Investing in Shares 101: 1 Basics

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Dr Tony Stewart is a scientist and analyst by training. He has run a strategic market research business and has an extensive background in statistical analysis. At the beginning of his investment career, he read widely and undertook courses on investing run by the Securities Institute of Australia. He has invested in the Australian stock market for thirty years.

ORT_Logo Breadtag Sagas ©: Author Tony,  1 September 2021

Investing in Shares 101: 1 Basic Concepts & Pitfalls

1 Introduction

There are so many complex and simplistic guides to investing that confuse rather than inform. Shares 101 Basics addresses the problem. Shares 101 Basics is biased slightly towards Australia and the ASX (Australian stock exchange), but it applies generally to the USA and UK as well, which are usually in step.

The book I used in the 1990s to help me understand the basics of investing said:

These days, people who either own shares, get appointed as trustees, attend seminars or otherwise advertise their interest in investment matters, will soon, will soon find themselves receiving unsolicited material containing offers of assistance, ‘research opinions and newsletters. (Fitzherbert)

In today’s Internet era, this is magnified. Perhaps I am too suspicious when it comes to finances, but even an organisation that I support wholeheartedly, The Australian Shareholders Association, seems a little suspect in recent years in its educational activities.

A tour of my experiences in the share market might help those starting out. First, I am going to cover the basics. The second article on value investing will look at the best approaches to investing in shares. The third article will detail my personal experiences warts and all.

In Q Research, I often used the David O’Gilvie 1963 quote based on an earlier one: where he bemoaned the reluctance of marketing executives to use their own judgement; instead they use research as a drunkard uses a lamp post for support, rather than for illumination.

In this overview of best practice and my experiences of thirty years investing in shares, I want to offer illumination in Shares 101 Basics rather than support for your prejudices.

2 Overview

Target Audience

The target audience I have in mind in Shares 101 Basics are those wanting to begin investing in shares and looking for help.

I call these investors retail investors, like myself. In Australia, they were until recently pejoratively labelled mums and dads. Mum and dad investors are small-scale risk-averse shareholders, typically an ordinary person with a mortgage and family. (OED)

Before the Internet era retail investors were at a huge disadvantage to professional investors and organisations. Insider trading and sweet heart deals were rife then; and not much has changed. But, the advantage to the large and corporate investor has been greatly diminished by online trading and instant information. Nevertheless, the Gordon Gekko era whilst not as blatant still exists. And, corporations still have major advantages, such as, share placements, the ability to manipulate markets and the like.

Nevertheless, many mum and dad investors frequently perform better than professionals.

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Posted In Canberra in Pandemic Lockdown


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