Teach Me To Inve$t

A couple of months ago I had developed a Monday morning hours Jury Duty emergency. Long tale short, I was able to postpone my “citizen duty” but not before having to show up to courtroom that morning anyways. So, what does jury duty want to do with this post? Well, this “from the routine” event acquired me turning up for work a few hours later than normal. Before going up to my office I made a decision to go by a store in the lobby of the building where I work to get some stuff. Yes, ladies and gents!

One of my trading “virtual mentors” Jim Cramer was by the cashier. Despite my sporadic shyness and introverted ways I pushed all that aside and decided to go up to him, introduce myself and have for an image. But not before informing him just what a huge enthusiast I am! I asked the cashier to consider the photo (no shame in my own game). Which quick second, my friends, flipped my whole day/ week/month around to discover the best! He could be super welcoming and humble. Excuse the wild hair (mine, not Jim’s). I have been a huge lover of Cramer for several years!

I was introduced to him by the friend whom got me directly into investing (start to see the ‘about me personally’ section). I’ve read many of Jim Cramer’s books but also watch his TV show on CNBC “Mad Money” on weekday evenings. Although I really like all of his shows; my favorites involve him talking about the fundamentals as it pertains to investing. Every once in awhile he likes to bring us to the fundamentals of being a successful individual trader back.

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Last Friday’s show (aired 08/09), for example, fell in to that category. He spoke about “Golden Rules for the average person Investor”. 1 Don’t own way too many stocks: 10 is an excellent amount. Diversification is important but there is a huge difference between being holding and diversified 100 different kinds of stocks.

As per Cramer: “A lot more than 10 and you’ll likely start skimping on the homework, and that’s incredibly dangerous”. He suggests we keep 10 high quality varied names. This is actually the kind of strategy I have been following in my own investment career and I couldn’t agree more! Is the answer to that question a good one? 4. NEVER buy stocks and shares on margin. Buying stock on margin means you borrow funds from your web broker (or broker generally) to invest.

DON’T DO THIS. NEVER. This is often a huge risk, particularly if you don’t know what you do. When you invest on margin, you can’t afford to lose. If the worst happens you shall owe the amount of money you borrowed, interest on the amount of money plus you make zero income. This is not the real way to go.

I have described again and again that profit the currency markets should be 1. Your cash only 2. Component of your discretionary income (what’s left after all your expenditures have been paid). 5. Avoid Market Orders. I explained Market Orders on one of my initial posts.

Basically, with a market order you are informing your web broker (or broker) to “buy” or “sell” at “whatever price”. You run the risk of paying too much when you get and offering at a lesser price than you could have. 6. Don’t panic when stocks and shares down are. There could be a lot of known reasons for it none which may be related to a particular company in any way. As I mentioned before, the market has its disposition swings and times often, down days may have nothing in connection with specific companies but instead can be a result of news in the media and one thousand other reasons. Look in to what exactly may be going on Just.

Sometimes a “down day” can be a great opportunity to grab stocks from amazing companies at great prices. 7. The SEC may not have your right now so ‘watch your own’ back. For individuals who don’t know, the SEC (Security Exchange Commission) is one of the regulatory institutions that are supposed to protect the eye of individual investors.