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Investing...

Hanging on to what you have, despite inflation, pestilence, plague.

(This one's for you, BL.)


These pages are an attempt to interest beginners in the possibility of using the stock market as a vehicle for investment.

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They come to you from a complete amateur... but someone who has been doing stock market investing since 1991. Read no further if you don't subscribe to the theory that anything you do (or don't do) is your responsibility, not mine.



Investing in the stock market is quite simple. I suspect that even in these form-crazed days, we could walk into a broker's office with $2000 in cash, open an account, and buy 10 shares of stock in some company.

The idea behind buying shares is simple.

We hope that at some future date we will be able to sell the shares on to someone else for more that we paid for the shares. Of course, sometimes when we go to sell shares, they are worth less than we paid for them.

Even when the shares are worth more, we sometimes "lose"... how?

(Think! Can you come up with the answer yourself???

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Here's how we can lose money even when the price of our shares goes up.

Suppose you bought 100 shares of Agilent, ticker symbol is "A", at the start of 2010. They would have cost about $30 per share. By the end of the year, you would be feeling pretty clever... Agilent was selling then for $41 per share... $1100 profit, if you cashed out.

However... has you invested the same $3,000 in Tata Motors, creator of the "Nano", India's "Volkswagen", and owner of Jaguar, Land Rover, etc, then by the end of the year you would have had a profit of $1700... Tata went from $17/shr to $27/shr in the same period. (Prices as adjusted for subsequent splits, up to March 2012.)

(To digress... Going back to buying Agilent, ticker "A"... Surely Maria would approve of starting at the beginning? Although perhaps she would have us start with shares in the tractor manufacturer John Deere, ticker "DE"? (Deere went from $39 to $43 over the same period... but has done better (and worse!) in other periods.) End of digression!)

Owning shares is relatively painless and risk free. You could invest in a racehorse, instead of in shares. (If you had rather more than $2000.) But while he was yours, you'd be faced with housing, feeding, and training him, etc. And he could break a leg at any time.

Furthermore, while you own company shares, you may receive dividends. Some companies pay no dividend at all, and those that do pay dividends at different rates... but they can be an extra reason to own shares. (Fear not: the ones that don't pay dividends have other attractions.) (Agilent, Tata and Deere paid, per share, nothing, $0.30, and $1.84 respectively in 2010.)

So! Really simple!

Buy shares today. Collect dividends. Sell the shares later.

Ha! If only.

The point of this website is to try to help you see the details of investing in the stock market. I am going to pretend that I won $100,000 on a lottery ticket on 3 March 2012, and used that to start some stock market investing. I will try to convey the reality of investing to the extent that will be necessary for the reader to understand what it takes to invest. But I will also be taking some short-cuts, to keep the burden of detail manageable.

I hope you will "join the party" and enjoy following the saga of Sheepdog Guides Investing.



So! Where next?

The following is a partial list of pages in the Sheepdog Guides Investing site. Each will open in a new tab or window.

Not only are there pages explaining general principles and considerations, but there will be an ongoing account of a hypothetical portfolio, which will not be "fudged"... it will reflect my actual "wisdom" (or foolishness) as an investor of what started as $100,000 in March 2012.




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