Teaching Yourself How To Invest

The stock market has performed badly of late. All the major indexes are down from their highs, as the market has buckled under the pressure of the housing meltdown and the credit crunch.

If you don't know much about stocks, now is a great time to educate yourself. Valuations are more attractive than they've been in a long time, and investing now will likely pay off down the line, when markets head back up.

Consider these tips to teach yourself how to invest in stocks:

Read a book.
There are hundreds of investing books out there. The challenge is to find one that is worth your time and money. One such book is "The Intelligent Investor" by Ben Graham, the founder of modern security analysis and, incidentally, famed investor Warren Buffet's former teacher. First published in 1949, the book is widely regarded as a primer on value investing, an investment philosophy based on buying stocks for their value and not necessarily for their growth prospects.

Pick a few companies.
One of the best ways to learn what investing in a company is all about is to follow the stock. Pick two or three companies that you know and like, and begin checking their stock price daily. Follow company news, and read quarterly earnings announcements. If the stock price goes up or down more than 5%, find out what was behind the move.

Keep up with business news.
Knowing what is happening in the business world and the economy will give you more perspective on investing. You'll see how economic indicators such as jobs reports effect stock prices, as well as how important the Federal Reserve's monetary policy is to the market.

By Marshall Loeb