Be a Leader Not a Follower Lesson 105

  Each day we hear of a stock "that's on fire," "can't be stopped," "exploding," "looks to double,"and other terms that indicate we're missing something. We get a sense that we're missing out on something that will create wealth for us in a short time. This type of excitement on the radio, news print, or the internet more often than not will cost you money in loses. Investing in a stock by following hype is a great way to gain nothing.

  Buying a stock without looking at its quality, is like buying a car because you were told, "it's a great car." There are great cars to be had, but all cars like all stocks aren't great.

  If a stock is said to be "exploding and looks to double," we have no idea what is causing this stock to increase in value. We have no clue at what price is the best for us to pay, and we have no idea at what price to sell. We also don't know how much more this stock will continue to go up (did this increase begin or is the increase stopping). The other thing we don't know is the qualifications of the person making these exciting comments about a stock.

  I suggest we look at this kind of "helpful" information, like hearing about how great a certain horse ran and won at the trackm as old news. By the time you got this "helpful" information about this horse winning by a "length", the race already happened, it's over, it's done, and there is no point trying to put money on this horse race that is now history.

  The news talks about this great stock going up, but this is after the stock went up (If they told us before the increase, that would be "helpful"). The radio announcer is excited about stock xyz, but this (race) has already happened, so don't put your money on a stock that you heard about, because the increase that everybody is talking about, has already happened (hold on to your money).

  When we hear that a stock "popped", the price increase already happened, Owners of a stock, in anticipation of a "pop" (Leaders) profited. Those that bought after the "pop" (Followers), got nothing except to watch the price go back down.

  All of us need to be leaders in investing. A leader picks the stocks that have meaning (we like the product or what the company represents), and are willing to do homework to learn abour the company and decide at what price your willing to pay in order to make a profit.

  A follower only hears about a stock, doesn't do any homework, and pays too much for a stock that may not perform as hoped. If you get in late you pay too much, and watch the stock lower in value, you now have three choices. Number 1, Hold till the price rises again (when?), Number 2, Sell at a loss (bummer), and number 3 learn how easy it is to do the homework that is required, before investing, to prevent this from happening again.

  For more information on this and other important subjects visit our site; http://www.youcontrolinvesting.com/ to learn how to get started investing the right way at a low cost. For our low price you will receive a textbook to learn with and use as a reference. We also will provide current information by Email, about Wall Street, so that you will be better informed, and become a good investor.