Having started investing myself recently (in the past 6 months) I've come quite a long way
up the learning curve because I've jumped in with both feet. I've read as much as I can.
I've watched CNBC when I can. I've read some more. I've played in my own "rotiseree"
league by picking stocks and not spending money on it. Then, when all is said and done, I
read a bunch more. Here is my step by step and some insights into the market:

1. Read Read Read. Cramer (all 4 books). "The Buffett Way". Books by Peter Lynch. The big
ones are all recommended on Amazon's top lists.
2. Read some more (online). TheStreet.com (RealMoney.com if you can afford it).
SeekingAlpha.com. Wall Street Journal. BLOGs. Pretty much anyone actually in the game
investing will have good insights. If they aren't in the game, it's MUCH harder to
actually see what and why things are happening.
3. Get a cheap broker like Scott Trade or King Trade. The cheaper the better. Most of my
information and research comes from other people and free resources.
4. Get into a stock picking simulator and get a feel for stocks. Learn techniques like
averaging down. I think this step is very important. You don't go from playing backyard
baseball to the majors in one fell swoop. Try your strategies out first. As you find out
what works, you can apply this to real capital. Remember, investing isn't a race.
5. Watch TV. I like Mad Money on CNBC. Fast Money is a great too.
6. THIS IS THE MOST IMPORTANT SUGGESTION: LEARN PATIENCE AND DISCIPLINE. Discipline will
keep you from making bad trades and keep your losses as little as possible. Creating a
strategy (from Reading) and STICKING TO IT are key. The best strategy in the world won't
get you anywhere without discipline.
7. Diversify. This is probably the 2nd most important lesson. You don't know what will
happen on any given day. Why put all your eggs in one basket. Greed is good, but don't be
gluttonous. You will be burned. Ask everyone 100% vested in tech in early 2000.
8, Last, and only when you're ready to lose money (as everyone who has ever played the
market has lost at some point), make a pick, give your reasons (make yourself explain it
to your significant other and have them challenge you on it) and go in for the kill. I
have found that, though the other steps are key, actually being in the market is where you
learn the most. It's the battlefield where you test what you've learned and if you think
you know as much as you do. You're going to be in the ring with people who have a lot more
money than you and they can actually move a stock. You're just along for the ride, so
research and choose wisely! The stock market can be non-intuitive to a beginner. When
stocks go down is the time to buy. When they go up, you sell. I know, sounds dumb, but the
more you work at it, the more it will make sense.
9. OK, this is the last one :-) Read some more. When you buy, that's the time you really
have to pay attention. Pay close attention to your losers as they are the ones you have to
watch to be sure you still believe they have a reason to go back up. As Cramer says,
"Winners take care of themselves."

For reference I'm a 26 year old biological engineer. I spend 20-40 a week doing research
and investing. It's a lot of work but when you do it right, it pays off big time. Good
luck!

Last edited on: 02-16-2007 11:49 pm

Hi two of us,

Seldom do I hold long term. Most positions are held 6 mos or less, and I do leave some
profits on the table more often than I would like due to the stock price continuing higher
after I sell, and I'm working on that. However, I seldom take a big loss and that is more
important to me. I monitor positions after they are sold for at least a month to see if
they continue to go higher, or settle back down. Often a stock I like will drop back and
I'll buy back in if the fundamentals are still sound, I used to go all in or all out, but
Cramer has taught me the lesson of "trading around a core position" to better deal with
the uncertainty. The basic principle is sell into strength at high prices and buy back on
weakness at lower prices, but maintain a core position. LMS, CMI, IVAC and XING worked
well in the last half of 2006.

One thing I've learned (am still learning) is that when you are most afraid of a falling
stock is when you should probably be buying, not selling it -- after you've done your
homework and understand why you think it is a good buy. And when you are giddy with gains
and patting yourself on the back on your brilliant stock pick, you should start selling at
least part of your position.

Stock trading/investing is my 2nd job! I spend about 10 to 20 hours a week on the stock
market, and at least 20 minutes early each morning to do a cursory check of all stocks I
hold for news and earnings estimate changes.

I also read the quarterly reports and listen to the conference calls -- or at least read
the press release put out at end of Q -- for all holdings. These are the source of really
good ideas.

The conference calls are recorded and retained for several weeks so you don't have to
listen live. When listening to the recorded calls, you can increase the playback speed by
1.5 to 2 times (use windows media player) and get through them quicker! You can also pause
and reply sections you want to hear again. Listen to the IVAC and BRLC calls from the
past couple of weeks.

Good Luck!
TW (Portfolio: TW_Open)

Last edited on: 02-12-2007 07:30 am

Laycie, BTW

If you are holding the three stocks mentioned on your portfolio page, those look like
solid companies to sit with as one learns how to invest. It is good to start with only a
few stocks. It keeps your risk smaller while aloowing you begin to see how markets work
over time.

Be patient and avoid fear and greed. Better yet, watch where others may create
opportunities through their emotions.

