Investing in Stocks For Dummies
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Investors who analyze a company can better judge the value of its stock and profit from buying and selling it. Your greatest asset in stock investing is knowledge (and a little common sense). To succeed in the world of stock investing, keep in mind these key success factors:

  • Understand why you want to invest in stocks. Are you seeking appreciation (capital gains) or income (dividends)?

  • Timing your buys and sells does matter. Terms like “overbought” and “oversold” can give you an edge when you’re deciding whether to purchase or sell a stock. Technical analysis is a way to analyze securities through their market activity (past prices and volume) to find patterns that suggest where those investments may be headed in the short term.

  • Do some research. Look at the company whose stock you’re considering to see whether it’s a profitable business worthy of your investment dollars.

  • Understand and identify what’s up with “The Big Picture.” It is a small world after all, and you should be aware of how the world can affect your stock portfolio. Everyone from the bureaucrats in Europe to the politicians in the U.S. Capitol can affect a stock or industry like a match in a dry haystack.

  • Use investing strategies like the pros do. In other words, how you go about investing can be just as important as what you invest in. Strategies such as trailing stops and limit orders are great tools, and fortunately, today’s technology gives you even more tools to help you grow or protect your money.

  • Consider buying in smaller quantities. Buying stocks doesn’t always mean that you must buy through a broker and that it must be 100 shares. You can buy stock for as little as $25 using programs such as dividend reinvestment plans.

  • Do as others do, not as they say. Sometimes, what people tell you to do with stocks is not as revealing as what people are actually doing. You should look at company insiders before you buy or sell a particular stock.

  • Keep more of the money you earn. After all your great work in getting the right stocks and making the big bucks, you should know about keeping more of the fruits of your investing.

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