Clearly the purpose of deciding what shares to buy, or stocks, for most people is to make money, a few may buy shares in order to accumulate a position in a company such that they may obtain a controlling interest or get some voting rights etc, but these are rare exceptions.
Learn to buy the best shares
Ok so what are the the best shares to buy?
First lets get a look at the bigger picture as far as what stocks and shares are available to buy. The 1st thing to understand is that the general public can only in general buy shares which are publicly traded, let me explain further.
There are hundreds of thousands of companies in existence but only a small fraction of them have decided to go public and allow anyone, you and me, to buy a share of their company, there are some fantastic companies out there that make a lot of money and great profits but they are private, family owned and you can’t buy shares in them, yes they are keeping all the money for themselves!.
So why does a company ever “go public” and let every in to buy shares in their company?, there are lots of reasons, here are a few:
- They are short of cash
- Owners want to cash out some of their shares and retire, or just spend some!
- Makes acquiring other companies easier
- Being publicly traded may help their core business
So what can you buy, you can buy shares in what are called publicly traded companies, every country in the world just about has some publicly traded companies, even Iraq, but who would want to buy shares in a company that has it’s headquarters based in Iraq?, it could be here today, blown up tomorrow.
Joking aside that brings a very important point about buying shares and stocks, and that is are you a trader or an investor?
A trader is someone who has a fairly short time frame in mind, it could be minutes, hours, days, weeks but not usually much more than a month or 2 at most, and within that period they will open and close their trade, hopefully for a profit.
An investor is someone who has a much longer time frame in mind, usually at least several months to a number of years.
This is important because while a stock or share may show a profit over a say 3 week period, over a 2 year period it may show a loss, and vice versa, this is what trading is all about and where the majority of traders and investors screw up big time. Once you master trading shares over the correct time period for your trading style you are well on the way to becoming a profitable trader.