Foolish Collective
Re: New to Investing

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June 17, 2005

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As a former regular here, let me first welcome you to the FC and wish for you that your experience here be fulfilling, and that you find the FC to be a home on the net. I don't know for sure whether there are any now, but there used to always be extra chairs available for the newbies...ah! I think I see an empty one right over there next to the fire!

I've only been into investing in stocks for about 3 months now. I've been reading up like crazy - books, magazines, newspapers, websites...

That's a good start, but I would caution that your knowledge and experience base is probably not quite deep enough yet to make momentous decisions about what style of investing is best suited to your personality. The course of successful investing is a process, not an event, so leave yourself room to evolve your ideas as your pool of experience deepens.

I think that regardless of how you ultimately feel about fundamental vs. technical analysis, your inclinations to start with focusing on the fundamentals is going to serve you very, very well. But the material one should read and read slowly, attempting with every sentence to garner the insight behind the presentation is quite substantial. A lot of great books teaming with the sharing of hard-won insight into how to understand businesses and evaluate them and make money from that understanding.

After your pool of experience deepens enough, you may ask questions like: "I found a nice company at what I think is an attractive price, but how do I know the price won't get more attractive?" or "I own this great company and the price of it's stock has really appreciated but how do I know when to sell?"

Depending on how compulsive you are about finding the answers to these and thousands of other questions that seem to be ill addressed by the fundamental approach, your quest may lead you to again revisit the technical analysis issue. If you do, then I would suggest that there might be other boards whose participants would actually try to give you more meaningful answers than some you might get here. It seems as though the schism between FA and TA is unbreechable in some locales and this has been one for me. Your experience, of course may vary.

Nonetheless, no board is perfect and this one has a wealth and depth of freely shared education, experience, insight and intuition that you could spend (and spend well) many years here before ever asking any of the other questions.

I will, for the record, just say that my own investment performance has exploded with using a combination of FA and TA. I have used both exclusively (just FA for a long time, then just TA for a few years) and the results were not even in the same league as the combining of the two outlooks has been. I have been using a combined approach for the last 4 years and, according to a portfolio performance report provided by my brokerage house, my time-weighted net annual rate of return is in excess of 40% per annum during that time. I am not suggesting that anyone else could duplicate this performance, nor am I suggesting that 4 years is enough time over which to view the efficacy of such an approach. I'm just putting it out there that one person's viewpoint, substantiatable by independent third party confirmation, is that the combined FA/TA approach works better for him.

Good luck with your experience here, it is a great group of folks.


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