Stock trading is very easy to get into and requires little starting capital - which means there's a lot of people participating in something they don't know what they're doing. When this situation occurs, it's very easy for a small percentage of the population to make a majority of the profits. And guess what? In the stock market, a small percentage makes the majority of the profits.
If you want to get started and become successful, you're going to have to put in the work. Take a look at the video tutorials on Investopedia. Learn basic accounting and business fundamentals. The more research you do, the better you become - and the stock market is all a competition of wits and emotions.
If you listen to many of the nitwits on Yahoo Answers who think that investing is like a casino only one in which you can't lose, then it is a waste of time. Take penny stocks - 98% of the companies are "shell" companies that exist to do nothing other than lure investors in, and you will lose everything investing in them.
The best thing to do is educate yourself about the various types of investing. It will turn into a life long process, you never learn everything. To start, I would get a subscription to Money magazine, and also start watching CNBC. When you hear terms you don't understand, look them up. The first types of investments you learn about should be simple ones: learn what banks offer first (even though they are generally poor investments) as a baseline, then start looking at mutual funds and stocks. Don't get wrapped around crap like options, commodities and currency trading, it is again the playground of many fools on Yahoo Answers, 99% of whom don't have a clue what they are doing.
I like turtles is correct. Invest for the long term, ignore short market news and invest using dollar cost average.
Remember these 10 tips
1. Have an Investment Policy Statement
I have discussed the importance of having a written investment policy statement. An IPS will be your guide to investing and will keep your emotions out of investing.
2. Proper Asset Allocation (Mix of bonds, stocks and Cash) and Diversification
According to studies asset allocation accounts for about 90% of your portfolio volatility, ensure you have the proper asset allocation for your risk tolerance and diversify across different asset classes.
3. Buy Low Cost Index funds or ETFs
Investors can get confused by all the various investment vehicles available, the most common and widely used vehicles are Mutual Funds, however these can be expensive for investors. Best strategy is to purchase low cost index funds and exchange traded funds (ETFs).
4. Ignore the Noise
Everyday analysts and economists make predictions, estimates and give their view on how things will go, the media covers these reports extensively. The problem is that more often than not these reports are contradictory and confusing to the investors. Conclusion: Just ignore the noise.
5. Know What You Invest In
When it comes to investing best advice is to invest in things you know. If you do not understand the investment stay away from it. Performance chasing is always a dangerous strategy since most professionals can not beat the chances are you won’t either.
6. Contribute Regularly
Contributing on regular bases to your portfolio is a great way to build wealth. Often it can be hard to make large lump sum contributions, dollar cost averaging is a great strategy. Just take a small portion of your pay check on regular bases and contribute it to your investment plan.
7. Review Regularly
Markets are volatile, they are up one day and down another day. These market movements will cause your asset allocation to shift, so you need to review your portfolio on regular bases to ensure you rebalance things. Do not overdo it, annual reviews are perfectly fine.
8. Make changes as needed
Things change; you grow older and closer to retirement, you will have children, get a raise/promotion etc. Your portfolio should not be static and needs to change as your circumstances change. Make changes as needed.
9. Avoid“Exotic” investment opportunities
There are many “exotic” investments available but these have not been time tested and can blow up any day, these exotic investments were the main cause of the recent financial collapse. Keep things simple with stocks, bonds, ETFs, index funds and Mutual Funds there are ample opportunities in these.
10. Ignore Market Ups &Downs
As stated earlier; markets are volatile and will have its swings the best thing is to ignore them. Nobody can predict what will happen in the short term, but history has taught us that over the long term markets move upwards.
Investing can be very simple if you follow these rules; however the industry and media try to create the illusion that investing and wealth creation is complicated and requires professional help. Remember that It's Important That You Reinvest All Dividends
Best of luck..Take Care
It's hardly a waste of time. The money I have made investing in the stock market (and I'm 18) would take me roughly a month to make working...that's a lot of hours of my life I saved not having to work for money, simply because I put the extra effort and invested the time in to learning how to invest (no where near as much time as working 8 hours a day 5-6 days a week for an entire month.) that's 160-192 hours (depending on over-time), the other half of your life is spent sleeping (more than half if you're not aware of certain things, if you know what I mean.)
Answer is it's not a waste of time, or money. And it's a great skill to have. I suggest really learning about it before you get in to it. Because as the saying goes "The more I know, the more I know how little I know.", You must always learn, and learn more. Always seek new information and insight. "Live as if you'll die tommorow, learn as if you'll live forever." - Mahatma Gandhi
Number one thing to consider is supply and demand, study it, learn it, and then reflect on it in your mind. The stock market is supply and demand, mixed with the emotions of fear of losing and desire of gaining...When I'm investing I look at it no different than when I'm shopping for something, I want the best deal, the things on sale. Look for stocks on sale...in other words, look for a stock that's under-valued for it's currenct fundementals and the internals of the company, it's finances, revenue, profit margins, debt, assets, future growth prospects, P/E ratio, EPS, competition, then there's even technical analysis like RSI, MACD, so on...you have to consider a lot of things, depending on how long you intend to be invested...short term investing doesn't require as much analysis...Some of the largest returns seen in the investing world is short term investments focusing on quick gains...Longer-term investors see smaller returns and expose themself to more market risk...the shorter you're in, the faster your profits are yours so you can seek a new investment, and it mitigates risk due to market exposure.
Always invest in a company that pays at lest 3% dividends...you want to be paid while your money is tied up, and it also adds to your profitability...I seek 8% and higher...there's some that pay 12-16%...like REITs and Royalty Trusts etc.
"Be greedy (opportunistic) when others are fearful" - Warren Buffet
look at historical charts...2008 crash to now...most stocks recovered...that's a perfect example.
"Treat the stock exchange like a cold shower (quick in, quick out)." - Rothschild Family Maxim (In other words make your profits and run, unless holding is a more favorable option in your judgement...just remember, crashes are always on the horizon.)
Personally I wouldn't feel comfortable holding on to a stock for more than 1.5 - 2 years, no matter how big of a dividend yield the stock pays.
Then of course there is the option of short selling a stock...(You profit when the stock decreases in value. The exact opposite of the traditional buy LOW sell high....it's sell HIGH, buy low....Very counter-intuitive, I know.
The way short selling works is, you borrow shares you do not own from the brokerage/another shareholder, and sell it on the market....with of course, the antisipation that the stock will decrease (go down) in value...and then you buy it back at a lower price, the shares go back to the holder it's owed to, and you keep the difference (profit).
Is it a waste of time and money? Like penny stocks stuff like that. ? And if it isn't a waste of time . what would be the best stock market to join and to buy stocks from a place that won't rip ya off? And how do you buy stocks do you use PayPal to do that. ?
