Facebook Lesson #1: Research is fundamental

Facebook’s stock should trade for $13.80 – Mark Hulbert – MarketWatch http://t.co/ywmMTQsq via @MarketWatch — Cafe AJM Open 24/7 (@ajmcafe)

John (Jack) Bogle (Net Worth $4 Billion) – “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” [from Barry Ritholtz “The Big Picture” blog @ritholtz]

How many Facebook investors bothered to read the S-1? http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm

As an individual retail investor who once bought AAPL shares when it was priced in the 20s and sold it in the 60s, it pays to do some research when evaluating a stock price.  Of course, merely pouring over a corporate balance sheet does not guarantee you will make a gain on that hot growth stock but it may take the emotional air out of a trigger trade. The stock market may not look like a casino but many of its players treat it like one. Don’t be a sucker; be an investor!

Some thoughts on personal investment portfolio management.

Know that the stock market is the flea market of the financial world. There are professionals and amateurs trading.  If you don’t work in the financial services industry, then you may likely be an amateur.  While there a great instinctual stock pickers, they are a rare breed even among the professional managers. First of all, you must have a plan when investing in the stock market. Ask yourself: Why am I allocating capital (often hard-earned income) in this manner? If you are thinking “overnight millionaire” then stop right there. Put down that mobile device, log out of that brokerage account. Go to the library (download e-book, buy paperback) and read The Millionaire Next Door.  After you let that best seller marinate your brain, ask yourself again: why are you investing?

In another post, I’ll present the case for and against investing in the equities (stock) market.

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