Stock Market Tips

Keep them at the forefront of your investment thinking!

Included here are some stock market tips for potential investors in the stock market who wish to follow a value investing approach.

Some stock tips are general investing tips that all investors need to heed.

Whereas others are more specific value-investing tips.

Think of these tips as 'truisms' - that is, advice that has survived down the ages and is still relevant today. Don't be disappointed if you don't find any specific stock market tips about individual companies.

This page is more about the process of good investing which varies little from day to day, not about the fortunes of particular companies that can vary daily.

You might have heard the Chinese proverb ...

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime!

Some of the lifetime tips that are listed below are linked to further information that will provide you with valuable insights relating to that tip.


General Tips

If an investment looks too good to be true, it probably isn't!

Do your own investment homework. Don't rely on others.

Use freely available financial information to develop your own financial literacy.

If the financial facts change, change your mind.

A healthy degree of skepticism will serve you in good stead when evaluating financial information and advice.

If an asset pays a dividend, it's an investment; if it doesn't, it's a speculation.

At least half of all stock investment return comes from the dividend.

The higher the return expected, the higher the risk.

You can't have too much investment patience or too much investing discipline.

In the final analysis, it is not the companies you invest in or the stock market that determines whether you will be a successful investor, it is you.

Even the best investors have only a few great ideas every year. No one has great ideas every day.

Don't put all your eggs in one basket.

Nobody has gone broke taking a profit.

Invest because opportunity exists, not because cash is available. Read this one again!


Company Related Tips

Be wary of companies with excessive debt. Look at their debt to equity ratio.

Know the difference between profit and profitability. Use return on equity to measure profitability.

Don't fall in love with companies. All companies become overvalued from time to time.

There is a difference between a company's price and value. Price is what you pay. Value (or the lack of it) is what you get.

Look beyond earnings per share charts in company reports.

Don't ignore qualitative information about companies.

If a company does well, the stock price eventually follows.

Good management is invariably worth paying a premium for.

Invest in companies, not in the stock market.


Buying and Selling Tips

If you pay too much for a stock, your returns will be compromised from the start - even for high quality businesses.

Avoid high risk companies when making buying decisions.

Take the time to estimate the fair value of a stock before making buying and selling decisions.

It is too easy to hold on to losing positions. Have a strategy to assist you in selling.


On A Lighter Note

Will Rogers may have provided the best piece of advice about investing in stocks ...

"Don't gamble; take all your savings and buy some good stock and hold it until it goes up, then sell it. If it don't go up, don't buy it."


To Conclude

There are many aspects to stock value investing and it takes time to appreciate all of them.

Experienced investors develop rules of thumb over time that assist in the stock selection process.

All value investors, as well as the beginning investor, should re-visit the above stock market tips until they remain at the forefront of investment thinking. I do!