Stock Market Investing

By Author: Anthony Green
Total Articles: 36
Comment this article

Although the stock market has served millions of investors for nearly a century, recent years have shown me that a great investing vehicle such as stocks can be easily misunderstood, misused, and even abused. The great bull market of 1982�1999 came to a screeching halt in 2000. During 2000-2002, millions of investors lost a total of over 5 trillion dollars. What bothers me is that much of that loss was easily avoidable.

Investors at the tail end of a bull market often think that stock investing is an easy, carefree, certain way to make a quick fortune. How wrong they are. The countless stories of investors who lost tremendous amounts of money speculating in tech stocks, dotcoms, and other flashy stocks are lessons for all of us. Successful stock investing takes diligent work and knowledge like any other meaningful pursuit.

The stock market has been a cornerstone of the investor�s passive wealthbuilding program for over a century and continues in this role. The period of 1995-2005 was one huge roller coaster ride for stock investors. If it was a stock chart, the graph would look like Mt. Everest. ...
... Fortunes were made and lost. With just a little more knowledge and a few wealth-preserving techniques, more investors could have held onto their hard-earned stock market fortunes.

Understanding the essentials of stock investing and investing in general will only help you, especially in uncertain economic times. Stocks may even touch your finances in ways not readily apparent. For example, stocks are not only in individual accounts; they�re also in mutual funds and pension plans.

An important point is that stocks are really financial tools that are a means to an end. Investors should be able to answer the question �Why am I considering stocks at all?� Stocks are a great vehicle for wealth building, but only if investors realize what they can accomplish and how to use them.

Even the stocks of great companies can fall in a bad investing environment. This is where you should be aware of the �macro.� If stocks were goldfish, the macro would be the pond or goldfish bowl. In that case, even healthy goldfish can die if the water is toxic. Therefore, you should monitor the investing environment for stocks.

Stock investing became all the rage during the late 1990s. Even tennis stars and punk rockers got into the act. Investors watched their stock portfolios and stock mutual funds skyrocket as the stock market was reaching the mania stage at the tail-end of an 18-year upswing in stocks. Investment activity in the United States is a great example of the popularity that stocks experienced during that time period. By 1999, over half of U.S. households became participants in the stock market.

Yet millions lost money when the stock market fell big time during 2000�2002. People invested. Yet they really didn�t know exactly what they were investing in. If they had a rudimentary understanding of what stock really is, perhaps they could have avoided some expensive mistakes. Before you invest your first dollar, you need to understand the basics of stock investing.