STOCK INVESTORS SHOULD BE PREPARED TO BE WRONG

Am I the only one that buys stocks only to watch them go down the next couple of days? It seems that 90% of the stocks I buy go down right after I buy them. It's almost as if my buy order signals the stocks to go down! Now I am pretty sure that I must be experiencing selective memory but it does seem that way nevertheless.

If you are going to learn to invest your money in the stock market, one thing you have to be prepared for is that you will have losses. You will make bad stock picks and you will be wrong some of the time. It doesn't matter whether you are picking your own stocks or whether you are taking the advice of a professional, you will have stocks that are losers sooner or later.

The good investor will learn how to minimize those losses by getting out before too much damage is done but he also knows when to buy back in. The good investor will also be able to pick more winners than losers and learn how to negotiate the ups and downs of the market for a lifetime of smart investing.

One way you can lose money is by doing a lot of panic selling. Some investors hate to see their stocks go down and once it seems like that is the way a stock is going, they sell it. Selling isn't always bad of course, but if you are doing it all the time based purely on emotion because you are scared, you will find it very hard to make money in stocks. You should usually be buying and selling stocks based on a stock's fundamentals and the future you see that company having.

2008 was an awful year in stocks and a lot of people lost a lot of money. The same thing could be said right after 9/11 when the market went down fast because of fear and panic. Now, anyone who sold during those times when the market was plummeting did avoid further losses and that is good for some people. But if you kept your money in after 9/11 you got it all back several years later and a lot more.

The same thing will probably be said about the Dow going from 14,000 down to 7,000 in 2008: if you left all your money in you have gotten a lot of it back as of today and will most likely get all of it back, eventually. That is if you have the time to wait.

Panic selling and selling based on fear means that you are most likely afraid to buy back into the market. You are often paralyzed and your money will be out of the market too often. It is a fine line between being out of the market based on what you see happening with the economy or a stock and being out of the market just because you are scared.

When you invest in stocks, you have to be prepared to withstand some losses and be alright with the fact that your stocks may not go up the second you buy them. You also have to know that some of your picks will be bad ones. The good investor will be able to recognize the bad picks based on what is happening with the company or economy that turned the pick from a good one to a bad one.

IS IT TOO LATE TO BUY APPLE (AAPL)?

Is now the time to buy Apple stock? Is it too late or should you buy some in anticipation of it going up more for Christmas? I bet thousands of stock investors are asking themselves that question right now and have been for months.

The time to buy AAPL in 2010 was about a month before the iPad came out on April 3rd. You can see in the chart below how the stock was going sideways until the beginning of March and from that point it went up fast. Some choppy waters during 4 months of uncertainty after that and then straight up again.

If you bought Apple stock before the iPad was released you were betting that it would be a hit. That is how people can make a lot of money in stocks very quickly: by being correct about things in the future. But if you bought AAPL before the iPad release and it was a bomb, you would have lost a lot of money so that is the risk.

Right now people are trying to figure out just how big the iPad is going to be. All the signs show that it will continue to be huge as Dell and other competitors are going to be coming out with their own tablets. Apple has also said that the 2nd generation of the iPad that will be released in 2011 will have a smaller screen.

The question is though, should you buy Apple stock here at it's all time high of 283? Or should you wait and hope to catch it at around 250? Will this Christmas be the Christmas of the iPad and see off the chart sales? If you wait to buy, it may never go down and continue straight up and you will never get in.

These are the questions stock market investors have to ask themselves all the time. Greed plays a big part in people's investing decisions and greed has probably played some part in Apple stock going as high as it has gone so fast. People just don't want to miss out and that means they keep bidding the stock higher!

An analyst at Kaufman Bros. has just come out with his new price target for AAPL of $374 which is almost $100 higher than where it closed today. This high number adds fuel to the fire and makes people want to get in now so they don't miss out. But at $283 there is a lot of room to fall and so the risk is there. If iPads don't sell as well as hoped this Christmas season, the stock may fall rather than go up.

So, it is your decision how much you have to have Apple stock. It is your decision whether you can risk missing out by waiting for it to go lower. And it is your decision whether you could stomach the loss you might have if something goes wrong and the stock stalls. Like all stocks in the market, every individual investor has to make up their own mind how much they are willing to risk and what to risk it on.