HOW TO INVEST IN STOCKS ? (3)

• Strategic Stock Trading: Master Personal Finance Using Wallstreetwindow Stock Investing Strategies  With   Stock Market Technical Analysis
• The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
•  Understanding Stocks
•  Stock Investing For Dummies
•  The Neatest Little Guide to Stock Market Investing, 2010 Edition

Avoid stock tips. Do your own research and do not seek or pay attention to any stock tips, even from insiders. Warren Buffet says that he throws away all letters that are mailed to him recomending one stock. He says that these salesmen are being paid to say good things about the stock so that the company can raise money by dumping stocks on unsuspecting investors.

• Likewise, don't watch CNBC or pay attention to any television, radio or internet coverage of the stock market. You should focus on investing for the long term, 20 years, 30 years, 50 years, or more, and not get distracted by short term gyrations of the market.

Invest regularly and systematically. Dollar cost averaging forces you to buy low and sell high and is a simple, sound strategy. Just set aside a fixed sum of money, such as $1000, to buy stocks every month. Set aside a percentage of each paycheck to go into savings. Always leave at least six to 12 months living expenses in cash for emergencies. And remember that bear markets are for buying. If the stock market drops by 20% or more, move more cash into stocks, and move all available discretionary cash and bonds into stocks if the stock market drops by more than 50%. The stock market has always bounced back, even from the crash that occurred between 1929-1932.

Consider selling portions of your holdings as a stock appreciates significantly, at least 50% to 300%, based on quality of the stock. Use upper limit for better quality stocks. Letting your winners run as long as the story is still good will increase your long-term chance for success. Warren Buffet says that you should hold winners forever, but if the price-to-book gets too high (above 100 is too high), you should consider selling the stock.

Consult a reputable broker, banker, or investment adviser if you need to. Read as many books and articles as possible written by experts who have successfully invested in the types of markets in which you have an interest. You will also want to read articles helping you with the emotional and psychological aspects of investing, to help you deal with the ups and downs of participating in the stock market. It is important for you to know how to make the smartest choices possible when investing in stock, and even if you do make the wisest decisions, to know how to deal with loss in the event that it happens.

Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies.

HOW TO INVEST IN STOCKS ? (2)

• How to Get Started in Stocks 
• Everybody's Guide To Money Matters: With A Description Of The Various Investments Chiefly Dealt In On The Stock Exchange, And The Mode Of Dealing Therein ...
• The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market 
• You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits
• Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market (Wiley Trading
• How I Made $2,000,000 in the Stock Market 
• Fire Your Stock Analyst!: Analyzing Stocks On Your Own (2nd Edition) 

Think. Warren Buffet says that after you think, think again. Warren Buffet says that if he cannot fill out on a piece of paper several reasons to buy a stock, then he will not buy it.

Practice. Clearstation has a free "Paper trade" service where you can buy 40 different stocks and you try your hand at building a portfolio. The simplest method is to set a "stop" a dollar below the current purchase price so that you get rid of all the weeds (stocks that are dropping). You hold onto winners and you then get a portfolio of stocks that are trending up (you kept all the winners).

Open a stock brokerage account with a discount broker. No specific recommendation can be offered here, as the stock brokerage business is a rapidly changing field. Trial and error is probably the only way to find a good broker, but you should do your own due diligence by checking out their site and looking at reviews online. The most important factor to consider here is cost, i.e. how much commission is charged, and what other fees are involved? Discount brokers generally charge commissions of less than $10/trade, some as low as $1/trade, and some offer a limited number of free trades per year, provided you meet certain criteria. Other than costs, you should also consider whether dividend reinvestment is offered (which is the best way to build up your positions), what research tools are offered, customer service, etc.

