Recently, every newspaper, website, and TV show has made it seem like stock trading can be done by anybody, and if you just apply “a system” you will come out with a profit. Is that true?
I would begin by saying that though this has been purported, the reality of today’s markets shows just the opposite. It is the group of people telling us this that have pillaged the unwitting and placed us on a precipice on uncertainty. Working the stock market is not rocket science, but it is not paint by numbers either. Here are some tips that if followed, can separated the knowledgeable from the lemmings.
Number one, understand that the stock market is not a game of jacks. It is neither a hobby or a lottery with rules. While many may tell you that it is something that can make you rich on a hobby basis, it is serious business, and shapes entire economies (for good or for bad). If you are looking for something to make you money on the side with little involvement, you either need to hire a professional with an EXCELLENT reputation to handle your portfolio, or be prepared to invest a lot of time and energy in researching and a willingness to take risk.
If you do decide to go it alone, and know that it is not like a lotto ticket, be prepared to find quality software to help you evaluate the stock market research that you undertake. The days of simply comparing stocks in the newspaper like horse races is a thing of the past. The good news is that there is a lot of quality stock market software out there on the market to help you keep you portfolio in line and keep you up to date on the latest information, as well as making historically statistical (which may or may not repeat itself) assumptions based on that information. Be sure to check out many options before you decide which one is right for you at the price you can afford.
Be sure, even if you think you know it all, to continue to learn everything you can about how the stock market works, changes in not only pricing, but in the plethora of legal information that you need to navigate the maze known as the market. Taxes and dividend laws change constantly, as do the ethical obligations of investors, as well as the rights and involvement level in invested companies that an investor may hold. Many people play the stock game for money, but there is also power involved, as you are an investor in a company, and you may find that the power plays can affect a stock price as much as the mathematics.
Learn not only about the stock market, but about personal money management. While hedge funds have become popular over the years, they are some of the riskiest investments you can make. Buy and hold is the traditional way, and still holds true as the foundation of stock market financial planning. You need to structure your life so that you do not have to depend on money you have invested for tomorrow to live on today, as early withdrawal can remove any profits you may have coming down the road, or even cost you money now.
It is also advised that you find a good stock information subscription service to join, as you can never have enough information, and that information needs to come from a reliable and trusted source. I would even go so far as to hire a stock adviser on the side even if you are handling your own portfolio, as it is their job to know the playing field better than the normal Joe.
No matter what you do, invest for the future, and not for today. Many people will make the mistake of moving their money from one hot tip to the next, and will eventually lose everything. If you use common sense, the right tools, correct information, and build a support system around you for legitimate advise, and then, and only then, anybody can invest successfully in the markets.
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