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Are you plagued with annonamous stock tips that are mysteriously sent to your email? Who sends us this garbage and what do they hope to gain? Do they actually think that we would buy or sell a stock based on a tip from someone we don't know?
Well the truth is that everyday thousands of unsuspecting people do exactly that.
There are two parts to making a good investment decision (assuming your goal is to hold the stock in your portfolio for some period). The first part is to identify a company with a sound business and good prospects for future growth. Do your own research.
The second part is to identify a price that makes sense for where the company is and where it is going. You have to pay for both. The trick is to not pay too much for either.
Although there are numerous formulas to help you determine current and future value, figuring out the right price to pay for a stock remains as much art as science. In subsequent articles, I explain these formulas and how to use them. However, part of learning to invest in stocks is developing a feel for what makes sense.
When you are investing hard-earned dollars, it makes sense to take your time and get comfortable with your decisions. If a stock doesn't "feel" right, take a pass. There are many opportunities, so you don't have to jump at the first, second, or twentieth stock you analyze.
If you pass on a friend's "great stock," and it turns out to be a home run, congratulate them for their good fortune, but don't second-guess yourself. For every home run, there are 20 strikeouts.
A wise investor once said, "One of the best ways to make money in the market is to not lose it."
After examining and testing hundreds of money-making opportunities and work at home programs, ONLY ONE brought in a paycheck that covered all my monthly expenses.
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