The Educated Investor

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The Biggest Key To Successful Investing? Self-Education
Friday September 5, 10:26 am ET
By: David Saito-Chung

The market may be in a good mood these days, but a lot of individual investors still don't feel that way.

A federal judge in Los Angeles sentenced Reed Slatkin to 14 years in the slammer. The money manager was found guilty of robbing hundreds of millions of dollars from investors in a Ponzi scheme.

Also on Wednesday, a New York-based hedge fund agreed to pay $40 million to settle charges of making illegal trades with a number of large mutual funds. WorldCom ex-CEO Bernie Ebbers pleaded innocent to criminal charges of fraud, which led to massive losses for shareholders.

If the fable master Aesop were still around, the moral of the story might be: Blindly entrust your money to an investing "professional" or a single "great" company, and you might get your head handed back to you.

Never think you must absolutely let someone else manage your hard-earned nest egg for you. Of course, there are many excellent, hard-working money managers who succeed in the market. Yet with time, an open mind, discipline and effort, virtually any investor can master IBD's method of finding great stocks and do as well as - if not better than - the pros. That has always been IBD's mission. Those who wish to invest successfully need a sound education in the market.

"What impresses me most - even after going through a period like 1998 to 2002 - is how little things change," IBD founder Bill O'Neil wrote in his new book, "The Successful Investor: What 80 Million People Need to Know to Invest Profitably and Avoid Big Losses" (in most book stores Oct. 1). "The losses suffered in the most recent decline may have been extraordinary, but the mistakes that led to them were not. They were the same mistakes investors have made in every cycle."

Since August 1999, this column has devoted every inch of space toward helping readers learn how to find, buy and sell great stocks. Investors.com keeps all recent Corner articles in its archives for future reference. The WebLink, Big Picture column and Investors.com Corner all aim to help you know more than your local broker about how the market really works.

Do you know a friend who's interested in stocks? Fire these questions at him or her. 1) What is a breakout? 2) What is a pivot point? 3) How do you find out which sectors host the best stocks? 4) How do you know that the market has bottomed and that it's time to buy good stocks? If your friend doesn't know all four answers, he or she would benefit greatly from spending an evening browsing through the IBD Learning Center.

Learning is a constant process. On Sept. 10 at 7 p.m. Eastern time, discount brokerage Ameritrade will host a Webcast with O'Neil on the topic "Using Charts for High-Performance Buying." The CD-ROM-based Encyclopedia of Personal Finance, published by Precision Information LLC, includes more than 2,500 interactive screen pages on a wide range of topics.