Important Stuff:

-- Open to beginners as well as the already savvy investor.

-- Open to any major on campus.

-- Join any time. Be independent or sign up with a friend. Just send us an e-mail so we can include you on our list.

There is a lot of investment information available online. One of the best and most simpe is the investing school at The Motley Fool. It offers short articles on how to find stocks, analyze companies and devise investing strategies.

Before you head there, however, you may need to understand the following:

Our Club's Limitations:

The SJC Investment Club invests only in individual stocks. Not bonds, derivatives (such as options and futures) or mutual funds. Those may be fine ways to invest, but we're staying focused on US-traded stocks.

 

Portfolio:

When we talk about an "investment portfolio," we simply mean a group of stocks you own. A portfolio may consist of a few or several stocks.

 

Diversification:

One key investment guideline is to keep your portfolio reasonably diversified. That's the finance jargon for "don't put all your eggs in one basket."

For example, you wouldn't want to have a portfolio of only these stocks: IBM, Microsoft, Dell Computer, Yahoo, Amazon.com, and Apple Computer. Those are all good companies. But if that's your whole portfolio, then all your eggs are thrown in a high technology basket. If that industry runs into difficult times, your portfolio will suffer in a big way. (Because all your stocks will be affected in about the same way.)

Invest in some high tech stocks if you want. But make sure you also invest in some stocks in the manufacturing, retail, entertainment, publishing, and other industries. That's what investors mean by diversification.

 

Two Essential Questions:

However sophisticated, or simple, your thinking is about a stock, there are always two essential questions to answer before investing:

• Is the company a strong, and growing one?
• Is the company's stock price attractive?

You'll want to answer both questions, "Yes," before considering the company a good investment.

 

Trading versus Investing:

There's a difference. If you're a trader, you believe you have enough specialized knowledge that you can trade stocks frequently and quickly for profit. "Day" traders do nothing but trade stocks frequently throughout the day. Some make scores of trades between 9:30 am (market opening) and 4:00 pm (market closing).

No evidence suggests these kinds of traders consistently make a profit. There are occasional stories about trading successes, but there are occasional stories about Las Vegas successes, too.

If you're an investor, on the other hand, you are more interested in finding a place to invest your hard-earned money for the long term. You trade out of this investment only when those long-term prospects have changed. Or when your investment goals change.

Analyzing Companies:

If you are new to investing, or new to business, you're likely to come across a lot of new terms and ideas. It can all sound complicated, but it's actually straight forward.

Companies which are good investment prospects are expected to have good future business prospects. That means they're expected to make money - their income is expected to be greater than their expenses for short, near or long-term periods.

Investment professionals have developed many ways to analyze these future business prospects, though most investors have only a few key things they like to look at. One of the benefits of an investment club is you get to know what others look at when analyzing stocks.

 

Getting Ideas:

You can get stock ideas from lots of places. You can also think of them yourself. Do you know of a business area that's growing and expected to continue to grow in the future? That industry might be a good place to start looking for stocks.

One reason why the popular press reports so much activity in "Internet stocks" is that most people recognize Internet businesses have potential for great growth over the next several years. But that's hardly the only industry expecting to grow.

Think about it. You know about Baby Boomers, right? Large numbers of people now in their late thirties through early fifties. As these people grow older and retire, all kinds of retirement-oriented businesses, from real estate to travel to leisure, are expected to see good growth. (And think about what kinds of health care companies are going to benefit from Baby Boomer retirement.)

Are you interested in science or the environment? What companies are working hard to clean up the environment? What companies are trying to prevent (by offering a service or product) other businesses from damaging the environment in the first place? If you know of some trends in these areas, you probably can also find good stocks for your portfolio.

That's about it. Now visit this "investing school" pages for additional information on finding stocks, analyzing them, and making investment decisions.

Investing Basics at The Motley Fool