important things to remember.
- First and foremost, please faithfully continue to support your local Church and other ministries? Two Fish
believes investing in stocks should not come at the expense of other financial obligations, such as reducing
debts, tithing and supporting ministries. - Asset allocation is an important key to protecting your money. Too much or too little exposure to a particular
investment type can be detrimental to effectively growing God's wealth. For example, younger investors with
a goal of growing wealth over a longer period of time may want the majority of their money invested in
stocks -- instead of bonds, cash or other investments. Whereas, older investors, with a goal of preserving
capital funds, may want the majority of their assets allocated in bonds, cash and gold or other precious
metals, with less exposure to stocks. - Two Fish can't preach enough about diversification. In other words, make sure all your eggs aren't placed in
one basket because if that basket falls you could lose all your eggs. And while diversification is good, don't
be too diverse. It is possible to have too many stocks, which can negatively impact the stocks in your
portfolio that significantly outperform the market. - Please remember, investing in stocks isn't about becoming rich. It's about effectively growing the wealth
God has blessed you with, so in turn, you can bless those who may be less fortunate! - If you only learn one thing from Two Fish, we hope it would be that "Patience truly is a Virtue." So before
you think you're ready to buy a particular stock, do ample research, and then do some more, and right
before you're ready to buy, stop, go back and do even more.
Here are a few more tips Two Fish considers valuable for beginners:
Opening an account: The Internet has made trading stocks quite easy. And with most brokerage firms requiring
only a few hundred dollars to open an account, trading stocks has become more accessible to those with very little
extra cash. Although Two Fish feels there are many great brokerage firms to choose from, we favor Scottrade
because they provide quality customer service, a minimum of $500 to open an account, a flat rate of $7 for all
trades and they do not charge inactivity fees (some firms will charge you if you do not make a minimum amount of
trades each quarter -- which makes Two Fish frown.) In addition, Two Fish encourages individuals to be “self-
service” investors that can actively trade stocks without the help of a broker.
Trading: Please use a limit order when trading stocks. The stock market can be highly volatile, and if you place a
market order for a particular stock, it means you buy or sell shares of a stock for the best available price (which
can fluctuate widely depending on market conditions and the particular stock.) However, by using a limit order you
are assured to buy a stock at or below a specified price or to sell a stock at or above a specified price. This is very
important for beginners, so let's walk through a hypothetical example; Let's say you’re looking to buy our example
stock, ABCD which last traded on the market at a price of $12.42 per share, but now the bid (buy price) is $12.12
and the ask (sell price) is currently $12.78. If you placed a market order at this time to buy ABCD shares you
could potentially get shares priced anywhere from $12.12 to $12.78 per share (representing a price fluctuation of
over 5%.) However, if you're only willing to pay $12.25 or lower, you would simply place a limit order to buy X
amount of shares at a limit price of $12.25. Now you're guaranteed to get shares at $12.25 or lower (of course this
assumes someone else is willing to sell the shares at that price or lower.) Quite simply, a limit order protects you
from getting an undesirable price for your shares.
Learn: Although Two Fish puts a lot of hard work into delivering only the very best investment ideas for Christians
-- please try to learn as much as you can. For the beginner, Yahoo Finance is a great place to start. They have a
wealth of information and their well written articles can teach you just about everything you'd want to know about
stocks, markets and investing.
Think twice before you sell: Selling a winning stock too early has haunted many investors throughout history. Just
for an example, let's follow what happened to Mike early on in his investing career. In 1990 Mike had $2000 to
invest, so he decided to buy $1,000 of Dell stock and $1,000 of Wal-Mart stock. Over the next 3 years, both
stocks did very well. However, from 1993 to 1995 both stocks traded relatively flat to down and thus Mike decided
to sell both of them in January of 1995. He did quite well to, as his Dell investment went from $1,000 to just over
$14,000 and his Wal-Mart investment grew from $1,000 to nearly $2,000. However, another 5 years later Mike
realized he had made a terrible mistake as both stocks kept climbing and never looked back. Had Mike held onto
those shares for just another 5 years (from 1990 to 2000) his Dell stock would have been worth over $900,000
and his Wal-Mart stock worth nearly $13,000. Again, think twice before you sell!
Want to see more tips -- send Two Fish a question and we'll do our best to help.
