Have you ever thought about investing in the stock market are you intimidated by
putting money into assets you know little or nothing about or are scared
that you may lose your hard-earned savings today we're gonna go over the
quoted as saying that this is the best book ever written about investing
Buffett read this book when he was attending Columbia University and
Benjamin eventually became Warren's teacher so if one of the richest men on
the planet says that this is a great book to read then I think it's worth
picking up first you need to understand what investing actually is all you need
to know to get started is that there are three big types of investments hold
asset classes which include stocks bonds and cash stock is just ownership in a
company and there are two ways to make or lose money in the stock market you
see when you own a stock you own a piece of a company and as the value of the
company increases the stock price goes up but if the value of the company
decreases the stock price goes down as well these ups and downs determine the
amount of profit or loss the second way to make money is when the company shares
its yearly profits with you in the form of dividends stock prices can go up and
down dramatically for all kinds of reasons
as a result stocks are the riskiest type of investments in your plan however
there's a way to invest in the market that doesn't leave you at risk of losing
everything intelligent investing there's a lot of
money to be made through investing but a lot to lose finance history is full of
stories of investors like Warren Buffett who by investing in the right company
earned vast amounts of money in return and they're just as many if not more
stories of misfortune where people place the wrong bet and end up losing it all
there are three principles that apply to all intelligent investors first
intelligent investors analyze the long-term development and business
principles of the companies in which they consider investing before buying
any stock a stocks long-term value is not arbitrary rather it depends directly
on how well the company behind performs so be sure to examine the company's
financial structure the quality of its management and whether it
pays consistent dividends intelligent investors use thorough analysis to
secure safe and steady returns this is very different from speculating which
investors focus on short-term gains made possible by market fluctuations
speculations are thus very risky simply because nobody can predict the future
for example a speculator might hear a rumor that Microsoft will soon release a
new state-of-the-art computer and then will be motivated to buy lots of
Microsoft stock if the speculator is lucky then this knowledge will pay off
and the person will make money but if he is unlucky and the rumor proves wrong
then the individual stands to lose a lot in contrast intelligent investors focus
on pricing these investors buy stock only when the price is below its
intrinsic value don't fall into the trap of looking only at short-term earnings
look instead of the big picture by examining the company's financial
history these steps will give you a better idea of how well company's
performing independent of its value on the market for instance a company that
isn't currently popular and therefore has a low share price but shows
promising records of consistent profit is likely undervalued and would make a
prudent investment second intelligent and investors protect themselves against
serious losses by diversifying their investments never put all your money in
one stock no matter how promising it appears just imagine the horror you
would feel if the promising company that you put all your investments into shows
up in the news for tax fraud scandal your investments would lose its value
immediately and all the time and money will be lost forever by diversifying you
ensure that you won't lose everything at once and to further remove you from the
emotional stress of investing in the market you should always stick to a
strict formula when investing Graham calls it formula investing but it's more
widely known as dollar cost averaging this concept consists of setting a fixed
budget you're going to invest every month or quarter and then invest into
the stocks that you've previously picked no matter the price third intelligent
investors understand that they won't pull an extraordinary profits but safe
and steady revenues the target for the intelligence
is to meet his personal needs not to outperform the professional stockbrokers
who trade on Wall Street we can't expect to do better than those who trade for a
living and we shouldn't be aiming for fast money anyway
chasing dollar signs only makes us greedy and careless whether you're just
starting out or you've been investing for quite some time you will always want
to walk the path of the intelligent investor maybe you won't become a
billionaire in a week but I guarantee that over time you can turn your
investments into modest but steady profits thanks for watching if you
enjoyed this video please comment share and subscribe for more informative
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