Playing The Stock Market - Past Performance Is No Guarantee of Future Results

So you're at a club faking a Latin dance. Your moves mysteriously work magic on a sweaty sweetie across the floor, and the two of you pair off. When the music stops, your dance partner whispers, "Past performance is no guarantee of future results." Evidently turned off by market losses, your partner can't help but utter mood-dampening phrases to virtual strangers.

With the stock market in a perpetual downward spiral, investors have resorted to all sorts of stress-relieving tactics, so it's not a stretch to believe the scenario above. Anyone who has owned investments during this prolonged downturn can probably recite specific double-digit earnings that same portfolio was producing in the late 1990s. The difference between those investors and you is that they actually own a portfolio. And now, you are ready to play the stock market. Well, at least you're willing to learn more.

Stocks, or equities, are investments that represent ownership with the potential to appreciate in value. Owning stock is like owning a piece of the corporate pie. Your ownership, and potential for loss or gain, is based on how many shares you purchase. Sure there are risks, but there is also the potential for a big payoff. Just keep in mind that investing is meant to be a long-term adventure filled with normal market fluctuations that cause earnings to rise and fall.

You won't get your arms around investing in one sitting--or one song on the dance floor. But the understanding will come if you keep at it. Based on the history of the stock market, your efforts have the potential to seriously pay off over the long run. Can you say that about a night at the dance club? In the name of balance, allow us to remind you that you could lose money too, which might affect your ability to pay the cover charge.