Understanding Stocks
Understanding Stocks
Understanding Stocks
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178 UNDERSTANDING STOCKS<br />
that way. If the markets are too dangerous for individual investors, you<br />
have no choice but to give your money to the professionals.)<br />
Not Everyone Should Invest in Individual <strong>Stocks</strong><br />
Although I believe that people should learn everything they can about<br />
the market (which is why I wrote this book), overall I think that most<br />
people should be cautious about buying or selling individual stocks. I<br />
know this is an unusual conclusion after writing a book about stocks.<br />
(And believe me, I know this is not a popular position to take!) In my<br />
opinion, there are many less risky things to do with your money than<br />
investing it directly in the stock market. It’s an extremely tough game to<br />
master, and only a few actually succeed at it.<br />
I think that many individual investors don’t have the time, the<br />
knowledge, or the discipline to buy individual stocks. You can’t just buy<br />
a stock and go to sleep. You have to closely monitor individual stocks,<br />
and, unfortunately, most people don’t have the opportunity to do that.<br />
There are many hidden pitfalls that make investing in the stock<br />
market risky. Until the markets are truly fair for the individual investor,<br />
which isn’t likely to happen anytime soon, my advice is to be very wary<br />
about investing directly in the market. The risks are too great. (This will<br />
change when the stock market environment is as fair for individual<br />
investors as it is for large investors.)<br />
That doesn’t mean, however, that you shouldn’t be paying attention<br />
to the market. The time will come when out of all the chaos a fair, trustworthy,<br />
and investor-friendly market will be created. When the time is<br />
right, you might consider investing in individual stocks. Until then,<br />
learn everything you can about the market, but don’t participate until<br />
you fully understand the risks and rewards.<br />
And Yet There Are Exceptions<br />
On the other hand, I don’t want to discourage those who feel that they<br />
can win the stock market game. If you are excited by the stock market<br />
and feel that you can make money at it, by all means, set aside a small
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