Introduction to
Stock Investing Basics

Everybody wants to win big in the stock market. I can recall a time not long ago where scads and scads of people quit their jobs to become “day traders.”

I'm reminded of The Simpson's episode where Homer became a stock trader in his own company. He amassed a tiny gain, bought something with it, and found that he sold far too soon when all of his working buddies drove into work the next day in fancy cars, sporting facelifts and other signs of the nuevo riche.

Many of us made small fortunes during the last bull market. Some of us amassed HUGE amounts of cash. All that happened in the late 90s and early 2000s, ending abruptly in 2001, when the recession came, 9/11 exacerbated it, and the NASDAQ tumbled.

Guess what? Those day traders became unemployed and homeless. Some went bankrupt. Some undoubtedly lost everything: Money, homes, and cars. Marriages were broken. It's a safe bet some died from the stress.

But that's not why you're here. You didn't acquire this book to be discouraged. You got it because you wanted helpful advice on navigating the “stock market.”

Let's get a couple of things out of the way.

  • First, there is no single stock market. In fact, there are many. Some are physical, like the New York Stock Exchange, and some are “virtual” or computer-driven, like the NASDAQ.
  • Second, there are fundamental differences between investing in the stock market and speculating in it. We'll get to that a little later. Suffice it to say, for now, that investing is about the long-term and speculating is about the short-term.
  • Nobody involved in the stock market cares about your particular plight; they're in the market for the same reasons as you are. They want to increase their wealth.

The inspiration behind this book is the readership of my personal finance sites, Money Hacks and Your Money Is Your Life. I owe it to my readers for energizing me and compelling me to embark on a quest to educate, encourage, and inspire others to make their lives – both financial and non-financial – better.

My initial foray into the personal finance world was back in the late 80s while I was in college when I became interested in stocks, the markets, how they worked, and how one could amass a sizable portfolio over time if one followed a few simple rules, which I will call axioms, the subject of the first chapter.

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