Buy a small portfolio of stocks. Blue chip stocks are stocks of market leading companies known for quality, safety, and ability to generate profit in good times and bad, although they are generally fully priced and difficult to buy at a bargain price except in a severe bear market. Stay up to date with different value investing websites such as Motley Fool or Fallen Angel Stocks to see what kind of deals are out there. If you do not have the time or inclination to learn about individual stocks, buying and holding no-load, low expense index funds forever using a dollar cost averaging strategy is best and outperform most mutual funds. The index funds with the lowest expensive ratio and annual turnover are best. For investors with less than $100,000 to invest, index funds are usually best. If you have more than $100,000 to invest, however, individual stocks are generally preferable to mutual funds, because all funds charge fees proportional to the size of the asset. Even the lowest fee index fund, Vanguard Total Stock Market Index Fund (VTI), has a 0.07% annual expensive ratio. This amounts to only $70 over 10 years for a $10,000 portfolio, but $700 over 10 years for a $100,000 portfolio, and $7,000 over 10 years for a $1,000,000 portfolio. If the expense ratio were 1.50% (typical for an average mutual fund), the fees would amount to $15,000 for a $100,000 portfolio, and a whopping $150,000 over 10 years for a $1,000,000 portfolio.

Hold for the long term, at least 5-10 years, preferably forever. Avoid the temptation to sell when the market has a bad day or month or even year. On the other hand, avoid the temptation to take profit even if your stocks have gone up 50%, 100%, 200%, or more. As long as the fundamentals are still sound, do not sell. Just be sure to invest with money you don't need for five or more years. However, it does make sense to sell if the stock price appreciates too much above its value (see below), or if the fundamentals have drastically changed since purchase so that the company is unlikely to be profitable anymore.

Hold onto the winners and do not add to the losers without good reason. Peter Lynch said that if you have a garden and everyday you water the weeds and pick the flowers, that in one year you will have all weeds. Peter Lynch said that he was the best trader on Wall Street for 13 years because he picked the weeds and watered the flowers.

HOW TO INVEST IN STOCKS ? (1)

• The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit (Little Books. Big Profits) 
•  How to Make Money Selling Stocks Short (Wiley Trading)
•  Stock Trader's Almanac 2011 (Almanac Investor Series) 
• How to Trade In Stocks
• Explosive Stock Trading Strategies 
• Understanding Stocks 
• TAPCO Enhanced Stock Wrench .223/ 
•  Rough Stock 
• Finding #1 Stocks: Screening, Backtesting and Time-Proven Strategies (The Zacks Series) 
• Stock Market Wizards: Interviews with America's Top Stock Traders 

Save. Before you can invest, you need money. Don't start investing until you have a secure job and six to twelve months of living expenses in a savings account, as an emergency fund, in case you lose your job.

Read. Before you start investing, you need a basic understanding of what a stock is, what it means to invest, and how to evaluate stocks. Get some basic books in stock investing. Here are some of the best books and resources for all serious investors:

• The Intelligent Investor by Benjamin Graham. Get this on audio CD and listen to it a few times and it will make a lot of sense.

• The Interpretation of Financial Statements by Benjamin Graham & Spencer B. Meredith

• Security Analysis by Benjamin Graham & David Dodd

• Common Stocks and Uncommon Profits by Philip Fisher.

• One up on Wall Street and Beating the Street, both by Peter Lynch. They are easy to read, informative and entertaining.

• The Essays of Warren Buffett, a collection of Warren Buffett's annual letters to shareholders. Warren Buffett made his entire fortune investing, and has lots of very useful advice for real people who want to invest. Warren Buffet has these online and you can also read these online free: http://www.berkshirehathaway.com/letters/letters.html

• Buffetology, The New Buffetology and The Tao of Buffet, all by Mary Buffet and David Clark. These are basic books on the investment methods of Warren Buffett. The New Buffetology can be purchased on audio CD.

• The Secret Code of the Superior Investor, by James K Glassman. This is an excellent treatise on the importance of buy and hold.

• Motley Fool and The Tycoon Report, both excellent online publications

• www.kiplinger.com

• Wikinvest.com is great place to find information on companies and concepts in the market. It is also helpful to conduct due diligence on the investment information sources themselves. Check out the performance and advice of websites, newsletters and blogs. One resource to conduct this research is at Greedreviews.com