The most important thing i can tell you about beginning investing is this:

There are no cheats, secrets or tricks. Learning to invest takes a long time just to get
the basics (years) and you will never stop having a lot to learn.

Some tips to start:
-Be in the market with a very small buy or two as we only learn buy doing. Stay small as
you are likely to do poorly at first.
-Read and research as much as you can and do not rely on one source for the information (I
enjoy Real Money and Cramer's writing, but it is limiting to only hear one voice).
-Never listen to what others tell you to buy or sell.
-Remember that patience wins and emotion loses.

Good for you for trying to learn investing and asking for help. There are a lot of smart
people out there and trying to learn from them is a good thing. Also, learning to think
these things through on your own is even better. No one is going to look after your
interests better than you. The stock market and everything related is about other people
working to make your money theirs....EVERYTHING! BE SKEPTICAL of everything.

Read several books: Cramer's Real Money and and Mad Money are a good start. Ken Fisher's
new book, "3 questions..." is an excellent book, too. Neither of these guys have all the
answers. Also get a book on fundamental analysis. Read the business section of your
newspaper every day. Business Week is a good magazine, and their web site has many
valuable free sections. For research, Reuters is a great site, Yahoo finance is good,
thestreet.com is good. These all have free sections with valuable news and info.

Make a financial plan and budget to get and keep your finances under control. Motley Fool
and Susie Orman have some good books and web resources for that. If you have any credit
card or other high interest debt, your first priority is to get that paid off before
investing/trading in the market.

Set your financial and personal goals. What do you like to spend your time doing? How
much money do you need (and want)? Make a long term plan and a short term plan.

If you think the stock market is an easy way to make money, you are going to be
disappointed. It takes a lot of time and work and some luck. It takes discipline and and a
calm disposition to do really good. You have to separate your ego from the market.

Learn to cut losses quick, don't hold a losing position. If a stock is not going up, you
are losing money. Learn to take profits. Don't try to optimize trades by catching tops
and bottoms. You and no one else knows what is coming next; people with experience and
understanding can make a better guess. You need to develop that experience and
understanding. Make pretend trades now - you cans start today - on paper to start getting
a feel for it. Keep a journal of why you buy and sell, and go back to review it every
week or month. What went well, or didn't and try to figure out why.

You can do it...I've been studying the market for 15 years and have had a few REALLY good
years, and a few with small losses. You can see what I'm up to at this site, in the
portfolio TW_Open. I update it every week or two, so it isn't totally current.

Good luck!
Tom

Ken Fisher preaches 100% equities, he can explain the argument a lot more eloquently than
I can. All I can say is I share his view and he's hands down one of the best ever. One
thing though, of course I would never suggest anyone have "all their money" in the stock
market but the money that you want to invest with, absolutely.

I definitely believe in diversification. I trade stocks long and short positions but the
bulk of my money is in mutual funds (a variety of sector funds), Certificates of Deposit,
Bonds and I keep about $10,000 in cash in a money market account. Anyone who puts all
their money in the stock market are in for a hugh loss if something triggers a sell off.
I agree with mock portfolio!

Is there not one other person that sees the importance of diversification and preserving
wealth?

God or Warren Buffett, you don't have the ability to predict the future. That's why you
should diversify, even if it's just a little bit.

Truly, does everyone holding 100% equity portfolios know for sure that - in the future -
stocks will continue to return 8%-10.5% annually? Do they know that they will be the best
perfoming asset class for sure? Do they know when the market will go down, and when it
will rise back up again? Do they know when the next terrorist strike might occur, knocking
down the market in the process? Do they know....

That's the point of diversification - to protect you from what you don't know.

I think we've pretty much fully discussed this topic. My point is that - for everyone out
here that is just starting out - don't rush out and put all your savings in just a few
stocks. Do you really want to bet your future on something as volatile and sometimes
irrational as the stock market? Please, just understand teh power of gradual compounding
and accumulation of wealth, and don't be overly greedy or egotistical. It amazes me that
the overwhelming majority of this website seems to share this "100% equities,
overly-aggressive speculative-trading" methods.

" If you build a portfolio around a good benchmark like the S&P and strategically
underweight and overweight certain sectors, you'll never get knockedout and you will
dominate bonds. Will you have more volatility, absolutely. But if you can stomach it, who
cares. I personally dont want half my portfolio going up and half of it going down in
order to have some sort of optimal risk level that some academic came up with. That's for
me though. I'm comfortable with my method and don't mind taking on more risk."

I am all to familiar with such techniques, my friend. These are the same techniques used
by mutual funds and other similar investment vehicles around the world... Ironically,
there was a post above (I read it the other day... maybe last night) about how some mutual
fund lost them like 50% of their money during the tech bubble pop, and that's why they
won't ever go back to mutual funds again. Well, the overall stock market fell by 50%
during taht time... that's why the mutual funds fell by 50%. When the market moved back
up, I bet the mutual fund probably moved up right along with it. That's the thing... all
equities - over the long run - will move with eachother. Unless you are