Intro To The Stock Market

Posted by Doug Beavers on: 2005-08-12 18:19:19

The stock market is full of stress and anxiety for almost everyone who has a fairly decent amount of money invested in it. It can be a very emotional roller coster ride as you watch your investments jump one day just to drop the next. One of the biggest mistakes investors make in the stock market is buying high and selling low. They jump on a stock that they see has made some excellent jumps in the past months only to have it drop shortly after buying into it. The people that made any money on that stock had already made it a month before that individual bought the stock. The most important thing with the stock market is knowing when to buy and when to sell a stock. An individual must also realize that though you hear stories of people becomming rich quickly in the stock market, it is not something you want to count on as these people who become rich quickly are few and far between.

The best thing you can shoot for in the stock market is a long term, moderately growing stock. Also, it is much better to own a stock that pays dividents. You can reinvest these dividends back into the stock. Usually a divident rate runs around three percent therefore you are essentially getting three percent interest on the money you have invested in that stock no matter how the market is doing. An educated stock investor will learn how to watch companies and be able to give an educated guess as to when their stock will rise or fall. That is just what it is though, a guess. You must always remember not to invest large amounts of your money in the stock market as there will always be a risk involved with it. That said, you must also not be afraid to take a little risk with some of your money.

The stock market investor must also remember that they cannot worry so much about how much their stock changes each day. The only time an investor should do this is if they are investing in penny stocks where the price of a share can double or triple in one day. When investing in regular priced stocks, however, the investor must remember not to get worked up if their stock falls one day. You must look at the long term picture of things. Yes maybe you lost money today but in the last 2 years, you will most likely have gained money. Worrying too much about the daily change in the stock market is the main cause of all of the stress that goes along with investing in the stock market. By eliminating that worry, you also eliminate that stress, making the investing of your money that much more enjoyable. This does not mean that it is bad to check the price of your stock each day, it just means that if, on a certain day, the price happens to fall, do not concern yourself with how much money you lost. Remember, you don't lose or make any money until you sell the shares of stock that you own.

It is always good to research your stock investments as well. There is information available for every company that has stock offerings and you can almost always find some sort of financial information. This can give you a little insight on how the company is doing and possibly how well the stock will perform. Blindly purchasing stock is not a good thing at all to do, sometimes an individual might get lucky but more often than not, this will lead to very little returns or even the loss of all the money invested on that particular stock. You may also ask your broker their opinion on the stock that you plan to buy, they are there to help you in any way they can, remember, usually when you make money, they do too. If you don't have a broker I would recommend that you get some kind of financial assistant. These individuals can be very helpful in building your portfolio and can give you much needed advice.

The bottom line with stocks is investing in the stock market can cause stress but it can also be very rewarding. You mus remember not to buy high and sell low but to buy low and sell high. You must also remember that doing extensive research on a stock that you wish to buy is mandatory in order to ensure a good return on your investment. Though it is not wise to have all of your portfolio comprised of shares in companies, it is wise to have some of it invested in them. The roller coaster ride of the stock market can be very rewarding if you know how to handle and manipulate it to your advantage.

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About the Author

Doug Beavers, Web Designer and Investor

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