Beginners' Guide

• This particular style of investing focuses on identifying the top-notch companies when the price of their stock is less than its likely future potential. The investor pays heed to the fundamentals of a company with the belief that the worth of the stock is bound to cause the price to climb.
• Value investors usually steer clear of the herd and make their moves when the bulk of investors are doing the opposite. When the price of a share falls, the value investor ends up buying more. Similarly, when the price of a stock starts to soar, the value investor sees it as a possible bubble bursting threat and starts getting rid of his shares.

Though once again, there is no guaranteed result, the low cost of buying provides a safety net.

• Regardless of the investment option you choose, it is extremely essential to find a company that's well worth the price. After all when you buy into a particular business, you are staking a claim on the mere chance of its worth.
• The Beginners' Guide to Stock Investing reminds you to do a fundamental analysis of any company you are considering for investing your money. Pay attention to the financial history of the business, as well as on the basics that would go into making that company grow.

• While a business might meet all the fundamental expectations of an investor, it's important to keep in mind that timing is everything.
• Prices fluctuate due to investors' changing perceptions and beliefs. It is therefore, essential to keep yourself updated about the stock market happenings as well as the macro-economic environment, currently affecting, or likely to affect the company in future. In times of unrest, investors generally fall prey to the panic and the speed with which prices fall leading to an unpleasant impact on their profit potential.

• The best way to safeguard your investments is to scatter the risk. Diversifying your portfolio by including different kinds of stocks and sectors will help in beating the odds. The diversification strategy works on the belief that when you lose cash on a certain investment, you can subdue the effects by continuing to make money from other unrelated investments.
• While many prefer to stick with large cap investments, it's the mid cap ones that recover easier from financial setbacks. This is why it makes sense to opt for a varied selection of stocks.
• Along with spreading your money across sectors, it would also be wise to spread your money over time. Investing a sizeable chunk of cash all at once, could increase your risk exposure. But remember, do not over diversify too!

• Although most prefer the idea of quick money, it is long term investing that'll benefit you more. It is in the long-term that the power of compounding sets in. When interest is gained on a stock investment, from that point on you continue to make cash on the original lump sum as well as on the profits you've earned.

• With stocks we always hope for a positive outcome, but once in a while investments go south. The key to survival lies in understanding when to book your profits and when to cut your losses.
• The prices of stocks are always fluctuating, so there are bound to be times when your investment falls. Though the majority of times the investment manages to rectify itself, there are a couple of instances when it's best to get out.
• If the reasons, due to which you bought the stock in the first place, have changed dramatically, it's a sign that it's time to make an exit form that stock.
  You must pay heed to the margin factor. If the worth of a stock drops by 10%, it's best to opt out.

Once you've understood all you need to know about the stock market, it's easier to put the plan into action. And better still, if you follow the beginners guide, you'll graduate to an investing pro in no time.