Top 5 Stock Market Tips for New Investors

Business person chart help red ink to profitabilityThe stock market is an amazing tool for anyone looking to take control of their earning potential. It’s the place where dreams are made, where companies can double in value overnight and a handful of savvy moves can take you from the brink of ruin to the peaks of financial success. Yet it’s also the setting for your worst nightmares, when one or two bad decisions can literally bankrupt you, erasing years of work and your life’s savings in minutes. With big risk comes big rewards, which is why the market will never disappear. But if you’re interested in getting involved in investing, your best move is to learn as much as humanly possible. The well read investor will always beat the one who goes by gut feeling. So here are five of the top stock market tips to help new investors stick in the game, and hopefully find some measure of success.

First of all, do your homework on any stock you are considering. These are all publicly traded companies, which means all of their financial records are on file for your perusal. And since we live in the age of the internet, you can also explore any article that’s ever been written about said company. It’s up to you to do this research, and it’s more than worth your time. Until you understand that company inside and out, you cannot truly make an educated decision about their stock. This extra effort will help you separate the ‘hot’ stock that’s been overvalued from the one that will provide you long term growth and security.

Since this will take a lot of effort, remember that you don’t have to hold a ton of companies to be a true stock market investor. Hang on to only a small amount of names at a time, and invest in larger amounts of those you have vetted completely. This will help you avoid some of the more frequent ebbs and flows of the market, while rewarding all of your diligent research efforts.

At the same time, you should pay a certain amount of attention to business news, and use it to guide your choices. You must always take media pundits with a huge grain of salt, but if you see the majority of them talking down a company you hold a lot of stock in, it may be time to listen. The same goes when a CEO or other major player leaves a company. It’s never good news when the captain won’t hang around to go down with the ship. There will always be leaked corporate announcements or projections that attempt to strike fear in the investor’s heart. But when you see a real move that’s this significant, pay attention.

You can avoid some of these concerns by only investing in the companies that lead their industries. Keep an eye out for these near monopolies, the household names that are loved and respected on an international level. Companies such as Apple, Time Warner, Wal-Mart and other industry leaders will always be the most expensive stocks to purchase. But that high purchase price comes with peace of mind. You know that they will weather any storm, and maintain their value regardless of what news story or projection may come out.

With that in mind, consider only buying stocks that you’d be willing to hold on to for the rest of your life. You probably have a vision of the busy trading floor, with power brokers moving thousands of shares an hour, each and every day. But that isn’t how most investors make a solid return. In fact, your goal should be predicting the strength of a stock to such an extent that you don’t have to sell it ever. It becomes a cornerstone of your portfolio that you can hold on to in good times and bad. The trading academy may sing the praises of the next best thing, but holding on to certain stocks will insure that you don’t lose your shirt, and can continue playing the market for the long haul.