Welcome to Wall Street, baby! Are you ready for this market?

I know there are a lot of newbie investors on this board who are almost paralyzed with fear of jumping into this market.

You should be nervous.

It will cause you to think before you leap.

And hopefully do your due diligence before you buy.

But fear to the point where you can’t even decide what names to do due diligence on is simply ridiculous.

It’s time to start rolling up those sleeves and doing your homework — so consider yourself officially shoved into the big wide ocean of the stock market.

Welcome to Wall Street, baby!

There are no magic names.

There are no magic days.

One of the best pieces of advice my mother gave me when first learning about the stock market is to use play money, as the market is really just a grown-up version of Monopoly.

In other words, pick some names, put them on a list, and start tracking them for 30 days to see if you deserve your Independence Day when July 4th rolls around.

You can either pick three names of your own to follow and pretend-trade, or I am hereby giving you the name of three stocks to write into your pretend portfolio.

Again — I don’t want you to actually invest any real money into these stocks — just write them down, continue your daily research on them, and write down what moves you would make on a day-in and day-out basis, and record those moves. Then, in 30 days, you’ll have a better understanding of whether you’re ready to start investing your real money, or if you should continue to follow names with no real money vested.

So here are the three names, two of which I’ve long posted about in this forum as being on my due diligence list.

As of today,  June 3, 2009:-

The first is Celgene, trading on the Nasdaq under CELG, which closed up $1 today at $45.28.

The second name is Walmart, trading on the NYSE under WMT, which closed up 95 cents today to 50.88.

The third name is McDonald’s, trading on the NYSE under MCD, which closed 61 cents today to $60.99.

Take those names and record what real moves you would make.

With Walmart and McDonald’s long being on my due diligence here, any readers of this forum should, hopefully, have a good grasp on those names, with Celgene being new to my due diligence list this week, with a specific eye to a short play.

Let’s pretend your current position is 1,000 shares of each stock.

Feel free to dump any of the positions and either hold that money out of the market, or buy a completely different stock — just keep track of the price you sold a stock at, the price you bought a new stock at, and how your positions have fluctuated on a daily basis.

And since two of the names have long been on my list, I’ll even allow you to enter your pretend portfolio by recording their gains today as gains you would have made if you had been doing your diligence on the same names on my list.

I’m even going to give you the added bonus advice that in this current market, there is no shame in perhaps picking an S&P index fund, instead of your position in one or two of the stocks — or perhaps in addition to the stocks. Just track your position in the same way.

Okay, that’s about as much hand-holding as I can handle.

Just make daily notations of why you sold and bought a stock. Without having real money in the market, it will hopefully lessen the fear to actually open your eyes and see exactly what position a stock is in and whether any of the fundalmentals of why you are holding the stock have changed.

At the end of the 30 days, you’ll have a better understanding of whether you’re ready to take the plunge into the market for real.

The usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

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One Response

  1. […] about Walmart? Did you pay attention to my column last June when I said it was a long name on my due diligence? Did you roll up your sleeves and find a reason […]

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