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Sooner or later, the majority of us are going to be faced with the prospect of investing a portion of our savings for the future.   And that will likely mean investing your money in stocks and the stock market, if it's not already there.

Take a look around, and you'll see that internet message boards and radio call-in shows are absolutely smothered with questions regarding the market:

"I'm 47 years old and my 401(k) has lost 40% of its value; what do I do now?"

"The stock market is killing me.   Should I drop my 401(k) contributions from 10% down to 3%?"

"What do you think about adding some gold mining stocks to my IRA?"

"I work for Home Depot and I think their financials still look good, but my stock's dropped 30% since January.   Should I sell?"

Unfortunately, there are few simple answers when it comes to the stock market.   Successfully investing in stocks and mutual funds requires much more than simply opening a brokerage account and setting up an automatic-withdrawal-and-investment plan and dumping all your money into the Pollyanna Hiawatha ABC no-load mutual fund each month.

As with all other facets of your financial life, the best thing you can do for yourself − and your money − is to approach your decisions from a position of well-rounded knowledge.   You will need to consider your age, and by extension, the time you'll be able to leave your money in the market.   You will need to consider your own tolerance for monetary risk.   You will need to consider the amount of time you can devote to managing your investments each day, week, month, and year.

But it won't stop there.   Some other questions you'll need to answer eventually, whether it's by trial-and-error or otherwise:

Are you a fundamental investor, a technical investor, or a combination of both?   Will you be trading monthly, yearly, or never?   Will you dollar-cost average into your investments, or buy full positions at the outset and let them go?   Are you investing for growth, income, or a balance of both?   Do you care about dividend-paying stocks?   Or are you comfortable only with absolutely guaranteed investments, such as U.S. treasury securities?   (Yeah, you've heard of 'em:   T-bills, government bonds, government notes, and all that. There's more about them in another article I wrote.)

Above all, you will need to consider the state of the stock market in general and whether it is an appropriate time to invest your money there at all.   Sometimes − as the market performance of 2000 through 2003 can attest − it simply is not.

Many of these questions will depend entirely on your age, risk tolerance, and various personal preferences.   However, when it comes to deducing the overall health of particular stocks (and the stock market in general), there are some very good books covering the subject.

Whatever your beliefs about technical and price chart analysis may be, I strongly urge you to at least read the following works before you begin investing.   Determine for yourself whether or not the reasonings and methods of the authors below might not help you become a more confident and successful investor.   Chart analysis is not about picking market bottoms and tops to-the-minute, to-the-hour, or even to-the-day.   Rather, it is about odds and likelihoods.

It is about realizing when bottoms and tops have been put in, perceiving whether prices are in uptrends or downtrends, and taking the necessary steps to grow and/or protect your money.

It is about not relying on supposed "long-term historical stock market returns of 10 to 12 percent" as a given. (I have a pretty heated and detailed article on this topic right here.)

But, above all, it is about limiting losses, and keeping what you've earned.

Listed below are the most helpful market-oriented books I've read.   They are listed in the order I would suggest reading them.   If you read only one, make it Weinstein's Secrets for Profiting in Bull and Bear Markets.   It alone could save you tons of money.

For a printer-friendly version of this list, click here.   It'll open in a new window.

NOTE:   Before buying any of these books brand new, you might wish to check Amazon.com for used and almost-new copies, as described here.   You can save yourself some nice coin.





Secrets for Profiting in Bull and Bear Markets
Author:   Stan Weinstein
Publisher:   McGraw-Hill (1992)
ISBN:   1556236832
See This Book at:   Amazon.com   ||   Barnes & Noble.com


The Visual Investor:   How to Spot Market Trends
Author:   John J. Murphy
Publisher:   John Wiley & Sons (1996)
ISBN:   0471144479
See This Book at:   Amazon.com   ||   Barnes & Noble.com

How to Make Money in Stocks
Author:   William J. O'Neil
Publisher:   McGraw-Hill (1994)
ISBN:   0070480176
See This Book at:   Amazon.com   ||   Barnes & Noble.com

24 Essential Lessons for Investment Success
Author:   William J. O'Neil
Publisher:   McGraw-Hill (2000)
ISBN:   0071360336
See This Book at:   Amazon.com   ||   Barnes & Noble.com

Trader Vic:   Methods of a Wall Street Master
Author:   Victor Sperandeo
Publisher:   John Wiley & Sons (1993)
ISBN:   0471304972
See This Book at:   Amazon.com   ||   Barnes & Noble.com

The Nature of Risk:   Stock Market Survival and the Meaning of Life
Author:   Justin Mamis
Publisher:   Fraser Publishing Co. (1999)
ISBN:   0870341324
See This Book at:   Amazon.com   ||   Barnes & Noble.com

When to Sell (For the 90s):   Inside Strategies for Stock Market Profits
Author:   Justin Mamis
Publisher:   Fraser Publishing Co. (1999)
ISBN:   0870341340
See This Book at:   Amazon.com   ||   Barnes & Noble.com

How to Buy:   The Insider's Guide to Making Money in the Stock Market
Authors:   Justin Mamis
Publisher:   Fraser Publishing Co. (2001)
ISBN:   0870341650
See This Book at:   Amazon.com   ||   Barnes & Noble.com



Related Links

Mutual Fund Education Alliance
The Street.com:   The Basics of Fundamental Analysis
StockCharts.com




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