You do not need to have any money before you start investing in stocks.
Starting to invest in stocks without practicing the art of investing beforehand is simply gambling.
Investing and gambling are diametrically opposed.
The smart thing to do is familiarize yourself with a value-orientated long term investing approach, read the financial press and practice buying and selling stocks for at least a year using a free online virtual portfolio.
Yep that’s right a year.
Even if you have a nice wedge with which to invest you would soon see it frittered away in the quest to know what you’re doing when it comes to stocks.
Why not leave it alone in the bank whilst you master the ins and outs of stock market investing?
At the same time you can add to your funds to have a bigger pot to play with after the apprenticeship year has ended.
Similarly if you don’t have cash ready to invest then spend your apprenticeship year squirreling it away until you know how to invest in stocks.
The actual apprenticeship – learning how to invest in stocks – should be split into two strands that should run side by side.
The first strand is theory.
The second strand is practice.
Practicing Investing In Stocks
There are several ways that you can go about practicing investing in stocks but the best and easiest way is to sign up to a free online virtual portfolio.
I recommend ADVFN because not only will you get a free portfolio but as part of your free account when you sign up, you will also have access to:
- Stock market prices from exchanges around the world
- Up to date news on the individual stocks in your virtual portfolio
- Stock market price charts for any stocks you select
- Email alerts to notify you when a stock has reached a certain price
- And much, much more
This is all free of charge. Did I mention that?
One of the clever ways I use ADVFN’s news service on a daily basis is to click on their news page to view their ‘big movers’ feature – stocks are moving up and down the most on any given trading day.
The big movers list provides me with a quick snapshot of these large gainers and losers with an accompanying news headline and charts:
For the purposes of your apprenticeship, you’ll need to start a brand new portfolio which is as simple as clicking the portfolio button at the top of the page (when you’re logged in) after which you’ll see this screen:
Fill out the details and you’re ready to add individual stocks to your apprenticeship portfolio where you can add buys or shorts.
The Theory Of Investing In Stocks
Knowing what you are doing is key to investing in stocks and there is no way around it: you will have to start reading.
Of course there are thousands of books, articles, YouTube videos, online courses, seminars and more from which you can learn to invest in stocks.
But you’re reading this because you want the short version as well as access to the best resources to get you to know what you are doing.
Below then are some resources that I recommend you read as a starting point for your apprenticeship year.
Ask questions by leaving comments on this blog post.
But just read.
- The Intelligent Investor by Benjamin Graham – the best book ever written on investing in stocks first published in 1949. This edition is the latest with additional commentary by Jason Zweig to place Graham’s brilliant book in a modern context. It is no wonder Warren Buffett thinks this is the best book ever written about stocks because Ben Graham (the father of value investing) wrote it with newbies in mind. A must read.
- The New Market Wizards by Jack Schwager – The New Market Wizards is a collection of intimate and revealing interviews with some of the most successful investors of all time. They reveal their strategies, triumphs, losses and more. You will also learn about a range of investing styles from short to long term or technical analysis and fundamental analysis and how this can change what stocks to buy and when.
- Graham Newman Letters To Partners – This is Benjamin Graham’s warts and all commentary on his own stock purchases and sales from his hedge when he ran one. This is the father of value investing showing you in real time what it is like to make money in stocks. Much of what is written in these letters should become part of your own strategy for success.
- How To Find Undervalued Stocks – this blog post is consistently within the top 3 all time posts read on this website. Not only does it highlight the importance of reading but also shows how the valuation of an individual stock needs a common sense approach in the traditional Grahamite method of valuation. For example using ratios can help the individual investor but ratios should not be the only way you value stocks.
- ADVFN Daily UK/Euro Briefing – This is an email I get delivered for free into my inbox every day and I read it every day. It basically tells me what has been happening on the financial markets each day to keep me in the loop as to the most important news stories that influence the financial markets and therefore the value of my portfolio.
There are many more resources both paid and free that you can access but these should get you off to a good start. For example I’ve produced a resources page which lists the most popular tutorial style posts and links to more resources besides.
I’ve also produced a free ebook called ‘How To Start Value Investing In 30 Days’ which you can access here in response to many of the questions I’ve been asked about investing over the years. The advantage of ebook is that it is concise and written in today’s language designed to get you practicing how to make money in stocks right away.