Stock Market Investing - Is The Market Bigger Than Us All?

A lot of people who study stock market investing eventually think the market is rigged. I'm no different. I think that for anybody who has invested in a stock only to watch it immediately go down, or for anyone who has retired at the same time all of their company stock tanked and for anyone who wonders why stocks with lousy fundamentals go up in price, you eventually become jaded. Maybe it's age, but as time passes, I am more and more skeptical of how the stock market functions.

As my friend and I were talking about it this week, I realized we sounded a lot like we did when we were complaining about the NBA and it's lousy officiating. Back then, we'd always say that "the league was bigger than us all" and we resigned ourselves to the fact that we couldn't do anything about it. So after that discussion, I said to myself that the market is bigger than us all. I felt better but disappointed. Is the market so out of whack that a small investor has no chance? That's what my friend kind of thought. And, it's easy to agree with all the crap about hedge funds, Goldman Sachs and the whole Bernie Madhoff scheme in the media day in and day out.

But, with all that, I still think that the market is "the place" to make a fortune. What's needed though is a new stock market investing guide for the little guy. One that recognizes that the market is not perfect because it's being gamed by the big money players who don't care whether you make money or not. They only care if they make money. So, if you are tired of getting ripped off by the "system". I hope that you'll stay tuned as I start to put together the guide to stock market investing that proves you can turn the tables and play the same game as they do.

Will it be easy? No. Will it take study? Yes. What's going to be required is that you commit to be a master of your strategy and start looking at your investment program in a new light. You will need to take a long hard look at how you've done things in the past. You'll need to practice your craft and break down every step you take in your daily routine down to separate and distinct checklist that will guide your every decision.

If you can't commit, then what should you do? Well, put your money in a mutual fund and ride it out for 15-20 years. Put it in the best fund you can find or even consider index funds. If you can't meet the minimum investments start with an ETF, but get started because the market over the long haul has always averaged better than anything else. Personally, I suppose everyone should have a base of mutual funds before they start investing in individual stocks -- at least until they become good at stock selection and entry and exit points. While you are learning you might want to consider your stock purchases as tuition until you hone your skills. I definitely think you can out do your broker, if you study and apply what you learn. Mainly because your broker never advises you to sell. This to me is the cardinal sin of a broker because the buy and hold strategy for individual stocks will basically guarantee that you'll watch your gains disappear. Learning to sell is so hard that the brokers don't even know when to tell you to do it and therefore teach the buy and hold strategy.

I guess if you are a real beginner, you are probably going to start from scratch by reading some books. I know that when I first started, I read the Neatest Little Guide To Stock Market Investing and Stock Market Investing For Dummies. I know recently, I picked up a beginner book called, How A Second Grader Beats Wall Street: Golden Rules Any Investor Can Learn. These books can form a good base of knowledge for you. But, the real bible of investing is How To Make Money In Stocks by William O'Neil. This is a must read as far as I'm concerned for anyone serious about getting started in the market.

Why do I think this book is the bible for investors? Because he teaches the CANSLIM theory of investing which focuses on the two most important components of a stock. The first side is the fundamental side which are the earnings, the sales, return on equity. The basic performance of the company. The second side is the the technical side. This is the side that is like an x-ray that tells you things like price and volume. While both sides are important. it's the technical side that tells you the real story.

You see, where CANSLIM can really help you, is by teaching you how to do what the big money does and not what the big money tells you to do. Your job is to identify where the big money is flowing and follow it.

This is key and you won't find this information on CNN, Fox News, Money or the Wall Street Journal. There's only one place you can find that's devoted to sharing that information with you and that's the Investor's Business Daily.

By using their tools - which you can access online - stock market investing with the IBD information at your fingertips is the first change you need to make in your philosophy (if you haven't already).

As you can tell, I'm not really advocating a new investing strategy as CANSLIM has been around for a while. I'm not even saying that you need to choose it for your strategy. Any of the major strategies can and will work and they still do. What won't work is jumping from strategy to strategy. This idea that you one day be a value investor, the next day be a growth investor and then the next be an options trader won't cut it.  This is a major problem as I see it for stock market investing - beginners won't stick to a strategy. What happens then is that you are not a master at any strategy. Pick one and stick to it.

In following that advice, the strategy of choice for this site is going to be CANSLIM for the reasons I gave above. But the techniques as far as mastering any strategy will be the same. Break down your decisions step by step. Master each step. Refine the steps as you go along.

Very, very few people do this. Many people who fail at investing on their own, didn't take the time to master what they set out to do. When they fail, it's easier sometimes to blame others, like the market. And, while I do subscribe to the notion that the market is bigger than us all, I don't believe that you can't succeed. After all, even in the NBA, someone wins the championship. There are winners and losers in every market. You can be one of them.