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Free Stock Market Tips

By Edited Aug 17, 2015 0 0

Perhaps the most important of the many stock market tips out there is to know your own limitations. What you are doing when making a trade (at least ones which are not perfectly hedged) is betting on the rest of the market having been wrong in that pricing. Needless to say, the average investor isn't going to be able to beat the market, which has already "priced in" expectations for any given stock or option. While investment banks and services will tout the ability for investors to make their own picks, and the tools available to use in doing so, that is because their best interest is always in having the investor make trades. How else will they collect commissions and fees?

So many of the "stock market tips" available out there tends towards pushing investors to be very active in their trading, even though that is generally not in the best interests of a given investor. When you are making any trade, you are competing with the rest of the market, for real money. To make money (compared to your other options), you need to be able to beat the professionals at their own game, which isn't for the average Joe off the street. So how do you make money on the stock market when you realistically can't expect to consistently beat the market? Well, that would be to join them by buying index funds. Index funds essentially are a way to buy into the professional's game, and have them play for you. While this isn't a formula for "getting rich quick"... well, that's actually the selling point there, since "get rick quick" is generally a sure sign of a bad investing idea. It's one of the safer bets out there. Though it's always important to understand that even the safest bets are still just that ... bets, and as with any form of gambling the possibility is that it can lead to losses as well as gains.

Another of the stock market tips that can make a difference is to know how to hedge a portion of your investments against your income. If you have a job in a specific sector of the economy, you are essentially invested in it already. In a lot of cases, this is the most significant "investment" in a small investors portfolio, and it's one that most people may not ever even consider as an "investment". Indeed, instead of hedging their exposure to that sector of the economy, they may actually be buying in even more, be it through their own personal investments, or stocks being part of the compensation for the job. While this has it's benefits, such as keeping workers more (emotionally as well as financially) invested in their job, it also increases the risk to the workers of the sector or company faltering, as in that case not only will they risk losing their jobs, but a significant portion of their portfolio as well. Savy investors realize this, and may hedge themselves against losses of employment (or even pensions) from such events, by "shorting" the sector they work in.

(Disclaimer: there may be legal issues with shorting your employer's stock directly or indirectly. As with any "stock market tips" here, or anywhere for that matter, be sure to consult with a licensed professional before making investment decisions.)



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