First a story. When I was a sophomore in high school, our Geometry teacher asked if anyone wanted to participate in his stock-picking exercise. We were to pick a stock and track its performance over the course of the semester. Guess who lost big time? Me! I was the laughing stock of class. I was so embarrassed because I picked…wait for it…Genentech which ironically would have made me rich if I’d been playing with real money and had held onto it! Because truly it was a rose bud of a stock waiting to blossom, but the stock happened to fall over the course of a semester.
Fast forward in time, the first thing I did when I got my first full-time paycheck was buy Cisco stock. I also ended up interning for Cisco in business school, so life certainly comes around full circle. I also remember buying Yahoo and Excite. Any business that I thought had promise, I bought. Over the years, I’ve lost a lot of money and I’ve also made a lot of money too.
Anywho, I have advice on buying/selling stocks. If you don’t currently invest in the stock market, I’m going to show you how to dive in and make money (i.e., not lose your hard-earned mullah). You ready?
Here’s how to invest in stocks without losing money:
There’s always going to be risk in whatever stock you pick. Even Warren Buffet makes mistakes, so regardless of all the research you do, you’re going to pick some losers. It’s just like dating. You’ve got to kiss a lot of frogs to finally find your prince.
Also keep in mind, I don’t short stocks. I have a buy and hold philosophy.
So settle on a handful of stocks and JUST DO IT!
Let’s take a few examples.
Yahoo has been in the news lately. The powerful Marissa Mayer’s is at the helm and the trajectory is looking better than ever. Buy.
You can’t live without Starbucks coffee? You buy it on a daily basis and there are always lines whenever you go? Buy.
Do some research and google ‘top stocks to buy now.’ Read some articles, go with your gut, and buy!
Like I said, some of these are going to be losers, but if you don’t take the risk of getting into the market now, you’re never going to reap the rewards. And wouldn’t you rather earn more than the 50 basis points your cash is earning in a savings account?
Set aside a budget for how much you want to invest in stocks, figure out what you want to buy, diversify your portfolio, and then go for it and buy.
Here’s what’s important. In order to not lose money, you have to set an alert to sell if the stock price hits a certain target that you don’t feel comfortable with. You got that? You have to set the alerts! I’m always watching my portfolio so I just sell if the stock is ever down more than 2% from when I bought it. Don’t watch as the stock continues to plummet and then pray that it will suddenly reverse course. It ain’t going to happen. Sell as soon as it hits your uneasiness target. It’s an easy way to prune your portfolio and not lose more than 2%.
What are your investment tips?
Do you have any stocks to recommend?
What stocks have you bought that were big winners or losers?
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