Strive to be an Independent Investor

Blood on the Street by Charles Gasparino teaches investors that blindly following the advice of professional analysts often results in huge losses. Many investors who believed the Wall Street hype about technology and telecommunications stocks in the bubble era of the late 1990s are still feeling the pain. Even now, when analysts are supposed to give unbiased assessments about a company and its stock, most recommendations are biased to the buy side. The independent investor sees through all of the buy propaganda and makes his or her own investment decisions.

How can an individual become an independent investor? First you must be willing to commit ample time to become informed about stocks and the stock market. The best way to accomplish this is to read, read and read more. Read books, magazines, newspapers, research reports and the Internet about investing. Decide who "tells it like it is" versus the talking heads who feed you a constant stream of opinions, speculation and hype. Develop the ability to separate logic and hard data from cheerleading and speculation.

Learn how to look at a price chart and understand what the price pattern is telling you. For example, if you see a chart where prices have headed straight up, be leery of buying the stock. Prices can not go up forever. Understanding price patterns is a key to independent investing.

Another effective exercise is to open an account with an online broker and buy and sell stocks. You can start with a few thousand dollars, trade three or four stocks and learn the dynamics of price movements. There is no substitute for actual trading to learn how stock prices move up and down.

Remember that you are investing your money so guard it with care and knowledge.