in the Stock Market
Suggestions for students and others
As your wealth grows, learn how to invest in the various stock
markets. Even if you choose to rely on a financial advisor, you
should understand the basics, if for no other reason than to judge
the quality of the advice you receive.
True, if you do not know what you are doing
in the stock market, putting all your money in savings is the
wisest thing to do, but you will never reach your financial potential
unless you master more risky investments like stocks.
You need bank savings available for emergencies,
but these types of accounts do not grow your money as the stock
Ignore the advice of people who have lost
"50 percent", "70 percent", or whatever, who
say you should stay out of the markets. Dr. Voyageur is sorry
for these loses, but these people simply did not follow sound
investment management. To stay invested in stocks that were losing
so much value was just not using common sense. To stay invested
in just one type of stock was not using common sense. To keep
on investing full speed ahead when there was no end in sight to
a major market downturn was not common sense.
Learn what to do, as suggested below, and
you will not make these types of mistakes.
To start off, you have decisions to make, which include:
- Whether or not to use an advisor and,
if so, how to pick one. If you choose to do your own investments,
what level of service do you need from brokers.
The balance you need among stocks, cash (easy to access savings),
bonds, and other investments.
Whether you buy individual stocks or mutual funds
What mutual funds or stocks to buy
When to buy them, and
When to sell them (This is too often not considered)
Picking the right investment retirement tax shelters
The Road to Wealth: A Comprehensive Guide to Your
Money--Everything You Need to Know in Good and Bad Times by Suze Orman, highly recommended elsewhere on
these pages, gives great help with making many of these decisions.
On this page, however, we concentrate on
buying stocks to dramatically increase your wealth.
Investing in the stock market
Libraries are filled with financial advice,
often of dubious value. Other advice takes an extreme view, discarding
any value in other approaches.
You need the discipline of a system, but
you need balance in your system.
Stock investors tend to divide themselves
into two groups.
Purely technical investors, the "chartists",
believe taking the time to study fundamentals is a waste of time,
as the behaviour of buyers and sellers as shown by charts tells
all. Many fundamentalists, on the other hand, consider study
of charts nothing more than voodoo.
For the inexperienced, fundamental investing
means basing decisions on analysis of information available from
company reports, the government, other companies in the field,
consumer confidence indexes, background of management, long-range
weather reports (if applicable), and factors such as visits to
stores. Technical means analysis of stock price trends, the "charts".
An excellent introduction to both extremes
is the "Bulls & Bears" show on the Fox News Network,
available by satellite or cable in many countries on weekends.
Here we witness good natured arguments from four points of view,
purely technical analysis, purely fundamental analysis, the market
is going down, and the market is going up. The show is fun to
watch and both new and seasoned investors gain valuable knowledge.
Guest quality is outstanding.
Investors Business Daily
In Dr. Voyageur's opinion, you must combine
the good from both fundamental and technical approaches to achieve
This is why he likes the American newspaper
Investors Business Daily (IBD) so much.
Easily accessible to inexperienced investors,
IBD not only gives financial news, it teaches sound investment.
Check it out. Pay special attention to its stock rating system,
the "how to invest" articles, and the featured companies.
Investors Business Daily maintains an Internet
as an adjunct to the paper. Subscribers may access powerful on-line
stock screening tools on this site.
However, anyone may utilize the excellent
and free IBD on-line investment course and the useful "Ask
Bill O'Neil" feature.
Dr. Voyageur suggests that you first buy
(or borrow) and read William O'Neil's How
To Make Money In Stocks: A Winning System in Good Times or Bad,
3rd Edition before signing up for a free two-week subscription
to the IBD newspaper available on its website. William O'Neil
founded Investors Business Daily, remains its publisher, and is
considered one of America's most successful investors.
Unlike so many others, O'Neil emphases control
of loses as a key to building wealth. He stresses piggybacking
on upmarket trends. He emphases the "new economy", the
exciting new companies that have begun to attract large investors
and the old companies undergoing profound positive change.
Learn what's in O'Neil's book, study the
extensive material available on the IBD website, and read IBD
thororoughly and you will begin to invest wisely in a relatively
All this is done in a format appropriate
for both complete novices and for the most experienced investors.
Expand your knowledge
As time goes on, expand your depth of knowledge
by reading Canadian Business, Forbes, the Financial Times, the
Wall Street Journal, Inc. Magazine, company reports and proxies,
etc. Also, tap into the free features of Yahoo
Finance and the combined CNBC and MSN Money
On the other hand, your investment system
should be immune to the often inane comments posted on the many
stock message boards, which you should avoid until you know what
you are doing. Emotion and heresy does not belong in a successful
You should also study the highly successful
"value investing" tactics of Warren Buffett, which for
years made him the wealthiest person in the U.S.
Frankly, Buffett's long-range outlook hasn't
produced during the last several years, where you would have been
far more successful following O'Neil.
Sitting atop one of the largest fortunes
in the world, however, Buffett easily casts aside short-term setbacks.
You can't ignore this man.
One of Buffet's suggestions that Dr. Voyageur
uses all the time is to invest in what you can experience.
You know product quality from first-hand
use. You know how you have been treated by customer services.
Whether products arrive on time. How well-trained and competent
and friendly are those who serve you in stores. Products selections.
Out of stocks. Cleanliness. How crowded is the mall for this time
of year. How warm or rainy it has been. And, on and on.
Consequently, you're on your way to making
The Intelligent Investor: A Book of Practical Counsel by Benjamin Graham with a preface by Warren E.
Buffett gives an excellent introduction to the techniques Buffett
has used so successfully.
Best wishes for great success!
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