How to Invest in Stocks Arvada CO

Steps

1. Save. Before you can invest, you need money. Don't start investing until you have property, $10,000 in savings (to be kept in savings) and another $10,000 to start investing with.
2. Read. Warren Buffett made his entire fortune investing, and has lots of very useful advice for real people who want to invest. Motley Fool is an excellent online publication, as is the Tycoon Report, and Wikinvest.com is great place to find information on companies and concepts in the market. It is also helpful to conduct due diligence on the investment information sources themselves. Check out the performance and advice of websites, newsletters and blogs. One resource to conduct this research is at Greedreviews.com
3. Buy a small portfolio of stocks. Blue chip stocks perform well, and are often fairly priced. Stay up to date with different value investing websites such as Motley Fool or Fallen Angel Stocks to see what kind of deals are out there. If you do not have the time or motivation to learn about individual stocks, mutual funds provide a low risk investment that follows the market trends very closely.
4. Forget about it. Avoid the temptation to sell when the market has a bad day.
5. Invest in a regular and systematic manner. Set aside a percentage of each paycheck to go into savings. Always leave at least $10,000 in cash around for emergencies.
6. Consider selling portions of your holdings as a stock appreciates. This bias of selling losing stocks quickly and completely and selling gaining stocks slowly and partially may increase your long-term chance for success.
7. Consult a broker and take part in simulated stock experiences. Read as many books and articles as possible written by experts who have successfully invested in the types of markets in which you have an interest. You will also want to read articles helping you with the emotional and psychological aspects of investing, to help you deal with the ups and downs of participating in the stock market. It is important for you to know how to make the smartest choices possible when investing in stock, and even if you do make the wisest decisions, to know how to deal with loss in the event that it happens.
8. Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies.

Tips

• The share price of a stock has no relation to whether the stock is cheap or expensive. Refer to Motley Fool, Better Investing and other groups of "value investors" for advice on determining the fair value of a stock.
• Start a Roth IRA. You can save hundreds of thousands in tax dollars in the long run.
• Buy companies that have little to no competition. Airlines and energy companies are generally considered bad long-term investments.
• Try not to restrict yourself to any particular type of company. Understand that companies are in a sense 'black boxes' that generate revenue and profits--by becoming able to evaluate a company beyond a superficial glance--using Morningstar.com "5-Yr Restated" financials will help--you will be able to identify stocks in companies you haven't heard of and others haven't either--yet deserve your attention.
• Companies with strong brand names are a good choice. Coca-Cola, Dell, 3M, and GE are all good examples.
• Understand 'why' companies like blue chips above turned out to be good investments--their quality is based on their prior history of consistent revenue and earnings growth. By being able to identify those types of companies prior to everyone else, you will be able to reap larger rewards in your investments. Learn to be a 'bottom up' investor.
• Companies with virtual monopolies like Microsoft and Wal-Mart are good investments if you can find them at a good price.
• In general stay away from seasonal or trendy industries like retail and regulated industries like utilities and airlines, unless they have shown consistent earnings and revenue growth over a long period of time. Few have.
• Cyclical stocks may have periods of strong growth followed by times of contraction. They may be difficult to own by the amateur investor.
• Invest in companies that are shareholder-oriented. Most businesses would rather spend their profits on a new private jet for the CEO than pay out a dividend. A return on equity (a common statistic) greater than 15%, a 2% dividend and large cash reserves are evidence of shareholder-oriented companies.
• Buy companies that are in profitable industries. Look for companies with profit margins greater than 10%. Media and beverages are the classic examples.
• Wall Street focuses on the short-term. You will only beat the market if you hold the stock for many years.
• The goal of your financial advisor/broker is to keep you as a client so that they can continue to make money off of you. They tell you to diversify so that your portfolio follows the Dow and the S&P 500. That way, they will always have an excuse when it goes down in value. The average broker/advisor has very little knowledge of the underlying economics of business. Warren Buffett is famous for saying, "risk is for people who don't know what they're doing."
• If you truly don't know what you're doing, invest in an index fund that is tied to the S&P 500. They will charge only a fraction the fees of other funds because they do not need to do any research.
• Alternatively, if you have the time and energy to learn about the market and it's daily changes, consider learning how to trade options, futures, commodities, foreign currencies, preferred stock, or bonds.
• Don't look at the value of your portfolio more than once a month. If you get caught up in the emotions of Wall Street, it will only tempt you to sell what is probably an excellent investment. Before you buy a stock, ask yourself, "if this goes down am I going to want to sell or am I going to want to buy more of it?"
• Most importantly, remember that you are not trading pieces of paper that go up and down in value. You are buying a share of a business. The health and profitability of the underlying business and the price you will pay are the only two factors that should influence your decision. (In addition, perhaps, to the social responsibility of the business).

Warnings

• Don't blindly trust the investment advice of anyone who will make money from your buying and/or selling (this includes brokers, advisors and analysts).
• When it comes to money, people lie to save their pride. When someone gives you a hot tip, remember that it is just an opinion.
• In order to put yourself in the drivers seat, you should go to the following site. It shows you step by step how to invest in Commodities and Futures yourself without the help of a broker. It delivers the goods. http://www.themilliondollarfuturestradingexperiment.com

Sources and Citations

• Stock Advice
• Better Investing
• Small Cap Stock Advice
• http://www.themilliondollarfuturestradingexperiment.com
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