Ignore Drunk Cousins

My first foray into participating in the stock market led to my dumbest investment. I listened to a drunk cousin at a wedding reception and his hot tip to “buy Global Crossing.” Well, six months and $10,000 later, those shares were worthless.

— S.A., online

The Fool Responds: Listening to drunk cousins hasn’t made many people rich. Unfortunately, many beginning investors jump into stocks without educating themselves first. It can be smart to “pretend invest” for a while first, setting up a mock portfolio and watching to see how your picks do and how you react to their moves. (Do you get greedy? Panicky? Bored?) Then consider entering the market gradually, or at least spreading your money across a handful of stocks or funds to start. Remember also that there’s no shame in simply putting all or most of your long-term money in a simple, low-cost S&P 500 index fund and then leaving it alone for a decade or two. Or pick your own stocks and funds — after learning more, perhaps in Motley Fool or Morningstar books and Web sites (www.Fool.com, www.Morningstar.com). 

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