If you're looking to invest, you should read books on it.
There are multiple styles of investing:
1. value investing
This is what Warren Buffett does. It means you buy low and hold.
2. Technical analysis. This is investing for nerds. It is highly technical and I wouldn't recommend it, because it feels like you know what you're doing, but your just speculating imo.
3. Indexing. This is what I would recommend. People who index believe that they can't beat the market, so they decide to join it.
What style you should choose depends on if you believe in EMH (efficient market hypothesis). EMH says that all future information in a stock is already in the price of the stock. Example: If you know some company will buy a lot of boeing airplanes, then other investors will know about that too and will buy a lot of boeing stock. This in turn will raise the price of the stock so much that it will cancel out the positive effect of the new planes profit and you won't make money.
Whether EMH is true or not is quite diffcult to answer. Some people think it is and some think it is not.
Let's say you think EMH is bullshit and you can make money out of the market. Let's say you choose to do what Bufett does.
Now buffett spend a crap load of time working on investing. He knows the ins and outs because he was a financial analyst early in his life. Because of that he knew quite a lot about stock and bonds.
Buffett has read yearly reports on companies, and spent a huge amount of time doing that. Buffett is one of a handful of people really making a lot of money out of investing.
Now you can't do that. You've got full'time jobs, and you don't have what it takes.
Furthermore, if you think a stock will go up , because the market sector will go up you can be terribly wrong.
Example: when cars, became popular and everybody bought them, not many people have profited because of that. Only one company exists today that still makes cars since the beginning.
But you guys aren't investing. You are speculating. You're not sure if something might go up, but it might and that's what speculating is.
If you don't have much time to invest, and want a 'relatively' safe approach to investing, I will suggest to you index investing.
I can explain what that is, but I'd rather you read books on it.
Read, the four pillars of investing and common sense on mutual funds. That should cover it. If you have any questions just ask me.
Cheers,
Leon from Holland
