I got an email from a reader who had just bought their very first stock. Its a buyer's remorse type of email as this person was wanting confirmation from me that they did the right thing, even though it was already done. Here is the email:

I never bought a stock before because of my limited knowledge of investing. But today for the first time, I decided to buy 17 shares of Apple ($10k worth) in anticipation of the new iPad release Friday (I like Apple and I own a Mac which I'm using now) I bought the stock for $589/share with a $530 stop loss.

Do you think I made the right decision? Do you think using a stop loss at 10% less was a good choice? Do you think I just bought into the hype and the bubble will burst? I appreciate any advice you can give me. Thanks.

I wrote back and told them that I couldn't comment on any one particular stock but most analysts think the stock will continue to go up from here so don't worry too much.

email is a great insight into the mind of a stock investor. The difficult decision about whether to buy Apple stock could come from a novice investor like this person or a much more experienced investor and it shows how emotion can play a big part in the stock buying process. It doesn't matter who you are or what your experience level, pulling the trigger to buy a stock can be a difficult decision that doesn't stop with the purchase. After all, the decision to sell can be just as hard!

The desire to make money and not miss out on something that is getting a tremendous amount of media airplay is, I believe, bringing in a lot of first time investors. We hear about Apple and it's skyrocketing stock every day. The fact that so many people own and love their products means that it is hard to escape the story even if you are not an investor. But for anyone that has a little spare money to invest, the desire to jump in can be too hard to resist. This person can't be the only one that is buying their first stock and making that stock be AAPL!

A new investor like this will, undoubtedly, spend much of today refreshing their computer screen to see what the price is hoping to get confirmation that they did the right thing. Confirmation to them would be the stock continuing to go up. They will do a lot of that for the days and weeks ahead as putting $10,000 down on one stock as their first stock purchase was a big move. But as the weeks go by they will probably pay a little less attention to the hourly price and just check it every day.

Any Stock Market For Dummies book will advise against putting a big chunk of money down on one stock as your first purchase. Diversity is always recommended and achieved by buying different stocks in different industries. Betting everything on one stock is well, a bit like gambling and you can lose big. At least our reader put in a stop loss to prevent that.

Whenever you have a stock that goes parabolic (Google was the last one to do it), you get new investors that just have to get in. They see and hear that everyone else is making money and they want a piece of the pie. It is their first introduction to the stock market and that is a good thing.....lets just hope that they get out with a gain so that they learn to invest correctly next time by spreading their money around a bit more to mitigate the risk.

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