Investing Advice for Beginners

By Motley Fool

In this clip from Industry Focus: Energy, Motley Fool analysts Taylor Muckerman and Sean O'Reilly share two pieces of advice for new investors. Find out why it's so important to understand what you're invested in, and why it might behoove you to make a watch list of companies you're looking into.

A full transcript follows the video.

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This podcast was recorded on Feb. 9, 2017.

Gaby Lapera: The way that I've closed all the other shows is I've asked each person for a little bit of investing advice for beginners. Sean, if you want to go first? I know you've already given one, but if you have any other nuggets of knowledge -- I hate the word "nugget." I can't believe I just said that.

Taylor Muckerman:What did he already say? I missed it.

Lapera:He said make a bear case.

Sean O'Reilly:Oh, make a bear case; invert the thesis. I'm going to say invest in what you know. It's not going to be a Buffett-y type of thing. I just know that the first stock I ever bought, this thing went up a bunch and it was awesome, wasUnited States Gypsum Corporation, and I bought it because my dad wasfinishing our basement when I was 15,and I couldn't help but notice that all the drywall he was buying was USGsheetrock gypsum. You can find it atHome Depot. It's one of those products --

Muckerman:Observantlittle son of a gun.

O'Reilly:Thank you. It'sone of those products where you go to Home Depot orLowe's,two major competitors, and they both sell only one brand of drywall, and it is USG sheetrock. So that was a nice little invest-in-what-you-know. I had faith and confidence, it went down after I bought itbut I held on,and then the housing bubble happened and it turned out well.[laughs]

Muckerman:Perfect. Mine,I have two. Read Greatfree content there.

O'Reilly:Oh my gosh.

Muckerman:Maybeeven subscribe to a service or two.


Lapera:It'snot like they pay usto say stuff like this.

Muckerman:But also, create a watch list for yourselfso you can keep track of stocks.

O'Reilly:That's a good one. Can youcreate the watch list on, Taylor?

Muckerman:I believe you can. I haven't, I use Google Finance, so,not quite as much of a --

O'Reilly:He means yes.

Muckerman:Not quite as much of a home-oriented asI might have just let on to be,but yeah, create a watch list. Generally, what I'll do is, I'll adda stock where you cansimulate buying one share. That way if the stock drops a lot, I can buyanother share to see how it might rebound, orsee if it continues to drop,so you can dollar-cost your average of your watch list, just to see how the stock is performing over time. So maybe you don't add it to your watch list at the high and then be like, "Oh, this stock crashed; I need to buy it!" Maybeit was just a little overvalued, and now it's fairly valued. Or maybe if you add it to your watch list at the bottomand it skyrockets, you're like, "It's way overpriced,look at the watch list, I missed out," youmight not have missed out; maybe the market is just finally catching up to it. So don't just add it and leave it. You candollar-cost average, just like you showed in your regular portfolio, I believe,into your watch list.

Gaby Lapera has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Home Depot. The Motley Fool has a disclosure policy.