Monday, 13 July 2009

Berkshire Hathaway

Yes I'm posting more about Warren Buffett! But then How to buy stocks for beginners would not be the same without constantly mentioning the daddy of all investors. Anyway, Berkshire Hathaway so if you're trying to learn how to invest like Warren Buffett then why not take a look at Berkshire Hathaway's holdings. The shear mention that this company is interested in another is enough to make a share price rocket in the stock market. So as a beginner what can you tell from looking at these companies? For a start you can see that Warren Buffett always stuck to the rule of investing in something you know or can easily understand. He doesn't own any tech stock because he doesn't know anything about it. He does own a large number of stocks in Gillette and Coca Cola. How hard is the razor and soda business to understand? Not very...hence he bought them. He did of course split up the stock to A and B stock to let others who don't have quite as much cash to jump on the Buffett gravy train. I've resisted the buffet gravy tie in I bet you're glad.

So if you fire up any tool I keep mentioning yahoo finance but anyone will do and look up BRK.A or BRK.B that's the stock symbols by the way, you'll be able to see a breakdown of the company. The stocks are quite expensive. Then he is very successful at this. You can also check out the Berkshire Hathaway website which is absolutely atrocious I have to say. This free rubbish from Blogger is a better template. I can't quite claim to have the same wisdom to bass on about how to buy stocks. That's the great thing about the Berkshire Hathaway site, you can read the letters than Warren Buffett sends out to his shareholders without being one yourself. . Like I said earlier, he's the best in the business so why not learn from him? I have to mention Charlie Munger as well. He's the Vice President of Berkshire Hathaway and widely regarded as Buffett's partner in the stock market. He's also just old. Anyway, he's someone worth looking up as he applies the same techniques that Buffet does taught by Ben Graham all those years ago. There's no point in telling you how much Berkshire Hathaway is worth at the moment because the nature of the business makes it clear it'll be out of date as soon as I post this. There's so much information out there on basics of stock market for beginners it's hard to know where to start...or stop.

In short, read up on Berkshire Hathaway and Charlie Munger. End of lesson for today folks!

Sunday, 12 July 2009

Keep Your Investing Head Clear!

The hardest thing I found about buying stocks and shares is keeping your head when everyone else around you is loosing theirs! It can be quite easy to get caught up with the herd and acting in the same way they do. When I first started trading I was obsessed with checking my stocks every day. Well that's a lie, it was all day every day. Having that little ticker in my browser at work became natural, a point here and point there would affect my mood. In the end it's not a big deal.

This is one thing that beginners in the stock market have a real hard time with. Warren Buffett has always said that the best time to sell stocks is....never! Forget about the 1 or 2 point gains. If you do your research properly in the first place you're buying into a good company. You just have to realize that buying stocks is a long term investment. To buy and sell constantly is foolish. You'd end up loosing more in commission to the stock brokers than you'd actually make in the sale.

So in summary, do your investment research properly at the start. Buy your stocks and hold...unless of course the business model changes...

Wednesday, 8 July 2009

My Investing Mission

Ok so lots of people have asked me why I'm creating how to buy stocks for beginners and there's several answers to that. Firstly I remember how daunting it was starting out with stocks and shares, what is the bull or bear market, how do you actually buy shares online? I thought I'd start this blog and offer up some of my own findings and save you the valuable reader some time! I can remember way back when I first started researching the stock market and all those books I read, the informative sites and the not so informative. If I can save you 5 minutes of research and wasting your time on some sort of get rich quick scheme then I've achieved something. Not that I'm saying I can give you all the answers I just mean to give you a little jump start.

Investing online is certainly here to stay and I've used a few online brokers which of course I will recommend. There's so many useful online tools to be used to. I absolutely love Yahoo Finance. The stats on offer are absolutely mind boggling and they can be searched and filtered anyway you require. There's also some fantastic online communities you can get involved with such as the guys at Motley Fool. There's so many experienced campaigners on there which is just a wealth of experience for you to use. Anyway enough about other sites back to my blog!

