Monday, October 8, 2012

So lets get started— Your very first trade!! (PART I)

I understand a lot of people are terrified of the stock market and getting started and probably have this horrible idea in their heads that they will put money today and it’ll be gone tomorrow. So, for those people who need a little push to get the ball rolling I bring you one of my favorite websites for virtual investing:

First of all, the website is absolutely free! All you need to do is sign up (go ahead and use a pseudo name or nickname if you wish) the point is that they give you $1,000,000 in virtual money which you can use to invest in any company you want. The cool thing about this is that the interface they use (the computer screen where you enter your trades, etc) looks very similar to the one I use when I trade with real money (check out my future post on what brokerage firm I use). Anyways, this website is perfect for those just starting out as it simulates real trades, on real time, on a real interface! The stock prices, market news, etc. is all in real time…REAL!...The only fake thing is the money which is what makes it so great for starting out.
Remember I said I wouldn’t share anything here I haven’t tried myself? Well, I recently set up my own account (you can find me under: teachmetoinvest) and went through the sign up process and now Im ready to play! There is even the option to “find your friends” on the website so if you get other people you know to sign up you can compete against each other, etc. All in the name of educational entertainment! (yes I just made that up).
One tip though for those that don’t like junk mail: after you set up your username, etc. there is another screen that comes up asking you to check off different market newsletters that they would email you from time to time. There are also other “deals” where you have to enter your cell number or address. My advice is don’t even bother with that stuff. Is all propaganda/marketing tactics and we all know about those! Just say no to all those “extras” (make sure none of the boxes are checked off) all you really want is to start practicing investing so focus on that.
So which stocks would I pick to get the ball rolling?
Sit down with a piece of paper and let the brainstorming begin:

  • Think about current top industries and whom are the leaders in those industries? do you see them as a leader for the long or short term?
  • What companies are leaders in today’s market?
  • Which companies are on the news all the time (positive news)?
  • Which companies have been around for what feels like 100 years and something inside of you tells you they wont be going anywhere at least in your lifetime?
  • What companies are not only popular here in the U.S but also internationally?
For example, if you are traveling outside the U.S somewhere where you hated the food yet you spotted a popular American fast food restaurant, wouldn’t you be excited? Think about your friends and the tech gadgets they use, does it feel like 99% of them have one particular brand? What products do you use on a consistent basis? Who makes your toothpaste? Your deodorant? Your shampoo? are the majority made by a couple of main brands? (ie: colgate, procter and gamble). Picture yourself in the supermarket buying soda would you choose a ghetto brand over Pepsi or Coke? Probably not.  Think about those revolutionary popular companies that provide foods that are helping people live healthier lives (does wholefoods ring a bell?). Are your friends constantly talking about how they cant live without chipotle? are you still trying to figure out why you have no problem spending $5 for a coffee @ Starbucks yet get mad when your friends ask you to lend them a dollar? When you are browsing through a book store or any store for that matter doesn’t the following thought cross your mind: “I can probably find this cheaper on Amazon or ebay”.
Sit down and brainstorm! Make a list of all those companies that pop in to your head and look in to them.

The above is just one way to look at stocks. When we get further in to investing there are other financial factors we should examine as well and we’ll go in to not so exciting things called technical and fundamental analysis but that is irrelevant right this second. The purpose of this post is to get you started and to get the ball rolling.
So this is your homework for the next couple of days, compile a list of companies you would want to invest in. Your "dream list" taking in to consideration the above noted questions.

If you are already thinking up excuses in that you have no time for brainstorming here are some ideas:
  • Brainstorm your list while on the train or while sitting in traffic
  • While you are waiting in line for something
  • Even while sitting on the toilet!
There is really no excuse if you really want to learn).

IN PART II-- I will walk you step by step through the trading screens in and explain each option/category. Get excited. You're on your way! :)
If you have any questions up to this point please comment below and I will be happy to answer. What would be your dream company to invest in if money was no object?

Photos courtesy of

Companies named in this post are just meant to get your mind thinking and your ideas rolling and an example of my personal thought process when I initially began investing.