Advice - Stocks and Shares
This page is still under construction, but visit the book
reviews, which may give you a new insight and help you avoid the pitfalls
In the meantime, a few do's and dont's for successful investment...
- Never listen to "tips" (except this one). Whoever they come
from, and even if that person genuinely think they are helping you,
the chances are the news is already fully built into the price. Tips
are dangerous and will lose you money.
- Do your research. Think about why you want to buy or sell something
and take notes of the reasons. Routinely reassess the original reasons
and see if they still apply.
- Don't sell your winners. One of the commonest mistakes is to keep
your losers and sell the winners. This is a surefire way of making sure
you always lose.
- Just because a share has lost 50% of its value doesn't make it "cheap".
Stocks usually fall for a reason, so don't buy a falling stock on the
hope of a rebound.
- Don't ignore commodities. Oil, Gold,
Silver, coal or even coffee. Commodities
are physical and supply is limited. They can be an effective risk-reward
play, benefiting from safe-haven status in bad times, and benefiting
from high industrial demand in good times.
- "The trend is your friend". Whatever you may believe about
what the market should be doing, it can keep going against you
for a lot longer than you can remain solvent. Don't fight the trend.
- Be prepared to take a loss. Sell your losers fast. In fact set your
stop loss when you buy and then reassess it regularly. Take the hit
and move on to riper pickings.
- Take risks, but be sensible. Investing should be fun, and if you want
safety stick your money in the building society. However be careful
to monitor your total exposure and get out without taking big losses.
- Don't ignore macro-economic forces. Whether its political instability,
oil prices or inflationary forces, don't ignore the factors that could
move the entire market up or down. Your shares could be fighting an
- Be contrarian. Don't follow the crowd. Dare to think differently.
Think about buying when it is the "stupid" thing to do. Think
about selling when everyone says prices can only go up.
- Do your own research. Use the web, use books,
and even phone up the company secretary. Know your investment.
- Its might be a cliché, but the adage "If it sounds too
good to be true, it probably is", will always apply.
- Don't kill your profits on commission. Use a well-established broker
and look at spreads as well as commission. Spread-betting
or CFDs are a cheap and tax efficient
alternative to owning shares.