On paper, investing seems easy enough. Stock prices fluctuate. All you have to do is simply buy a stock and sell it at a higher price. It’s a magical idea. Just repeat until wealthy.

Philip Carret outlines the typical experience a novice investor goes through as they come to realize investing is not nearly as easy as it appears on paper.

The novice learns that no such simple plan of operations as this will work. His experience, however, does not shake his confidence in the axiom that stock prices are consistently fluctuating. Indeed, the next stage of progress of the novice — a stage beyond which many traders never get at all — comes with the observation that the prices of securities fluctuate considerably from day to day and week to week.

A confident novice is a deadly combination. With all those stocks flopping around which do you buy? The one you hear about, of course. Continue Reading…