Stock Advice So Bad It Will Make You Cringe

"Make money when the market is dropping or not moving at all."

It's an appealing pitch -- particularly when it was made on the heels of a massive recession and a plunge of more than 50% in the value of the S&P 500 -- the promise to learn how to prosper during unpredictable times.

We weren't the only ones eager for guidance. The invitation to the "Rich Dad Stock Success" workshop drew more than 100 eager people to a conference room at the Hilton hotel less than four miles from The Motley Fool offices. It was a cold, damp night in January 2010. It was the second workshop held that day.

For 90 minutes, attendees (including myself and my colleague Dayana Yochim) sat in rapt attention. We scribbled madly in our notebooks, taking in every detail of what we were being told. I took seven pages of notes -- filled with investing advice that every investor needs to hear.

The path to financial freedom is here -- we agree
The man running the seminar had the charisma and command of an evangelical preacher. He started by polling the audience about our investing experience. Hands went up: It was split 50/50 between investors and non-investors.

Then he began with some refreshingly prudent advice. The audience was told, rightly so, that:

  • Investing is risky and could result in losing money.
  • Everyone's goal should not be to get rich quick, but to "get educated." In fact, the theme of the meeting was "education" -- a word everyone echoed back out loud when prompted.
  • Illiteracy was the foundation of financial struggle, a quote he attributed to the enterprise's best-seller guiding tome, Robert Kiyosaki's book Rich Dad, Poor Dad.
  • The rich are that way because, quoting another Rich Dad, Poor Dad line, they "know how to compound."
  • Three keys to building wealth are to: (1) believe in opportunity, and yourself, (2) understand the power of education, and (3) desire to buy "assets" -- as opposed to buying "liabilities."

This message of knowledge-as-empowerment had us enthusiastically, if not physically, nodding our heads. Education, information, compounding, thinking in terms of assets and liabilities -- these were all basic beliefs upon which The Motley Fool was founded.

He had us at "get educated." Then he lost us with every subsequent click of the PowerPoint slideshow.

The man behind the curtain
You could feel the tectonic shift after about 15 minutes. It was a steep descent as our emcee betrayed his early message of education and launched into the crux of the workshop's advice. Here's a paraphrased sampling:

On managing a 401(k): You should manage it based on what's going up or down. If six funds in your 401(k) are going up and four are going down, you should own the six going up.

On how to identify a good stock, part 1: Don't even worry about it. There's a shortcut answer to the "Is this a good stock?" question -- doesn't take longer than three seconds. See part 2.

On how to identify a good stock, part 2: Buy a software package called EduTrader. Type in a ticker symbol. A green (good), yellow (neutral), or red (bad) thumb will appear next to the ticker. The thumb tells you whether a company is good, neutral, or bad from a fundamentals perspective.

On when to buy: This, too, is simple. You want a stock "going in the right direction," which means you'll need the moving average convergence divergence test, also known as the MACD.

On the MACD: Buy when lines cross on the way up, sell when the lines cross on the way down. "Just go into the software and see where the lines cross."

Just to be clear, the cringe-worthy element of this experience was not being up-sold to a product or service. We do not begrudge anyone for charging for their research, teachings, or education. (The Motley Fool charges for its suite of premium services, after all.) This was a free seminar, and I knew going in there'd be an offer to purchase other things -- not unlike how the Fool offers 30-day free trials to our subscription products.

What was appalling was how actions and words so massively diverged. The earlier evangelizing about education was twisted into an unrecognizable form. This wasn't about education -- unless you count "learning how to read a green arrow and a line crossing another line on a chart" for knowing when to buy a stock.

The truth in the fine print
I haven't read a Rich Dad, Poor Dad book, either, so I can't speak to whether this was a fair representation of Robert Kiyosaki's body of work. His books are popular, so presumably they offer advice of value. The seminar was offered by Rich Dad Education, a joint venture of Kiyosaki's Rich Global and a tiny Florida company called Tigrent.

Still, I know a disaster when I see one. If you know someone considering one of these workshops, warn them that they won't learn much. Here's a direct quote I scribbled down: "I couldn't care less about why a stock goes up -- as long as it is." So much for education.

It wasn't just education that was glossed over. To give us an example of how this "make money no matter which way the market is going" strategy works, our emcee showed us the MACD strategy for DuPont in 2009. Over the course of a few months, the software would have generated buys or sells on DuPont -- cue Ed Rooney's voice here -- nine times. According to our emcee, DuPont lost 5% during the time frame used in our example, yet this MACD-fueled strategy would have returned 16%. But with one caveat: In order to use the software correctly, you need to be looking at it daily.

Oh, and another catch: That 16% doesn't include taxes or trading costs. In fact, not once did I hear trading costs, taxes, or any other frictional costs mentioned during the 90 minute presentation. By my own envelope estimates, to make nine DuPont trades in the span of six months, you'd have to pay roughly $10 per trade on nine occasions, plus $39.95 for the monthly software, plus short-term capital gains taxes -- all for a single stock in your portfolio. Also, in order to fully comprehend the software and strategy, we were told we'd need to attend a three-day seminar in the following weeks. Total tab for that: $495.

Roughly a dozen people signed up on the spot.

Investing: a battle between simplicity and complexity
One of the toughest things in investing is knowing when to keep things simple and when to dig deeper. (On the whole, I favor simplicity -- no surprise to anyone who's read past columns.)

In the end, the most discouraging part of the seminar wasn't what was said or what went unsaid: It was the captive audience hungry for education. Some uniformed military who'd just gotten off work, some parents with their young kids -- they all wanted to learn about investing, but didn't. Those seeking true investing education at the Rich Dad Stock Success seminar instead got the quick-start rundown of how to use a software system.

Where you come in
Here's where I need your help. Below I've compiled what I consider my 11 must-do's for anyone wanting to learn about investing. In the below comments section, I'm asking for you to chime in with advice you'd give to a newbie:

  • My money rule-of-thumb: Don't buy stuff you can't afford.
  • Only invest money you don't need for at least the next five years.
  • Look at low-cost broad-market index funds first, only easing into individual stocks or ETFs once you're comfortable in your knowledge.
  • Read as much as you can as often as you can. Speaking of which …
  • Read our 13 Steps to Investing Foolishly.
  • Read Peter Lynch's One Up on Wall Street.
  • Read Phil Fisher's Common Stocks and Uncommon Profit.
  • Read pretty much anything written by John Bogle.
  • Study the teachings and writings of Warren Buffett.
  • Challenge others and seek to have your own opinions challenged.
  • Realize that there aren't any shortcuts in investing. If you want to own stocks, be prepared to spend time on reading and due diligence. (If that's not for you, see the third bullet above.)

What would you add? Share your advice below. Learn on.

Fool.com managing editor Brian Richards doesn't own shares of any companies mentioned. The Motley Fool has a disclosure policy.


Read/Post Comments (136) | Recommend This Article (242)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 17, 2011, at 5:04 PM, oldengineer wrote:

    Subscribe to Hidden Gems

    Subscribe to Stock Advisor

    OE

  • Report this Comment On February 17, 2011, at 5:42 PM, begavr wrote:

    Make a watchlist of stocks you like or where you shop, put the price of the stock on the day you enter it on your watch list. Watch it go up and down. This really inspired me to read and learn more about investing. The Motley Fool has inspired me to learn and handle my own retirement investments. I've been a Fool for 15 years and love it.

  • Report this Comment On February 17, 2011, at 6:16 PM, DavesHere wrote:

    On the RD/PD special that ran ad nauseum on PBS, old Bob let us know that he, aw shucks golly gee, had not done very well in school, even though he had since written several books. He also disdained stocks, forecasting riches for anyone, like himself, with the good sense to invest in zero-to-little down, high-leverage real estate. The idea was to gamble only with other people's money, And then real estate crashed and all of a sudden there was Bob's face, offering to teach us how to beat the stock market, with the disclaimer that Bob would not be in attendance. Apparently, the real money is in selling books and giving seminars by proxy.

  • Report this Comment On February 17, 2011, at 6:22 PM, fluctuator wrote:

    "I couldn't care less about why a stock goes up -- as long as it is."

    Isn't this just relative strength investing? I would say that's a legitimate theory.

  • Report this Comment On February 17, 2011, at 6:23 PM, LucaC wrote:

    Buy with a small portion of your investing money a few big cap, dividend paying companies that are rated 4 stars or more on CAPS.

    JNJ, KMB, KO, INTC, PEP, for example, come to mind.

  • Report this Comment On February 17, 2011, at 10:01 PM, ET69 wrote:

    I think the best thing you can do over the long run is read the classical economic theoreticians' basic books.

    In that regard even though it is a 100 years old I would read Karl Marx,s :Capital Volumes 1-3. Say what you want but nobody has ever understood the economic system we live under better than Marx. sure there are errors and things he could not have predicted but fundamentally he was right about the essentials of the capitalist system and you will be surprised how little has really changed.

  • Report this Comment On February 18, 2011, at 4:38 AM, yaiwolf wrote:

    More people lose money because they PAY to much for the stock.. great companies can cost you lots of monies. One has to know: How much am I'm willing to be pay for this "surefire winner"?

  • Report this Comment On February 18, 2011, at 4:32 PM, mizzoushark wrote:

    Diversify your stock holdings and don't overweight on any one stock or in any one industry. Or, said another way - don't put all your money on red.

  • Report this Comment On February 18, 2011, at 4:41 PM, go4buffs wrote:

    For a newbie, I would recommend the following steps:

    1. Transparency: know where 80% of your money is going. Got to know this before you know how much you can save / invest. Transparency makes it easy to determine 'whether you really need something or not'. Transparency exposes your spending weaknesses

    2a. Get out of debt.

    2b. Read everything you can. If what you're reading is too good to be true, it is.

    2c. Come to the realization that you (not a financial advisor) are the best keeper of your wealth.

    2d. Be patient

    3a. When you want to invest (with money that you will never need until retirement), pick a few broad market ETF's / Index funds to get started

    3b. Keep reading and learning

    3c. Be patient

    4. Find a partner who has the same financial belief systems http://caps.fool.com/Blogs/the-most-underestimated-secret/30...

    5. Keep reading

    6. Dabble into a few stocks when you feel comfortable

    6b. Be patient.

    7a. Don't get greedy

    7b. Be patient.

    8. Retire early.

    Retiring early in great comfort is extremely difficult because it is so easy...the keys are being patient, don't get greedy, and make sure you have a partner / spouse that has similar financial beliefs.

