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A lot of people say that you can make a lot of money in the stock market. But aside from that what are the other reasons why you should start investing your money in stocks? Take a lot at these reasons.

1.) Experts declare, that if managed correctly investing in stocks is the best investment.

Studies confirm that while the stock market may have had its high and low moments, on the overall picture, no other investment can beat the stock market. Prof. Jeremy Seigel supports this with numerous case studies in the book “Stock for the Long Run”.

Prof. Seigel observed that from 1802 to 1997, a period of 195 years, although the stock market was volatile and fluctuating, it was still the leading vehicle of investment for most of the time. Even the greatest stock market crashes became mere insignificant blips in the business charts. Hypothetically, US$1 invested and re-invested in 1802 should multiply to US$7,500,000 at the end of 1997.

Here’s an example closer to home. The highest return rate in recorded history of the Philippine stock market was 224% in 1986 The lowest return rate however, was negative 41% in 1997. Still, if you held on to your investment for the long haul of about 20 years, the average return was still somewhere between 24% to 28% annually.

2.) You are forced to learn.

When you invest in the stocks, you will force yourself to read business news and to see the impact of major news headlines to your investments. News will cease to be mere coffee table topics but will assume a new meaning to you as to how it may or may not affect your investments. Thus you will strive to understand financial and business terms in the news items, jargon you have never encountered before even in your wildest dreams. You get smarter as you are compelled to read and learn to expand your business knowledge. You may have slept through your business and finance subjects in college but now you can’t even blink while you try to grasp what inflation is and how it can affect your investments. You will be motivated to learn like never before.

3.) You will understand the meaning of “Knowledge is Power” and the importance of the internet.

We are now in the age of knowledge or age of information technology. Never has the saying “Knowledge is Power” been more applicable than to this age. Although to most people it is just another old proverb, those who have tried online trading have discovered what it truly means. Way back to my college days, I have yearned to experience investing in the stock market. I was fascinated with the frenzy in stock exchange offices as portrayed in movies. It made me ask what it could be all about. Unfortunately for me, I had not been able to invest early in life. I lacked three important things: information, capability and money. But thanks to modern technology, information is now available through the internet just a mouse click away. With your fingers on the keyboard, even online trading is possible. I am online most of the time monitoring the news, investing in stocks, doing online banking and a host of other things. It will not be long before I am able to invest globally in different stock markets all over the world. And I will do all these while sitting comfortably at home!

The economy and related themes have been a major message woven into news & media reporting throughout the past year. With an average of over 40 million viewers every day, television news has a broad reach. With such a critical message and such a huge audience, it should be no surprise that the media has an impact on investors choices in the buying and selling stocks each day. This article exposes some of the little-known facts regarding the impact the media has on investor decisions and what they can do about it.

Following are six examples of ways in which news & media influence stock market investing.

1. Specific Referrals: Specific references from news & media sources to a company or stock symbol have considerable impact on investment activity associated with that stock. Furthermore, the response is quick. Within a matter of minutes, a stock price can begin to rise, if the media reference is positive, or it can begin to fall, if the media reference is negative.

2. Negative Impacts: Often, a specific referral within the news & media can impact stocks from other companies within the same sector or industry group as the referenced stock. Unfortunately, there are times when the referral results in inappropriate consequences.For example, a negative news reference to Stock #1 drives down the price of Stock #1. Stock #2 is in the same industry group as Stock #1 and the price of Stock #2 drops as well. It is highly likely that investors holding either Stock #1 as well as investors holding Stock #2 will both quickly sell their stock to capture any accrued gains or to limit their loss.Unfortunately, the negative news reference for Stock #1 may not be relevant to Stock #2. If this is the case, there is no legitimate reason for the price of Stock #2 to drop. Investors with knowledge of the company associated with Stock #2, often see this as an opportunity to quickly buy additional shares of Stock #2 to take advantage of the lower price.Generally, the market will quickly wake up to the unintentional negative impact and the price of Stock #2 will begin to rise back to its previous level. Knowledgeable investors are happy since they bought at a lower price. Those existing investors that sold Stock #2 are unhappy because they reacted to a falling stock price and now recognize that Stock #2 should not have dropped in price under these circumstances.

3. Overriding News: As pointed out earlier, stock prices respond quickly to news specific to a company. However, news reported later in the same day or week, can often override the earlier company specific news. The initial news may have caused a stock price to begin to rise, only to see a change in the direction of the price when the latter news report was released. In most cases, investors cannot anticipate this situation and its consequences are unfortunate, but real.

4. Who Can I Believe?: News & media sources often make extensive use of “guest experts” that are generally well-informed about some aspect of the economy or stock market. This is a positive element in their newscasts. However, listening to these experts demonstrates that even the experts seldom are in 100% agreement on the issue at hand. Most investors are looking for answers and may be frustrated by the lack of definitive answers to their questions. Although this may be a turn-off to some investors, it makes a positive contribution to the industry as a whole as it does provide investors with more pieces to the puzzle on the path to a better understanding of the “big picture”.

5. Do Not Run With The Bulls: News & Media reporting can produce a response that demonstrates “herd mentality”. Such a reaction is generally not based on sound investment principles but on the opinion of a group or individual that can start the bulls running.Over time investors tend to gain confidence in stock recommendations offered by a television financial personality or the editor of a financial newsletter. When this “leader of the bulls” makes a buy recommendation on a specific stock, generally after the market close of that trading day, the herd quickly responds by placing a buy order for that stock. When the market opens the next day, this large number of buy orders can cause the stock price to quickly surge or gap up and many of those buy orders get filled at prices considerably higher than the previous days closing price. When other investors see that stock price rising, they want to get in on the action and they place orders further driving up the price of the stock. Often, this inflated stock price is temporary and the price of the stock returns to more appropriate levels leaving some of the herd in a loss position.The best advice is “do not run with the bulls”. Wait to see what the price does over the coming week and then make a decision based on your own fundamental and technical analysis of that stock.

