First, understand that stocks always go up and down in value. They NEVER EVER stay the same. When you purchase a stock you have a 50% chance it will increase and 50% chance it will decrease.

Second, find out why it went down in value. Did the market go down as a whole? Is the company in trouble? Was the company just plain overpriced to start?

Don't take the news or bloggers words for it. Investigate for yourself. Check the company's valuation on Yahoo or Google Finance. If the company has a high PE ratio then it may have been too expensive to start with. Go to the company's website and pull a quarterly report. Try to determine if the decrease is attributable to a company specific event or if it is a bigger event that affected the market as a whole.

Third and most importantly. If the stock has declined severely, find out if the company may go bankrupt. Again, check Yahoo or Google to see if the company is profitable. Check its cash flow and earnings per share. If a company is not going bankrupt, then its equity will always have some value. If you determine that the stock in not in jeopardy of going bankrupt and it has profits then I urge you to consider step four.

Fourth, Buy More! Some of the best investments I have made are by buying a stock for a second or third time. Buy enough to bring down your cost basis to a level where you can make a profit. Remember stocks go up and they go down. They do not go up forever and likewise they do not go down forever. You have a 50-50 chance; and if you lost the first time the odds are you will win the second time.

Have you put aside enough cash to cover your living expenses? Believe it or not, this is a very important factor that many new investors do not consider. The consequences could be devastating should they risk all their capital and lose. You should only risk the money which you can afford to lose, your short term goals should take this into consideration.

In summary, make sure you have fully thought out your share trading plan. Never invest your living expenses and be sure you have kept a fair amount of savings aside for any unforeseen real life crisis that may arise.

Shares Investment

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