you need 2 things, understand the industries, and understand investing in those industries.
you understand the industries by reading a lot. read biographies of people who worked in those industries, they will be full of insight on how things really work. read the papers and commentary about the industry as well. from what ive seen, newspaper commentary is wrong about 50% of the time, read the articles, take note of what they say, and see how things pan out in the future. you need to get to a point where you can read company announcements and make up your own mind if what they are doing is a good move or not. another thing to look at are industry cycles, the overall sharemarket is a continual cycle of boom and bust, and its rare that an industry or sector as a whole will have consistent growth. for example, i have read that new mines are generally very capital intensive when they start, but they should start showing a profit within a year of operation. mines have a fixed life, what happens when its stocks are depeleted? how do they estimate the stocks? you dont need to know the nitty gritty details, but should have an idea of how these things all work. similarly with commodities, also be aware of the market for the stuff they produce. who is buying the steel and wheat that australia produces ... how are they going? you dont need to be a guru but be aware. you're not going to pick up a book and learn all this straight off, it will take a while of just keeping your eye open and paying attention. if there are any industry specific economic indicators you should learn how to interpret them, for example how do they guage the overall quality of harvests etc.
understanding investing in those areas means being able to determine the nature and risk of the particular investments. how do new mines raise capital? how risky are these ventures overall? are there any industry or sector specific investment products and how to they shape up compared to stright buying of shares? for example in property there are property trusts when you buy a number of units. with the money raised by selling units in the trust, the trustees go off and buy office buildings, and the rents from these buildings are distributed to unit holders. they are less risky than buying your own commerical property, and also require less capital, but at the same time arent as profitable. im sure there would be similar things in your chosen sectors. understanding the business cycle will also help you make good decisions when to buy. maybe prices tend to be low during the winter when theres not much activity in agriculture. maybe mines nearing there end of life carry a discount, and thats why they seem to be a bargain.
im a bit tired but i hope this makes sense. once you begin to get a bit of an idea, start paper trading cause it will make things more interesting. if a share rises 10% in a day it will probably have a note in the financial review the next day explaining the reasons. i had a tendency to skip these but once shares you "own" start to jump up and down, i find it adds an extra level of interest. i do reccomend paper trading though, untill you are comfortable with your own decision making. when you dont have a steady stream of income or a low income you should focus on capital preservation. if someone making $100k a year loses $10k, it will sting a bit but they can probably save it up again soon enough. if its taken you a year to save $10k, losing it due to newbness is gonna suck. also, dont worry about derivates (options, forwards etc) untill you understand the underlying securities. if you cant pick profitable enterprises, options aren't going solve your problems. the sharemarket will always be there, and we will probably live till we are 80 ... just take your time, and enjoy it. i am still learning too, and this is how i would go about it.
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