    In reality, being patient (especially with money) and not getting greedy are properties that go against human nature.

    go4buffs.

  • Report this Comment On February 18, 2011, at 4:47 PM, emphature wrote:

    This takes some will power: Before you look at a company's stock price or it's market cap, look at a company's fundementals and have a system for measuring the fundementals of the business it is in, not just the company (leadership, financials, earnings, competition, industry direction).

    Then, determine what you think a company like this should be valued at in market cap and extrapolate a preliminary P/E an EPS from the information you have. THEN take a look at what the market cap and P/E is from the market's perspective.

    *If it's overvalued, consider passing (there are thousands of stocks after all)

    *If it's where you thought it should be, congratulate the market for being efficient and maybe put it on a watch list.

    *If it's undervalued, DO MORE RESEARCH. In my opinion, this is a only good starting point.

    I find this gives me a good perspective before I am influenced by other factors and grounds me as I work through the other factors (sentiment, charts action, institutional interest, portfolio compliment, etc).

    I can't say if everyone's "system" will work, but this has done me well and saved me from overpaying for a lot of companies (that eventually the market did make worth their true value).

  • Report this Comment On February 18, 2011, at 5:13 PM, FoolishJayhawk wrote:

    1. For those with no time or interest in stocks, but want more than a savings account, find a money manager that you trust -- could be a mutual fund, a fund manager, a mentor, a fund house (e.g. Vanguard, T Rowe Price, Schwab), etc, and stick with it.

    2. Invest early, invest often.

    3. Distinguish the forest and the trees -- keep your long term goals in mind and don't worry about daily fluctuations.

    4. History is on your side (no, really, it is).

    5. Don't get excited when your stock portfolio is up 20% or down 20% in a given week or month; keep your eye on the prize.

  • Report this Comment On February 18, 2011, at 5:23 PM, talotu wrote:

    Eric Tyson does a fair job of debunking the whole RD/PD enterprise, he's just one more person trying to scam the masses.

    http://erictyson.com/articles/20090113

    I hate that Kiyosaki gets articles on Yahoo Finance from time to time to delude the public.

    I suggest anyone who cares about the investment masses send an e-mail to Yahoo finance asking that this charlatan be canned.

  • Report this Comment On February 18, 2011, at 6:16 PM, Sparkynet wrote:

    If you just have to watch CNBC, make sure the sound is turned off. Just kidding. I would say go4buffs comments echo my sentiments on investing, especially the be patient advice. Spend about 6 months to a year educating yourself and then find a stock you believe in in an industry you may know something about. Don't worry about "missing out" on a stock until you feel 100% about buying it. Investigate as much as possible the management of a company as well as the balance sheet. Watch out for tax exposure and broker's fees. Always remember even the "smartest" money is only right a little over 60% of the time.

  • Report this Comment On February 18, 2011, at 7:41 PM, SpaceVegetable wrote:

    One Up on Wall Street was my first investment book and it's still one of my favorites. It's a well-written and understandable introduction to investing.

    My top tips would be:

    1) research

    2) research

    3) research some more

    4) use a low-cost brokerage and buy a few shares of what you've researched

    5) follow any news about the companies you've invested in

    6) don't panic and follow the crowd when the market r your stocks go up or down

    An additional tip:

    Check out http://www.johntreed.com/Kiyosaki.html

    before spending money on anything Kiyosaki is involved with. It's quite enlightening and somewhat entertaining.

    Kiyosaki is a quack. He makes his money off of his books and seminars, not any investment schemes.

  • Report this Comment On February 18, 2011, at 7:46 PM, Merton123 wrote:

    I would add "Total Money Makeover" by Dave Ramsey to the books to read. He talks about budgeting, not using credit when purchasing assets that decline in value, and gives good advice on buying a home.

    The previous posts and article does a good job discussing investing. I would only add "Pay yourself first" and in the long run you will have some assets. Otherwise, like the majority of Americans your only asset will be the equity in your house assuming that you haven't gone to the bank to borrow constantly agaisnt the house for toys.

  • Report this Comment On February 18, 2011, at 7:58 PM, blink182fan wrote:

    When I first looked into investing when I was 19 years old, I thought of every type of industry I could think of: Aerospace, Agriculture, Banking, insurance, commodity based companies, etc. Then I went into the tags section and wrote out about 5 or 6 companies in each one and wrote down some ratios for each one. (current, ROE, Debt/Equity, Operating and Profit Margins). That way I got a good perspective on 25-30 companies in the united states.

  • Report this Comment On February 18, 2011, at 8:00 PM, RideHD wrote:

    Read William O'Neil's books as well and understand that there are different investing and trading styles that work very well, something many people refuse to accept!

  • Report this Comment On February 18, 2011, at 8:16 PM, XMFShirKi wrote:

    Thanks Brian for the review.

    The same seminar is coming to San Diego area next month. I might go out of sheer curiosity, but truthisntstupid is double right - the book did not discuss TA at all; and I agree that its main staying power was motivational, rather than educational.

    It's funny because RK himself has very little interest in the stock market and was pushing real estate very strongly for years. It's clear that he's great at selling himself more than anything; this company that he's affiliated with is probably milking that for all it's worth.

    The Cashflow 101 game, likewise, is a great tool to get people thinking and talking about their finances. Don't confuse that with actually teaching them anything: in the game, splits actually double your assets (rather than keep them the same, as in real life), real estate is only good if you pay little to nothing down, and so on. I love the game and share it with my friends and family, mostly to get them psyched about finances and to understand the difference between a salary and a "passive" investment (what a misnomer - how many hours do we spend tracking our investments?). But I then make sure to tell them the differences between the game and real life.

    As for tips I try to give people, most of these are loosely based on my experience, with a lot of input from David Bach's books. My tips are first and foremost for finance newbies - much more important in my mind before you even start to invest (especially in taxable accounts).

    * Know what you earn and what you spend. Where is your money and what is it doing? This ties into Brian's "live within your means" tip.

    * Maximize any tax benefits you can, such as retirement accounts.

    * Have a nice cash safety net (3 or more months of expenses, depending on your comfort level). Don't put this money in stocks or bonds, but do put it in a money market account (and shop around for rates).

    * Money for the next 1-5 years should be in a money market account, CDs or at most, bonds.

    * Stocks are great for 5+ years, nothing less than that. Only invest money you can afford to lose and will not lose sleep over.

    * Just because the stock market does ~10% annually, doesn't mean it does 10% every single year. The opposite is correct. Expect volatility. If you can't stand it, smooth it out by holding more bonds; but don't give up on it.

    * ETFs and index funds are the way to go if you don't know a thing.

    Best wishes to all,

    -Shiri

  • Report this Comment On February 18, 2011, at 8:49 PM, jerryguru69 wrote:

    1) ignore everything Robert Kiyosaki says and all of his books; especially, do not think that flipping properties is a good investment strategy for the layperson.

    2) read the articles on www.fool.com on a regular basis, and believe what you read

    3) do not invest in anything you do not understand

    4) do not buy stock in a company unless you understand how it makes money.

    5) buy when everyone else is selling, sell when everyone else is buying

    6) a CD in a local bank is a perfectly acceptable alternative to stocks and bonds (Orman calls this 'chicken money') for your nest egg.

    7) do not be in a rush: yes, correctly investing your money is complicated and totally unpredictable.

    8) do not invest in anything that does not permit you to sleep comfortably at night.

    9) invest wisely: do not gamble

    10) relax.

  • Report this Comment On February 18, 2011, at 9:21 PM, Clint35 wrote:

    Don't rely on software to make decisions for you. Don't rely on a bunch of charts or technical analysis. It's fundamentals that matter. Don't rely on other peoples' opinions to make investing decisions for you. They can be wrong as easily as you can. You'll be the one that loses money or loses sleep after your decisions are made. Be patient, you won't get rich overnight. Never stop learning. Never give up.

  • Report this Comment On February 18, 2011, at 9:24 PM, Clint35 wrote:

    I almost forgot; have fun. If you don't enjoy investing and doing your own research then it's not worth doing.

  • Report this Comment On February 18, 2011, at 9:33 PM, TMFBrich wrote:

    Great comments and advice, everyone. Keep 'em coming!

    -Brian Richards

  • Report this Comment On February 18, 2011, at 9:40 PM, bigkansasfool wrote:

    As apposed to the motley fool stock advisor? Quote "Outperforming the S&P by +0.00% since 2002!", of course this service is only $149/year.

    Why does the free seminar make you cringe when you're selling a service that clearly states they're not outperforming the market? Hypocrisy makes me cringe.

  • Report this Comment On February 18, 2011, at 9:54 PM, TMFBrich wrote:

    @bigkansasfool,

    You have bad information.

    Stock Advisor's cumulative returns since 2002:

    <<Total average returns since March 2002

    David Gardner picks: 145.1%

    Tom Gardner picks: 77.4%

    S&P 500: 21.3%>>

    -Brian Richards

  • Report this Comment On February 18, 2011, at 11:50 PM, AcctgToITandBack wrote:

    Interesting, since Kiyosaki was all about buying real estate that is leveraged to the hilt. Most of his investments were in the Phoenix area, as I recall - one of the areas in the country that saw the biggest loss in value. I wonder if he is trying to make up his losses by selling stock picking software and seminars.

    By the way, I went to one of his real estate workshops several years ago and had similar comments about it. In addition, the presenters clearly knew nothing about the real estate situation in NJ where achieving positive cash flow while having 100% financing is very difficult if your property taxes for a cheap house run between $6,000 and $10,000 a year. Even so, almost all the people at the workshop rushed to buy into their seminar - although I suspected at the time that some of those people were plants.

  • Report this Comment On February 18, 2011, at 11:58 PM, awallejr wrote:

    Aside from encouraging reading and research, the advice you would give another would depend on that other person's circumstances. Certainly advice to a single 20 year old would be different than advice to a 30 year old raising a family, or a 60 year old nearing retirement.

    I would advise greater risk taking to the 20 year old than the 60 year old, for instance.

    I don't understand this comment, however:

    "•Only invest money you don't need for at least the next five years"

    What does that even mean? Take your monthly expense and multiply it by 60 and keep it in cash? That was the cop-out baloney Cramer said after having advised people to invest in the market at DOW 13,000, 12,000, 11,000 then throwing in the towel at 10,000 with that comment.

    Aside from the fact that he is now taking credit for Doug Kass's bottom call, had people started becoming more aggressive as the market crashed he and others scared everyone away because they didn't know what they were talking about. My God the sale prices of stocks that were taking place.

