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I used to own a mountain bike shop (5 years ago) and I dealt in s/hand bikes (seeing as the price of some of the new ones were so high...).
First thing to do is go and buy a couple of magazines.
Read all the bumf on the mega-machines.
Sigh and get back to the real world.
Go near the back and check out the second-hand stuff - you will be able to get a $700 bike about 2 years old for half price.
When you look at a bike to buy there is a 'grade' of equipment fitted to the bike :-
XTR = Top of the range
XT
LX
STX-RC = Quite good
STX
Alivio
Altus = basic
Manufacturers don't usually equip a good bike with anything less than STX-RC (the wheel hubs, brakes, gears and changers usually have stickers on them to state what 'grade' they are).
Bring a bikie with you when yo go to buy to check the bottom bracket / head bearings etc
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