Stock Market

Discussion in 'The Pub' started by Judge Shredd, Aug 19, 2014.

  1. Judge Shredd

    Judge Shredd Member

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    Ive been wanting to invest some money in the stock market for awhile, but limited funds and uncertainty have deterred me. Sold a bike early last year and thought I should invest it, but later decided I didn't know enough to make a good choice. Was looking at Google finance and saw that if I would have invested in Fannie Mae (FNMA) I would have made a pretty penny:-({|=. It went from around .30 to a high of 5.30.

    Anyone else had good luck investing or know where I can get some good advice??
     
  2. surftime

    surftime New Member

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    dont chase stocks like that until you know what you are doing. Just invest in some indexes like the S&P. Its up huge the past few years so now might not be the best time but you can cost average in - for example break your total amount to invest into 6 parts and invest one part each month into the S&P for the next 6 months

    Down the line if you want to learn more, read books, get educated - then that might be the right time to after individual stocks. At that time check out the IBD strategies. Personally its a lot of time and there are a lot of smart people to compete with and I prefer just investing in my business since I have more control that way. But there are many stories of people that started with little knowledge, got educated, and went on to make big $

    have fun
     
  3. bing!

    bing! Active Member

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    I'd advise you to read a few good books, and start of with some mutual funds and ETF's. I've had good luck with the following, YAFFX (Yacktman's Focused Fund) and Vanguard Value ETF.

    One Up in Wall Street by Peter Lynch is a good book and helps you to learn to "Buy what you know". Take to heart this adage "Only take on risks commensurate to your ability".

    It's takes years to get a good feel for markets and their psychology so start slow. Buy a good mutual fund, understand its investment style, look into it's holdings, and watch how it performs.

    In stock picking, you'll need basic financial knowledge (valuation/fundamental analysis), market timing/psychology (technical analysis), stay abreast of world, political, economic and business news, and you've got to learn to spot trends. I remember when I first saw yoga pants flooding the streets in Santa Monica. BAM! Lululemon became a billion dollar company.

    I can't even say that I'm an expert. Even though I have 12+ years of investment industry experience, and 23 years of trading experience, there is so much to know, and only so little to invest. Investing isn't playing with money. It is very real. Always think that.

    There is another saying I live by. I buy when there is blood in the streets. I bought Netflix when it raised rates and fell to like 10 bucks. I bought Apple 2 years ago when everyone hated it. And I just finished accumulating Target Stores. That I'll let sit for a couple of years. More recently, I've started buying Sturm Ruger and Smith and Wesson stock. When you adopt this investment style, you must have command of two other skills. Patience and discipline. It takes time for the market to change it's opinion, and it takes discipline to stay the course when bombs are going off (figuratively).

    Good luck!
     
  4. BikeThePlanet

    BikeThePlanet Active Member

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    The Four Pillars of Investing and The Boglehead's Guide to Investing are two excellent resources. As is the Boglehead's forum. Open an account with Vanguard or Fidelity and buy low cost index funds. Re-invest your dividends and returns. Don't try to time the market. Have X amount automatically invested each month.

    Before you start make sure you have an emergency fund (6 months should do), determine how long until retirement, and work on you allocation ratio.
     
  5. emejay

    emejay most annoying avatar

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    Good advice from all of the above replies. New investors tend to look at speculative investments, and they tend to get burned. Think of hitting consistent singles instead of swinging for home runs. Let the power of compound interest be your friend and maintain a long term perspective. Like bing!, I like value investing and buy when things are out of favor, like Target Stores, and also stocks that pay dividends (like Target).
     
  6. Bullseye

    Bullseye New Member

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    surftime is right on... Index Funds and ETFs are a great way to get into stocks without the risk exposure of 'picking' a handful of stocks. The ONLY individual stocks I own are in companies or industries for which I have specific experience, knowledge and insight.
     
  7. g-dub

    g-dub Member

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    If we're talking about a couple thousand from a bike sale, one time only, it's not worth getting into an "investment" mentality. Pay off debt or put it in CDs for a rainy day. If it's a couple hundred a month going forward for the long run, the most important thing is to decide how best to protect it from taxes (Trad. vs Roth IRA). The actual investment should be something boring with really low fees.

    If you're looking to just take a flyer on something with a big payoff, and you are willing to lose it all, then futures options are by far the quickest way to either win big or go broke. February 2015 Orange Juice. (j/k)
     
  8. UR2KLOS

    UR2KLOS Senior Member

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    The more you learn about the stock market the more you will realize that it is very difficult to make money on individual stocks when the deck is stacked against the little guys. The big guys don't follow the rules and the SEC is unable to stop them. Most people will make more money with index mutual funds or index ETFs. Vanguard has the lowest expenses in the business. Find a Vanguard fund or ETF that follows the S&P500 or the total stock market. It is not as exciting as buying individual stocks but in the long run the index funds will beat almost everything else. They are also very tax efficient. I wish someone gave me this advice 30 years ago.
     
  9. bing!

    bing! Active Member

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    Take heart. I don't think there were ETF's 30 years ago :)
     
  10. wizard

    wizard tradersancho's dad

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  11. ridinrox

    ridinrox Well-Known Member

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    I remember when 9/11 happened and Wall Street imploded; I bought $500 worth of stocks to show I had faith in our country (Clorox bc of chemical warfare threats, Sun Microsystems - I think they no longer exist, and EMC). I made a whopping $100+ in capital gains to date...whoop!

    I have no clue obviously, but my 401(k) has seen leaps and bounds...yahoo!
     