    Learn the basics of which statistics you should be looking at. Listen to conference calls. Look for small caps with great potential if you are young, or look for safer income producing assets if you are older.

    Don't buy anything because someone said to. Research the company first.

  • Report this Comment On February 19, 2011, at 12:22 AM, TMFBrich wrote:

    @awallejr,

    <<"Only invest money you don't need for at least the next five years." What does that even mean?>>

    I meant that you should be investing for the long term and not the short term, and that if you *need* money for something in the next five (or perhaps three) years -- say, college tuition -- you should look to a shorter-term and safer-haven places (e.g., CDs or money market funds).

    The stock market is a good place to be long-term, but can be volatile (and therefore risky) in the short-term.

    Thanks for your comment.

    Best regards,

    Brian Richards

  • Report this Comment On February 19, 2011, at 6:53 AM, Rich1965 wrote:

    Don't start actually buying stocks until you feel like you can "speak the language" so when you watch CNBC you understand most of what you are hearing and can tell the buffoons from the sages.

    Also wait until you can laugh at Cramer for the right Foolish reasons.

    Most importantly, become a Fool.

    Rich

  • Report this Comment On February 19, 2011, at 8:13 AM, bigkansasfool wrote:

    @TMF - the webpage clearly says that the motley advisor is outperforming the S&P by 0.00%. If they have a problem with their website that's not my fault. I'm going by the information that they themselves are telling me about their services.

  • Report this Comment On February 19, 2011, at 9:29 AM, Daedalus21 wrote:

    I couldn't agree more about earning an education about investing--I've been a Fool since 2006, and it's been a pain-staking process to understand what investments have the value of long term growth (I've definitely had my misses, but my hits have surpassed them).

    Although the speaker at the seminar may have started with Kiyosaki's principals (and he may even be affiliated with him), what he is selling is more akin to a cure-all elixir; an easy one-step fix to all your financial ails. People will listen to whoever is talking, especially if there is a microphone in front of them. I hope for those people's sake, you were handing out Motley Fool fliers at the exit.

    In Rich Dad, Poor Dad, Kiyosaki is just trying to educate on the differences between assets and liabilities; his experience was primarily with real estate, but he specifically states that one should invest their money in what they know the best, be it real estate, stocks, alpaca farming, whatever. Like any educational tool, take the bits and pieces that make sense to you, throw out the stuff that doesn't, and move on to the next one. You can't fault the guy for trying to capitalize on any avenue he can (like sponsoring a seminar like that), you just have to be smart enough to spot the BS when it's right in front of you.

    I'll keep reading everything I can get my hands on Foolishly, which is what we should all be doing.

  • Report this Comment On February 19, 2011, at 10:49 AM, fibostn wrote:

    Thanks for the heads up regarding "Rich Dad Stock Success". My temptation to succumb to ever pick up any book of the like is no longer present. Sigh...Relief.

    With that said:

    Our community priorities should be something of the like:

    priority #1 is EDUCATION

    priority #2 calculating risk regarding to what is learned; see point #1

    priority #3 Investing. Investing. Investing.

    [work smart not working hard] Learn from mistakes and don't repeat.

    priority #4 not risk aversion, but risk awareness

    Happy Weekend Community Investors.

  • Report this Comment On February 19, 2011, at 10:49 AM, TMFBrich wrote:

    @bigkansasfool,

    Which web page? On www.fool.com, under the "Top Stories" section, there's a box that shows performance of TMF services. Stock Advisor's returns are handily beating the market.

    It's possible there's an error on a different page. Looking into it....

    Regards,

    Brian Richards

  • Report this Comment On February 19, 2011, at 10:50 AM, flowmotion wrote:

    1) read the intelligent investor.

    2) if you're going to dig into annual reports the cash flow statement should be of special interest.

    3) look at what other great investors are doing.

  • Report this Comment On February 19, 2011, at 10:58 AM, Spanktown wrote:

    To anyone sitting on the sidelines, afraid to invest because they don't "know enough", I would point out that for the first ten years or so, the majority of growth in EVERY investors' investment portfolio balance will be due to the investors' own contributions.

    I don't want to over explain, but good returns are typically between 5% and 25% (There are legends about astronomical returns sometimes. There are also stories about people winning the lottery, and no one (no sane person) bases investment strategy on the possibility of winning the lottery.) Suppose you can invest $100/mo. After 1 year YOU will have contributed $1200 to your portfolio.

    Let's say your investment has been unusually lucky and is returning 25%. Your investment returns will have contributed $150 to your portfolio. If you invested in a Bond Index fund that returned 4%, your investment returns will have contributed $24.

    If you sat on the sidelines thinking, "I don't know enough! What if I pick the wrong index fund to invest in?" You would have $0 in your portfolio. If you invested in a conservative safe index fund, you would have about $1200 (plus or minus the returns.)

    Meanwhile, you continue reading about investing, and talking to people about investing, and becoming more educated about investing. The years pass, and you keep contributing $100/mo to your investment account. (I wouldn't go to any hotel conference rooms to get educated about anything...)

    In 10 years, you will have invested a total of $12,000. If you had been investing in a S&P500 Index fund, you would likely have ~$17,000 (assuming an avg annual rate of return of ~8%).

    Your $17k portfolio will now have a life of its own, effectively making ~$1300 per year OR if you like, it will be able to make its own $100/mo contribution going forward.

    Think about how quickly the last 10 years has passed. IF you had started investing $100/mo into an index fund 10 years ago, you would have this $17k self sustaining investment portfolio, right now.

    Don't wait another day! Go open up an account with Vanguard, for example. They have a fund called the STAR fund that has a low $1000 minimum initial investment. If you don't have $1000, start putting 100/mo into a savings account and you will have $1000 in 10 months.

    Get started today!!!! The WORST thing you can do is let time pass without investing.

    (I still say this even after the start I got. I bought a Tech100 Mutual fund from Strong Investments in early 1999, right before the Tech bubble popped. AND it turned out Strong Investments were screwing their little investors and got bought out by Wells Fargo. I learned from that debacle that it is better to invest in something boring like Index funds than to chase performance.)

  • Report this Comment On February 19, 2011, at 11:51 AM, jabontik wrote:

    Thank you for a good article

  • Report this Comment On February 19, 2011, at 12:18 PM, triciaburke wrote:

    Last September in NYC, I attended the 1st day of a free 3-day seminar by the Kiyosaki/Tigrent companies re: investing in real estate. The presenter's style was a combination of evangelical preacher, used car salesman, and rags-to-riches story teller. When they advised the participants (most of whom were fairly new or brand new to real estate investing) to go back to our hotels and request credit limit increases on all of our credit cards because rich real estate investors carry a lot of credit card debt so they can be ready for any opportunity that comes along, I decided not to return to the seminar for day 2. I knew they would be pitching the expensive "advanced" real estate courses on day 2 -- THAT'S why they wanted you to increase your credit limits. How irresponsible and unconscionable.

  • Report this Comment On February 19, 2011, at 12:28 PM, ultimatetreeman wrote:

    #1 - Subscribe to a TMF premium service - I would recommend Stock Advisor. Take the time to read through everything you find on the site. Try to develop an understanding of how the stock market works, and what separates investing from speculating. Also truly believe that anyone can be an extremely successful stock investor with some preparation and discipline - you don't need a Harvard MBA to suceed.

    #2 - Set up a brokerage account with a discount broker, I happen to prefer E*trade, but there are many other good firms.

    #3 - Be Patient! Activity doesn't necessarily translate to value.

  • Report this Comment On February 19, 2011, at 12:55 PM, drippinfool wrote:

    I would emphasize a couple of ideas from Mr. Bogle:

    Nobody know nothing about the future;

    and

    Good performance comes and goes, but costs go on forever, so diversify among asset classes and minimize investment costs.

  • Report this Comment On February 19, 2011, at 3:30 PM, personalwm wrote:

    You make some very good points. If I might add a few comments:

    1. Unless you are a professional investor, it is probably best to keep it simple. Build up positions in low-cost ETFs and no-load mutual funds to try and match the market returns while minimizing costs. Investing in individual stocks or marketing timing is difficult.

    2. Do not buy stuff you cannot afford. If possible, try to focus on appreciating assets, not depreciating ones when you do spend money.

    3. Do not agree with the suggestion of only investing money you do not need for 5 years. You should allocate your capital in a variety of assets. Cash and liquid fixed income included. If you structure your portfolio properly, you will always have some available liquidity. For emergencies, planned expenditures, and as capital for new investment opportunities that arise.

    4. Before starting an investment program, develop an Investment Policy Statement that will serve as a written path to investing success. A key focus should be an analysis of your personal investor profile. Your objectives, constraints, time horizon, risk tolerance, etc. In understanding you as an investor, you can improve your chances of achieving your goals.

    For more investment commentary, please visit www.personalwm.com

  • Report this Comment On February 19, 2011, at 4:39 PM, bwana38 wrote:

    First off, let me start by saying that it was Robert Kiyosaki's book "Rich Dad Poor Dad" that got me interested in investing in stocks and "buying assets." It was a well written book and very entertaining. That being said, when I read columns by Kiyosaki these days, they seem to be pointless and go nowhere. It seems he is good in catching people's attention but seems to lack substance as time goes on (just like what happened to Brian Richards at the above seminar.).

    On the topic of investing in stock for people new to it, I would echo the points made above underscoring the importance of reading, reading and reading more. Especially from things about Buffet. Also reading from many different websites like Motley Fool, Investopedia, Marketwatch, CNNmoney.com, ect can give you a nice education.

    What I would also add would be that it is helpful if you love the art of investing. To become good, or moderately successful, you have to love it enough to want to do research on stocks and read about different things to make you better on a daily basis.

    Finally, experience is the best teacher. Seeing what happens with your portfolio from the beginning and making adjustments to your strategy accordingly makes sense.

    Just thought I would put my two cents in.

  • Report this Comment On February 19, 2011, at 7:29 PM, goalie37 wrote:

    Two keys I would suggest are:

    1) Learn to define the words "investment" and "speculation."

    2) Learn the difference between dividends/interest versus capital gains.

  • Report this Comment On February 19, 2011, at 7:43 PM, goalie37 wrote:

    For a new investor, it is very important to realize that you will make mistakes. And these mistakes will sometimes lose you money. Rather than letting emotion drive you away, look at these mistakes as your education.

    Before I became involved in investing, my disposable income was always disposed. I had a great time, but absolutely no assets beyond some things I could get a few bucks for at a garage sale.

