Why we have to learn about stocks?

Many of us invest especially in the beginning stages through information from friends and relatives or office colleagues. In my recent visit to the bank I came across a person who just invested (first investment) 200 shares on theme parks IPO because he was introduced to the scheme by his friend. He does not have any clue about IPO, how to sell or buy the stock or how stock market works. No one should be ashamed of not knowing things first. But we have to try to learn things once we get introduced or get an interest. If one wants to win a war most of the time then they have to master the Art of war. Stock market or investing entails information. Unless your father is a stock broker or you have ties with someone who deals with stock  markets or own a company, stock market is new to almost all of us. So there is no shame in not knowing about stocks. But once you decided that you want to be an investor then it is important to learn about stocks.

Do you think Warren Buffett knows more about stocks? Yes. He is even having a masters degree  from a top university and leant from a top teacher. Without financial knowledge no one can become a top investor. In schools we learn very limited information about banking, personal finances and investing. So we have to learn and improve our financial knowledge. Superior financial knowledge leads to increased financial decision and wisdom. One has to spend small amounts of time everyday in improving financial acumen. Reading articles on newspapers and asking questions on why a particular stocks goes up or going down. For example do you understand the following terms: cyclical stock, FDA decision on a drug, SEBI, reverse stock split. Start today and you will have more financial IQ next year than what you have today. That will help you to understand the stocks better.

So how can one know more about stocks. After the advent of internet and Google it is easy for anyone to lean anything. So stocks are no exception. Whatever questions one has they can simply type on Google and it will take you to some site which deals with that question. Web sites like fool.com, Investopedia, Wikipedia, money control, morning star and reading newspapers and financial columns help you to gain more knowledge over time.

Risk comes from not knowing what you are doing. - Warren Buffet