How to Invest in the Stock Market

Many people earn a good income and have money to invest. However, they are uncertain on how to begin investing in the stock market. Unfortunately, most people have had to learn how to invest the hard way; by trial and error.

I have been trading in the stock market for over 40 years. I remember well that I made my first five investments on the advice of a broker. I made a small amount on one of the stocks and the other four turned out to be losers. After working with numerous different brokers over the years I learned that most brokers are nothing more than salesman that are restricted to recommending only the stocks that their firm is currently recommending. Very few of these recommendations will consistently outperform the S&P 500 benchmark. The brokers are eager to tell you what to buy but they seldom tell you when it is time to sell.

Some people invest on the basis of rumors they have heard. This is probably the worst way to invest. Others watch CNBC to come up with their investment ideas. But watching CNBC is like being “the rope” in a game of tug-of-war. One guru will say buy and ten minutes later another guru will say sell.

Obviously, there are many other ways people make their investment decisions. It is my belief that the best way to invest in the stock market is to trade Exchange Traded Funds or No Load Mutual Funds. These investment vehicles provide excellent diversification since each ETF or Fund holds an entire portfolio of many different stocks. The firms that manage the ETFs or Mutual Funds have a large staff of analysts that study the companies. They visit the factories, interview key executives, and examine market research on the companies’ products. They have real time computer horsepower and multiple world-wide sources of data that no individual investor could afford.

Since I started to focus my investments on ETFs and No-Load Mutual Funds, my investment performance has improved significantly. In fact, I consistently out perform the S&P 500 by a wide margin. The key to this performance is my robust trading systems. My Rebound Mutual Fund Trader, is currently generating an annualized rate of return of 32% which is nearly triple that of the S&P 500 for the same period. In fact, subscribers to this system doubled their money in just 32 months from this trading system.

Trading with a trading system that has stood the test of time takes all of the emotion out of trading. All of us are torn between two very powerful forces; fear and greed. By investing with a robust trading system, there is no emotion involved in the trading decisions. If the system says to buy, we buy. If the system says to sell, we sell. There is no second guessing the system. We rely on the system’s signals because we know that ignoring the signals would prove to be a mistake.

I use a strict stop loss and profit protect discipline on every one of my trades. This discipline ensures that if we have to take a loss on a trade, the loss will be relatively small. We let our profit run and only take the profits when the profit protect stop is hit.