There are wise practical principal ideas that anyone new to investing should always keep in mind when they start out. These simple principles are things that long time players in the stock market swear by exactly because they're so simple that they could almost be considered common sense.
Let's of us take a look at these principless and you'll see just what I mean:
Investing in Companies We Use
Think about this: You have a certain tennis shoe or clothing manufacturer that you will shop when you want something new, right?
More often than not, people stick with one company for things like electronic devices and other consumer products because that company has proven its brand over the years with build quality and reliability.
While trying out new foods is always fun, there are certain restaurants and brands that you'll always find yourself going back to because you've liked what they offer for some time.
Brand loyalty is made or broken on what a company's product or service can continually give to its customer base. By investing your money into a company whose offerings you're familiar with, you already know that the company is making money and has established itself in its sector.
Therefore, you know that company's stock is a good place to park your money for now.
Buying for the Long-Term
Know that like many of other areas of our society, the stock market follows trends and that means that businesses have their good days as well as their bad days. This often translates to stock prices that fluctuate.
Remember the companies that offer quality products and services from the last tip? Well, if their products are truly of high quality, then enough people will continue to buy from that company to guarantee that the price of their stock will only go up as time passes and company not only generates revenue, but profit as well.
Those fluctuations aren't entirely bad either.
By paying attention to how prices in stock rise and fall, understanding the dividend compound at work, you can play the market to your advantage.
Having Cash Available for Spreading
Investing Intelligently With Your Cash, keep that old adage in mind when you want to buy stocks for a company .
Stock prices are particularly vulnerable to things like companies having a bad quarter, a raise in capital or rumors about a change that the company or its industry would undergo brought about by speculators.
If the price drops for any of those reasons, or the company does something like announce that it's going to lay off half of its workforce or close a production facility, you'll be glad that you didn't buy all of your intended shares in one fell swoop.
By waiting and buying your shares in chunks, you'll already have cash put aside. When stock prices dip for whatever reason, you can then buy your additional shares "on sale", as it were, and wait for the price to go back up.
For classic examples of this happening you need to look no further than Apple's stock. When company CEO Steve Jobs announced his taking a leave of absence for medical reasons, the computer manufacturer's stock price fell a few points but eventually recovered and even overtook its old position in time.
