Stock Market Investing Basics

Any discussion of stock investing basics usually begins with a list of the most common styles of investing. Everyone wants to know if you are a value investor, a growth investor, a day trader or what well-known technical analysis strategy you follow.

Style is an important part of any investing discussion, but there are other considerations.

This discussion is limited to stocks and ETFs, but the basics of investing are applicable to any investing arena.

What investing basics do I need to consider?

Each of the following questions has some bearing on how you choose to trade or invest. In fact, some will determine if you look like a trader or look like an investor.

  • How much do I need to buy (all) the stock - Market Cap
  • How much do I need to buy the company - Enterprise Value
  • How many baskets for your eggs - Diversification
  • Can you move the market – Stock Liquidity
  • Which sandbox(es) – Stock Markets and Exchanges
  • What is your investment mix – Asset Allocation

  • How low can you go - Risk Management
  • Are you a Financial Analyst - Individual stocks or baskets of stocks

These were the easy questions.

Now for the tough part

The remaining questions are about your personal investment environment and you personally. It doesn’t even sound like fun.

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December 2016