  12. RustyIron

    RustyIron Rob S.

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    Judge,
    You're to be commended for looking to the future. It doesn't matter than you have little to invest; a little bit over a long time will reward you with substantial returns. Stay with me and I'll whip some quick math on you that will make you very happy.

    From 1987 through 2011, the S&P 500 has returned an average of 10.5%. If you invest in a fund that is tied to the S&P 500, and has a long history of success, there is no reason that you should not expect to make the same sort of returns.

    Let's see what you can do with such returns. Let's say you're a 20 year old, and you put away $50 a week into this index fund. You do this for 40 years, and earn 10.5% on your investment. On your 60th birthday, you'll have socked away $1.3 million. When you start understanding the math, you'll want to sock away even more. After all, fifty bucks is chump change. Shoot for investing 10%-20% of your weekly earnings if you want to end up with a really big pile of cash.

    Individual stocks... often misunderstood. On many companies, it seems that the price is often driven by hype, rather than cold, hard logic. Just because a company is a great company, does not mean it's stock is a good value and that you'll make money off of it. You want something that is highly discounted from it's real value, for whatever reason. Cool companies are not necessarily a bargain. Companies that sell a lot of product aren't necessarily a bargain. Sometimes boring companies that you've never heard of can be a steal. I'll leave it at that.

    If you plan on learning a lot by reading all the articles on the web or periodicals, be cynical. Most of these journalist hacks couldn't make it in the real world, that's why they only write about it. If you DO choose to get information from bloggers, your barber, and the Washington Times, there will be pessimists and optimists. Look at that person, and ask yourself if their current situation makes them worthy of giving you guidance.
     
  13. Judge Shredd

    Judge Shredd Member

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    This is my Favorite part of that piece

    "Nineteen-year-old Travis Baker spent the afternoon day-trading penny stocks because his prefrontal cortex isn't yet fully developed and he couldn't recognize risk-reward trade-offs if they hit him in the face."

    Thanks for the advice everybody.
     
  14. jcampbell

    jcampbell going Gods speed since 75

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    Unfortunately I'm restricted to comment on this subject but I would suggest you talk with someone who is knowledgable. Before you even think about the actual investment you should clearly understand the account type you'll be using.
     
  15. dstepper

    dstepper (R.I.P.) Over the hill

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    As of late my investments in stocks have done much better than my real estate investments. My annuities just chug long at 5% like they are suppose to do. Getting advise is not clear cut, financial advisors can not give tax advice and tax accounts can not give financial advice. In my experience the money I spend on a CPA an a financial planner more than pays for their services.
     
  16. kcm

    kcm New Member

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    Everyone has great general advice. Its great to think of the future for yourself and possibly family, and the next new bike. But before putting any money in stocks, make sure you pay off all your high interest debt, ie credit cards. there is no reason to invest and get 10 percent return gamble when you are paying 10-20 percent interest on your debt. If you are the only/ or major bread winner, I would then get life insurance, however only ONE type, term life insurance. all other types are not worth the money and fees. you know you are getting term life when you get no money at the end of the term and they make you take a blood test before they sell you the term life. ... then if money left over, invest! Invest in yourself by riding MORE!!!! the returns are much greater!
     
  17. jcampbell

    jcampbell going Gods speed since 75

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    Insurance related: Not necessarily 100% true. There are different product types that provide different solutions. Term is not always the answer. Almost all life policies require medical. The moral of the story is find someone you trust that will show you the possible solutions to cover your situation at a given time and keep information flowing to and from this person so that they make sure you are in the best product for your needs.
     
  18. g-dub

    g-dub Member

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    If the question is "how do I help the insurance salesman buy a new bike?" then I agree.

    If the question is "how do I keep my kids out of the orphanage?" I mostly disagree.

    I say "mostly disagree" because there may be some funky tax situation for some particular person that a more complex product is appropriate, but you'd have to explain the particular situation in detail. As general advice this is a stretch.

    Insurance is insurance, investing is investing. Separately they are hard enough to understand and plenty scary. For most folks the only reason to mix them together is to make the consumer confused. Confused and frustrated consumers are more willing to buy a high commission product.

    I got an MBA from a relatively well-regarded school, and my buddies & I came out of the study of Portfolio Management decided to using low fee index funds for our own investing. There's a lot of facts and data behind that decision, it's not just emotions or laziness.

    If you want to speculate, there are ways to do that and do well--if you are actually in the pit.
     
  19. bing!

    bing! Active Member

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    I generally agree with this ^^^^^

    Term insurance is insurance stripped off all the bells and whistles. If you want some sort of cash value or annuity, youre better off reinvesting you savings from buying term into another vehicle.

    As far as stock picking. If you remove benchmarking as a portfolio strategy, and focus on valuation, historical financial stability, business model and management, you can pick really good companies that you will want to own over the long term. There is a big difference between speculation and investing, and that seems lost in a lot of people's minds. Own the stock, and not flipping it is one way of putting it. My holding period is around 2 or more years. I only sell on major economic malaise or a fundamental change in the co.

    I've seen the studies that say you can't beat the market. I've also handled quant, arbitrage, value oriented, event driven, fund accounts (to name a few) that have consistently produced returns that are more than satisfactory.
     
  20. g-dub

    g-dub Member

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    Sure, but after I pay your fee and accept all the risk, I'm almost as well off in the index after 50 years. Toss in my personal time doing research and the price of my worries, and I'm ahead by indexing.

    There are plenty of inefficiencies for a pro to tease out. I'm just an engineer looking to retire some day.
     

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