6. Watch Out For Old News: Many stock market traders fail to recognize the impact of institutional investors. Wikipedia defines institutional investors as “organizations that pool large sums of money and invest those sums in companies. Their role in the economy is to act as highly specialized investors on behalf of others.” Examples of institutional investors are banks, insurance companies, brokerages, pension funds, mutual funds, investment banking, and hedge funds.Institutional investors have the benefit of internal professional staff that specialize in studying the pros and cons of a company in order to determine whether that institution should buy that company stock. The media is not aware of the work of these professionals, nor the investment activity of the institution, until after the fact once the price may have been driven up. At that time, the media may unknowingly report the “old news” of the price rise. This report can cause the public to begin to buy that stock further driving up the price. This can result in artificially high prices that will eventually drop back down after the old news is no longer being reported.Watch for technical indicators that provide indication of institutional activity. Make an informed decision. Do not respond to old news.

Conclusion:

* Stock market investing is an adventure that should not be undertaken by an untrained person. However, with training, investment research, and a big picture view of the economy, it is possible to benefit from some wise investments.

* Appreciate news & media sources for who they are; everyday people reporting as best they can on a very complex global economy that is quickly changing and adjusting to a broad range of political and financial factors. Recognize that writers and reporters are not and cannot be experts in all things, so do not accept all news as gospel. Instead, develop a bigger picture view based on multiple media sources over a period of time. Factor that information into your training and experience to make wise investment decisions

In the process of making an intelligent investment decisions, you need to take support from various sources. There are so many investment types and lucrative companies to invest upon that the process becomes really difficult to pass through.

Whenever you look for some investment advices, you generally get the straight answers about how to make some good investment in the stock market or somewhere else. In this article, you will not find that usual what do part, instead it will cover 5 points telling what you need to avoid while investing:

• Stay away from the promotional companies. It is not always the right decision to invest in companies which are developing a new product or entering into a new market. You never know how they will perform in the stock market. It’s a kind of the risk factor that comes first. Instead, a company which is having some good investment news for past few years can be a better investment option. However, you need some good investment advices in this regard and you should watch for the potential of the new products in the future.

• What the annual report says is not enough to make the investment decision. This is true that the tone of the annual report is likely to favor the company most. But, its performance in the stock market is certainly something opposite to the annual report in this sense. So, instead of going by the annual report only, you better search for other investment options as well.

• Don’t stick with the Decimals and Fractions. Sometimes, investors (especially the small investors) come across a situation when they get some lucrative investment news about a particular stock. But they don’t go for the purchase and wait for some further drop down of the price. Sometimes, it may come out as a very wrong decision. If you face such a situation, seek for some genuine investment advices and buy the stocks accordingly.

• Don’t overemphasize diversification. The concept of diversification is indeed a blessing for the investors. It gives the opportunity to diversify your risk by choosing more than one investment options. If there is a crash down in one investment, then there is a probability that it will be covered by the other investments. However, there should be a limit on this number of diversification. You must maintain a balance between these two.

• Don’t stop buying stocks from the fear of external stimuli. If a war or war like situation appears into focus, then the stock market also gets affected. The share values may decrease by some huge margins. In such a situation, instead of dropping down your hope of investing, you should keep on buying the stocks. After the scene or the stimuli is over, the prices are likely to go much higher. But, while buying from the stock market, you should ask for the investment advices about the number of stocks to purchase. You should prefer those companies whose products and services will have the same demand as earlier.

An investment is an intelligent one as long as you are avoiding the pitfalls. You may not succeed all the time, but patience is what you need most in each and every investment you decide to stick with.

I just got off the phone with a new client that said, “investing is crazy complicated, I can’t keep up with the news, the numbers and all the terms, there’s just too much new stuff happening every day and I don’t have time.” I said to him, you’re right. There is a lot of numbers and news and technology that constantly feeds information to you about the markets. BUT if you’re paying attention, this one minute email will save you a decade of stress and frustration. If you believe protecting and growing your money is about more information and faster information and better devices to deliver that information to you AND that you must keep up with the latest ‘bit of info’ then you will for sure be in a constant state of overwhelmed. AND you will never actually be able to make a smart decision about your money consistently. Every time something new and shiny comes out about investing you’ll think, “That is the silver bullet”. And before you know it, you’ll be dragged down to the depths of the ocean filled with pockets of ‘silver bullets’.

Here’s the real truth. There is one thing. One piece of information that will tell you what to be in. It never lies and it doesn’t change that often. It is better than news. It is better than sheets filled with numbers. And it is better than any new iPhone App. You don’t even need to look at it every day…or even every week. Heck you might only need to look at it every month and maybe even every quarter. And the best part, it’s free. You just have to know where to find it. Get this one thing right and your future is taken care of. Miss it or disregard it and your future is possibly in jeopardy.

So enough already, what is it? It’s a price chart comparing three of the four asset classes you can invest in. Your only four choices of assets to invest in are:

1. Stocks
2. Bonds
3. Currencies
4. Commodities

Find the asset(s) that are moving up against the other two or three and you know where to place your money. I have one more for you. Examine a price chart of the S&P500 compared to an ETF, or bonds, or commodities, or currencies.