Udet,
You can do all the research you can possibly do, you can know someone who works for the company and is touting the stock as a sure thing...and the damn thing can still tank.
But, you shouldn't be discouraged from playing the stocks, just make sure you are doing so with money you can lose, as Toad suggested.
What I do is to allocate my savings into zero risk (AAA rated bonds guarenteed by the US government), low risk (mutual funds invested very conservatively) and high risk (equities, the horse track, a poker game or lotteries). Generally my money is invested 70%, 20%, 10% respectively.
So...10% of my savings is play money.
I don't do the horse track (I've been a few times...they usually have to wait until my pick crosses the finnish line so that they can start the next race), I never play high stakes poker and we have no lottery here. Stocks are the way I play.
But I don't go too crazy.
Generally world events, politics and reading the business section of the newspaper dictates my investing in stocks. For example: 9/11...on September 12, 2001 I bought some Ratheyon shares, knowing that everyone and their brother would be doing the same thing. The price went up about $5. Then I sold. DON'T get greedy, make a profit and jump out. Now, having said that I did the same thing with the war in Iraq...I bought back into Ratheyon and even recommended the stock to Gofaster, I think. At the time the stock was almost $29. I just checked the price..it's now $29.88. Not the greatest at all. Don't forget that I lost on the potential to take that money and buy bonds yielding say 4%..instead the money sat doing nothing floundering around the same $29 price I bought at.
I also have a few general rules:
1. I never invest in penny stocks.
2. I never invest in mining shares.
3. I avoid smaller exchanges..generally I stick with the NYSE and NASDAQ.
