The truth about the stock market and investments?

Question

I just want to know from people who are in this business, is it easy?, is it rewarding?, do beginners get killed?, why is it that not a lot of people invest in the stock market? and : WHERE CAN I LEARN TO TRADE?.

Answer 1

The truth about the stock market is that it has made investing almost too easy to do. When I first got into the business twenty years ago, there was no such thing as ETFs and online accounts. Trading was a term used primarily by bona fide traders who worked for investment banks. Today, I can hardly avoid hearing someone say they trade stocks. Trading and investing are entirely two different disciplines. Warren Buffett is not a trader. He is an investor. So are most of my weathy clients. To answer your question (finally!), it is very easy for the average person to invest in the stock market and make money. The making money part is a matter of intelligence, information and commitment. For it to be rewarding, you would need to develop an investment plan the way you would for a business. People who have company retirement plans tend not to be investors, surprisingly. They are saving their pre-tax dollars in hopes of having a nest egg in the reitirement years. Most of them do not get involved with their accounts. A large number of them quit, altogether. The investors with whom I have dealt have taken one of two approaches to becoming successful. The majority of people place their trust in an experienced stock broker or investment advisor who has a solid reputation. An intelligent way is to learn as much as you can from these professionals, because many of them do have the training and insight the average private investor will never receive. Once you have the knowledge of how stocks, bonds or mutual funds work, you're qualified to build a solid portfolio. There are some good books on this subject that you should include in your quest for knowledge. Please see below. Ask yourself a simple question. Do I want to be a trader, or do I want the full benefits from being an investor? You can buy an electric guitar and a digital synthesizer today and start recording some kind of sound before the week is over. I don't recommend that approach to the greatest market on earth, if you want to be wealthy. Most of the people you know who lost money in the market, skipped their study classes. All the best to you!

Hawk

Answer 2

Well, the stock market has regularly returned better than 10% per year. Even with corrections, it rebounds back to better than it was before. A brand new person shouldn't be much into buying on their own, individual stocks. Start with Smith Barney or whoever, a mutual fund or perhaps a solid blue chip to get yourself comfortable with the concept. The thing is people have different levels of tolerance for risk. Some can't sleep if they think they might lose money. Other's arent' happy unless they are taking a chance and others are in between. But you have to learn the basics. If you study sports then you know sports, if you study investing then you know investing.

Answer 3

Trading in the stock market is both easy and rewarding a lot. It involves not much hard work. However, you need to have knowledge of the stock market and the way it functions. You also need to research the stocks that you are going to invest in. Beginners will go bankrupt if they do not know about how this functions or the stocks they are going to invest in. But, there are pretty good and mostly accurate stock market simulation games out there, that you could test and condition yourself to before you go about investing in stocks completely by yourself. And as some people have already said you should probably invest is mutual funds to start of with. They tend to be safer investments. A lot of people don't tend to use the stock market because they are not informed or well-versed in the art of investing and they do not view the full potential of the stock market. Most people don't tend to invest in the stock market because they are afraid of the element of loss that could occur with bad investing.

Answer 4

I am not " in the business", but I have been taking care of my own investments for some time now ( and my wife's, daughters' and friends 401) ...and I can give just this little advice : Start with an IRA with an investment company ( Fidelity, Vanguard, E-trade,etc.) Put your $ 4000.00 or so into a mutual fund and then study that fund ...what are they invested in, how are they doing, what funds are doing better, why..?? You should see some reasonable gains in six/nine months or so...and you should have learned about some of the companies you are invested in. Now take some of your mutual fund profit and do some little individual stock investing...
You asked.."do beginners get killed?" Only if they chase every new thing they hear or read about...look at those companies that are already making you money...the fund manager picked them for a reason!!
And you are mistaken to think that " not a lot of people invest" in the stock market.... Do you realize how many people now have 401k plans at work? and even the old-fashioned " company pension fund" where do you think that big lump sum that is going to pay retirees is sitting? Not in a Bank at 3.6%!!
You can get some help as far as " learning" at msn's financial site; http://moneycentral.msn.com/investor/home.asp
Ithink somewhere down on the bottom of the page is something about " investing for as little as $ 100." and also "learning to trade"
I hope it's what you need... if you can read you can do anything!!
( GEE! I think that's what my second grade teacher told me !)
P.S. Back to YOUR question(s) yes. it's easy, yes, it's rewarding
Best...best...best of luck.

Answer 5

There is no direct correlation between your individual stocks performance and the performance of the 30 stocks on the DOW. The DOW is actually a much more useless number than most realize. It is not market cap weighted, so, if abc stock sells for 10$ and goes up 1 dollar that is 10%, a huge day. If xyz stock sells for 100$ and goes up 1 dollar that is 1% and a fair day. Both situations are weighted exactly the same on the DOW Jones Industrials. If the DOW is at 10000 and loses 700 points, that is a 7% loss for the average of 30 large cap stocks. It means nothing else.

Answer 6

It takes hard work and study to be a successful investor. Sometimes the best way to learn is to invest and then lose your money. Then you will really reflect on what you did wrong. I think the best way to become a good investor is to study what the best investors are buying and selling. Then go to http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Good luck.

Answer 7

Well, as a beginner I wouldn't trade. Start with an established ocmpany and get a mutual fund. You can invest as little as $25 per month if you do an automatic monthly withdrawal. I always ask people if they are maxing out on their 401K if you have one available. If you are, then the next stip is to get an IRa depending on your current income. Another good thing to look at when urchasing stock is...what do you use on a daily basis? Those are good ocmpanies to invest in also. Good luck.

Answer 8

1) No.
2) Yes.
3) Yes.
4) Billions of people invest in the Stock Market. It's extremely hard to find someone without at least one stock these days. (I mean among college graduates)
5) Harvard.

Answer 9

I cannot answer most of your questions & I am not in the business, but today I was reading an interesting statistic in Forbes Magazine; 40 percent of working people in the US have an IRA. Many of them also have 401K accounts. 1.55 trillion dollars is invested in those accounts. In addition, there are private online (discount broker) accounts which hold another 258 billion dollars for individuals investing outside of a 401K. That suggests stock/bond investing is not so uncommon, at least not in the US.

Good Investing to all,

;-)

Answer 10

One can get tricked into thinking it is easy, especially if you get into the market in the midst of a bull market. For example, if you bought any stocks related to commodities in recent years, you'd think it's easy, and that's because "all boats rise in a high tide".

I think alot of people don't invest in the market if they got killed in the dotcom scandal. Stocks were surging in price with no inherent increase in the true value of the companies.

You need to learn to trade by using real money. This means starting small. You will never truly understand the impact of your own psychology if you go to these "practice with fake money sites". I remember starting with a straight up cash account, then moved to margin when I felt comfortable, then i learned options. Start with small amounts and please do research. In school, people passed exams by studying. It is surprising how infrequent this logic is applied to the stock market. Too many people treat it like a casino and that exactly is why I do not believe in the "efficient market hypothesis".