Jay
I believe we are in for a bout of profit taking so you will be able to get into the market at today's prices or lower for the next several months, possibly until Autumn. So there is no rush to pile in. If you cannot resist the urge then buy defensives - utilities and food producers. You can go to a site such as Digitallook.com or the London Stock Exchange and see shares listed by sector and by index e.g. utilities in the FTSE 100.
I personally never invest in large caps on the principle that elephants don't gallop. But small caps have their own risks. You should take your time and read up on investing generally - there are lots of excellent articles on this site, on iii.co.uk and on fool.co.uk to name but a few.
You need to decide whether you are interested in growth, income or both. You need to think about whether you are really interested in the FTSE 100 or in shares generally. There are several thousand UK listed shares outside that index.
There are all sorts of approaches.
I used to buy shares because I liked the story - wonderful new technology / drug / software / marketing idea... will revolutionise the industry blah, blah. Most of these were briefly fashionable and the price rose for a while, then the price drifted down and down over years. After ten or fifteen years, most had either been taken over, changed their business model or gone bust. A very few came back and performed wonderfully. I realised that there was no way to tell which stories were believable, which would ever do well and if they did when they would.
I also tried following press tips. Most are either rubbish or rehashing something given out to clients by a broking firm. The clients get in first and make the most. A few good tipsters exist - Simon Thompson in the Investors Chronicle for example. His tips jump as soon as they are published, often by over ten per cent. You can wait and hope the price drifts back down again or you can try to get in first.
Broker tips need to be taken with a bucketful of salt.
Then I decided to do my own research and maintain a long list of shares that would be good buys at the right price and a short list of shares that looked good now. In roaring bull markets growth shares do best, in bear markets utilities and consumer staples. The market has been rising for a while now with ups and downs. Opinions differ on whether it will keep going or fall back a long way. I expect, without any great conviction, a gradual upward trend with dips. In which case shares with a safe and historically rising dividend would seem to be the ticket.
I use Sharescope software to list shares by yield, dividend cover, dividend growth, gearing (or leverage - debt) and various other criteria. Then I take the candidates and look at charts of their price in absolute terms and relative to sector and market indices. So I overlay price momentum onto the fundamentals. The I look at the web sites of all the companies on the short list and read the reports, the recruitment section (lots of skilled vacancies is usually a good sign) and the information provided for customers.
You could do much the same with the free facilities on digitallook.com or other sites such as Citywire. This is my approach and works for me. You may have different tastes and a different personality, so find what suits you.
