Getting Started in the Stock Market - Investing 101

February 8th, 2008 1 Comment

As I previously mentioned, I’ve decided to get my feet wet in the paper assets arena. More specifically, the stock market. As a prospective finance major, I figured it’d be a good idea to gain some direct experience and see if I can’t get lucky in the process. So I set aside some of my online profits and opened a brokerage account and began to play around a bit. I’ve learned a lot in the past two or so about both my tendencies and the markets tendencies (or lack there of). I’m not even close to being an expert, but here is my guide to getting started in stocks.

Where do I open an account?

There are a bunch of online brokerage accounts available, and they all have different requirements, fees, and offer different services to investors. Examples are E-Trade, Charles Schwab, Fidelity, Scottrade, and Tradeking. I personally use TradeKing because they only charge $5 per stock transaction, and since I’m not dealing with a lot of capital these fees can make a huge dent into my monies available. If you want a tradeking account you can get a $100 bonus as well (get in touch with me so I can refer you)

Market News

I’ve been trading based solely on my gut, the news, and my logic. The major news sites I frequent

For more community based sites and/or blogs of experts I trust:

ChrisPerruna.com - (Really good. I’ve been familiar with him since he started out.) - He uses a modified CANSLIM method that I plan on incorporating in my investment strategy (more below)
The Kirk Report
Wallaston Investments
SeekingAlpha.com
The Up Down - Great place to make a fantasy portfolio

Managing your Portfolio and Tracking Stocks

I use Google Finance alone to monitor my stocks. My Tradeking account obviously monitors my trades and performance, but I use Google Finance’s portfolio capabilities to track interesting stocks and my performance so far. It’s very intuitive, yet simple and clean. All you need is your gmail/google account Highly recommend it. Another similar product is offered over at MSN’s moneycentral.

Investment Strategy

As mentioned earlier, I rely on my gut/logic/news/trends to trade. This is an absolutely terrible trading strategy. Let me repeat that: Do not trade on your gut, the news, and logic, because the stock market is unpredictable and very irrational. I’ve gotten by without losing too much money so far, but all I’m doing right now is gambling.

So for real investment strategies, I recommend reading some investment books. The book that I plan on diving into later this spring is How To Make Money In Stocks: A Winning System in Good Times or Bad by William J O’Neill. I know it’s a long, spammy title, but this is a legit book. I’ve seen several peers online succeeding with investment techniques presented in this book known as the CANSLIM method. Chris Perruna as mentioned above bases some of his investment strategy on the CANSLIM approach, and he’s had good luck. This is definitely a must read for any noob investors, including myself.
So if you’ve always wanted to get into the stock market, open a TradeKing account, educate yourself, and prepare to start investing once we get out of this bear market/recession in the next 12 or so months. Make a fantasy account at the UpDown, or get your feet wet and gamble with a couple $XXX.

So how am I doing? Week 1: 5% Overall gain…. Week 2: Down 3.5% overall….mehhh…

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