Advice on the Stock Market
When the stock market goes up, there is no shortage of people and institutions eager to offer investment advice. Funny how many of them seem to disappear during a bear market. With so many sources of advice out there, how do you make sense of it all? I propose a simple strategy that separates fact from opinion.
The salient point to understand is that before you seek opinion, understand the facts. And I mean really understand them. In the stock market, there are many arcane terms and procedures that people may incorrectly assume that they understand. The method I use to tackle the factual aspects of a topic is to divide and conquer.
Break up any body of knowledge into a set of constituent parts, starting with the most basic and building from there. For instance, do you know the difference between the primary and secondary stock market? Do you know how a bid/ask spread works? How about a trailing stop? These are all concepts you must master before you even think about purchasing a single share of stock.
OK, so where do you do your research? Well, the Internet is brimming with facts and advice, some of it quite good. For the stock market, there are a whole series of investor-related articles published by the Securities and Exchange Commission. Another great source is Investopedia, which has topics for the novice and expert alike.
What if you are a dispenser of stock market advice: your business is to convert sales leads to cash-paying customers. For instance, stock brokers work on commission – without customers, there is no cash flow and no business. Luckily, there are companies out there that sell leads based on a number of factors. In the case of brokers, business-to-consumer leads are needed.I am not a big fan of Wikipedia, because anyone can write anything and it just might get published.
True, the online encyclopedia is supposed to self-police itself, but when your money is at stake, you might want a higher level of authority. I stick to "name brands" when it comes to investment advice. You can read what Goldman Sachs or JPMorgan has to say about current economic conditions on their websites. If your investments require up-to-date knowledge of the housing market, you can check out sites such as FairHomeLending.com.
The bottom line, know your facts before opening your wallet!
