Shares and Stuff: A brief introduction

Yeah, so right, cos I'm all grown up now, I thought I'd invest some of my wealth in the stock market, or slightly more specifically, buying shares.

It was a rather pleasant surprise to find that the HSBC, who I've banked with for a number of years, have a share investy account thing which is really easy to set up. Just a few clickety clicks and a patient wait for the paperwork to go through, and I have an InvestDirect sharedealing account. This would enable me to buy and sell shares.

Now all I had to do was find some share to buy.

I've found that the easiest way to find companies to invest in and to track share prices is with Google Finance. To start with you search for companies, it tells you the share price and similar companies. What you want to do is find companies that you think are going to do well.

A brief sojourne...
Twenty or so years ago my mum was getting into the buying shares game and asked my advice, I suggested a company called Virtuality Group Plc, who in the early nineties pioneered virtual reality arcade games. I thought, this is the company of the future, Mother, invest now.

How could they fail? I mean, c'mon, VIRTUAL REALITY!! Sadly, they didn't become the new Microsoft, the new Nintendo, Apple or Google. And as home computer processing power increased, their products became pretty much pointless.

Sorry Mother, you asked the wrong twelve year old for stock market advice.

This time round I thought a bit less imaginatively, Royal Bank of Scotland (LON:RBS), for their shares fell about 95% in the credit crunch and subsequent government bailout, from almost £7.00 to 19p a share. Imagine if you had £10,000 tied up in them in 2007, that would be worth about £300, after the crash. You'd be ruined. But my thinking is that the company is much undervalued now, sure they were a bit over-priced before the crash, but their low price now is more a symptom of investors not wanting to touch them with a barge pole rather than an honest valuation of the company. Get the shares now whilst they're cheap, and give them a year or two and I reckon you'd easily recoup.

Another company that caught my eye was Halfords (LON:HFD), the bike and car parts superstore. We are in a recession, everyone's skint, but we still need summer holidays and the sun is shining. So, instead of jetting off to Malaga, folk are going to be driving to Mallaig. If I'm right then in the middle of the summer Halfords is going to be booming, and I could make a profit.

A third company is Kenmare (LON:KMR), they mine in Mozambique, and since May 2010, their shares have more quadrupled, going from 9p to 40p. £10,000 invested this time last year would be £40,000. I reckon they haven't peaked yet, and once their new mine starts churning out whatever magic metals they can find, then the sky's the limit.

So, I've bought myself shares in all these companies, only £250 in each, and the £12.95 commission on each transaction. But, I hear you ask, where do I get this money from? Well, I'm skint, so this money has come out of my overdraft. Its magic money plucked out of the air. But that's okay, its only if their value falls that anyone loses money.

A week passed. I got scared that Royal Bank of Scotland was going to crash again so I sold my share in them at a loss and bought more in Kenmare.

That was probably a mistake too, they were doing their annual salary negotiations with the workforce in Mozambique, and the workers went on strike and shut the mine down.

No matter, the weather's been good and Halfords shares have gone up by about 10% since I bought them. Wehay!