Many investors are willing to put their money on the line, investing in various stocks without doing objective market analysis and looking out for possible traps. Even few simple stock investing tips can save you $1000s! Here are some simple, yet real stock investing tips:
- Never buy stocks during a market down trend, markets have a strong tendency to make major lows in March and October, if the trend is down in the preceding month you better watch out until these two suspect months register a well established low! Regardless of the month however, a down trend must be avoided all together since it will influence 75% of the listed stocks, even the stocks that will rise during a market down trend will have limited gain.
- Never invest in the company you work for! Contrary to popular belief, this is not a wise thing to do, if the company goes bust you will lose both your job and your investment capital! If your boss says that by investing with them you ‘help protect your own job..’ just agree to disagree… fancy talk does not guarantee anything. You must avoid investing in your company, in your industry and any related industry that is likely to underperform in case of a recession where you risk getting laid off.
- Don’t listen to your broker! Most brokerage firms are biased and are often paid by companies to overrate their stock so that you will invest in it. When it comes to stock investing there is no such thing as an expert. We have always seen all sorts of brokers, investment analysts and experts testifying before the SEC for all sorts of bubble stock scams.
- Watch out for the 200 day moving average! Most often, most stocks will be tested at their 200 day moving average because that’s where institutional investors will decide whether to buy them or not, and you better invest in the same direction as them:
See how QCOM stock had its trend determined by the 200 day average at many points:
The bottom line about stock investing and our stock investing tips:
You have to realize that it is the difference of opinion that makes markets work, and therefore there are no real experts you can trust! If you pick any 10 investment analysts and see their advise, all 10 will give you 10 different tips. One analyst will claim that we are in a bear market, another will claim it’s a bull market, and another will say that it is a bull market but will favour a completely different sector of stocks… Their statistical records are appalling, most market know-it-alls, have a success history of less than 40%, and even statistically proven, right investors such as Warren Buffet and Jim Rogers can often give you completely conflicting stock investing tips, so the reality is that no one really knows where the stock market is going!