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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 of investing.

In the meantime, a few do's and dont's for successful investment...

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. "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.
  7. 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.

  8. 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.
  9. 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 uphill battle
  10. 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.
  11. Do your own research. Use the web, use books, and even phone up the company secretary. Know your investment.
  12. Its might be a cliché, but the adage "If it sounds too good to be true, it probably is", will always apply.
  13. 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.



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