Stargazer- One of the dumbest statements made most often by people who were in the market was: " I watched my retirement portfolio go down and down and down." The second dumbest statement most often made is, "I kept buying stocks and then lost it when the crash happened." Who in their right mind would sit by and watch their future get pilfered away and not do anything? People who don't understand what they bought, that's who.
Here's the simple lessons to learn. If you plan to put your money into the market, doesn't matter which market, you must understand that the money is at risk and you can't sock it away and check on it years later. Too many people did that and fell victim to the buy and ignore. ( buy and hold) Anytime you can have a downside risk, guaranteed you will. Its a question of when. And that is the key to investing in stocks. You have to monitor it and that means understanding the catalysts that can move a stock, understand the the difference between a company triggered stock move and a world event influence. World events will pass and the stock will recover. A bad move by the company could take much longer to recover. Money management dictates you should always keep an 8 month emergency fund to cover your needs should you lose monthly income. After that, you can invest in stocks that pay you to wait on growth and do that in a tax advantaged account like a Roth IRA. Once you max that out you can play with additional cash you have in the speculative stocks, such as Apple, Google, Netflix, etc. These pay no dividends but if you buy them when a world event takes out their stock, they will often recover in a very short time frame and can make you some nice money. The problem is most people don't buy at the right time and get stuck owning a stock after it has really peaked. If you follow these stocks over several months to a year you can see the cycles and make the right move. Then you buy in increments and be prepared to hold for the next high. Then you have to be prepared to take some profits before it cycles back down again. Apple generates it's own cycles and is less influenced by world events. Goggle gets hammered by it's own management decisions but continues to recover over time and reach new highs. Once in awhile a company makes a really bad management move and the press magnifies that to the point the stock gets both legs kicked out from under. I lost everything I gained in the first half of 2011 with the losses in the second half with Netflix. They were so badly damaged that I felt I could do better in another stock and chose to sell 2/3 of my Netflix for the tax loss for 2011. Generally I invest and trade about 30 stocks in all major sectors. This is diversification which is the best strategy to grow your wealth but it requires daily attention to understand what is owned. If you can't do that then probably the market is not a good place to be. I discovered you don't need to understand complex stuff like options and technical analysis, but it does help to understand some basic public company accounting and how to read the SEC filings so you can predict a move.
Yes, Apple is solid, but here's my basic tip for that comment- All stocks tend to go down between July and September. This is the time to buy. All stocks tend to hit peak price right about now so this is time to sell. On an annual basis, following this simple buy low sell high timing rule can make you some modest returns in these volatile stocks. I sold half my Apple recently and probably won't be buying back until later, maybe after the ipad 3 announcement as that will probably cause the stock to fall, then sell it just before the iphone 5 announcement in beginning of summer. There are technical reasons why this happens, too complex to discuss here but if you study Apple, you'll see these cycles happen like clock work. Sometimes it is best to understand these cycles exist than to waste time trying to understand why they do.
Be cautious about reading analysts reports. These hacks are usually 100% wrong and never get ridiculed for their incompetence. With a company like Apple they are way too bearish with future earnings estimates. Predicting the future uses some pretty complex math but unlike engineering, in stock Tech analysis it is based on crystal ball gazing for the numbers.
