Stock Market Books

Investors can use a number of strategies to invest in the stock market. To begin with, they need to analyze market trends, learn about the market in which the companies they are interested in operate, and purchase shares at an appropriate time.

Usually, good companies announce their profits, or their status in the market, at certain times of the year. The prices of their shares tend to increase before such announcements are made. Therefore, investors need to watch out for these periods, and not purchase shares at this time. In other words, it is important to wait for the right ‘Market Timing’ for trading in shares. Some basic stock market strategies for investors are listed below: -

Make a well-planned investment portfolio that satisfies a particular level of risk tolerance.

Keep reviewing and updating the investment portfolio to keep up with market trends.

The technical analysis of stocks helps in gaining better knowledge about a company: its profits, its market capitalization, and its future growth prospects. Equally important is to be able to understand and apply the quantitative measures of the stock market.

Since investing in the stock market is complex, inexperienced investors should always seek help from financial advisors and stock market analysts before committing themselves and their money.

The motto being “Buy Low and Sell High”, always buy shares when their prices are low, and sell them when the price goes up.

Invest intelligently. A sharp sense of the market, along with a good knowledge of the company you plan to invest in, helps in making better investment decisions. Investors should thoroughly research the market in which the chosen company operates.

Long-term vision and planning is vital. Investors should evaluate their capital strength, and set their tolerance limits, before investing in a company. This means, knowing when to hold on to the shares, and when to quit.

It is generally advised to devise and apply an exit strategy cautiously. Investors can make their exit when they have gained good returns over a certain period.

The returns gained from selling the shares of a company can be re-invested in some other, promising higher profits.

Investors should also set their tolerance limit for the amount of loss that they are ready to bear when the market is down. They can exit when their losses approach or cross this predetermined limit. This strategy of limiting the amount of loss an investor can withstand is commonly known as “Stop Loss Limit”.

Another strategy investors can follow is to ‘Buy and Change Frequently’. Market research shows that every company has some limit on the expected gains from their shares. Investors can therefore move out of a stock when they have achieved maximum returns from shares accordingly. It is important to invest in a variety of companies to withstand the losses of a few.

The objective of any investment is to maximize returns while minimizing risks. Diversification helps in maximizing returns from investments in stocks and bonds by managing risks better. Investors ought to distribute their investments across several categories like foreign securities and mutual funds to be on the safe side, and in the process enjoy good returns.

The 10 dumbest things investors say to advisors.

1} When my investment gets back up to what I paid, get me out.

This is surely a big mistake. That stock has absolutely no idea that you’re waiting for it to go up so that you can sell.

2}The stock is selling at $3.00 a share. How much can I lose?

$3 multiplied by the number of shares.

Oh yeah, don’t forget to add in commission.

3} I want to buy shares of XYZ Company. Three years ago, they were selling at $60; now the stock selling at $5.

You can actually make a lot of money investing in good companies when their stocks are out of favor (go to dictionary – look up: “Warren Buffett”). You cannot make money buying junk just because it’s cheap.

(Same dictionary – lookup “cheap junk”).

If this creates confusion – please see item 2.

4} The stock is up 10 % this past month.

It’s too high, I can’t buy it now.

Have you ever heard of a long-term uptrend? Just because you missed the bottom doesn’t mean you missed the boat.

I’ve heard that the shortest time measurable by man is the time between when it’s too soon to buy a stock and when it’s too late.

5} I paid $60 for that stock 3 years ago. Today it’s selling at $4.

I can’t afford to sell. I don’t want to lose so much.

I’m just guessing here, but did you say the same thing at $30? $20?

6} I bought the stock at $10 and now it’s $35. I have too much profit.

I can’t sell here. I don’t want to pay so much in taxes.

My wish for everybody is that next year you have more than twice the profits and that you have to pay twice as much in taxes.

7} I never sell an investment at a loss. I’m a long-term investor. Eventually, they always come back.

Ever heard of ENRON? Pan American Airlines? Polaroid?

Penn Central Railroad?

If I were to be your advisor for the next 20 years, I GUARANTEE you that you will have losses. Losses are a very important part of a successful investment program. Since the perfect human hasn’t been created yet, the perfect advisor hasn’t been created yet. Expect to have some losses and plan accordingly.

8} Sell my utilities; buy DOTCOMS.

Stock brokers heard this, a lot, just a few short years ago. Every up cycle investment advisors are instructed to sell safe, but dull investments and buy something with sex appeal that’s moving. The worst possible thing has happened – one of the clients’ friends or acquaintances is making more money than they are.

It’s the CINDERELLA story. They’ll look great for a short time. Then, the clock strikes “OVER” and their limo turns back into a pumpkin.

9} I know as much about the stock market as any broker.

What would you think of me if I came to your place of business and told you that I know as much about your business as you do?

Can you outperform a professional in the short run? Absolutely.

You would never say this to your doctor, lawyer or accountant.

You wouldn’t even say that to your butcher or your barber. Stock market investing is the only profession where the amateurs think they know as much as the professionals because they might have picked a winner at one time.

10} That total stranger made the investment sound like such a great idea.

Of course he did. That’s his job.

Do you remember your mother telling you “Don’t talk to strangers.”?

When was the last time you ran with scissors?

If you develop the practice of giving your money to strangers, sooner or later, you will come to harm. Or, as Al Capone used to say “Anybody found sleeping in the trunk of a car, deserves to be shot.”

Value. The Intelligent Investor’s Guide to Finding Hidden Gems on the Sharemarket

Product Description
Charting is a complex and sometimes derided world, but one that nonetheless commands an enormous following. Some basic knowledge of charting is essential for any keen investor, and this fully revised and updated edition of Alistair Blair’s Guide to Charting is the independent, introductory overview of technical analysis for the private investor. Guide to Charting is packed with purpose-drawn charts and worked examples, and explains in detail how charting theories wo… More >>

Investor’s Guide to Charting: Analysis for the Intelligent Investor

Product Description
This book explores charting from the viewpoint of an outsider. It explains in detail how charting theories work and gives you all you need to start practising technical analysis. Unlike other books on the subject, it puts the charting technique inton context. It compares technical analysis with fundamental analysis, and the records of some renowned exponents are examined. In a unique section, technical analysis is applied to recent price charts for each of the to… More >>

“Investors Chronicle” Guide to Charting: An Analysis for the Intelligent Investor