RSSNot Everyone Should Risk Their Money In The Stock Market
Finances how to buy stocks, stock market for dummies No Comments
With the stock market close to 11,000 most people are hoping that it breaks through that barrier and continues to go up. 2010 has been a year that has seen the market move mostly sideways and a good uptick at the end of the year would be good for investor’s spirits.
But before you go out and read up on how to buy stocks because you want to make some money, be warned that the market might be poised for another big drop. The economy is not helping anyone as jobs continue to be impossible to find and debt levels are high everywhere you look. The government owes more money than ever before, credit card debt is higher than ever before, and bankruptcies are all over the place. How can stocks go up in that environment?
Beginner investors need to go slowly when they start out to learn what the stock market is all about. Too many of them get blinded by greed and don’t learn the basics that are needed for a long successful investing career. Books like the “Stock Market For Dummies” and others should be read so that they have some knowledge to start off with and so that they understand what they are in for.
A common mistake beginner investors don’t understand about stocks is the very real risk they are taking with their money. When the market is going up, everything looks rosy as most stocks go up with it. But in a down market things can get ugly very fast. This is when beginners start to wonder what is happening and they panic. Greed and panic are the two emotions that are responsible for a lot of the stock buying and selling we see when there is volatility in the market. The first lesson anyone investing has to learn is that there is no place for any kind of emotion in the decision making process. Buying and selling must be based on some factual information that drives the decision.
Stocks are a great place to invest the money you don’t need right away but you need to understand what you are getting involved in before you put too much of your money at risk. Risk. Risk. Yes, Risk. This means you may loose your money. Not everyone likes to go to bed at night knowing that they have money in the market that can be going up or down every day. This is something you have to adjust to and get used to over time.