« Online Trading | Main | Insurance »
Stock Investing
Mention the word “investing” to most Americans today and the first thing most will think of is the “stock market,” primarily the NYSE (New York Stock Exchange). That’s primarily because it has been around so long that it has entered the public subconscious as the very definition of stock investing.
It was in May of 1792 that two dozen New York stockbrokers tried to organize the freewheeling equities trading of the era by agreeing on a simple organizational structure. Legend has it that the bargain was struck in the shade of a buttonwood tree on Wall Street, with this new “Buttonwood Agreement” becoming the basis of the New York Stock Exchange. More than 200 years later, financial professionals and the new generations of involved investors are still trying to iron out all the vagaries of stock investing, a task that will always be “in progress” because of the evolutionary nature of money and markets.
No guarantees
Until the 1980s, stock investing was something that was accomplished through the auspices and expertise of a small group of brokers and a handful of large financial institutions. The names of the “biggies” – Merrill Lynch, SmithBarney, Morgan Stanley, Goldman Sachs – have even entered the cultural vocabulary and are known even to the man on the street who doesn’t know a stock trade from a hole in the ground.
Still, even for some informed investors, certain stock trades became literal holes in the ground, into which their hard-earned money has disappeared. Perhaps they overinvested in tech stocks in the late 1990s, or perhaps they were finagled into buying some “sure thing” penny stock. There are a lot of ways to make and break fortunes with stock investing, so it is not something to be undertaken lightly, and mistakes can be made even with expert advice. There are no guarantees.
Doing it the right way
It would be nice if “the right way to invest” were something that could be distilled into a 10-point to-do list. Unfortunately, things are not that simple, and there are far too many variables involved to allow any “sure things.” The best you can do is stay informed, all the more so if you are trading online and making all of your own decisions. Even if you are using the services of a brokerage firm or independent advisor, stock investing should not be seen as a hobby or pastime, unless you can afford to lose everything you have invested and have unlimited funds to start all over again.
Both individuals and groups (clubs, non-profits, corporations, syndicates, etc.) are invested in the world’s various stock markets, and it is a full-time job staying abreast of what companies, governments, financial firms and other investors are doing on a daily basis. This is what you must do, however, if you intend to handle your own stock investing.
If you do not have the time for it, don’t do it. The fact is, even when you have a professional financial manager handling your portfolio you are still well advised to stay informed as to where your money is, what it’s doing there and what to keep an eye on. This is the reality of stock investing, and it’s as real as it gets.
Remember: You can secure your future if you stay involved and informed, or risk it unnecessarily by being undisciplined or impulsive. Take stock investing seriously, give it the respect it is due, and you will be as secure as you can be. There are never any guarantees of consistent success, of course, but you will guarantee failure if you don’t pay attention and use your head.
Topics: Investing |
