We started Stockbeast for a simple reason – to build a community of everyday “retail traders” to share knowledge and advice around one topic – investing in stocks.
Disclaimer: Investing in stocks is not for the faint of heart. It is a risky venture with the potential to create both wealth and great loss of wealth. There is no magic wand let alone an article that magically teaches you how to invest in stocks.
De-risking stock trades
Stocks are reasonably good investments if you are judicious in which companies you decide to invest in. You don’t necessarily have to predict the next Amazon, there are many companies that are well run, with healthy balance sheets, meaning they have plenty of cash on hand, along with CEOs with bold vision and excellent execution. These are generally well known names.
Be careful ever trading in low cap stocks of dubious reputation, with little to no big name analyst coverage. Also, IPOs are for pros. These institutional investors try to leave no money on the table. Better to wait out a newly public company for several months before taking a position. Finally, diversify your holdings. Not only should you hold less than 1/10th of your overall balance in any one name, we suggest you diversify your sectors as well. If you must take an investment in a smaller, riskier name, take only a small position.
Stockbeast covers only well known names with lots of credible analysts and news coverage.
Timing and cost basis is key
Just as location is jokingly cited as the one and only thing to a good real estate purchase, timing is hard to underestimate. Now there are forms of short term trading that take timing to the extreme. That’s not what we mean.
Our content is specifically tailored to long term buyers who intend to hold on to a position for at least a few months. Yet even in longer timeframes, timing is a critical factor.
Don’t ever jump “all in” into a position. Instead “creep” in on a down day with 20% of your budget for that name. Continue to dollar cost average on the stock’s way down. Let the stock come to you and take pride in a low average purchase price.
Value is relative
When combined with a reasonable price to earnings or price to sales and bright prospects for the company, you may feel you are picking up a good investment, but lately many big name stocks are way over valued from a P/E and P/S perspective. Tesla and other star stocks all bank on future new catalysts. The current macroeconomic condition, with it’s near zero interest rates, is one of the biggest driving forces to this priced for perfection, bull market, and traditional value metrics has taken a backseat.
One of the smartest things a new trader can consider doing is practicing with paper trades. ThinkorSwim from TDI Ameritrade is one great app for paper trading. When you’re ready to trade with real money, you can use the same app you practiced with.
Ask questions, share ideas and get the latest market moving headlines from a community of other retail investors and traders. That’s why we built Stockbeast.