How To Buy Stocks

Forbes Special Situation Survey Newsletter
The Prudent Speculator Newsletter
They advertise rarely. It's been around 50 years. The successful people already have it.

We're fortunate to have an article by stock market guru Ian Bradshaw. He is of the opinion that it's darn difficult for the new investor until they have mastered the fundamentals, like what is a bull and a bear market? Is it a woodland shopping mall? He has five recommendations for the stock market magnate in the making...

• Purchase Intelligent Investor by Ben Graham. Bradshaw says this is one of the very best books ever written to explain what the stock market and investing is all about, and putting the information to use with Graham's "Value Investing" theory.
• Grab a free account with Yahoo Finance. It's a compendium of useful research tools as well as your doorway to the Yahoo investing community.
• Sign up for a free stock broker account. Just go to your favorite search engine and type in same. You'll find all sorts of offers for free trades, (at least until they get you hooked) so that you can practice your new avocation. Along with the account, you'll also find many of the same kinds of tools that you can get for free on Yahoo.

After you have successfully joined and studied, Bradshaw recommends you start putting your research to use, and that is well and good, if you're well schooled.

So, what are you likely to learn? Perhaps the first thing is that you should never invest what you can't afford to lose. Hundreds of murder mysteries in print and on television have begun with stock trades going bad. Think on that before you blow all of next year's butter and egg money on a fancy stock tip.

Next, your researches should lead you to an investment system you can stick with after you have mastered all the terminology of stock trading. Get out your trusty spreadsheet and populate it with some stock picks to follow and see how you would have done had you plunked your money down. Run your program for a month to see how you fare. This will give you some idea of what to expect when you get real. Set a mock budget, mock invest, and see how it goes. If your chosen system is a dud, nothing lost. Choose another and repeat. Only when you are satisfied, then proceed with hard cash.

Get in the habit of researching everything you can to learn as much about the stocks you plan to buy. It's good practice, and you'll build confidence and learn the methods of sound investing in the process. With success comes confidence. One stock guru said that stock investing isn't rocket science, though they use a lot of the same terms, like going up and going down.

If you're going it alone fine and good, but should you decide to employ a stockbroker, you need to spend quality time inspecting his bona fides the same as you do when researching stock picks. Don't hesitate to question rates and results. It's only good business.

Finally, you must practice patience and restraint. Many a good man ended his career in a leap from the 38th floor because impatience got the better of him and he blew his bank account on a risky stock investment. He may have even blown his life insurance payment as well, leaving the family nothing but an interesting story to tell. There is way more than enough sad stock stories for you to read about, to not wind up repeating them yourself. Dip a toe into the water first, and if it's too deep, keep your certified floatation device handy...which, in stock purchasing terms is common sense.

Of course, there are two ways you can do your part to do your utmost to insure stock happiness and that is to invest in The Prudent Speculator, a Forbes Publication, and the Forbes Special Situation Survey. As investments go, this is pretty much a no brainer. Buy at a low cost, and reap HIGH rewards!

Further reading in this series:

• The Highs and Lows of Investing
• Making Money Trading Stocks Online