Where does one begin is he/she wants to start investing?

Where does one begin is he/she wants to start investing? –@Nisey7

First off, day trading is dead. You can read my “8 reasons not to daytrade” http://bit.ly/h028VG or my “10 Reasons Not to Own Stocks” http://bit.ly/kZz4rA.

That said, I do not think investing is dead.

Read “The Essays of Warren Buffett” by Lawrence Cunningham to see what the master has said over the past 50 years. Note, I’m not even pushing my own book, “Trade Like Warren Buffett” http://amzn.to/yGff5O. Cunningham’s book, compiled from Buffett’s letters to investors, is better.

Second, read “The Rational Optimist” by Matt Ridley. Ridley is one of the smartest men alive  right now. His book will teach you how to question the assumptions constantly posed and feared by the media and used to scare you. He goes over everything from peak oil, to overpopulation, to wars and violence, and analyzes all the statistics. Why is this useful? How will this help you pick stocks?

It’s because picking stocks is not the hard part in investing. Warren Buffett says it succinctly, “if you have good reason to believe a company will still be here 20 years from now, it will probably be a good investment.” We know Apple will still be here, for instance, so that’s a good stock to pick.

The problem is: what do you do the next time there’s a 2008 (or even a summer 2011) and all stocks crash. You have to be able to really analyze and say “is the world ending” or “is this just a blip.”

Look at this chart here of the Dow for instance. Can you see where the crash of 1987 occurred? It’s barely noticeable. And in your consciousness even it has to be barely noticeable. That’s the hard part in investing. “The rational optimist” plus being healthy and secure in other parts of your life, will help you become a better investor.

The times when I lost the most money investing was not because I was picking bad stocks. Most of the stocks eventually hit new highs long after I sold them. It was because I was either unhappy with my work life or marriage or family or whatever. And so not thinking straight caused me to not invest straight. That’s the key to successful investing.

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