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How to Invest in Stocks

An Advanced Conversation


Bobby: I've sold my Apple stocks this morning after I earned $142 per share, and I'll buy my shares back after a big drop I'm expecting this year.

Stacy: What's that making you so hopeful about the Apple stock?

Bobby: Well. Under today's economic realities, I no longer believe the long-term investment is gonna work. So, why not keep my Apple stocks for a while, which is performing exceptionally well, then sold them.

Stacy: What'd you mean by keep your Apple stock "for a while", for how long?

Bobby: That's a million-dollar question. I don't have a definite date to sell out my stocks. But now, already made a killing of thousands of dollars in the last few weeks, I know that Apple can't rise further unless it first takes a down-slope.

Stacy: So what's your strategy then? Tell me.

Bobby: My strategy is a short-term investment and vigilant market watch.

Stacy: But vigilant and steady market watch requires expert knowledge and extensive time input.

Bobby: True. I've been working on it and, slowly but surely, I'm becoming an educated, smart investor.

Stacy: Wow, I may need that, too. Tell me more, Bobby, how you're educating yourself?

Bobby: I'm reading, following economic and market trends; learning how to make sense out of what I read and hear.

Stacy: For example, how did you come up with your decision to stick to your Apple stocks despite the news on Steve's leave of absence?

Bobby: Making sense is what I applied to this investment. Here is what I've learned about the Apple stock: IPad and IPhone are selling big. Apple has increased its sales by 50 billion dollars since IPad came onto the market last year. Apple has earned huge profits and is a well-managed company.

Stacy: Are those reasons good enough to invest in a stock?

Bobby: The answer is "yes" and "no". However, I am more bullish about the short-term prospects of Apple's performance. The least to say, Apple has a product people love to buy.

Stacy: I don't have Apple stocks. From what I hear now, I'll be better off buying Apple. Do you recommend it?

Bobby: Well, I'm also learning that people have different investment objectives. Do you want to buy Apple for the reasons why I bought it?

Stacy: What reasons are you talking about?

Bobby: Such as short-term investment, profitable stock, solid product and good company are my reasons to invest on Apple.

Stacy: Bobby, because I believe in your smarts, that's the reason why I like to consider it.

Bobby: Thanks, honey. However, you should always make a buying decision based on your own needs.

Stacy: What'd you mean by my own needs? Doesn't everybody buy stocks for one good reason, to make money?

Bobby: Yeah. But you should also consider your own circumstances.

Stacy: Like what?

Bobby: Your investment objectives, such as high return and risk taking versus modest return and safe investment, short-term versus long term investment; your investment capital and so on.

Stacy: My investment objectives? Of course, I want high returns but I know nothing about risk taking.

Bobby: Stock investment is never risk-free. However, educated risks taking prevents losses and, in return, increases chances for high return.

Bobby: Above all, are you willing to devote lots of time and do your homework?

Stacy: What should I read?

Bobby: Read the economic news regularly. Begin with good newspapers: The New York Times Business Section, Wall Street Journal, The Financial Times.

Stacy: These newspapers are available on the Internet. Aren't they?

Bobby: Right. You can also sign up with several websites. The popular ones: moneycentral.msn.com, marketwatch.com and morningstar.com.



Steve Jobs


long-term investment

short-term investment

market watch

investment objectives






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