2/Buy What You Understand

Main Menu

313 Blackstone Avenue
Ithaca, New York 14850
607-255-4405

#2 – Buy only what you understand.

Don’t invest anything until you have taken the time to investigate and are comfortable with what you are doing. It sounds simple but consider the number of people who poured billions of dollars into tech stocks without really knowing what they were buying. As we found out, 2000 – 2002, every technology stock will not always do well.

Should you really chase the latest tip, a “red hot IPO” or should you invest in solid companies with “real earnings”?

Don’t be afraid to ask questions. Know what you are buying and why you are buying it. Know what you own and why you own it. Spend time analyzing companies or mutual funds and then try to pick the best ones. Before you buy a mutual fund, you need to find out what it owns,

If you don’t really understand what a company does, don’t invest in it. If you can’t explain what you are buying (own) to someone so that they understand it, perhaps you shouldn’t put your money there. It all sounds simple but consider---Las Vegas is busy every day---so we know everyone is not rational. Good informational sites for beginners on the Internet are---www.better-investing.org and www.fool.com.