    I reasoned that pretty much any investing I did was better than none. If I lost 10% on a $1000 investment, I had $900. If I went partying, my $1000 would net me $0. I referred to this benchmark as the Exotic Dancer Index (EDI).

    As time went on, the mistakes became fewer, and the successes became larger and more frequent. Like all the above comments, learning paid off.

    Don't be afraid to do this. If you are reading the commentary from a Motley Fool article on a Saturday, you are definitely on the right track.

  • Report this Comment On February 19, 2011, at 8:35 PM, PeyDaFool wrote:

    "I referred to this benchmark as the Exotic Dancer Index (EDI)."

    Haha, hilarious!

  • Report this Comment On February 19, 2011, at 9:59 PM, theHedgehog wrote:

    "Roughly a dozen people signed up on the spot."

    Most likely 3 or 4 of those were shills, but still, not bad for 90 minutes' work.

  • Report this Comment On February 20, 2011, at 7:12 AM, nickolassc wrote:

    1. Don't overpay, throw out P/E (except when it's in the stratosphere, then be cautious) look at P/B, growth rates, D/E, and FCF.

    2. Be patient. You don't have to catch bottoms, but if you like McD's at 80, you'll Love McD's at 60...If it never gets there, that is ok, as they say there are plenty of stocks in the sea.

    2a. Investor temperament, never invest based on the fear of missing gains, this is what fuels bubbles and get's you burned everytime.

    3. Stay liquid enough that you're ready to act when it's time, for example accumulate bond ETFs when bonds are fairly valued on a historical basis while waiting for your stocks to go on sale then load up.

    We have had 2 major opportunities for buying the entire market this past decade, if you had bought stocks near the bottom during each opportunity, you'd be sitting pretty right now, my only fear is that we will not get these opportunities again any time soon, however quality individual stocks go on sale every single trading day.

  • Report this Comment On February 20, 2011, at 10:15 AM, rando101 wrote:

    The first rule of investing is don't lose money.

    The second rule is don't forget Rule No. 1.

    the third rule of investing buy low sell high.

    How hard can Investing be? :)

  • Report this Comment On February 20, 2011, at 12:06 PM, plange01 wrote:

    the king of bad advice has to be the hysterical burnout cramer scheming with his friends to sell foolish listeners stocks while they sneak out the back door...pump and dump at its best...

  • Report this Comment On February 20, 2011, at 4:19 PM, hoboplayer wrote:

    I never buy without looking at the short sellers. I figure they are smart guys doing some of my research for me.

  • Report this Comment On February 20, 2011, at 4:31 PM, george1336 wrote:

    Investing ideas I try to follow:

    1-invest in companies--not stocks.

    2-learn to trust your own instincts by educating yourself. read about companies and what they are doing.

    3-a stock broker is a salesman on commission. you buy, he makes money.

    you sell at a loss, he makes more money.

    4-if you think your broker cares about you making money, read 3 again.

    5-selling a stock means you are locking in profits or limiting losses. the company may be a great buy again next year.

    6-patience is a virtue--procrastination can be expensive.

  • Report this Comment On February 20, 2011, at 4:38 PM, hoboplayer wrote:

    Never gamble. Play & study poker for relaxation. You will learn lessons in life and investment.

  • Report this Comment On February 20, 2011, at 6:04 PM, bbauer52 wrote:

    Just had to say thank you for all the posts everyone above has made - managing my SEP/IRAs and our 401K was quite a challenge, especially because I didn't consider myself in any way to be financially savvy - still don't. Just seeing those ups and downs were concerning. After reading Beardstown ladies & thinking they were so brave to venture into investing, I was inspired by Suzy Ormon to open an Ameritrade account, do auto deposits for 12 months and gain a $100 reward for same. In the past three years or so, I've become a Fool myself and through MDP and SA am slowly educating myself and thoroughly enjoying it. I am still a newbie!! Keep bringing all these posts - it encourages us to stay the course!! Thanks again.!

  • Report this Comment On February 20, 2011, at 6:06 PM, Estrogen wrote:

    pay yourself first through automatic payroll deductions or IRA xfers. Vow to never touch your tax sheltered investments (ira or 401K), even for real estate.

    Start early. If too late for you to start early, teach your kids to start early. Think long term. Think generationally.

    Buy an HP 12C and run compound interest scenarios. You'll be amazed by what Einstein called the "8th wonder of the world."

  • Report this Comment On February 20, 2011, at 6:48 PM, Krosser wrote:

    This is pretty much my exact experience with the RDPD franchise. It's great at first, they get the fundamentals right, but from then on it's rich people getting richer by telling other people how to get rich.

    Blah.

  • Report this Comment On February 20, 2011, at 6:58 PM, ringyroy wrote:

    Investing vs Religion

    Goal : Making money / Attaining salvation,heaven,,

    Number of ways : Many

    ......

    Is there one right way?: No

    Should you keep switching ways periodically?: No

    Should you try too many ways?: No. You will be confused

    Are there many false prophets?: Yes

    Should you run from any prophet that promises you goals without effort: Yes. As fast as you can

    Are time-honored methods usually better? Yes

    Are methods sold on TV Yes

    Are the TV methods going to help you attain your goals or are they going to make the people producing the program rich? The latter

    Are time-honored respected prophets better / safer: Yes

    Is there effort involved in attaining your goal?: Yes

    Can it happen overnight?: No

    Should you spend all your waking hours focusing on it: No

    Should you allocate some time per week on it ?: Yes

    Should it suit your personality?: Yes

    Will you need it in your old age ?: Yes

    When should you start?: Preferably when you are younger. But now is a good time.

    Will you stay with the discipline AND believe in it: Only when you are ready

    What should you do when the going gets tough?: Stick with the plan / discipline

    No I mean really tough. When all odds are against you and it feels like the world is going to end.: Have faith and courage

    Can you subscribe to newsletters? : Yes

    Should you follow them blindly?: No

    Can you hire someone to help you attain your goal?: Yes. A financial planner / Trusted pastor

    Will they guarantee it: No

    Happy Investing! :

  • Report this Comment On February 20, 2011, at 7:15 PM, QuandoInQuando wrote:

    If there is one thing for which I would fault TMF it would be the ignoring of the value ot technical analysis. I have realized my best investing success with a combination of first looking for good solid companies and then using technical analysis.

    In short, I would say to add a fourteenth step: When your diligent research indicates that you have found a great company, proceed only when several technical indicators indicate "Buy".

    I agree that using only technical analysis is highly foolish (lower-case "f"). However, dismissing the usefulness of technical analysis might be Foolish, but it is still foolish.

  • Report this Comment On February 20, 2011, at 8:52 PM, QuandoInQuando wrote:

    Dear Truth . . . .

    Observing trends in P/E & dividend yield could be considered technical analysis, but there is a whole lot more to it.

    For starters, do a search on "MACD" (as mentioned in the above article). There is a whole lot of free information about how to use this indicator.

    But be especially cautious. The old saying "if it seems too good to be true, it probably is." is good advice. We ordinary folks loose way too much money because of our own greed and ignorance.

  • Report this Comment On February 20, 2011, at 8:59 PM, investorDK wrote:

    @hoboplayer:

    QUOTE: I never buy without looking at the short sellers. I figure they are smart guys doing some of my research for me.

    Where do you find information on short sellers activity?

    From my understanding of short selling, a number of factors have to come into fruition at the same time/within a certain time frame etc to pay off, so i agree that they must be the smart ones and therefore their research would be a worthy resource.

    Cheers.

    For all:

    PS I am pretty much a newbie so i couldn't offer any solid advise for others. Only maybe that stocks are REAL companies operating within the real world we all live in, you use & buy products and services of some of these everyday... so looking at stocks you are familiar with first might be a good place to start. I found this useful as I could relate to the company on a personal level which encouraged me to learn how to invest in it and made me feel more comfortable because it was something tangible, like Coca Cola, McDonalds or Apple (iPhone for example) BP (petrol stations all over the UK) and that these are not just a 'stock' or 'commodity' or a number that goes up and down for some reason. If you can figure out what factors effect the price of the stock you've already one half the battle.

    If anyone fancies giving a newbie some specific advise which I am sure would benefit others, perhaps someone could confirm the following:

    In the event I find a stock I like, say it is Coca Cola because I drink Coke, i know the brand, I like it and have just found out I can actually own a part of the Coca cola Company:

    1) What is the very first thing I should do?

    2) What are the main things to look at when trying to obtain the true value of a stock?

    3) What calculations or indications should I look for to predict' what direction it is going?

    Cheers much and sorry, I always ending up writing &/or asking far more than originally intended.

    DKpaininbottom.

    PPS - Despite what may appear above as a passion for Coke, I just thought I would mention, I do not actually like it and therefore do not drink it, but I would consider investing in it. It's not right for me, but I can see and appreciate why the company is successful.

  • Report this Comment On February 20, 2011, at 9:06 PM, investorDK wrote:

    Corrections on grammar:

    You've already WON half the battle.

    Can someone offer some ADVICE.

    I'm tired and love reading the MF.

  • Report this Comment On February 20, 2011, at 9:42 PM, BZNsailor wrote:

    The ad for the Rich Dad Stock Success free seminar sounded too good to be true and you know what they say about that. Against my better judgment I decided to go check it out. The "free" seminar was about technical trading concepts and it promoted an additional 3-day seminar and software package for $495.00. I knew little if anything about technical trading and, based on a SECOND bout of bad judgment, I registered. The seminar was a month away in a town 150 mi distant so I also committed to travel and lodging for this gig.

    About 2 weeks later I got an email that said the seminar was canceled but that I was invited to any other class in any other US city. The closest 3 were 350, 600, and 800 miles away. Along with travel and lodging the cost was now way more than I was willing to pay. I contacted them, discussed my dilemma and asked for a refund. I was told that their organization did not offer refunds. I was the victim of an obvious bait and switch scam.

    I made several calls with no solution and then I went to the internet search engines. The last call I asked for a "manager" and during our conversation I asked, "I can't remember does the FBI or Secret Service investigate wire and mail fraud, do you know? I doesn't matter anyway, I've contacted them both. How about my refund? The credit card charge back was done the next day.

    Advice on this issue? Based on my lapse in judgment and the resultant experience, stay away from the Rich Dad Stock Success program.

    What I would add to the list of 11 is this:

    As much as we revile Wall Street MBAs we must realize that their mouse click will move 1 million shares and effect prices while our 100 share click will be effected by the price THEY set. Be ware and Be aware.

