Getting started in stocks and purchasing shares can be confusing for the beginner. Stock market investing can be very profitable, though, so it pays to learn some basics. However, once you master the basics, it can also be great fun – even for a beginner.
Stock market investing can seem daunting because it is plagued by jargon, which is often the hardest part to come to grips with. To overcome the mystique of stock market terms and jargon, you can buy specialized dictionaries that explain them in simple terms. There are several offered on Amazon, and you can get Wall Street Lingo: Thousands of Investment Terms Explained HERE. This, as much as anything, will help any new investor gain confidence by letting them in on the “secret code.”
So, what are the basic principles of investing in shares as a beginner? Stock market investing comes down to finding hidden value in a company or companies that other people have not spotted yet. That will enable the new investor to buy those shares at a lower price and then resell them for a higher price later.
To help you spot those golden nuggets of hidden value, you can either get the help of a full-service stockbroking company, such as Charles Schwab or begin to learn how to read stock market indicators for yourself. It is beyond the scope of this post to go into depth about these indicators, but in simple terms, they are methods of seeing if a stock is following a particular trend either up or down.
There are many different ways of measuring these trends, with some becoming very convoluted, but almost all of them are designed to find patterns that show that a stock is worth investigating further. A few weeks ago, I posted about screening and valuing stocks in fairly simple terms. To read more on that process, click HERE.
If you are new to investing, you might want to consider employing the services of a full-service broker and ask them to explain to you how they have come to the conclusions they have. You could then try to discover what made them recommend buying or selling that individual set of shares by “reverse engineering” using some of the technical indicators. It is always useful with any investment to try to discover the “why” of the investment as this will help you repeat your successes and avoid your failures again in the future.
Be careful, though, because even for the beginner stock market, investing can become addictive!
Suppose you want to know more about investing and how the stock market functions. Get my book on Amazon. If you need assistance with getting started investing or developing an investing plan, reach out to me directly if you are in or near the Metro-Nashville area. If you are outside of Tennessee or wish to work with someone closer, seek out a qualified fee-only Registered Financial Consultant.
