Topic: How To Invest

Learning about investing through research, analysis, and (perhaps) investing clubs

Learning about investing doesn’t come without setbacks, but you can limit your risk with these tips.

Many people try to learn about investing by gathering up loads of information. But you also need to learn how to absorb and organize your information so you recognize and remember the essential aspects of it. Often, the best way to do that is by writing about it.

That’s just the way your brain works. Writing about something forces you to think deeply about it—or at least more deeply than if you’re not writing about it.


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The process I use for sharing and learning about investing

When I decide to write about an investment or an investment-related subject, I start by gathering up information—hard facts, plus other people’s opinions on those facts. By the time I start to write, I may have read, scanned or simply browsed through 20,000 or more words on the subject.

Every sentence I write helps me absorb and analyze the info I have in front of me and in my short-term memory, and extract useful perspectives from it. Some sentences raise questions in my own mind, and I have to stop and do more fact gathering. By the time I finish, I understand the subject much better than when I started out. In fact, the process of working with the information and writing about the subject will sometimes lead me to reverse the opinion I started out with.

This process seems to work better if you write for publication, or at least commit your thoughts to paper (or a computer file). If you try to do it in your head, any understanding you gain won’t stick with you. You’ll never really reach a sense of finality in your thinking, so you won’t do your best. You’ll risk becoming the kind of person who never succeeds as an investor but who constantly feels (and often says), “I knew that was going to happen.”

Learning about investing through the qualities of successful investors

If you ask investors who have a few decades of successful investing behind them, few, if any, will credit their success to any one investment or investing technique. Instead, most will talk about the value of everyday qualities like patience, consistency and a healthy sense of skepticism—in short, the kind of qualities that bring success in all aspects of life, not just investing. This is the key to stock investing for beginners.

Stock market research tips for safer and more profitable investing

Stock investing for beginners can be much more profitable with these stock market research tips that will help you cut risk and increase profits in your stock market portfolio. We’ve long recommended these tips:

● Look beyond financial indicators
Think like a portfolio manager
● Research U.S. stocks and seek to hold a reasonable portion of your portfolio in them
● Update your research, but give your investments time to pay off

Is it worth joining an investment club to learn about investing?

We see investment clubs as a good way to learn stock trading, and gather investment information.

Investment clubs can offer social and educational benefits. For example, they may be a good place to learn stock trading if you are a beginning investor and think you would feel more comfortable learning about investments with others. Some clubs let you invest as little as, say, $50 a month.

Investment clubs do have hidden risks that can hurt your profits. That’s because investment clubs make decisions by committee, where responsibility for mistakes is diffused. When committees make mistakes, they sometimes make big ones.

In addition, investment clubs can produce unexpected personality clashes and unfortunate peer pressures. As well, decisions formed by a group consensus sometimes take on an air of legitimacy and urgency that can cost members a great deal of money.

The best way to learn stock trading in an investment club with less risk is to join a group whose philosophy has something in common with our three-part TSINetwork investing strategy.

This approach helps you avoid overloading yourself with stocks that are about to slump because of industry conditions or changes in investor fashion. You also increase your chances of stumbling upon a market superstar—a stock that does two to three (or more) times better than the market average.

In addition, if you do join or form an investment club, make sure that in the initial planning the group carefully creates and follows a partnership agreement and organizational by-laws.

How do you learn more about investing? Do you put in time doing research and writing or just learn from doing it?

What is the most important lesson you learned as a new investor? Does it still work for you?

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