I love talking about Value investing and guys like Warren Buffett and Ben Graham and the contributions they have made to the industry. It can be quite hard to understand their concepts at first as it seems to go against the grain of what every other advisor will tell you. They love it when stocks are on free fall as it means bargains galore. You don't need to look for the stock tips, if you research a company and then hold your stocks you will hopefully end up making some money in the long term. So anyway I can spread the word about these guys the better. I know its not exactly a secret but people tend to get too caught up in the stock ticker and forget they're actually making an investment in a real company. It's not just about the numbers! Warren Buffett has modified Ben Grahams initial theory and puts a lot of value in the management of a company. If he believes in the person at the top then it adds to the value of the company.

The market is a tricky subject to keep contained, its so easy to go crazy with the information out there. Anyway if I can help any of you out there I'll be delighted.

Tuesday, 7 July 2009

Value Investing for Beginners Warren Buffett Style

Ever heard of value investing? How about Warren Buffett? He's only the single most successful person in the stocks game. When I was first learning how to buy shares I stumbled on this technique. Warren Buffett followed a technique known as value investing first coined by Benjamin Graham way back in 1934 with his book on Security Analysis but its probably his book titled The Intelligent Investor published in 1949 for which he is most famous. In this he detailed the approach of value investing. He would study a company in depth and look for shares where the price was lower than what he believed the company was worth. He determined this through different types of analysis and this is the basis of value investing.

So how can you determine the value of a company? The first step is to look for companies that trade at discounts to book value. Book value is the value of a company based on its balance sheet account balance. To determine this you'd have to get the companies annual report and get the total of the assets minus any liabilities. This is a good start now on to the next stage. Then also from the annual report check to see the dividend paid out to its share holders and ensure its high. Finally, look for shares which have a low price to earning ration. Many sites online now let you add this column in when searching for shares. Yahoo finance certainly does if you decide to buy stocks online.

Hopefully this guide is useful and provides you with a good introduction on value investing!

Sunday, 5 July 2009

Understanding Bear and Bull Markets

One of the terms you'll hear most frequently when trying to work out how to invest in the stock market is a bear and a bull market. So what does this actually mean? In it's simplest term, a bull market can be described as optimistic. Investors feel that prices are due to rise. A bear market can be described as pessimistic. Investors feel that stock prices are on the way down. As you can imagine a bear market is a self fulfilling prophecy as investors feel the price is coming down so sell shares rather than buying which adds to prices being driven down.

One of the most famous bear markets was the Wall Street crash of 1929 where 89% of market capitalization was completely wiped out. Marking the start of the Great Depression. In more recent times bear markets have occurred between March 2000 and October 2002 when the Internet bubble burst. Then of course depending on who you listen to we're living in a bear market right now with the current financial crisis!

Where did these names come from? One explanation is related to the way each animal attacks its opponents. That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market: if the trend was up, it was considered a bull market; if the trend was down, it was a bear market.

As I mentioned earlier a bear market can be seem as pessimistic as the stock prices are tumbling. In a sense it can be seen as positive for the investor as its likely there will be bargains to be had with undervalued shares. It really depends on your point of view and what kind of investor you are! Hopefully this post clears up any mystery and act as a step in the right direction!

Saturday, 4 July 2009


Hi and welcome to How to Buy Stocks for Beginners! With the current credit crisis there are bargains galore in the stock market. There has never been so much value for money and with the web it's so easy to buy stocks online. Stock prices continue to tumble but this the best time to invest. But don't dive into your wallet right away! Good research is the key. Beginners at stock trading should take the time to get the education they need in order to succeed. It takes time and knowledge to be good at anything in life and this include buying stocks.

I will never tell you which stocks to buy but I will point you in the right direction of what to look out for. Hopefully through reading this blog you will be able to spot a bargain or two. One piece of advice I've always adhered to is 'buying what you know'. In other words if you're a bit of a geek and know about the tech market chances are you'll know what a good product is and if a company is worth investing in. Stick to what you're familiar with and it'll at least give you a head start on someone starting from scratch. How to buy stocks for beginners need not be a total stab in the dark if you follow some of the lessons I outline on this site. It should at least help you navigate your way through the minefield that is the stock market.

Like everything in life, the stock market can be a bit of a gamble but as long as you do your research and keep your head if the price dips you'll be fine! Stock market trading for beginners can be a straight forward process if you follow the guidelines!