The stock market and The Basics of Investment
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We've learned in the 200-year more history of the U.S. stock market. It goes through some good periods, some bad periods. But, for sure it is going up over a long time. Here, we will learn some basic things of investment. We pick stocks as live examples for the basic investment. Stop gambling, learn basic things of investment and earn money.
First of all, The hard-working money that you intend to invest on stock market isn’t used for another purposes at least in 5 years. Then, you should be a long-term investor. i.e. your time frame is after 5 years. The right time is after 20 years becauce nobody couldn't be timing market exactly. Then, you should buy stocks follow method Dollar Cost Average. Buying stocks at one-time investment isn't a good idea.
Buy some shares of the companies means you own a part of their businesses. If the businesses are good, why do you sell your businesses.
Actually, the indexes that is increasing or decreasing will affect to prices of the stocks. It could result the stocks are overvalue or undervalue compare to their fair values that affect to make decisions buy the stocks.
You don’t sell them without a good reason. The stock price going down while the market is going down isn’t a good reason to sell your stocks because almost the prices of the stocks follow the market indexes. You sell your stocks concerning the main problems of the firms that you kept their shares as bankruptcy, poor management, earnings. But, their earnings could reduce because economics turn down or poor management. Their business could be back if economics or their management is good again.
A Stock's high price aren't also a good reason to sell stock. Some active investors buy stock of a firm that has a poor management. Then, they try to tell them change things so that everything turns good. the stock's price is increasing. Then, they sell the stock at a hight price. A lot of investors aren't the long-term investors althought they tell themselve they are the long-term investors and no timming the market. In fact, They are timming the markets and sell stocks at a high price for their gain or at a low price for their lost. The billionair Warrent Buffett is the long-term investor that i know.
You could use resources to as system of the stock rate, automatic portfolio builder, buy list of brokerage firms, newspaper, magazine, the web sites of finance, and so on to picks the stocks.
You should have an investment plan and stick with it and your portfolio is diversified well.
You should participate and discuss with people at investment clubs or investment communities or your trust brokers before making your own decision.
Moreover, you should go to a business school for training or perform stock simulations yourself to know your average return before you put hard-working money on the market.