  • Report this Comment On February 21, 2011, at 3:44 AM, GenChaos wrote:

    I remember reading Rich Dad Poor Dad way back in college because a friend recommended it as gospel. I wasn't very knowledgeable in terms of finance back then but even then I could see through the BS. I felt like half the book was focused on selling some stupid $300 board game he and his wife came up with that would teach us all about getting out of the rat race. Ever since than anytime I see rich dad anything I ignore it. I guess if there is one thing to learn from the guy it's be marketing because he sure can sell crap.

  • Report this Comment On February 21, 2011, at 8:15 AM, Origin97 wrote:

    horizontal analysis, and hidden gems

  • Report this Comment On February 21, 2011, at 9:22 AM, Popnfresh100 wrote:

    Learn how to do your own backtesting and/or examination of market history. Failing that, at least test theories out on caps or elsewhere before you buy in with real money.

    Don't assume any strategy- value, momentum, growth, is inherently right or wrong. Also, don't trust anyone claiming to be an expert (including the fool), or put real money into anything, unless you can see for yourself that their strategy works, and is not just cherry-picked data.

  • Report this Comment On February 21, 2011, at 11:39 AM, wrenchbender57 wrote:

    Great article and comments, thanks!

    To your first money rule of thumb I would modify to read "Don't buy stuff you don't need or can't afford".

    So much of what we think we need is really stuff that we want but that we don't need. If we wait a few days and think about our needs vs wants it will often be easier to determine that we really don't need the object we wanted.

    I read RDPD a long time ago and as I recall it had some valid points. But he seems to have gone way off track since.

    Another book that I read a long time ago and liked was "The Millionaire Next Door". I still recall advise in that book and use it. The basic concept was just to live below your income and save the difference. Don't buy stuff to impress others, etc..

  • Report this Comment On February 21, 2011, at 12:12 PM, jimmy4040 wrote:

    I've seen that guy on numerous shows. He's a financial idiot, but after all, he's not selling financial advice, but products. Good luck to all the poor people who can't tell the difference!

  • Report this Comment On February 21, 2011, at 2:19 PM, lctycoon wrote:

    The absolute best advice, for a newbie? Live below your means, save and invest for the future, do not depend on anyone else (employer, government, etc.) to take care of you.

    The more I see Kiyosaki's articles and seminars, the more convinced I am that the guy is a modern day snake oil salesman. A good book for newbies to read is "The Millionaire Next Door." Don't read Kiyosaki.

    Is it possible for the average person to get rich? Yes.

    Can you do it as quickly as Kiyosaki claims? No.

    Is it as easy as Kiyosaki claims? Speaking as someone who has started up a business before, it's not even close.

  • Report this Comment On February 21, 2011, at 2:48 PM, PhulishMortal wrote:

    I would go counter to a couple of the suggestions above and say don't buy a TMF premium service . . . yet (for a new investor). I subscribe to a couple of them and consider them money well spent, but I wouldn't advise a rookie to lay out that kind of money until he had gotten a bit further in the learning process.

    Some things that I would advise in addition to your excellent beginner's list, Brian, would be:

    Take advantage of many of the excellent web-based simulation tools, such as brokerage watch lists, CAPS, and the like. There are many tools that will allow you to practice investing using simulated money so that you can see the inherent volatility and frequent unpredictability of the stock market.

    Work your way through the copious educational opportunities also available on the web: TMF, Investopedia, Minyanville, and other places have troves of valuable information that can help get you up to speed.

    Get used to the idea that although there are many helpful and worthwhile tools and automated packages, the final decisions come down to you and your own brain; to defer your decision-making to a piece of software or a mechanical method is all but guaranteed failure.

  • Report this Comment On February 21, 2011, at 7:17 PM, daveraj wrote:

    I'm suprised no one gave David and Tom a mention regarding "the Motley Fool Investment Guide". It was my 1st financial book back in '96. Essential reading for noobs to the Fool. I think they should consider adding a digital copy of the book, or "Rulebreakers and Rulemakers" to anyone who subscribes to their premium services.

    And it takes awhile (about 3 years for me) to develop your own investment style, risk tolerance and financial self-discipline.

    And look both ways before crossing the street. Then you can continue browsing the Fool on your smartphone.

  • Report this Comment On February 21, 2011, at 8:38 PM, rpleis101 wrote:

    don't own a stock that you do not understand how they make money and what they are selling.

    If a stocks story changes re-evaluate it If it is no -longer a good story sell.

    don't get greedy, hogs get slaughtered.

    now why you own the stocks you own.

    do your homework.

  • Report this Comment On February 22, 2011, at 12:35 AM, whyaduck1128 wrote:

    Most of these probably have already been mentioned, but here goes--

    1. If you don't understand the product, don't buy the stock.

    2. If you don't understand how the company can make money, don't buy the stock.

    3. If anyone in a leadership position in the company has anything like a shady past, don't buy the stock.

    4. Don't set rigid buy prices or sell prices. You make nothing if you decide you won't buy until the price falls to 60 and it bottoms out at 63, only to hit 90.

    5. Don't worry about timing. You will never buy at the very bottom or sell at the very top unless you're very, very lucky.

    6. Don't buy stocks with money you need elsewhere.

    7. Use a little of your investment money for speculation. Just a little. Think of your spec money as being in a casino--you don't want to use your ATM card if you lose your initial stake.

    8. Have an idea of where you want to sell, both up and down.

    9. Stockbrokers are paid on commission, not on clients' results.

    10. Talking heads are often empty heads--or salesmen.

    11. If it doesn't pass the smell test, don't eat/drink it.

    12. A bit of cowboy wisdom--"Always drink upstream from the herd".

    13. If someone is touting a stock, ask how much they're going to buy right after you buy and if they'll sell when you sell. If they won't walk the walk, ignore them and their stock.

    14. Index funds are boring. They can also be profitable and low-maintenance.

    15. Perfection is impossible, no matter what your wife says about her father.

    16. If an investment causes you to lose sleep, get out now.

    17. Have confidence in your own abilities.

    18. Always, always, always reinvest dividends.

    19. There's no shame in admitting you don't know where the market is going.

    20. Pigs get fat. Hogs get slaughtered.

    21. There is no shame in taking a profit. If you have a big winner, sell half, then set another point at which you'll sell half of what's left. Rinse and repeat.

    22. A long-term gain beats a short-term gain, because the tax man gets less of it.

    23. There is no one right way.

    24. There are many wrong ways.

    25. Trust, but verify.

  • Report this Comment On February 22, 2011, at 12:39 AM, whyaduck1128 wrote:

    One more--

    If you like the product, check out the company.

  • Report this Comment On February 22, 2011, at 10:51 AM, thejatrain wrote:

    I'm sorry, but I find it profoundly hypocritical that this article is up. I recently received a mailer at home from VectorVest, who offer software similar to that which you are describing. The mailing was several pages long and described how the software would allow one to time the market. Lo and behold, when pressed they informed me that they received my contact information from the Motley Fool.

  • Report this Comment On February 22, 2011, at 11:59 AM, jasenj1 wrote:

    I find it interesting that most of the advice here seems to be for individual purchases. Here's my advice: If your company has a 401k plan with any level of matching, participate with as much $$ as you can tolerate - and then a little more.

    My company offers 50% matching up to some percentage. Put that in as boring an index fund as you can find and sleep peacefully.

    Individual investing is nice, but if your employer offers any level of matching I think you'd be a fool (and not a Fool) not to max out your matching opportunity before doing any investing on your own.

  • Report this Comment On February 22, 2011, at 1:05 PM, wrenchbender57 wrote:

    I find it interesting that most of the advice here seems to be for individual purchases. Here's my advice: If your company has a 401k plan with any level of matching, participate with as much $$ as you can tolerate - and then a little more.

    Great point. Just remember to keep it diversified. Lots of folks got wiped out with their 401k investments kept in the original company stock.

    That being said, you cant miss with a match from your employer. Usually means you double your money right away. Hard to beat that return.

  • Report this Comment On February 23, 2011, at 12:34 PM, kitharris1 wrote:

    it's nice to see good honest people willing to share their investing tips with the rest of us. thanks, keep it up, i love reading these tips and sharing them with my grown children. there are some really good tips here looking back on my 44 years of saving in my 401k.

  • Report this Comment On February 24, 2011, at 3:15 PM, firemachine69 wrote:

    My advice is pretty basic for anybody who's a Fool:

    -Practice Account

    Learn, learn, LEARN the ups and downs. See where you made a mistake. See where you succeeded. While the Bollinger band is all fine and dandy, it doesn't answer the fundamental question: "If I were shopping for this company's type of product, would I go to them?"

    Knowledge is power!

  • Report this Comment On February 24, 2011, at 6:19 PM, crashdamage1957 wrote:

    Those 11 points make sense to me. i also liked the " be patient, dont get greedy, keep it simple ' mantra that many of the commenter's spoke of, that also makes great sense. My 2 cents:

    -Star investing early, paying yourself first, shuttle money into low cost mutual funds , spread among the 5 basic asst classes.

    . Read Andy Tobias and John Bogle, , MF,and learn about asset allocation, dollar cost averaging, and paying yourself first.. and then actually do it.

    You can make it more complicated than this, but why would you want to? Certainly, you don't need too.

  • Report this Comment On February 25, 2011, at 11:56 AM, SnowdriftFool2 wrote:

    One word: kids.

    -> Involve your kids. They like to learn new stuff. Your wisdom and experience coupled with their youthful insights and energy nakes it funner for everyone. This is, after all, a learning experience.

    -> Let the kids research a sector they like. Most kids have something that interests them: sports, fashion, cars, airplanes, video games ... and there are sectors to match.

    -> Don't be afraid to actually buy a trading position based on what the lids think.

    -> Give your kids some incentives too. Let them keep a share of dividend payments from one of their stock picks, for example, or link a desired purchase to how well the portfolio does (takes some of the work load off of you too if suddenly your kids start telling you your portfoio performance from one week to the next ... which they might do if they have a vested interest).

    Fool on,

    Jack

  • Report this Comment On February 25, 2011, at 12:00 PM, BillJefferys wrote:

    RD/PD was investigated by the Canadian show, Marketplace, on CBC. They also concluded that it is a scam.

  • Report this Comment On February 25, 2011, at 12:12 PM, jrj90620 wrote:

    Buy companies,not stocks.Buy shares in companies like you are becoming a partner in a business with a smart friend.That's what Buffett does and what you should do,no matter how small a partner you are.Read all the articles and interviews you can find about/from management of companies you want to own.Listen to conference calls online,where you will hear questions and answers from management.You get a "feel" for what they're doing and if you agree.When becoming a part owner of a company, the 3 most important considerations are "management,management and management" .If you're a trader,like most stock buyers,none of this matters and you have about a 99.9% chance of losing over the long run.If you buy stocks instead of companies you won't have enough confidence to hang in/buy more during the down times.You end up buying high and selling low.

