You asked: How to Invest in the Stock Market? There is so much advice on stock market investing that makes it sound simple. “Buy Low, Sell High” is one of the most often heard, but also the most useless.
Of all the books that I’ve read on how to invest in the stock market, at least half of them didn’t give one piece of concrete, useful information (you can see my list of favorite books on investing here).
This is why we surveyed dozens of market pros to uncover some concrete stock market tips that you can actually use. The following insights are the result of this project.
- See the Top Stock Market Investing Tips.
Tips on How to Invest in the Stock Market
50 ”I would buy the S&P 500 or Nasdaq when they exceed their 200 day Simple Moving Average and I would go to cash (or a conservative investment) when it goes below.”
Tim Higgins, CFP®, ChFC®
Certified Financial Planner™ practitioner
3MERITUS Wealth Management
49 “Stocks have no real value until you sell. Build a portfolio at amount x$ in diversified stocks. When the value goes up 10 %–sell 10% and put those dollars into real stuff—art, collectibles, coins, real estate, etc. Then wait for your base to go up. Buy more for your base only when you can buy cheap.”
Creative Director Musee-Solomon
48 “It’s not timing the market, it’s time in the market.”
47 “When the masses are buying, you should be selling.”
46 “Rebalance on an annual basis to ensure that certain sectors/asset classes do not become too large a part of your portfolio.”
45 “Watching CNBC is bad for your portfolio. Is sensationalistic reporting and often leads individuals to make decisions that are not good for their long-term investment goals.”
Thomas Balcom, CFPR, CAIA, MBA
Founder 1650 Wealth Management
44 “In the past, investors have had success investing in stocks and/or mutual funds and simply holding those stocks or funds until retirement. However, these kinds of investments are at best a 50/50 bet. Given the state of the American economy and the debt of the U.S. Government, the very dollars that those investments are purchase with are now in flux. That means that even if the stocks that you purchase are worth more dollars down the road, the dollars that you could recoup by selling your investments would have less purchasing power.
To survive going forward, investors have to take a hard look at the many new alternatives now available to today’s investors. There are now derivatives markets that allow an investor to position themselves in a way that they have a much greater chance of success with less risk. Instead of a 50% probability of success, one can now take a position that, by it’s very structure, has a probability of success greater than 65%. In addition, that same structure limits the maximum risk of the position. The options market has always been portrayed as complex and risky. However, given the new tools available to individual investors, much of the complexity has been removed. In addition, the real risky investments are now those stocks and mutual funds priced in U.S. Dollars.”
John Richardson – ConsistentOptionsIncome.com
43 “Only ever buy a stock that is trending up, that is, making higher highs and lower lows.”
42 “Only ever buy a stock in a company that you understand.”
Michael Giles, Founder/CEO Roboinvest
41 “While screening stocks and publicly traded companies, take the advice of those who know what they’re talking about. Read magazines such as ‘Money’ and ‘Forbes’, and consider studying investment newsletters as well. The good ones cost money, though most offer free trials. Keep track of the business/investment section of your local newspaper as well, and sign up for free monthly publications offered by investment companies, such as Charles Schwab.”
40 “You can also research through a wide variety of quality investment websites. I’ve always found this strategy to be more helpful that trying to decipher complex stock analyses or trying to perform technical analysis. When I notice that a particular stock or company has received positive mentions in multiple sources, this is a sign that it may be worth investing in.”
Andrew Schrage – MoneyCrashers
39 “In periods of uncertainty, the only thing that can save you is your discipline. you must determine how much you are willing to lose before selling, and you MUST stick to it. Those that didn’t adhere to a discipline in 2008 and even during the dot com era lost a lot of money. You can protect yourself on the downside, using strategies such as stop loss orders, by sicking to your discipline. Discipline is important on the up side as well. You can’t get too greedy when you have a winner. You must be able to decide when it’s time to take money off the table.”
Rob Wilson – RobWilson.TV
38 “Any investor beginning to allocate capital into volatile markets need not worry about ratios, fundamental analysis or modeling. Beginning investors need understand that effective asset allocation and diversification according to risk tolerance is critical. Today’s marketplace provides myriad ways to invest via inexpensive and liquid vehicles called Exchange Traded Funds (ETFs). These indices track different asset classes and provide investors with the means of investing across all of them.
One can utilize ETFs in order to glean income (dividends and yield via stocks and bonds), growth, or simply seek out asset classes that are not perfectly correlated to stocks and bonds. Once an investor has diversified into a core portfolio weighted towards certain asset classes according to one’s risk tolerance, then an investor might begin to consider some complimentary stock positions. Whether purchased for growth or income, these investments should only be made if the investor understands the primary products and services (value propositions) offered. Need to read a book or white paper simply to grasp the company’s business model? Walk away.
