| Warren Buffett, the greatest investor in the | | | | no one can tell you that you shouldn't be playing |
| history of the stock market and one of the | | | | the stock market. But if you hope to have |
| richest people in America is attributed as saying | | | | success at it, you have to commit yourself fully |
| that "investors should know their limitations." | | | | to the endeavor. Winning the stock market game |
| There is a simple wisdom in that saying that | | | | requires an understanding of the basics of stock |
| applies to everyday life; know what you are able | | | | market investing, a clear stock trading plan and |
| to do and what you can't do, then do the things | | | | the best resources available. |
| you can. Ask yourself, if you got a chance to | | | | The first thing you need to do is start learning |
| fight with a grizzly bear, would you do it? You say | | | | about the stock market. Start with Benjamin |
| that is crazy because the bear is bigger and would | | | | Graham's book on defensive investing, then read |
| kill you? Ok, it's probably an extreme example but | | | | anything you can about Warren Buffett. Both of |
| you get the picture; you realize that you don't | | | | these men are giants in the world of investing and |
| have the ability to fight with a bear and you | | | | because of their stature, their views demand a |
| wouldn't do it. Well, sometimes it is the same in | | | | certain level of respect. Your learning should also |
| the stock market and yes, there are people on | | | | include an ever-increasing understanding of the |
| Wall Street that successfully fight bears and bulls | | | | stock market terms and techniques of Wall |
| everyday with a great equalizer. Index funds give | | | | Street. You need to understand Wall Street news |
| investors the tools they need to exceed their | | | | and how Wall Street talks and acts in order to |
| limitations. | | | | recognize its characteristics. |
| What are index funds? | | | | Second, you need to develop a plan for your |
| An index fund is a type of mutual fund that | | | | investing. Define your goals and identify a course |
| keeps a stock portfolio designed to match the | | | | for getting there. Want to trade stocks? Make |
| performance of a stock market or one of its | | | | your plans accordingly. Prefer the idea of futures |
| stock sectors as measured by an index of | | | | markets or options trading? Those are good |
| selected stocks. Index funds are also known as | | | | possibilities as well. What are your stop loss |
| market funds. | | | | strategies? Knowing these things will help you |
| Why are index funds better than going alone? | | | | make a plan that increases your chances for |
| The vast majority of investors on Wall Street | | | | success. |
| really do not know anything about investing. They | | | | Finally, you need a stock trading system that will |
| don't define their goals, they don't learn stock | | | | help you track your investments as well as your |
| charting and they refuse to perform fundamental | | | | potential purchases. The best system for this is |
| analysis on companies before they buy. These | | | | Japanese Candlesticks. This is a stock trading |
| are the same investors that don't understand | | | | system with over three hundred years of use |
| what happened when they lose their money. | | | | and it is far and away the best for tracking |
| There are very few investors that, over the long | | | | stocks and commodities as well as understanding |
| haul, out-perform the results of the major indices | | | | the trends and patterns that occur in the market. |
| like the Dow, the S&P 500 or the Vanguard | | | | Conclusion |
| Total Stock Market Index. | | | | For the average investor, nothing beats index |
| Index funds such as these and others give the | | | | funds. Index funds are simple, secure ways to |
| average investor the ability to exceed his or her | | | | invest and prosper in the stock market. Index |
| limitations. These funds are diversified portfolios | | | | funds allow the investor to relax, knowing that he |
| and represent investment options in a portfolio | | | | or she is using the most consistently performing |
| with a size only a few investors could match. | | | | method in the stock market for investing. For the |
| Because they have such a large portion of the | | | | more daring investors, index funds might be a |
| market represented in their portfolios, it is | | | | part of an investment philosophy that gives the |
| extremely difficult to outperform index funds | | | | investor complete control over his or her financial |
| over the course of a year, let alone 10 or 20 | | | | future. Whether investing on your own or taking |
| years. | | | | advantage of index funds, you need to know |
| What if I want to do it on my own? | | | | your own limitations. |
| That's one of the beauties of the stock market; | | | | |