  • Report this Comment On February 25, 2011, at 12:15 PM, jrj90620 wrote:

    Forgot to add one major point.I really enjoy reading about companies and financial things.Most people I know don't.Therefore,I recommend most people buy ETF's or mutual funds.Find the ones with lowest costs and best records.Take the time to do that and then you can concentrate on other things you enjoy more than financial stuff.

  • Report this Comment On February 25, 2011, at 12:19 PM, jrj90620 wrote:

    Thought about another major point.All these newsletters, that number in the thousands, have to promote trading.If they were to recommend you buy some shares of a great company and then hold it for 5 years,why would you pay yearly subscription fees.You have to go against the majority that are constantly promoting the latest fad and suggesting you trade often.It's a fools game.

  • Report this Comment On February 25, 2011, at 12:32 PM, Takeoverman wrote:

    Don't buy companies with dividends unless their earnings are greater than their dividends. If you do, you might be surprised when the dividend is cut. Also consider buying companies that are liquid, i.e. those with cash greater than their debt. Analysts are down on Nokia today, yet it is a $32 billion market cap company with $10 billion more in cash than it has in debt. Duh.

  • Report this Comment On February 25, 2011, at 12:52 PM, fooledbymf wrote:

    i am also very upset (not at motley) that i constantly receive from some self proclaimed expert initials E.D. "Shares in This Company (Could Explode By 4,538%) Before June 1st 2011" secret and others.

    E.D., i lost money in the stock market, but i haven't lost my mind!

    i am ticked because everyone says that they don't disclose information, but some do. or is it the web browsers tracking?

    i go to motley and some other investment sites. don't know but it sure would make for an interesting article. how come the post office lets them mail junk so cheap? if they paid what i had to pay in postage, i bet people like that would quit trying to find victims to fall for their garbage. they should be made to disclose how they came by my information.

    can't help but think that they do manage to get people to fall for their gimmicks and barnie "made off" their life savings.

    they have a great deal to subscribe to "Breakaway Stocks" best deal is $840 for a two year subscription. ever hear of this competitor???? seems to have all the answers.

  • Report this Comment On February 25, 2011, at 12:57 PM, foolfan609 wrote:

    What helped me the most was to subscribe to Stock Advisor and diligently read and watch for almost 8 months before actually investing. I learned more during this time than any time in the past about what questions to ask, what to look for, and above all, to find really successful professionals and use their insight and expertise. The Fool information, choices and evaluations have proven themselves and since I started actually investing using this information, I have been successful. OK - riding the coattails of successful professionals is nothing new - but for a very small investor like myself - having successful coattails accessible to ride on is important.

    I am an engineer - and one of the first truths/jokes is 'never reinvent the wheel'. Not mindless copying, but rather using patterns, processes and successes as a model.

  • Report this Comment On February 25, 2011, at 1:00 PM, hardikgoel wrote:

    Here is something I put together for my dad. I told him to use investopedia.com, seekingalpha.com and fool.com to do his research on investing. Comments are welcome:

    • Always conduct a thorough analysis and decide upon a suitable valuation method for the company considering the industry, market conditions and future prospects

    • If you don’t/can’t understand the business, how exactly it earns its income and uses its capital; DO NOT invest in it.

    • Set target exit points – both to stop loss and book profit. Set clear time horizons for each investment.

    • Always be aware of important resistance and support levels along with potential positive and negative catalysts.

    • Always trust your valuation and follow through your decision to the very end. Don’t second guess your decisions or unnecessarily change the capital structure of the portfolio in a moment of self-doubt.

    • In the long run, fundamental always trumps technical analysis. All the favorable technical indicators in the world do not validate a position in a company with weak fundamentals.

    • Always be patient, don’t enter in the middle of a rally with the hopes of buying high and selling higher. It’s not worth it. Making advantageous entries can significantly decrease the downside exposure (especially with micro-caps) and compliment upside.

    • It is always better to hold on to cash for a little while longer than make a hasty investment in a company that looks good at a first glance.

  • Report this Comment On February 25, 2011, at 1:13 PM, Langalier wrote:

    Excellent article.

    The only thing I can add is:

    Ignore pretty much everything Jim Cramer says.

  • Report this Comment On February 25, 2011, at 1:34 PM, farrockgrad wrote:

    Join AAII, a non-profit educational tool for investors. Between what you learn from them and somne MF publications, you should become a successful investor.

    Steve D.

  • Report this Comment On February 25, 2011, at 1:57 PM, martinedeboodt wrote:

    Unfortunately, too many people believe that making investment decisions is to be left to these so called 'experts' who take your money, invest it in something their headquarters tell them and charge you a 'management fee' independent of whether they make you money or not.

    My only advise is to get a subscription to one of the Motley Fool's newsletters (Stock Advisor for sure, Rule Breakers as well). And if you really do not want to spend any time reading about stocks, just put your money in the FOOLX fund. That one gave me 16% last year without even having to bother about what was happening in Wall street.

  • Report this Comment On February 25, 2011, at 2:26 PM, wr26 wrote:

    while reading through comments, one struck me, because it's what I tell everyone. Who cares more about your money than you? in july 2001 i went to my then financial advisor and told him I didn't like the markets and wanted out. He talked me into staying. After I lost $100,000 I took my money out and moved it. That was the first time he called me since July. This was January 2002. In august 2008 I went to my financial advisor (different guy) and told him my fears. He told me the exact same thing as the 2001 guy did. This time I took all my money out. unfortunately I couldn't get my kids university savings out as quick. I had $17,000 in my kids account. By the time I got to it, it was worth $11,000. I have brought it back to $17,000 through investments since then. I had $85,000 in august 2008. I now have $175,000. Could a financial advisor do that for you? It's your money, and you're the only one that cares about it!

  • Report this Comment On February 25, 2011, at 2:59 PM, jeffreyastus wrote:

    I invest in my company's 401k (nearly all investment options are mutual funds). During the month of December it returned around 4% on mostly aggressive growth funds. Pretty good. My Motley Fool (IRA) account for the same time period returned 9 1/2% on recommended stocks.

    And, on the subject of education I learned an expensive lesson: I thought PCLN was a flash-in-the-pan so I sold when it hit 270 (I bought it at 220). I guess I won't do that again! I should have listened to the Fools!

  • Report this Comment On February 25, 2011, at 3:03 PM, jacket97 wrote:

    Investing is a skill. The more you develop it and use it, the better you will be.

    You are neither as smart nor as dumb as the market is telling you on any given day. Measure yourself over time (years, not weeks).

  • Report this Comment On February 25, 2011, at 3:48 PM, srorer wrote:

    Same old story - there was a seminar back in the late 90's. A bit pricier at around $3K. You'd stare at their software's trading screen. Green light, buy. Red light, sell. Get rich! (without knowing anything, just click on the little lights) A businessman I knew lost $46,000 his first week and he wasn't color blind! He was told that you have to have the "knack" - whatever that is. He kept on trading and lost his business. He ended up bankrupt. Lazy people always get fleeced.

  • Report this Comment On February 25, 2011, at 4:16 PM, O2M wrote:

    And where did I hear about HGG, which has lost 25% in the last 3 weeks...... right here from the Motley Idiots!!! Look who's talking!!

  • Report this Comment On February 25, 2011, at 4:27 PM, aminozuur wrote:

    I've read the first half of Rich Dad Poor Dad, i threw it right into the garbage can because it;s filled with lies, yes, LIES ! For instance, Robert Kyosaki says he "often starts a company to bring it to the stock market", he claims that he can turn a $25,000 investment into a million bucks in a matter of months.. Yeah right, like you can just start companies and IPO them.. It's filled with lies and Robert Kyosaki is the biggest d-bag in the world, he's a total wannabe. I can't understand why the book is so popular. It's a bit like religion, it doesn't make any sense (rationaly) but still people believe, just because they want to believe..

    Seriously, Kyosaki and everything associated with his dumb Rich Dad series is the biggest crap ever.

  • Report this Comment On February 25, 2011, at 4:34 PM, NationalMatch wrote:

    Exactly. People that think they can get rich quick just by using software and by following 5 general rules deserve to lose their money. If it's too good to be true it probably is.

  • Report this Comment On February 25, 2011, at 4:49 PM, steveelcpo wrote:

    One of the most interesting books I read about investing years ago was called (I think) The King of Babylon. The story revolved around a semi-fictional king who was advising his protege to invest 10% of whatever you make and let the compounding of that 10% make you rich. It was a quick easy read. It also talked about paying tithe to your church of choice and/or giving money to charity.

    For the record, I don't agree with RD/PD although I did read his book. Housing is one of the biggest expenses of a family, whether you pay rent or buy a house. I never did agree with him on his premise about a house being a liability. Why pay rent and have nothing but receipts when that money could be going to building up equity, plus the tax benefits?? If his point was to not consider the house as an investment portfolio, that part I could agree with.

  • Report this Comment On February 25, 2011, at 5:16 PM, PST52 wrote:

    I attended the fre seminar , which was a sales pitch for the 3day $495 seminar which was a sales pitch for their in depth educational courses. To be fair, once you get into their advanced courses, they are quite in depth and very educational, also expensive. They do promote their software/data feed although one can use other software or data feeds and still use their principals. They also promote their live workshops and mentors and seminars, all at a significant cost, but very much focused on education and practice. Check out tigrent.com for more info.

  • Report this Comment On February 25, 2011, at 5:17 PM, LesBrian wrote:

    I would tell a Newbie (and someone looking at these seminars): If someone had a software product that made it so easy to "always make money," why would they spend so much effort trying to sell it when they could just implement their secret and be rich? It's because IT DOESN'T WORK.,

  • Report this Comment On February 25, 2011, at 5:35 PM, johnadams620 wrote:

    Only one other bit of info.For those who read the carnival barkers pitches (hurry,this wont last ect.) all trying to sell you something that is the end & be all,you will on occasion see something that seems possible.Perhaps even a good idea.WITHOUT EXECPTION scroll to their required disclamer and read it ALL.It may be the best educational investment you ever make...

  • Report this Comment On February 25, 2011, at 5:35 PM, WarrenKammerer wrote:

    If you go to the RDPD Educ $500. seminar they will tell you you need a $10,000. seminar. They will also show you how to call your bank and get your credit card limit higher.

