@Flash wrote:
There have been many books, newsletters and magazines written about investing. These are out of date before the printer's ink is dry. This becomes more and more true as the technology for trading gets faster and faster.
I think there are a lot of good basic principles of investing that are timeless or still relevant from decades ago.
Reading Peter Lynch, for example, still proves valuable in stock picking today, as his insights are still used and revered by so many. This YouTube video - about one hour in length - is of him teaching how to pick stocks:
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www.youtube.com]
"You shouldn't be intimidated. Everyone can do well in the stock market." - first two sentences from Peter Lynch
@ wrote:
Few people find it fascinating to study market movement, company governance and performance, sector performance, the economy and what the analysts are projecting.
Most finance/accounting/business majors in college take a course (or, at least, have a section of a course devoted to it) on investing. There are often stock market competitions in these classes. Outside of that, i think you're probably right, Flash, that most people don't care to learn about investing that much. Peter Lynch famously says that people will hear a stock tip on a subway ride to work and by the end of the afternoon put half their kid's college fund savings into a stock they've never heard of on a random "hot tip."
Hyperbole, for sure, but it captures the spirit of so many reckless investors!
I've probably always been interested in stocks from a very early age. It runs in the family practically.
@ wrote:
Even with that study, the decision to invest or divest takes a human longer than it takes a computer. Much of market movement is due to computerized trading algorithms that can instantly account for the latest information. As a result it is not at all an inappropriate suggestion that folks buy market diversification by purchasing index funds rather than attempting to 'pick winner' stocks. And for a couple hundred dollars an individual can begin buying index funds while buying investment real estate normally requires at least a 20% downpayment plus a likelihood that the monthly rent will at least cover the monthly mortgage, taxes and insurance payment.
I agree that most people should stay away from individual stock picking. But, I also don't think it's scary at all.
If you realize that what you're doing is simply buying a share of a business and that you should stay away from things you don't understand (e.g., Warren Buffett and Peter Lynch both stayed away from technology companies), then there shouldn't be anything that scares you from owning a share of a company like Apple, Google, Coca-Cola, Disney, Starbucks, and the like. These would be the types of businesses that EVERYONE is familiar with on an every day basis. One investment writer at Seeking Alpha (popular site) talked about how his 10-year old daughter chose Coca-Cola as her first stock to purchase recently:
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seekingalpha.com]
I agree with Lauren Templeton, who thinks that people interested in learning about investing should just buy ~$500 worth of stock in ANY company of their choosing, regardless of valuation (i.e., no matter if it's currently overvalued or not). From there, she says to just watch it for a while. Read up on news of the company. Learn what drives the stock price up or down (aside from things like randomness and momentum). Learn what the business is doing that may lead to higher revenue and earnings down the line, etc. She gives a great example of her 5-year old daughter buying Disney stock (well, in trust/guardianship). It's a company she is familiar with and whose product she loves.
Every time a new Disney movie comes out, they watch it together and discuss whether she thinks that movie will be popular and drive the stock price higher. It's an educational opportunity she thinks can pay off (well worth the $500) much more than lots of initial studying.
Just getting used to the idea that there is a real company behind a stock and its price and being familiar with its products/services goes a long way in taking any fear out of the equation. It's fun to own a share of your favorite company! From there (after that first ~$500 investment), you can then start to learn more about the technical valuation side of things (assuming you're still interested).
Edited 4 time(s). Last edit at 11/30/2019 05:33AM by shoptastic.