If you have been on the outside looking in, investing can be a scary place. All of this information coming at you and all of these new terms that you don't yet understand. It's easy for a stock broker to blow your mind with all of his "knowledge". It's the same thing when a computer repair man comes into your home and tell you all about how he is going to fix your computer. This of course only applies if you do not know anything about how to repair a computer but you get my point.
Those people who have the knowledge can make themselves out to seem like what they know is impossible to learn yet the stock market is something that not only is fun to learn but rewarding. Once you have learned as much as you possibly can you go and find more and more to learn. This is a never ending cycle of learning. You will find new companies that come out of nowhere and each day that companies change from the price to their earnings to the guys running the company.
When you take on investing as something that you want to do you are putting yourself into a whole new world of possibilities. Finally you put yourself in a position to make some real money. Why play the lottery? when you can find companies that could potentially make you money. There are many people who are completely afraid of the stock market but have never taken the time to learn about anything to do with it. How can you judge something that you know nothing about?
I have never met anyone who knows a significant amount about the stock market and then told me to stay away from it because it is foolish. The truth is once you learn about everything from dividends to earnings reports you become addicted. If you are smart you don't let emotions take over. Usually the guys who lose the most are the ones that make stupid moves and turn it into gambling. Sure you can become very rich by putting your life savings on a no name company that sparks up and lights a fire in the market but really that is how people get burned.
Making money in the market the right way is about diversifying properly and taking risks while reducing risk. It's about looking at companies as more than just numbers. It's about taking the time to see what they offer and then looking at how long you think people are going to want them. Looking at their upper management and seeing if they truly care about the company or are they just trying to earn more money? There is a big difference between a company that wants what is the best for the company and a company looking only to make more money.
Making money is the easy part but building a business that is going to stand the test of time is completely different. Blockbuster once made money, lots of money. What does that matter now? You need to look at companies for the long term. If you are only investing short term than are you really investing? I see short term investing more like a gamble because you need the stock to rise up in a short amount of time so that you can jump ship and get away from it. Some say long term investing is dead but I disagree with them.
Investing can be a scary place for people who are new to investing but if you are willing to read the books that are out there. I'm talking about the good books such as 'The Intelligent Investor' and other books that are really teaching you the proper way to invest instead of telling you their "secrets to investing". There are so many bad investing strategy books out their misleading people. You need to do research on the books that you are going to research and that sounds funny but it is very true.
Make sure that when you are investing in the stock market the first thing you research are dividends. Dividends are the building blocks to any successful investing strategy. Some may say that is wrong but in the past I have relied on dividends to keep me strong in down times. If the market is bad and you aren't getting dividends what are you really getting? Making money on dividends helps you to either re-invest your dividend payments or have a little bit of extra spending cash for other opportunities or bills you may need to pay.
Make sure that you don't let the fees get you down. Remember to factor in all your costs when investing if you are going to be selling often. Not all investors want to buy and hold for long periods of time but just remember that the more trades you are doing the more you are paying in fees in the long term. Many people who invest in pennies pay a substantial amount of fees because they are paying so many times both to buy and sell.
If you ever invest in penny stocks make sure that you are watching for what is know as pump n dump stocks. These are the types of stocks that may be listed in a large paper promoting one stock. If the stock looks like it is being promoted by a so called expert do as much research as you possibly can on it. You don't want to be the one stuck holding a stock you paid $3.00 for but is now worth 0.10 now that doesn't sound so bad but what if you bought 10,000 shares? because you saw they projected the target price to reach $6.40. This happens all the time to good people and then the bad people that pumped it up are the ones who end up with all your money. Always do your research! Always.
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