How to Train for Investing in the Stock Market
The bad news is, learning to invest in the stock market can be a long, time-consuming and often confusing endeavor. The good news is, there are mountains of resource materials available to help novice investors learn the trade. Being as much art as science, stock market investing can be a minefield for the uninitiated. But knowing where to look, who to listen to, and which resources to trust can get you off on the right foot. Reading, research and listening to veterans are the keys to laying a good foundation.
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Instructions
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Read and research. Go to the library and check out some stock market investment books, such as Ben Graham's 1934 classic, "The Intelligent Investor." Read contemporary books on investing, too. Online reading is great, but you can only gain in-depth analysis and historical context through a more leisurely approach. Make it a daily task to read current financial periodicals and newspapers such as the Wall Street Journal, Forbes and Business Week. They provide a well-rounded informational base for stock market investing, including news stories, business analysis and opinion pieces.
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Visit online financial and investment sites. Many standard financial magazines---such as Forbes and Business Week---have corresponding online sires, and other sites, such as Bloomberg, offer in-depth and up-to-the-minute financial news. While you're online, make a point of visiting educational sites. Many resources are available for beginning investors. The New York Stock Exchange, for example, provides an "Educational Materials" site for investors and would-be investors (see Resources). Other sites offer investor basics and primers, from established market investment strategies to glossaries of market terms (see Resources).
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Take classes. Most community colleges offer basic stock market, finance and investing classes. You may already have a college degree, but if your background isn't financial, you may need to learn the basics of stock markets and investing in a formal setting.
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Master the basics. Reading, research and classes may leave your head spinning, so take some time to concentrate on the fundamentals, such as knowing exactly how to decipher a stock table or quote. Yields, dividends, highs and lows, price/earnings ratios and price changes are terms that need to be second nature before you can move forward. You also should know the history of trading, stocks and markets so that today's financial circumstances can be better understood in context.
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Talk to the pros or find a mentor. Visiting local exchanges or simply talking to someone on the subway who you know is an investor can yield valuable information, especially about the nature of the investor profession. People love to talk about their lives, and most are flattered by someone who is interested in their profession. Consider applying for an entry-level position at an investment firm. Some may require a four-year degree for employment, while others may consider college students. You may have to perform cold calls for commission-only pay, or even run errands and make coffee, but being around the market and around investment professionals is invaluable experience. It also will make it easier to pick people's brain or find a mentor.
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Enroll in a paper investment course. Many online sites offer free games and classes that simulate stock market investing. It's an ideal way for novices to get their feet wet with a virtual account. Most sites also offer educational articles and tutorials for beginners that relate directly to the faux investing you'll be doing each day.
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References
Resources
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