One of the key factors when starting out investing in the stock market is to educate yourself. Before jumping in and investing your hard earned money be sure to learn whatever you can about the process and the intricacies of investing, If you know of someone who can mentor you that you trust, that’s better and icing on the cake.
Before I seriously started investing money in the stock market I made a point to read and learn whatever I could about stock market investing, the different type of investment strategies, the risk and pitfalls to watch for, and to determine what I was getting myself into. I went and purchased a couple of books by well known investors so I could understand what I was looking at, what I should be lokkinig at, and what to do with the information. Two books that I found helpful were Phil Town’s Rule#1 and Warren Buffett and The Interpretation of Financial Statements by Mary Buffett & David Clark.
There are a few morw out the and you can probably find them on Amazon. But be warned about some books on investing that you may find on the Internet. Specifically, I am referring to those that are “mentioned”/advertized on Twitter, in investment groups on Facebook or Mewe. Now, I’m not trying to say that they are worthless nor am I judging their quality. All I’m saying is that I tend to be suspicious of the authors of these e-books on investing where they mask their true identity behind a Twitter handle or any kind of vague handle. One of the things you should do is vet the author of the book you are interested in. Amazon generally contains a link with the authors name where you can research the author and determine if it is worth getting the book. Most of the e-books on Twitter and elsewhere in the Internet do not because they don’t disclose the authors true identity. Is the information being presented actually from the presented author or are they just rehashing someone else’s information. Maybe, after reading the e-book, you have additional questions or need further clarification on certain points. How do you know if the author is actually qualified to present such financial information?
That would be like seeking medical advice from an unknown source. The person answering your medical question may be someone totally unrelated to the medical profession and yet giving out medical advice. You have no idea how good or bad their information is. Do you know if they even follow their own advice? Without knowing the true identity of the author you open yourself to a number of risks and they avoid any liability/fiduciary responsibility.
Speaking for myself, I would never purchase any book (hard cover or e-book) about investing unless I knew the identity of the author and was able to verify their credentials.
I have previously published articles about being cautious with sources of advice and information here, here and here.
A few days back I saw a tweet that stated that stacks that were selling for under $5 didn’t double in price any faster than those stocks selling for over $100. I responded to that tweet with the following comment: “This is very true. But I can buy more shares of stocks under $5 as long as the fundamentals are solid and the dividends are consistent.”
Well, that comment brought out all of the arrogant investors who felt that THEIR way was the only way. I get responses from “Why does more shares matter? Shouldn’t the total amount of dollars invested be what you look at?” to “…it depends on the company equity dilution plus never invest for dividend if u live in a high tax region like india where dividend are taxed @30 %”
The answer to the first response was – No, because I’m a dividend investor and dividends are what is key to me and my strategy. Doing anything else is just pure gambling in that you hope the stock price goes up. And if you want more shares you have to buy more stocks instead of just re-investing your dividends. This is the way you create a sustainable passive income stream.
The latter responder didn’t seem to know what my investment strategy and assumed that I just invested money willy-nilly into anything that paid a dividend. Again, if they had bothered to take the time to read and understand my investment strategy there wouldn’t have a point of them to bother to respond to my comment. Now I didn’t bother delving into their investment strategy because I wasn’t interested in their strategy. It was obvious that they were a value investor and that wasn’t the direction I was interested in going with my investments.
Why do I say they’re arrogant? Because nobody responded with a question asking my rationale for my statement. Everyone assumed that my investment strategy has to be like theirs. Many of those that responded I would presume were value investors (buy stock and wait for the stock price to increase). That’s fine for them. But that’s not my strategy. They could have accessed my blog (there is a link to it in my Twitter profile) and they would have been able to read the blog entry that detailed my investment strategy here and here. A lot of my tweets are about posts/articles on my blog. To fully understand what I am investing in and how I am investing, you’d have to follow my blog.
Lastly, I am NOT a financial planner or advisor. You need to complete your own due diligence and research in which stocks to buy. You need to determine your own strategy. This last part is important even if you have someone who manages your investments for you. Otherwise, you’re using someone else’s strategy for their purposes and not yours.
Today I signed up with Bloglovin and included this blog. You can sign up yourself and Follow my blog with Bloglovin. My postings will also show up on my Twitter feed..