Learn Investing Secrets

Unfortunately, many investors who are seduced by the lure of easy money try to become "active" investors before they have the skills, the resources, or the appropriate intellectual framework to do so.

This is not to say that investing in stocks is extraordinarily difficult ... In fact, for every amount of money that outperforms the market, somebody else's money is not doing quite so well!

How can you tell if you are ready to become an "active" investor? If you cannot define any of the following words: gross margin, operating margin, profit margin, earnings per share, costs of goods sold, share buyback, revenues, receivables, inventories, cash flow, estimates, depreciation, amortization, capital expenditure, market capitalization or valuation, shareholder's equity, assets, liabilities, return on equity.

...

Unfortunately, many investors who are seduced by the lure of easy money try to get "active" investors until they have the skills, the resources, or the just intellectual framework to do so.

This is not to say that investing in stocks is extraordinarily difficult ... It is not!

However, scourging the market on a regular heart is far from easy and requires that an investor feature to the investing process a singular discipline, knowledge, or passion that will entertain him to rise upwards the herd.

Like in any other competition, not everyone can win! In fact, for every peg of money that outperforms the market, somebody else's money is not doing quite so well!

How can you tell if you are ready to come an "active" investor? Not an investor who buys and sells stocks on a regular basis, but mettlesome in the way the academics mean it -- someone who selects his own stocks. It is not like there is a licensing process or anything. In fact, there is not even a formal course of instruction. Much like parenting, you tend to find out if you are really cut out to be an investor only answerable to you have made a pretty substantial commitment!

In my opinion, you should not be investing in stocks:

... If you need the money within two to three years at the least.

... If you don't like to do math.

... If you use the word "play," "gamble," or any similar speculation-oriented word when you describe your investments!

... If you think indexes matter more than what companies you own.

... If you are unprepared for volatility. A lot of people look at the returns for the stock market only to turn pale at the first loss! If you cannot stand to lose money, you should not own stocks... Period!

... If you think you will only ever buy stocks that go up. You are not perfect! No system is perfect. No provider of alerting is perfect. You can -- and will -- lose money at some point during your investment career! You can minimize this loss if you do your homework and are reflective not far valuation, but money lost is money lost.

... If you take stock in that the share price excellent or share price movements insular tell you either in respect to the underlying quality of the workroom or its business. All too often people buy low-priced shares with the idea that they are cheap, only to find out that they are low-priced in that the underlying devotion sucks.

... If you couldn't write down a list of why you and what might make you sell. If you don't know why you a stock in the first place, how can you know when to sell it? Bad scene. weasel it.

... If you cannot tell the difference mid a symmetry sheet and an income statement. Especially if you don't even know where to find a copy of either.

... If you cannot make a rudimentary price determination of the underlying quality of a company.

... If you cannot define any of the following words: gross margin, operating margin, profit margin, earnings per share, costs of goods sold, share buyback, revenues, receivables, inventories, cash flow, estimates, depreciation, amortization, balance expenditure, market stake or valuation, shareholder's equity, assets, liabilities, return on equity.

... If you only have one source of information with respect to the company. I don't care whether it is your best friend, a message board, or some content provider. If you cannot independently verify the facts, you are upper limit to get unintentionally bamboozled. No one likes to derive from he is wrong. If you depend on one source of information, odds are when it finally coughs up the conclusion that it made a bad call it will be too late!

... If you cannot name the major products a order makes or the company's major competitors.

... If you don't use the Internet. Seriously folks, come on! essentially all of the disadvantage of physiological individual an individual investor from the information side was erased by the Internet. If you aren't on it, you are at a major disadvantage to all of the other players.

It is like trying to wrestle with no limbs!

More Articles: