Here's Wayne's (probably stupid) guide to stocks.
There are two ways to do stocks. Speculating, otherwise known as "gambling," and investing, otherwise known as "investing." Speculating is guessing what's going to go up or down, and buying (or selling, or shorting, or whatever). Investing is not worrying about what's going to go up or down, but buying for the long term, figuring that over the long term, everything's going to go up, and buying what's most likely to capture that long term trend well.
To invest, buy only stocks in companies that, among other things, are:
- Profitable
- Carry no debt
- Have as broad a market as possible (worldwide vs. Seattle)
- Are used by as many people as possible (toilet paper vs. left-handed scissors)
You then leave it alone. Don't sit by the virtual ticker and watch it go up and down. That is what speculators do. If you need that kind of excitement, go to Vegas.
Once you've found a good investment stock, find out if they have a DRIP. It's a nifty way for you to buy the stock on the cheap directly from the company, sometimes at a very low cost (as in, way lower than the usual brokerage fees), and in smaller quantities than you might have to if you were buying in the usual way. Great for us small guys.