OT: Buying Stock

[Christopher Browne]

On Feb 16, 2008 2:47 AM, Asaf Maruf <asafmaruf-Re5JQEeQqe8AvxtiuMwx3w at public.gmane.org> wrote:
> I think you should prepare very well before considering buying and selling
> stocks. I personally think investing is all about calculation, preparation,
> hardwork and timing. This is serious stuff. There is always the perception
> that market is down and stocks are easy picking and vice versa.
>
> This is our hard-earned money. We can't depend on perceptions or what the
> current market rumors are saying. We need to be dead sure. We need to be
> absolutely clear it is the right time to purchase/sell a particular stock.
>
> The intelligent investor will study the market, consider a portfolio of
> stocks and wait for the right time.

I'd say a big "nonsense" here.  Unless you've got a brain the size of
the planet, such that you can predict the future, then you can't know
for certain if the market is about to go in either direction.

You can't afford to wait until you are "dead sure;" the only time you
*can* be "dead sure" about things is that when you're dead, you can be
sure that stock prices do not matter anymore.

Instead, it makes sense to get into the regular practice of investing
something.  I think there's a lot of "snake oil" surrounding the
"Dollar Unit Averaging," but the truth that it *does* have is that if
you are continually buying a bit of this and that, then this will
mitigate the risks that come from variations in stock price.

Further, being in the regular habit of investing means that you've got
the Good Habit of Saving, which is of some independent value.

> I would recommend reading the classic "Security Analysis" by Ben Graham
> (http://en.wikipedia.org/wiki/Security_Analysis). Ben Graham was the mentor
> for Warren Buffett.
>
> Closer to home you can refer to www.gordonpape.com. Pick up one of his books
> and understand it.

I'd also suggest _A Random Walk Down Wall Street_ by Burton G. Malkiel.

I have been heading down the ETF (Exchange Traded Fund) route, lately.
 They provide a diversified portfolio, which is a good thing, and they
have way, way, way lower management fees than the (super-rapacious)
Canadian mutual funds.
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