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There are a lot of strategies that people have come up with for investing in the stock market. Which ones work, and which ones don't? There are some basics of stock market investing that one should follow in order for it to be a productive enterprise rather than a terrible mistake.

Ask the following about your strategy for making money:

     Does your strategy involve trying to figure out if a stock will 
     go up or down in the next few months?

If it does, the chances are you are not doing something wise with your money. The problem is that there are thousands of financial analysts that are examining precisely the same kind of questions you are. You'd have to outsmart them to make money. In other words, they'd have to be wrong, and you right. These people are professionals spending all the time analyzing these questions, by examining all the information available in incredible detail. When billions of dollars are riding on the right decision being made, big financial companies will devote considerably more resources to this than most ordinary people can. You've got to have an ego the size of a planet to really believe you can outsmart this vast army of financial analysts, who are often Harvard Ph.D.'s in Math and Theoretical Physics. These guys know way more then just the basics of stock market investing.

This doesn't stop people from deluding themselves into thinking that somehow they're special and much better and making decisions than the Big Boys. But this sort of vanity can be extremely self destructive.

The most basic rule of stock market investing is to ask the question: if this is such a good idea, why haven't the billion dollar companies thought of it? If you can't outsmart them, there's no way these schemes will work.

The basics of stock market investing really involve what you're trying to accomplish. It's extremely doubtful that anyone can consistently beat Wall Street on the profits you can be expected to make. But one thing you can do, is manage your risk. Make sure that your investments aren't like playing Russian Roulette with your money. In order to do this, you've got to try to minimize the "volatility" of your portfolio.