    *

    I imagine if you go to the $10,000. seminar they will tell you you need a $100,000. seminar.

    *

    In a way, watching them operate is an education.

  • Report this Comment On February 25, 2011, at 5:38 PM, WarrenKammerer wrote:

    All the fools who bought JDSU at $40. just before it went to $4. about 10 years ago. Hang tight, it is up to about $20. again.

  • Report this Comment On February 25, 2011, at 5:50 PM, peter2480 wrote:

    RDPD just the number of comments points to its intrinsic value -awareness! If I pay money to attend a professional ed seminar I will come away content if I have learnt at least one thing that can make my day to day working life a little easier (being a dentist I need every one I can get). Wrt to RDPD a previous comment mentioned learning the difference between an ASSET and LIABILITY. This surely is worth the $25 or so (cheaper at a flea market if your time isn't worth too much!). Been a long term MF but only recently signed up for a premium service - now I am getting excited .... calmsies now Dr, take a slow deep breath ....

  • Report this Comment On February 25, 2011, at 5:50 PM, LifeDaddy wrote:

    All of these comments and recommendations are good starting points. I would add that no investor, beginner or seasoned pro, expects to be right 100% of the time. So the new investor should set his or her expectations to make the right choices at somewhere around 50% of the time. When you make poor choices, cut your losses and reinvest. When you make good or great choices, let your winners run. A new investor will find that, at 50% success, they should have a solid and growing investment account if it is monitored on a regular basis.

    The other point that needs to be stated is that there is no substitute for indepth knowledge and understanding of the investment being considered. Read as much as you can dig up on the specific stock or fund you are considering. Read the Motley Fool and understand the recommendations made. Then, when you have a good grasp of the situation, make the decision to buy or not to buy.

    I have been a MF subscriber for several years, but I have not bought every recommendation because I simply did not agree with the premise behind every investment. Certainly, my decision not to buy something allowed me to sleep well each night. There has only been two occasions that I opened a recommended position that I later regretted.

    In the long run, the novice investor must be able to be comfortable with their buying decisions.

  • Report this Comment On February 25, 2011, at 6:05 PM, WellDunned wrote:

    "His books are popular, so presumably they offer advice of value."

    THAT is cringe-worthy.

  • Report this Comment On February 25, 2011, at 6:10 PM, JHK1944 wrote:

    I visited a working woodlot last fall and saw this sign: "The best time to prune this lot was 10 years ago; the second best time is today!"

    The same can be said for saving and investing.

    Education, a sound foundation in elementary and secondary school may be the most important part of that education. The learning curve is very steep for the average person after high school. If you don't have the foundation, math, science, history, critical thinking, etc., your investing future is going to be very difficult without serious help from sources that are NOT selling you "investment snakeoil".

    I found the article interesting but not profound--but much better than Kramer.

    You need to develop your own investment style that reflects your own values and strengths and that takes time. Your philosophy of investing should reflect more "right brain" than "left brain" involvement. Quantitative analysis based on data that has been "window dressed" is highly over-rated. Very few "quants" escape the "bubbles".

    Invest in companies and industries in which you know something more than what someone tells you. Use your own knowledge of consumer tastes and your own experiences--what you like and what you dislike.

    BE A LIFE-LONG LEARNER!!

    But most important is an "exit strategy". Before you buy a stock you should have specific criteria that signals a possible "sell". Then re-evaluate. Would you buy that stock under the new circumstances. If not, you are better off selling. Too many investors ride a stock all the way up and then ride it all the way down.

    SELL Discipline is more important than BUY Discipline. Don't let the Tax Code dictate your SELL decision.70% of a short-term GAIN is much better than 100% of a long-term LOSS.

    I'm retired: Iv'e made more money since I retired than I earned in a 30 year career.

  • Report this Comment On February 25, 2011, at 7:32 PM, marcg99 wrote:

    I've been seeing the endless advertisements for these seminars everywhere, so it's great to get a straight talk version of what going to one was like.

    Early in my investing career, I was recommended RD/PD and others by Kiyosaki, and I even bought his "teaching" board game (the only way to win was flipping real estate.) At the end of the day, I felt thoroughly conned by this charlatan. He made money, not by doing any of the things he was preaching, but by taking it directly out of my pockets and many others like me.

    Oh, he knows how to make money all right... sell investment advice. What was it that P.T. Barnum said? Oh yeah...

  • Report this Comment On February 25, 2011, at 8:01 PM, thurston4moore wrote:

    There have been enough really good suggestions so I don't need to add my two cents, but I do feel the need to sound off on something. Are the same people who keep recommending ETF's & index funds the same people who buy their wrenches, hammers, & screwdrivers at walmart? I just ran a ten year hypo. Had you invested 100K in the following funds, here's what you'd have had as a trailing ten year return:

    Vanguard 500 (admiral class): $113,570

    Expense ratio: .1%

    SPDR 500 ETF (SPY): $112,872

    Expense ratio: .07%

    American Fds Fund. Inv. (ANCFX): $148,795

    Expense ratio: .69% + 3.5% load

    Hartford Capital Appreciation (ITHAX): $148,717

    Expense ratio: 1.22% + 3.5% load

    I used funds with a load just to prove a point. Cheaper isn't always better! Don't you logically think (in the case of American Fds) that a team of professional money managers w/ on average 20+ years experience can collectively pick 199 stocks that will outperform the entire 500 in the index? If you had to buy individual stocks, do you really think you'd invest money in every stock in the S&P 500? Of course not! So stop recommending EVERYONE buy index funds, simply because the only thing you consider when you buy something is it's cost. I'm certainly not saying ignore cost, just don't make it your primary consideration.

  • Report this Comment On February 25, 2011, at 8:38 PM, MadMicro wrote:

    Some of this isn't Foolish but it works for me. I generally follow a multiple-buy multiple-sell strategy in "threes" and also practice good risk management in terms of allocation. Given a typical investment size of $3K this strategy would have you buy in $1K increments, often this works because the first buy is too high. And I generally keep my position sizes < 10% of the total portfolio. If a growth stock falls much more than 8% I sell to preserve capital. Target prices are based on market research and I try to sell when the investment reaches what I consider fair value. Spreadsheet are great tools to track all of this but some of it is art, this is particularly true with tech stocks.

    My best sources of investment research are TMF and NextInning but I also read widely in other sources.

    These tools have saved me from myself on multiple occasions :)

  • Report this Comment On February 25, 2011, at 8:40 PM, nstancill wrote:

    RD/PD...six lessons the rich teach their kids that most folks do not.....earned income, passive income and portfolio income....assets put money in your pocket...liabilities take money out...cash on cash return, ROI,...and of course, real estate investing....some dig RE investing, others do not...if you don't fine, really not an apples to apples comparison with paper assets...so why try...there's a reason why wealthy people keep their money in real estate...government gives this wonderful incentive called "phantom cashflow"...a.k.a....depreciation...if doesn't make sense...check RDPD out from the library or download to your kindle...and learn...learn...learn...for me, creating more and more passive & portfolio income with the help of RDPD & Fool.com (Rule Breaker member) is the plan....thanks for the article

  • Report this Comment On February 25, 2011, at 9:18 PM, SavantFool wrote:

    Before iinvesting, get out of debt.

  • Report this Comment On February 25, 2011, at 9:39 PM, foolisholdgirl wrote:

    It can be as simple as buying what you use and know. You don't have to look far to see those examples like Apple,Netflix or Amazon or Ford.

    Learn to be a bargain hunter in market down cycles.

  • Report this Comment On February 25, 2011, at 10:15 PM, julcion wrote:

    In addition to the education from Motely Fool,

    read Invester's Business Daily and check out their web site for a lot of free education!

  • Report this Comment On February 25, 2011, at 10:16 PM, keno68 wrote:

    Cramer doesn't pump and dump. His personal investment charitable trust has returned 41 percent over its existence, since 2002 I think. If you join his Actions Alerts, you can follow his investing in this portfolio and get a heads up prior to any trade he makes. That's real transparency. Also, that's why I signed up for Stock Advisor. I like the transparency of the Motley Fool, and of course the results they get. But, don't laugh at Cramer. In his world, things change everyday so you have to pay close attention and study the stocks yourself. He invests in any market. It's just somewhat different from the Fool, but not a joke. The best advice from both groups is "do the homework yourself"

  • Report this Comment On February 25, 2011, at 10:19 PM, keno68 wrote:

    I should have said Cramer's charitable trust has returned an average of 41% per year, not overall.

  • Report this Comment On February 26, 2011, at 1:59 AM, mike2153 wrote:

    Don't believe anything you read on a site called StockRich until you've read all the way through the very fine print at the bottom of the page (which is also just good advice generally). From someone who's learned the hard way.

  • Report this Comment On February 26, 2011, at 3:00 AM, HarryWho wrote:

    I think anyone considering becoming an investor should first get rid of ALL credit card debt!

    Then read Fooled by Randomness, The Intelligent Investor, Winning on Wall Street, and The Only Investment Guide You Will Ever Need, and most of the other books recommended in this thread.

    Maybe then look at the various MF products to see which one matches their risk tolerance.

    Investing while you are carrying heavy credit card debt is very foolish!

  • Report this Comment On February 26, 2011, at 7:56 AM, reneedyer wrote:

    I teach a Basic Finance course at the local Community College. I have my students play WallStreetSurvivor. You can learn how to "play" the market without actually investing your money.

  • Report this Comment On February 26, 2011, at 10:35 AM, dcrollins wrote:

    Excellent point about transaction costs, especially short term capital gains taxes. In "Rich Dad Poor Dad" he talks about using real estate specifically because of the homestead exemption allowing you to trade up tax free.

  • Report this Comment On February 26, 2011, at 1:13 PM, RockenD wrote:

    Having been a broker/trader/investor for over 30 years -

    Most people should hire a firm - Fidelity, Schwab, Ameriprise, ect. and use their services to invest as much as they can into index funds. They should not change the funds and continue to invest as much as possible into those funds. That is what 85% - 90% of the people should do.

    The people who are interested in stocks/investing should start with easy to read books like those from The Fools, Any of the Dummies books regarding investing, stocks, options, bonds, online sites like The Fool site which lay out investing in lay person terms and has a great help invest section.

    If possible try to find a stock investing club or friends who are also interested in investing.

    If you find you don't enjoy the process then invest in index funds for your retirement and spend your time doing what you enjoy.

