Stock Market Investing For Newbies

By Gilbert Stockton

You don't have to be smart to make money in the stock market, you just need to be persistent and study the stocks carefully. When you do stock market investing, you follow a few procedures and repeat them over and over again.

Select the type of investing that you want to do. You have two selections.

Long term investing: Long-term investors buy and hold stock. They select the stock and build a portfolio that changes only when a stock starts to under perform for the economic conditions. Before they select a stock they investigate the financials and company information and make an analysis and decision based on the growing profits of the company.

Stock market investing for newbies hint: Find a product that you like and investigate its stock. This shortcut leads you to companies that most consumers also like and that leads to company profitability.

Build a long-term portfolio with diversity. Diversity means that you use different industries, locales, and sizes to fill the portfolio. Some should be value stocks and others growth stocks so you have performers regardless of the economy. Study the company financials and see if they returned a continuously growing profit each year and what the management philosophy is.

Stock market investing for newbies hint: Look up mutual funds of various sizes, of both growth and value stocks. See what stocks the funds contain and focus on those to make a balanced portfolio.

Choose a market price to drop a stock from your portfolio. Decide on a down price that you sell to cut the losses. This price varies if everything in the market is down, not just that stock. Adjust the percent by the drop in the market overall.

Short term investing: Short-term investors look for opportunities to purchase stock and intend from the beginning to eliminate them from their portfolio. There are difference in how long and how they choose the stock to pick.

Some short-term investors look for undervalued stock or ones that create new products. They plan to hold the stock until the public realizes the value or the company introduces the product. These investors often specialize in a specific field and know a great deal about the industry that contain the stocks involved.

The second type of short-term investor studies only the price movement of the stock and uses formulas that analyze the history of those price changes. Some use intra-day prices and highs and lows for the day, others use patterns formed over longer periods of time. These investors chart the prices and look for signs that the stock price is one the rise.

Stock market investing for newbies hint: Use a service that does this for you. Many times, they have computers programmed to successfully analyze a multitude of stocks at one time and choose the best one for potential growth. If you want to test a service, try it with penny stocks, one of the more difficult types to track.

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