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<p>[QUOTE=&quot;Smitty, post: 1359021, member: 35044&quot;]Don&#039;t do it until you know a WHOLE lot more about how markets work. And don&#039;t trust so-called experts until you know who to trust. I&#039;ve been investing for a long time, and the more I learn the more I think people are crazy to play the market until they reach an advanced level of competence. Looking back, even though I had read books, charts and newsletters, I&#039;m stunned at my previous knowledge gap. Realistically, until about 10 years ago I made money in stocks on pure dumb luck.</p><p><br /></p><p>Most people will say that &quot;in the long run stocks go up&quot;. That may be true, especially since you&#039;re only 20, but that doesn&#039;t mean that ALL stocks go up. And the &quot;hot&quot; stocks can sometimes be the worst (read about the rise and fall of the Nifty Fifty) Sometimes even diversifying doesn&#039;t work. Let me give you a couple of examples of when diversifying among stocks doesn&#039;t go quite as planned. If you invested that $5,000 in an index fund (hypothetically) in 1929 you would have made exactly $0 by 1954 (minus inflation of course, ex/dividends). Can you sit there and make nothing for twenty four years? It certainly isn&#039;t a wise use of the time value of money. Likewise invest it in 1965 and by 1980 you would have made exactly ... nothing (minus heavy inflation, ex/dividends). Do you know if 2012 is not 1929 or 1965? If it is, do you know when to get out?</p><p><br /></p><p>What&#039;s worse is that what works in the market changes. If you&#039;re not flexible eventually you&#039;re going to get hurt. Fundamentals, trend, momentum, buy-and-hold and swing have all had their day at different times. But for periods of time they can completely bomb ... and you have to understand why. And you have to understand psychology because sometimes the market is driven by herd mentality. Then, to do it well, you have to figure out your strengths and weaknesses. If you try to invest in a way that doesn&#039;t match your interests or emotional capabilities, you&#039;ll get hurt.</p><p><br /></p><p>So what I&#039;m saying is, don&#039;t do it until you&#039;re ready.</p><p><br /></p><p>However, if you have &quot;play&quot; money go ahead and play around in the market. Sometimes having real money on the line is a great learner experience. But I wouldn&#039;t play the whole stash.[/QUOTE]</p><p><br /></p>

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