Once the investor has identified a company with which he is comfortable, then he should determine whether the stock is overvalued or undervalued. Sitting above the long-term average price-to-earnings (P/E) ratio? Walk away. At or below the historical P/E ratio? Then it may be prudent to begin to build, over time, a position in the company’s shares. This process should leave an investor feeling comfortable, educated and diversified. And in a position to work towards long-term, personal objectives.”
Jeff S. Vollmer – Managing Principal
Hyde Park Wealth Management
37 “Find a great dividend mutual fund, throw little bits of money in there at a time and forget about it. You won’t get rich immediately, but the long-term perks will be well worth it.”
Manager – Publicity and Special Projects
Her Campus Media
36 “Play it ‘safe and cheap’…and you won’t be kicking yourself about risky investments that went bad. Unfortunately, I had to learn this the hard way because I wanted to hit the homerun instead of earning my way around the bases. I struck out several times. If you’re a beginner with little experience in the markets, then invest (at the right price) in industry-leading companies that pay dividends. The key, however, is to GET IN AT THE RIGHT TIME. For example, RIGHT NOW, Intel (INTC) and McDonald’s (MCD) are incredibly cheap (near their 52-week lows). These firms aren’t going anywhere in the next century.
They continue to expand globally and service their core clients. Microsoft (MSFT) is another favorite of mine. Shareholders of Microsoft can go to bed at night knowing they’ll be paid a dividend and that the company’s management operates in the best interest of shareholders.”
Senior Producer of The Stansberry Radio Network
35 “When trying to gauge the price movement on a stock, try buying a very small quantity of the stock instead of just adding it to your watch list. Similar to playing poker, you won’t get a true feel for things unless real money is involved.”
34 “Take the emotion out of trading. Have a preset guideline of what your actions will be given the market reactions. Be disciplined. Use rigorous filters to see if the stock or other vehicle will fit your portfolio. Figure out your trading methodology. Buy value and hold or capitalize on growth and get out fast.”
33 “You need to be on your game 100% of the time or have a computer do it for you because flash trading is over 70 percent of volume daily. So use a computer to execute your trades.”
32 “When you diversify minimize the covariance between your vehicles. Also, look to see if the companies pay out rate has been increasing because they may be plowing it back into the company and making better product to make more money. Which would you prefer capital appreciation or dividends? Buy very few stocks about 5 or 6 to maximize your growth. It is much more risky but you will get a larger return if you choose wisely.”
31 “Have a plan for how long you will hold, and stick to it!”
David Sherry – DavidJSherry.com
How to Invest in the Stock Market top Tips
💡 Find our Top Tips reading: How to Invest in the Stock Market Top Tips.
30 “Shop Around For the Lowest Fee Brokerages…Just as shopping around for the best prices can save you a ton of money grocery shopping, the same is true when you get started investing. It might not seem like a lot, but the fees and costs associated with your stock trading can really add up over the course of years whether or not the investments you choose do well – so be sure to make sure you start off on the right foot. A recent NerdWallet study found that investors using the largest 3 online brokerages – Schwab, E-trade, and TD Ameritrade – are overpaying on fees by over $1.8 billion a year.”
Susan Lyon – NerdWallet
29 “Use time to leverage your investment opportunity. What this means, is that time, almost more any other component, gives the investor the most advantage.”
James M. Haupt, CWM/Partner
28 “For a new investor that is looking to begin investing in the stock market, I would suggest starting slow by investing in an index fund. Index funds, such as one based on the 500 stocks that make up the S&P 500, will give an investor immediate exposure to some of the best companies in the U.S.”
Mr. Everyday Dollar
27 “Everyone has the same 50% chance of a stock going up or down. It’s important to learn how to hedge your trades by using options, pairs trading and futures. For example, purchasing stocks with equity options can give you a chance to lower your cost basis which gives you a ‘cushion’ if the stock price moves against you. There are also option strategies which are non-directional which allows you to make money within a range of stock prices rather than only making money if a stock moves in a specific direction.”
Adam Bates Vice President
Insurance Services of America
26 “Study more behavior and philosophy subjects and less investment specific or Wall St jargon. Understanding investors’ behavior will make you rich faster than anything else. The masses are always wrong at the critical juncture. Buffett gets credit for being a great investor and he is, but the one thing he understands is investor psychology and how to buy when others are not (buy market lows), but also how to buy when things are going higher (buy high sell higher).”
