Investing in the stock market as a route to wealth involves being aware of the techniques and strategies that lead to investing success. In order to understand and implement these stock market techniques usually requires both knowledge and practice. Additionally, being prepared to accept loss and keep one's emotions in check is a useful aspect of investing in the stock market as a route to wealth.
• Learn and practice stock market investing
• Train emotions and prepare for loss
• Test invest using techniques from step 1
• Develop investing techniques and strategies
• Reinvest using enhanced investing plan
Learning about Investing
To invest as a route to wealth it often helps to know about investing. Learning about investing requires one to research businesses, study investing manuals and instruction guides, and become familiar with a number of financial tools used for analyzing stocks. There is a large amount of investment material, but here are two books that provide fairly solid introductory financial advice.
• The Intelligent Investor by, Benjamin Graham
• One Up on Wall Street, by Peter Lynch
The pseudo-science of investing
Statistical analysis such as Betas, Correlations and Covariances are used in charting and predicting stock value, but the fact remains, the future of value is both undetermined and unknown. We have all seen the warning "Past performance is not a predictor of future success"
More of the story is that the 'science' of money is a reflection of economic thought, regulatory environment, political belief, consumer psychology, supply and demand among other things. Few if any of these things can be predicted with 99.999% accuracy or lower.
The role of money, economy and regulation in investing
To investing in the stock market as a route to wealth involves being aware of money, the economy and financial regulation. For example, in Europe the securities markets are not regulated the same way as they are in the United States or Japan and in 2007 the value of the Chinese Yuan was pegged to the dollar making the products it represented a better import deal for various economies. This along with regulated interest rates helped fuel China's stock market.
While the supply of money is regulated, that amount grows every year. In the United States, The Federal Reserve limits the supply of money so it doesn't lose value, but the Federal Reserve also keeps a constant watch over the money supply in order to ensure there is an amount large enough to match the wealth being created by economic forces such as innovation, labor, enterprise, science, medicine, technology etc.
Money supply also referred to as liquidity impacts the stock market because liquidity is needed for large investments. The more work a population puts into an economy, the more money is needed to reflect the wealth generated by that work. Work as measured by employment and unemployment statistics is a measure of economic performance which is related to stock market performance.
Summary
By keeping in mind certain factors that do play a role in the stock market, investing may afford one the opportunity to invest as a route to wealth. This opportunity is assisted by being aware of the market, the economy and also knowing how to invest and having the discipline to invest correctly using investment techniques and strategies.
Since the stock market is not a scientific phenomenon in the sense that market psychology, economics and politically driven market conditions are real factors. The stock market will theoretically never be predictable.
• Learn and practice stock market investing
• Train emotions and prepare for loss
• Test invest using techniques from step 1
• Develop investing techniques and strategies
• Reinvest using enhanced investing plan
Learning about Investing
To invest as a route to wealth it often helps to know about investing. Learning about investing requires one to research businesses, study investing manuals and instruction guides, and become familiar with a number of financial tools used for analyzing stocks. There is a large amount of investment material, but here are two books that provide fairly solid introductory financial advice.
• The Intelligent Investor by, Benjamin Graham
• One Up on Wall Street, by Peter Lynch
The pseudo-science of investing
Statistical analysis such as Betas, Correlations and Covariances are used in charting and predicting stock value, but the fact remains, the future of value is both undetermined and unknown. We have all seen the warning "Past performance is not a predictor of future success"
More of the story is that the 'science' of money is a reflection of economic thought, regulatory environment, political belief, consumer psychology, supply and demand among other things. Few if any of these things can be predicted with 99.999% accuracy or lower.
The role of money, economy and regulation in investing
To investing in the stock market as a route to wealth involves being aware of money, the economy and financial regulation. For example, in Europe the securities markets are not regulated the same way as they are in the United States or Japan and in 2007 the value of the Chinese Yuan was pegged to the dollar making the products it represented a better import deal for various economies. This along with regulated interest rates helped fuel China's stock market.
While the supply of money is regulated, that amount grows every year. In the United States, The Federal Reserve limits the supply of money so it doesn't lose value, but the Federal Reserve also keeps a constant watch over the money supply in order to ensure there is an amount large enough to match the wealth being created by economic forces such as innovation, labor, enterprise, science, medicine, technology etc.
Money supply also referred to as liquidity impacts the stock market because liquidity is needed for large investments. The more work a population puts into an economy, the more money is needed to reflect the wealth generated by that work. Work as measured by employment and unemployment statistics is a measure of economic performance which is related to stock market performance.
Summary
By keeping in mind certain factors that do play a role in the stock market, investing may afford one the opportunity to invest as a route to wealth. This opportunity is assisted by being aware of the market, the economy and also knowing how to invest and having the discipline to invest correctly using investment techniques and strategies.
Since the stock market is not a scientific phenomenon in the sense that market psychology, economics and politically driven market conditions are real factors. The stock market will theoretically never be predictable.
Sources:
1. http://bit.ly/ar5dau (Google Books)
2. http://amzn.to/9brRb1 (Top 10 Investment books)
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