Why Are We So Clueless About The Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market by Marius Skonieczny
If you have been thinking about investing in the stock market in order to achieve your medium and long-term savings goals, I would highly recommend that you read Why Are We So Clueless about the Stock Market? . It’s well organized, easy to understand, and provides charts and graphs as well as examples in order to illustrate the main points outlined.
The author discusses the importance of doing research before simply selecting stocks to invest in. The book talks about the process of determining the value of a given stock and provides clear instructions on how to determine whether or not a company is a sound investment choice. The book emphasizes that there is no use in spending a lot of time researching a given company unless it meets certain criteria.
The book warns about not being overly diversified in your investments. If you know that you are buying five stocks at a significant discount, there’s no use buying more than that just for the sake of diversifying further. Although some people find great comfort in knowing that they own 100 different stocks, only a handful of their holdings might generate significant returns. Don’t feel that you have to be overly diversified. Be confident in your stock selections after doing your due diligence.
A major point in this book is that investors need to think of economic recessions as an opportunity to buy stocks at a discount, rather than as a time to panic and sell their stocks and lock in losses. When everyone else is buying, it is more than likely the time to sell, and vice versa.
The book provides tips on the kinds of analysis an investor should be undertaking whenever considering the purchase of a stock. As a part owner of the company, it’s important that you understand how to read the company’s balance sheet and understand the significance of the price to earnings ratio. Make sure that the companies you invest in are able to generate profits and maintain operations without relying on a lot of debt. Also, a good thing to look out for is a company that has a moat, or a distinct advantage over its competitors.
Before handing over your money to an advisor to invest on your behalf, do your research. You will discover that investing in the stock market does not have to be complicated and you may even want to select your own stocks. The more you educate and equip yourself, the less you will have to rely on others to advise you who may not have your best interests at heart.
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