I grew up in a relatively poor family where the stock market was not something anyone talked about. And when I went to college, I majored in Theater. So what finally gave this small-town girl the courage to buy my first shares of stock?
You might be surprised, but it was a market that was sliding ever downward. I watched the gloom & doom reports on the nightly news, and instead of being terrified, something told me that we would survive. And if we did survive, the market would eventually head up again. Which it did.
And so I take my first tentative steps toward investing
So instead of buying into the gloom & doom (often made even scarier as dramatized by the media), I decided it was time to go buy some stocks. 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 way before online brokers) by visiting different investment firms and talking to a few of their brokers. If you’re going to let this person help you invest your hard-earned money, you need to feel a connection – and get a sense they’re someone you can trust.
I found a woman who had been one of the earliest women to actually trade on the floor of the New York Stock Exchange. 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 me 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.)
Some lessons I learned from Marge about stocks and trading:
- If you’re trading stocks, don’t worry about buying at the lowest point or selling at the highest point. A lot of money can be made in between.
- Learn to value the trading history of a stock. It can help tell the story of where you might try to buy or sell and beat out all the other people trying to hit a top or bottom.
- When possible, use “limit orders” to set a specific price where you want to buy or sell a stock. This way your order for a stock that is moving quickly (up or down) can’t lock you in at a level you will regret. 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.
- 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 because we had watched the trading day numbers fly by for enough time to see it had a trading range (up and down) that was pretty solid, at least for a while. In the middle of that range, we both made money.
- Do your research carefully. So much info out there now. I love Morningstar.com and TheStreet.com, but even googling the stock and checking for any news you can find can help paint of picture of how solid it is and what the 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 that money to work elsewhere.
IMPORTANT NOTE: If you buy stocks to hold, letting go is NOT usually the best advice. 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. Too hard to get the timing right.
So many folks sold their portfolios in 2008 during the horrible crash, but by the time they got the courage to get back in, they had lost a lot in the process. 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
I have never forgotten Marge. And to this day, most of the things she taught me still inform my investing. The rest I’ve learned through trial and error. And as markets change, there is always so much more to learn.
But I am ever grateful to Marge for having given me a solid foundation (we learn by trying) and shown me 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, including when it comes to your career!
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