25 “Read both the active and passive side of the ledger. While most people spend their entire careers arguing which is better, it really doesn’t matter as long as it aligns with the type of investor you are. If you really can buy something and hold for 10 years then passive works. If you are a swing trader, then active is the only way.”
24 “Understand the critical importance of the law of large losses. For example 10% drop needs 11% for break even, 25% drop take 33% and a 50% decline takes 100% to get even. Understanding this and continually asking yourself if anything goes wrong how much can I lose on this investment. Not how much can I make if things go right.”
Tim Dyer – Vice President
Sage Capital Advisors, LLC
23 “My advice would be to avoid the strong urge to go ‘all in’ on one stock. This could hurt you in two ways: first, you could pick a dog and lose money, but more damaging would be the painful, long term lesson you would teach yourself from the experience. Give yourself the greatest chance for success by starting with an S&P 500 index fund or ETF.”
23 “When you’re young, you don’t have a lot of money, but you have a lot of time. Time is much more powerful than money (compounding). Don’t set yourself up for disappointment and the lesson you learn will make you rich over time.”
President Asset Management Strategies, Inc.
More investing tips:
21 “Don’t put all your hopes and dreams on one stock. If you don’t have enough money to diversify, buy a fund or ETF.”
20 “Don’t listen to technicians or technical analysis – it’s been debunked over and over.”
19 “Don’t expect to beat the market consistently, few professionals even do.”
18 “Know yourself and how you’ll likely react to big gains or losses and prepare yourself to act accordingly if they occur.”
17 “Educate yourself and learn about the firm(s) you’re considering buying. Focus on their business model, earnings guidance, revenue, management quality, costs, competitors and growth prospects.”
Michael T. Prus, President
Scale Investment Group, LLC
16 “Emulate and follow the actions of successful people, listening to and following the actions of not successful people never made anyone successful. For example, I’ve always invested in the companies that Warren Buffett and Ken Fisher invest in… I’ve made millions and I haven’t lost anything in the past 25+ years that I have been investing.
They have the research facilities, the wherewithal and the success records to prove that their approaches and stock picks work. I’m an IT professional and not a securities professional, listening to other IT folks regarding stock market tips would lead to failure and losses. Correspondingly, I wouldn’t ask Warren Buffett or Ken Fisher for IT advice and approaches… I would instead emulate and follow the actions of successful IT professionals.”
Vice President of IT & Data Center Operations
L K Consulting, LLC
15 “Learn how to use technical indicators especially the MACD, and the 10 and 50 day moving averages. Learn to love numbers, there’s a lot of value in the data!”
CEO Next Day Flyers
14 “Stocks are ending a rally phase within a longer-term, generational bear market. (See: Bear Market Rally).
The eventual low of this bear market is still some years away. The best advice for young graduates is to save in cash and cash equivalents and wait for future buying opportunities.”
Author of Escaping Oz: Protecting your wealth during the financial crisis
13 “Investing = Market Timing. The industry tells you that you can’t time the markets, yet they do it daily. With a greater understanding of how the markets really work, how supply and demand levels are created, traders can accurately time the markets with a high degree of probability. Couple this with proper money management, and anyone can trade like a professional.”
12 “It is also imperative that traders have a written trading plan which details how they apply Supply and Demand methodology, illustrates strategies, and outlines all their trading rules. This plan creates accountability while allowing traders to replicate success and eliminate failures.”
11 “It is also important for traders and investors to have a checklist of criteria to evaluate before they make a trade. We have a list of 10 criteria we use at Online Trading Academy called “Odds Enhancers”. These 10 questions allow you to look objectively at the security you are trading and evaluate it. If the score is over a certain threshold, you would take the trade and feel confident about it. If it was under that threshold, you would pass on the trade and look for another. This is a much more systematic approach to trading than conventionally taught.”
Instructor and Radio Host – Online Trading Academy
10 “Market timing doesn’t work. Buying low and selling high looks great in hindsight. Unfortunately, it is impossible to do so reliably.”
9 “It is amazing how each dollar invested compounds over time. The earlier you start, the more impressed you’ll be with your returns.”
8 “Day trading is not investing. It’s gambling.”
7 “When buying a stock, think of yourself as a prospective part owner in a business. It will help you evaluate the company based on its fundamental merits, not stock charts, price trends, and momentary investor sentiment.”
6 “Jumping in and out of the market jeopardizes your returns. Stay invested in the market at all times, but keep re-evaluating your portfolio.”
Leon Shirman, PhD, CFA
Managing Partner at Emerald Hills Capital
Author of 42 Rules for Sensible Investing