidirect.com

www.nyse.com