Do You Know Your Investing and Stock Market Limits?

Do you accept that you won't be the next Warren Buffett?

Professional investors spend their whole day researching companies, have analysts to help them, and can also visit companies.

By all means, that doesn't mean you can't stock-pick successfully as an amateur. The very trick here is to keep it simple and stick with what you do know.

Warren Buffett, for example, spoke about investing within your "circle of competence," an approach also favoured by Peter Lynch.

In his book "One up on Wall Street," Peter Lynch wrote:

"If you stay half alert, you can pick the spectacular performers right from your place of business or out of the neighbourhood shopping mall, and long before Wall Street discovers them."

Lynch sought his fortune in "hum drum" companies, with "mediocre management," operating in "simple-minded" industries with no competition -- certainly not the sort of firms you need to be a professional to understand.

As Lynch says:

"I continue to think like an amateur as frequently as possible. Any normal person using the customary 3% of the brain can pick stocks just as well, if not better, than the average Wall Street expert."