6 Great Subjects For Learning About The Stock MarketHow should a beginner start learning about the stock market?
It might be worth pointing out early, that if you dislike reading, learning and soaking up new information, learning about the stock market and investment generally might not be for you. However, if you are still reading... 1. Understanding the day-to-day market news and moves is an absolute must do. The first place to start is with a great quality newspaper. Where you live and which market you plan to invest in will largely determine the newspaper which is most appropriate to you. However, some great papers with excellent international coverage include the Financial Times of London and the International Herald Tribune. The Wall Street Journal is another excellent and informative read.
3. Much can be gleaned from studying stock market history. Here, we are suggesting that some stock market history be studied. Even the great Warren Buffett suggests that every investor should learn about market history and what made things happen and why. Who can argue with that? Most of the history of any market will coincide with the movements of the business cycle which will link to the basic economic knowledge you'll need (discussed below). 4. The world of finance and investment has seen many great minds. Some of these stars are still operating in markets today, others have long since passed. Many of them have put their thoughts, experiences and strategies down on paper either to show us all how great they are / were or in the hope of book sales. Either way, shorten your own learning curve by studying their work, it will be very useful. Some names to look for include, Warren Buffett, Benjamin Graham, Jesse Livermore, Peter Lynch, George soros, Jim Slater and more. A few works by or about these people will teach all new and most experienced investors a thing or two. Learning about the stock market also requires some background knowledge in other related areas. You won't need to become an expert, but when you read about the thoughts and commentary of experts, it will be useful to be able to understand them.
6. Good investment is the study and selection of good businesses. That being the case, all businesses - good and bad - use accountancy to keep score. Again, you don't need to become an accountant to be successful at investment, but you will see lots of numbers. It will be important to understand what these numbers and ratios mean, what they relate to and their impact on an investment or stock price. Being able to understand some of an annual report will be a real advantage in the long run. Reading just one book about accountancy will probably be enough - but you will need to read one...
For example, by investing an amount each month into a managed fund (passively), it is not required to follow the economy or markets nearly as much. It is passive for a reason! In this circumstance, it may not be necessary to learn about the stock market at all. It might be better to simply understand basic macroeconomics to know where the national and global economy is heading. On the other hand, an active investor or a trader will need to have much greater levels of market knowledge and understanding. Being able to judge with some degree of accuracy when and why a stock price will move is a very valuable skill! And, alas, it requires a great deal of patience and understanding to be able to do it. To trade, it will be vital to learn stock market patterns. To read more about getting started in investment, please also read:
We Recommend: Finance Blog | Trading Software | Find Stockbrokers Return To Our Homepages: Stock Market | Investment-For-Beginners |