As I mentioned in a previous article that most people speculate. Although most like to call themselves "Investors", they are simply not! To be a true investor, the first step to take before you put your money into anything is understand the nature of the business, company, or venture.More specifically you have to understand the economics of the business such as: expenses, development, pricing, competition, and future prospects. The second step is to look at the numbers. For example if you are looking to buy stocks of a publicly traded company, look at its balance sheet, and income statement...etc. Study trends of earnings, expenses, and assets.