How to Avoid Rookie Mistakes in InvestingBy: www.ProfitableInvestingTips.com

With stocks at multiyear highs, many folks are

contemplating getting back into the market. The stock

market is up again and that tempts more and more people

to become stock investors.

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Folks who bought when the market was low love this scenario. Late arriving

investors pour their money into the market just as fundamental analysis of

stocks tells the pros that it may be time to take a little profit or get out altogether.

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The second half of this scenario is that the market

turns and falls. Newly arrived investors hang on in the

belief that if the market was going up it will surely go up

again.

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Finally, in despair, they pull out of the market, licking their wounds, just as long term stock investors see

opportunities and buy low priced stocks with good margins of safety and intrinsic stock value.

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How to avoid rookie mistakes in investing is to do a little homework before jumping

into the market. Take a long term view of stocks that you

purchase.

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Decide when it will be smart to buy and when it will wise to hold and when it will be time to sell. Learn about

calculating intrinsic value and identifying a margin of safety

in a stock.

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Learn how to invest in such a way as to avoid letting fear

and greed drive your decisions.

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Time, Risk, and Reward

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Short term stock gains are possible in volatile markets. So are stock losses. How to avoid rookie mistakes when investing in volatile markets

is a four-fold task:

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Learn the fundamentals that drive the stock you

want to buy

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Learn the trading skill of technical analysis so that you can read changes in

market sentiment

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Decide if you are a short term trader or a long term

investor

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Remember that many successful investors do not

believe that you can reliably time the market

and make profits again and again

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If you want to put away money for retirement and you are not interested in sitting at a trade station all day buying and selling, pick stocks with a

good margin of safety and high intrinsic stock value.

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Consider dividend stocks that pay you quarterly and

consider reinvesting these dividends. Pick stocks with a

reliable rate of return and low risk. Remember the power of

compound returns.

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Do Your Own Homework

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A useful exercise is to think about how to invest $10,000. What do you

want to do with the money once your investments have grown? How

long are you willing and able to wait? How much risk are you

willing to take? Do you know about diversifying your investment

portfolio? What are reasonable expectations when investing in

stocks?By:

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How to avoid rookie mistakes when investing starts with

this kind of thinking. You do not have to run out and buy

any stock as soon as you have $10,000 to invest. You can pick stocks as though you

bought them and watch how they do.

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You can develop a process or strategy for picking stocks,

watching them, and deciding when to buy more and when

to sell.

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How to avoid rookie mistakes when investing is to learn to do your own homework and

not make a habit of following the herd of investment

lemmings as it heads for the investment cliff.

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Following the Numbers instead of Succumbing to

Fear or Greed

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Far too many new investors buy in moments of unfounded optimism and sell in moments

of mistaken despair. Greed and fear are the twin demons

that destroy all too many investors.

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How to avoid rookie mistakes in investing is to buy and sell

stocks based upon sound analysis and clear data.

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If you cannot say why you are buying except that your

friend says it is a good deal you do not belong in the stock

market. If your friend says that XYZ Corp. is a good bet and your own fundamental analysis tells you that he is

correct it is time to buy.By:

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Remember to always do your own fundamental analysis

and remember that there is nothing wrong with getting out of the market when it

does not make sense.

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Any number of long term successful investors sat on the sidelines when the Dot Com bubble burst or in the run-up to the 2008 market crash. You can too and then invest again when prices are

low.

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