The goal of a young investor is to develop himself into an intelligent investor. Success in the stock market is mostly a mindset issue.
Starting off, you should learn from people have made a big success of investing. Examples of such people are Warren Buffett, Peter Lynch, Sir John Templeton and others. Learning from others who are successful is an intelligent short cut, which can dramatically shorten the learning curve.
You must become familiar with all the terms and strategies associated with investing. You should look to develop your financial literacy skills before even looking at stocks. As a primer, you should know that most of what you will read on investment websites will draw your attention to investing only for capital gains and not considering the other side of the coin, which is to invest for cash flow.
The biggest and most rewarding investment you will ever make is an investment in yourself. Continuous learning is your only safeguard against making costly mistakes. Never allow anyone to make decisions for you.
As a young investor, you should realize that you are never going to be right 100% of the time throughout your investing life. You must be comfortable with the fact that you will make mistakes and look to learn from them rather than fearing failure. If you cannot stand to be wrong, it’s not recommended that you read further.
The stock market is governed by two emotions, fear (pessimists) and optimism (optimists). The novice investor will do well to consider that in order for you to realize significant success in the stock market, you should be a realist. A realist is someone who buys from pessimists and sells to optimists. Above all, the biggest emotional characteristic to develop is patience.
Money is never lost on the stock market, it simply changes hands whether the market rises or falls. Money can and is being made when a stock falls as well. The challenge then is to be on the receiving end all the time. The young investor should view the stock market as a market place for businesses. Your investing activities should be conducted in a “business like” fashion. Investing great, Benjamin Graham said it best in his book, “The Intelligent Investor”, “…investing is most intelligent when its businesslike.
In summary, the stock market can be your cash machine if you are financially smart and emotionally disciplined enough to block out the noise and “see the wood for the trees”.