    Rocken

  • Report this Comment On February 26, 2011, at 1:51 PM, flyfishferg wrote:

    Your best wealth generating tool is your income- which means the less you pay to banks in interest and credit cards the more money you have to generate wealth.

    If your investments keep you from sleeping at night then you are doing it wrong.

  • Report this Comment On February 26, 2011, at 5:35 PM, dlchasta35 wrote:

    Please keep in mind that you have never either made or lost money until you cash it in.

    Most people will fell they have lost money if their account goes down. The truth is they only lose money when they cash out any investment for less than they invested plus any interest they would have been paid in a money market account.

    They haven't made a profit until they cash an investment in.

    Investing is a long term project in which every one I have ever known about made some bad decisions.

    Worrying every time the market goes down is counter productive. All that counts is whether you have put more money into the trades over all than you have taken out.

  • Report this Comment On February 27, 2011, at 12:30 AM, organjess wrote:

    I also read RDPD when I started investing, along with Peter Lynch, Motley Fool, and half of the library's investing section. After a while I could see what was worth reading and what wasn't and his books did all say the same things after a while. I liked RDPD because, although he looked down on stocks, he also talked about how you have to play to your strengths. His was real estate. Mine is more stock oriented. :) I also liked his Teen book which emphasized not buying something until you could pay for it with earnings from whatever get rich quick scheme you could come up with (investing, starting a business, etc.) I do get frustrated that he seems to be out to sell books and games and expensive worthless seminars and I certainly would never pay for the seminars, although I talked my husband into giving me the cashflow for kids game for Christmas last year. I'm playing it with my daughter and it is a great way to introduce a lot of financial ideas to young kids (7 years) and no real-estate flipping. :)

    Personally, I know that there is too much I don't know about real estate flipping so I would never try it myself. So if you know yourself and you're not easily swayed into following other people's get rich quick schemes, it can be a good book for motivation or inspiration....or to help get your kids started early.

  • Report this Comment On February 27, 2011, at 3:59 AM, WftRight wrote:

    My first advice about investing would be to realize that no matter what you do, someone will think you're making a stupid financial choice. If you talk to many people about investing, you'll find this person sooner rather than later, and if you listen to this person, you will either avoid a disaster or avoid a huge profit. If you've made the effort to read this far into this article, you'll likely avoid the profit.

    When I first began investing, I worked with a stock broker that I knew through a social friend. She tended to put me in funds where we followed the crowd. We followed the crowd to disaster around the 2000 time frame.

    When I began investing again, I was reading on my own and making my own choices on individual stocks. I made some good picks for less than perfect reasons, but they worked out beautifully because of the timing of the market and some degree of luck. Some of my picks were actually pretty good and based on good reasons, but I balked at investing as much as I had planned because a friend got this serious, horrified look on his face when I was talking about my plans. He said that I was really brave to be investing in the market at that time. I backed off on several of my planned purchases, and most of them doubled or tripled within five years.

  • Report this Comment On February 27, 2011, at 8:52 PM, tullig wrote:

    I stole this one (I think from Dennis Gartman), Manage your risk, not your profit.

  • Report this Comment On February 27, 2011, at 8:59 PM, TC118 wrote:

    I went to one of the free seminars by the Rich Dad/Poor Dad group and then paid $500 for a seminar in investing on real estate. I found the reading materials and audio books very good, but found the seminar a complete waste of time. The person leading the seminar was narcissistic, dead wrong on tax-related issues (I am a CPA and know my taxes) and encouraging irresponsible behavior like using credit cards to finance down payments on real estate investments. My overall assessment was that the actual published items (books, audios, and the official Cash Flow game) were of value in their own right, but that the seminars had some downright dangerous and irresponsible investment advice by people whose only qualifications were that they succeeded through being lucky enought to apply them during a runaway housing market. Now the "teacher" had lost his fortune and needed to actually work by deigning to deal with us riff-raff. He told me to stop asking questions (did I mention that I have an MBA in finance and am a Certified Management Accountant in addition to a CPA), and I walked out because this was a total waste of my time.

  • Report this Comment On February 28, 2011, at 12:52 PM, Smitmiller wrote:

    @ TMFBRich (and bigkansasfool)

    I found a page that says the Stock Advisor is at 0.00%. It's the Premium Advice page at:

    http://www.fool.com/shop/newsletters/index.aspx?source=ipesi...

    And my own two cents: read The Richest Man in Babylon (mentioned earlier) by George S. Clason. Best basic money book ever! I give copies to my nieces and nephews . . . and friends . . . and strangers who come to my door . . . .

  • Report this Comment On February 28, 2011, at 1:46 PM, 4twocents wrote:

    Such great advice. Bagavr's advice particularly for newbies. Just watching and managing a watch list seems to really help those who really wanted to start but are feeling clueless. I started one in Jan for friends and family who want to get started. The problem often is there are fewer people wanting to do the research and learn how to invest then people who want someone to tell them what to do every step of the way.

    The mock portfolio helps those interested start learning and asking questions and those that aren't willing to put in any time usually ignore it and do nothing. But, usually once those that put in the time get started they really get into it once they see the rewards of knowing what your doing. Investing is personal. It can be discussed and chatted about, but at the end of the day each investor has to chose what's best for them.

  • Report this Comment On February 28, 2011, at 11:09 PM, TMFBrich wrote:

    @Smitmiller,

    Ah, thanks for the link! I've contacted the people to get that fixed.

    Best regards,

    Brian Richards

  • Report this Comment On March 01, 2011, at 9:02 AM, 3cans wrote:

    As a Midwest housewife, I was timid about investing until I joined an investment club many years ago. I know they are no longer popular, but sharing the experience with others really helped the learning process. We blundered and blossomed together, and I took what I learned from my meager montly investments in the club to build my own personal portfolio.

    Second, make sure your grown kids invest early. They possess the greatest investment assett: TIME. Lots of lectures on BLTH investing and not cashing in for down payments or new cars. Wish someone had told me when I was 24 years old.

  • Report this Comment On March 01, 2011, at 11:06 AM, arlod wrote:

    Because of fear of the stock market and all it's horror stories for years I had my 401 K investments in mutual funds provided by the company plan sponsor. After watching my contributions go up a little and down a lot over the years (18 total) I realized I would never be able to retire because I had less money than my company & my contributions. I self educated myself for several years and finally in January 2008 I decided I was ready to convert my 401K to a Chase stock account (newly offered in 2007 as an option) I also had been looking at many stock news letters and finally chose the Motley Fool Stock Advisor as my choice to assist me in research. This is the best advice I could give anyone. When I started investing in stock in January 2008 I didn't expect I would soon be going through my first market crash and the announcement that I would be losing my job at the end of the year. Long story short I followed The Fool's recommendations of buy & hold through the crash and as of December 31st 2010 my 401 K holdings were up 59.25%. My only recommendation is to look at their recommendations and research these on your own set of criteria. If for religious or other reasons you don't like how the company makes its money then look at other recommendations. The stocks recommended are good sound financial, cash creating stocks with good management in place and will definitely increase your portfolio profits. I have since 9do to changing circumstances and getting closer to retirement) set up two more stock accounts and also added two more Motley Fool newsletters to my arsenal (Rule Your Retirement & Rule Breakers).

  • Report this Comment On March 02, 2011, at 1:15 PM, uaku wrote:

    This sounds really familiar. I went to a free eduction hosted by TdAmeritrade called "Getting Started with Stocks and Options"

    It was nothing more than sales pitch. I learned a lot by reading books written by Lynch, Ben Graham and Margin of Safety. Yet to read more on works of Buffet. I saw few suckers falling and immediately signing for it. for the fun of it I signed up since they were offering 15 day free trials. I cancelled it after 2nd day. Waste of time and energy. Educate yourself by reading good books, nothing comes cheap and free. One quote I can say is "if its sounds too good to be true then it usually is"

  • Report this Comment On March 02, 2011, at 3:04 PM, verylargelarry wrote:

    Ease into a position. Buy in thirds.

    Set a target for the stock and three reasons why you feel it will rise to the target price.

    Continually dig into your stock's news and its segment news and adjust your premise grudgingly.

    When your targets or premises allow, hold.

    When they falter, sell.

    Otherwise, hold some growth, some value, and some speculative plays. Add or trim with segment rotations.

    Get some sleep, too.

  • Report this Comment On March 03, 2011, at 2:34 PM, radicalaccountin wrote:

    Wow, what alot of responses. I want to chime in too. I went to the seminar. I didn't hear all that good stuff, just upsell. I didn't sign up for the 3 day class. But I did call later and buy the $79 online class. Sales and registration were handled very professionally.

    It was well worth my money because it prompted me to work on my watch list. I can't tell you how much BS I found on MF website articles as well while doing my research. Someone saying a stock was "profitable" when all financials on Yahoo showed them losing money is just one example. There is lousy advice everywhere.

    Also, the stock market class eBooks are very well written. I haven't read all these books you recommend but I have read many of them and Soros too. NONE of them walk you through the basics the way the RDPD eBooks do. Motley Fool would do well to have something that good for novice or self-taught investors such as myself.

    The class was insane. His pitch was a). you aren't rich because you aren't motivated b), if you are motivated you will invest everything, even leverage c), then you wll get rich, or if you lose everything the way RDPD did more than once, you will eventualy get rich.

    I was told that a guy would call to answer any questions, because the class size is 35 people. He actually called to upsell me on $10K tutoring. I explained that I am getting 25% returns using my buy and hold strategy. They showed me 18% returns as a trader. Buy & hold is cheaper and I go to work, not work on trading which I would not enjoy (and don't think is helpful to the economy). He became very rude to me. I have people trying to take advantage of me all over the place now, so I only got upset because he was my tipping point.

    Rich Dad has been saying stay out of the market, buy precious metals for awhile. The class was well worth my $80 for the eBooks and motivation. I may take an entry level class in real estate since I am a novice there too.

    MF is more ethical. I love your work with lotteries. They are even more horrible than leveraged stock market investing. Thanks for that work!

  • Report this Comment On May 19, 2011, at 3:47 PM, hiker1nm wrote:

    Consider joining an investment club whose goal is to buy stocks with solid fundamentals, at a good price. Generally the initial cost and monthly cost is minimal. Better Investing is one such organization and they have chapters in all states.

  • Report this Comment On March 10, 2012, at 12:22 AM, strungout728 wrote:

    I know Kiyosaki Invests for Cash Flow

  • Report this Comment On March 10, 2012, at 5:05 PM, HarryCarysGhost wrote:

    Best investment advice-

    Start drinking....heavily!

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