what are the basic principles in investing in the stock market ? and what are the best ways to do so ?
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- Follow your instinct , When the market in Falling , pump in yout money and when the market is gaining , sell your stocks. Make lot of research on companies and policies , that you want to invest. "dont follow the crowd" Get yourself a Financial planner like american express, worth the Bill.
- Stick with companies you know and trust and companies that sell quality products. Look for up-and-coming markets like biotech (Genentech - ticker "DNA" was at $20 a year ago, now it's at $90) or companies that stand out in a specific sector (called "best of breed"). Don't "bottom feed" stocks that appear to be cheap or "chase" what other investors are buying. Be disciplined and follow your own program. When you get nutty is when you start losing. Use the "PE" ratio as a guide. Anything with a PE of 20 or so is fairly priced but might be a long term buy and hold. Anything with a PE over 60 or so isn't priced (stock) fairly in comparison to the earnings (per share) it generates. That doesn't mean "don't buy" but it translates into more risk. And one more thing. Just win, baby.
- DO NOT do individual stocks. Buy no load mutual funds. Vanguard or Fidelity is a good choice. See the list below.
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