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PERSONAL FINANCE AND INVESTING

An introduction to stock market Investing

I first got interested in stock market investing when I was twelve years old.  The first two stocks I bought were Union Oil of California and Sears Roebuck department stores.  These were the only companies that I knew well since that is where my family bought our gasoline and shopped for almost everything else.  My experience in stock market investing, you must understand, was only on paper at this stage.  However, fifteen years later, I became a licensed stockbroker for real and now my stock market investing was using my ideas and other people's (my clients) money.

The first and number one rule I learned as a professional was the same rule I happened on when I was twelve; in your stock market investing, only invest your money in companies that you know and understand.  I understood Union Oil.  The gas station was right down from my house.  Everyone knew my mother and father there.  When they gave away free calendars every year, they saved one for us.  I knew and liked the company.  That is the best rule to follow if you are beginning in stock market investing. This is the rule that Warren Buffett follows when he makes investment decisions for his phenomenal Berkshire Hathaway Fund. His fund constantly produces returns far in excess of the market as a whole and a lot of competitor funds. He only invests in companies with business models that he understands.

How many billions of dollars did ordinary people lose in their stock market investing during the late 1990's when they bought shares of companies that they had no idea about?  They heard the word Internet and they bought regardless of whether the company's business plan made any sense.  That is not sensible stock market investing but a high risk way of investing.  That is not even sensible gambling.

Stock market investing can be both profitable and enjoyable if you know what you are doing and how to do it.  Stock market investing is not brain surgery.  It is 80% common sense and 20% about educating yourself.  The most successful and profitable traders I have known over the years were individuals that followed no one else's opinion but listened to everyone else's information and facts.  Stock market investing rumor is not what I am talking about.  I mean facts. You need to analyse the fundamentals of the companies that you invest in and this is sometimes called fundamental investing.

The big winners used their heads.  Made the buys and sells that they thought made sense and most importantly, in their stock market investing, they only invested in companies that they understood.  If they felt that the company's idea might make sense but they did not fully understand it, they educated themselves by finding out the facts.

Stock market investing is no more difficult than any other moneymaking proposition.  However, will all business ventures you always must know what you are doing.  If you do not understand the game, do not play.  The same applies to your stock market investing.

I have listed some useful books where you can learn more about the stock market and how you can use this to help you build up your personal wealth. You can also learn how to play the Stock Market Investing game by attending these Investment Seminars.

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An Introduction to Day Trading
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An Introduction to Stock Market Investing
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