I grew up in a relatively poor family where no one talked about the stock market. And when I went to college, I majored in Theater. So what finally gave this small-town girl the courage for my first time buying stock?
You might be surprised, but it was because the market was sliding ever downward. I watched the gloom & doom reports on the nightly news. But instead of being terrified, something told me that we would survive. And if we did survive, I knew the market would eventually head up again. Which it did.
My first tentative steps toward investing
So instead of buying into the gloom & doom (often made even scarier as dramatized by the media), I followed my instincts toward my first time buying stock. Remember, I knew nothing about any of this. But everything inside me said it would not only be ok, but a very good thing. (It was.)
I did my research on foot (this was before online brokers) by visiting different investment firms and talking to brokers. If you’re going to let this person help you invest your hard-earned money, you need to feel a connection. And you need to get a sense that you can trust them.
I found a woman who had been one of the earliest women to actually trade on the floor of the New York Stock Exchange. And we connected right away. (Another trust your gut thing.) She loved my enthusiasm and was excited to help me learn. Taking the time to find the right broker pays off.
What Marge taught me about stocks that I never forgot
Her name was Margery Reade, and she gladly took me under her wing. Now let’s make it clear that she also made good money from me. So we both benefited by my becoming skilled in stocks and market trading.
I now mostly buy stocks to hold. But back then my goal was to ever-so-carefully make small amounts of money each time by trading them. And it worked. And I had fun.
Stock tips I learned from Marge my very first time buying stock:
- If you’re trading stocks, don’t worry about buying at the lowest point or selling at the highest point. You make a lot of money in between.
- Investigate the trading history of a stock. It can help tell the story of where you might try to buy or sell. You want to sneak in and out ahead of all the other people trying to hit a top or bottom.
- When possible, set a specific price where you want to buy or sell a stock using “limit orders”. This way you are not locking yourself in at a level you will regret for a stock that is moving quickly (up or down). Once the price is reached during the trading day, you might even wind up getting a better price than you set. But it can never be worse than you set. (Limit orders do not guarantee you get it. Only if your price is reached.)
- Buy on bad news; sell on good news. Now, this is just an old saying that doesn’t always hold. But even recently, as the bad news of the Brexit vote for the UK to leave the EU caused markets to drop precipitously, savvy buyers already had their orders in to buy, anticipating the ride up.
A few more stock tips:
- Even “dog” stocks can be good for trading. I remember trading a stock that had pretty crappy financial fundamentals (based on our research). But Marge and I loved it. We watched the trading day numbers fly by enough times to notice a pretty solid trading range (up and down). We both made money in the middle of that range.
- Do your research carefully. So much info out there now. I love Morningstar.com and TheStreet.com. But you can also google the stock and check for any news. What you find can find can help paint of picture of how solid the stock is and what its future might look like. Info can come from anywhere, even trends you see on the streets where you live.
- Nothing is guaranteed. Sometimes you just have to wait out the bad times to get back to the good. And if you’re stuck with a real stinker while in trading mode, know when to let it go so you can put your money to work elsewhere.
IMPORTANT NOTE: If you buy stocks to hold, the best advice is not to panic sell. Especially if you’ve done your research and know it’s a solid stock. In that case, you often do better to take a deep breath and just hang in there until things improve. Getting the timing perfect is too hard
So many folks sold their portfolios in 2008 during the horrible crash. But they lost a lot in the process by the time they got the courage to get back in. Meanwhile, many of us just kept what we had and waited. And that turned out to be a much better way to handle things in the long run.
A few more thoughts about my first time buying stock
I have never forgotten Marge. And to this day, I still use most of the things she taught me on that very first day still inform my investing. The rest I’ve learned through trial and error. And as markets change, there is always much much more to learn.
But I am ever grateful to Marge for giving me a solid foundation in the stock market. Plus I learned how much fun it can be. Especially if you stay positive and don’t get carried away by doomsday thinking. Good advice outside the market also, IMHO.