I’ve been chronicling my experiences using premium services offered by The Motley Fool, and approaching these services through the lens of someone who isn’t experienced with investing provides some valuable insight into what you need to know to get started. In my first post about this, I advised newcomers to set up their Motley Fool account and find an online trading platform or online trading simulator to begin.
Once you have set those up and you are comfortable navigating the Motley Fool and your trading platform, it’s only a matter of time before you’ll feel confident enough to conduct your first purchase or simulated purchases. What should you know going forward?
Use The Stock Advisor
It pays to take the advice of people who have more experience investing, but if you are new to investing online it’s hard to know who to trust. In the Motley Fool Premium services section where the stock advisor is located, you can see a list of daily recommendations, “Stocks To Buy Today,” that looks like this:
Getting to know these stocks--in spite of their price points--can teach you a lot about how to invest. For example, Amazon is one of the suggested picks. Clicking on Amazon takes you to a page with more details you should study for each and every stock you are considering. For Amazon, a stock listed as a Team David Best Buy Now back in October of 2020, you’ll see the Amazon logo, which you should click on to get more information.
Look At Performance
That info includes the ratings other investors have given the stock, the 52-week average showing the highs and lows of the stock as it’s performed in the last 12 months, and more. Why do you want to pay attention to these things? Because getting to know how a stock performs is crucial to making a good long-term investment strategy.
The Motley Fool stock advisor information includes advice that buying and holding for three to five years is advisable. And you read that correctly--the Motley Fool is not encouraging you to attempt day trading with these stocks...this is about the long game and for newcomers, that’s PLENTY.
The Amazon entry (NASDAQ: AMZN) I accessed at press time shows the following information:
Current Price $3,071.43
Today's Change -$72.31 (-2.3%)
Market Cap $1,577B
Price/Earnings Ratio 90.32
Earnings Per Share (Trailing 12 Months) $34.81
Here, we see that on the day this was reported, Amazon shares lost some ground--more than $72 lower than the previous report. Does that mean anything significant? $72 per share lost is a lot of money if you have purchased a high number of shares. But this is where doing your homework and watching these companies through your stock advisor and/or other resources pays off.
If we observe the stock’s performance over the last 52 weeks, we see that at the bottom end, one year ago, Amazon was selling for $1,753.11 on November 11, 2019. By March 2019 the stock had fallen to $1,676.61 after a mild spike above $2 thousand in February. But over the long haul, Amazon proves it is worthy to be recommended by the Motley Fool. In April Amazon rose to $2,474.00, reaching a peak in September at $3,499.12.
So when Amazon is selling for 3,322.00 in November and later in November for $3,071.43 as mentioned above, we know that yes the stock is deflating a bit compared to the 52-week high but that overall it is still vastly outperforming itself back when the 52 week average in this case began.
Is Amazon a good buy? Some investors who have the money to consider this particular stock might wait to see if there are any further reductions in the price before committing while others might be willing to pay the going price if they are convinced the stock has more room to grow.
That isn’t something a new investor is likely to know how to start researching right away, which is why it’s a very good thing to have the Motley Fool resources to guide you. Looking at similar kinds of stock with lower price points may help depending on the nature of the stock, market volatility, and other variables, but it’s clear that the information you get from the stock advisor can help you learn and grow as an investor without having to start from scratch with your investment research.