These days there are many in our generation or younger that partake in fantasy sports leagues that have absolutely zero interest or trust in the stock market. This does have some merit as we have been programmed by the media that the market is very complicated and you should only trust your money to a professional. That, and the fact that anyone over the age of 18 has seen two major stock market crashes leaving many of their parents' retirement plans in doubt. Yet they play fantasy football, baseball, basketball, etc. and have developed many skills that directly translate to managing a successful stock portfolio.
Think of a stock portfolio (which is simply a collection of stocks, funds and cash) as your fantasy sports team roster. Football being a great example but others work just as well.
Your team requires a QB, RB, WR, TE, and Defense. Think of these positions in terms of their value within your overall roster; you want a QB who will be consistent and solid, a Running Back who will get many opportunities to score touchdowns, Wide Receiver has a few purposes depending on how you want to structure your team, for example a boom or bust sort of player or a more dependable possession receiver. Your Defense should be solid, not give up many points and have the opportunity to create some turnovers (upside).
Now that you have an idea of how you want to build your team you do some research on what kind of opportunity each player offers. You narrow down your list to the players that fit your strategy and draft as many as you can. As the season plays out some of your picks will do better than others, some will completely fall apart and some new prospects will emerge.
Congratulations! If you have made it through a successful fantasy season, you have already done more than necessary to manage your own money.
In order to build a solid and successful stock portfolio you will need some of the following stocks:
-solid producing stocks in terms of consistency and upward momentum
-stocks with strong upside potential, but likely some higher risk
-stocks that are safer and less likely to go up or down quickly; pay dividends
You will begin to research companies you may work for or regularly use their products. You will begin to think about each company's future growth potential or lack there of. It is usually prudent to determine how strong their financial health is and most importantly you will need to observe and follow their recent stock price performance through looking at price charts.
Once you have narrowed your list to a few stocks that seem to be the strongest, you can then buy them and continue to monitor their progress. Just as in fantasy sports some of your picks will do well, some will do poorly and others will begin to attract your attention and you will research them. It really begins that simply. Buy stocks of companies you know and/or like, follow their performance, and adjust your holdings accordingly. With online resources it has never been easier to be a self manager of your savings. With my basic guidance and concept lessons you will know everything you need to begin to manage your own money safely and hopefully successfully.
We will cover many topics in further posts coming shortly; concepts that are very basic to understand. We will discuss how to identify strong buying opportunities through supply and demand. We will learn how to listen to what the Market is saying; we will not fear what some commentator on tv or the radio says. Most importantly we will learn how to manage risk in our portfolios. There are not many things in the market you can control, but the one thing you can control is how much you are willing to lose on a single stock. You set a limit and stick to it.
It really is very simple and requires no cost to begin the process of learning and following the market. I hope you will come with me on this path and learn what you can do for your financial future.
No comments:
Post a Comment