Stocks

Parent Cafe
1

<p>I’m a freshman in college and I know the only people who know anything about investing are in the parents forum so I came here.</p>

<p>I’d like to start investing in stocks but I don’t know where to start.</p>

<p>I’ve done some virtual trading on theupdown.com and think I’m ready to start investing with some of the money I’ve tucked away.</p>

<p>What do you recommend I do?
Where should I start?</p>

<p>I don’t want to trade online. I’d like a more personal stock brokerage firm.</p>

<p>I decided to get into the market because I think my money can go to better use in the market than more alcohol/clothes or whatnot.</p>

2

<p>Congratulations! I’d like to see more kids thinking about the future. Beer does not age well :slight_smile: Here is my advice (disclaimer: I’m not a pro at this, but have bought and sold stocks for a few years):</p>

<ol>
<li><p>Do not buy penny stocks (OTC or pink sheets). Although very tempting (ooh, I can get 50K shares at 5 cents apiece!), these are usually selling for pennies for a good reason and are thinly traded.</p></li>
<li><p>Do not buy on margin - you can loose more money than you put in initially and owe interest, too.</p></li>
<li><p>Do not sell stocks short - see #2.</p></li>
<li><p>Be prepared for volatility and grow nerves of steel. It is one thing to see you virtual portfolio go down, but when it comes to your real money… it can be painful.</p></li>
<li><p>Be prepared to take losses. Know when to sell you loosers.</p></li>
<li><p>Do not be greedy. Be prepared to take gains, they come in two flavors: short-term and long-term. Either kind is better than losses.</p></li>
<li><p>Know that Uncle Sam willl want you to fill out Schedule D before April 15th. Plan for sharing your capital gains with the Uncle, and set some money aside for that purpose (do not count on selling something on April 15th to get the cash for that purpose; a lot of procrastinators do just that).</p></li>
<li><p>Invest in what you know. Do not follow hype on stock message boards. Invest in good companies with solid management. Do not read Motley Fool. They are called idiots for a good reason.</p></li>
<li><p>The economy is going to the garbage dump. Know when cash is king.</p></li>
<li><p>Roth IRA?</p></li>
</ol>

<p>I can go on and on and on… Good luck!</p>

3

<p>It might not be as much fun, but I’d just invest in an S and P 500 index fund.</p>

4

<p>Sorry to shout, but please STOP and first read “The Little Book of Common Sense Investing” by John C. Bogle, founder of Vanguard Group of no-load mutual funds. The book is short and you should be able to get it at your library. The book is subtitled “The Only Way to Guarantee Your Fair Share of Stock Market Returns.” Low-fee (no-load) index funds may not be sexy but they will make you a millionaire, many times over, especially with your time horizon. Really.</p>

<p>Cross posting with mathmom.</p>

5

<p>If you want to trade individual stocks and are not starting with a large amount of money, the fees charged by traditional brokers will eat the lungs out of your investments. I’d stick with no-load mutual funds for the safest long-term investment in equities.</p>

<p>If you want to learn to stock pick and manage your own portfolio, good for you. It requires lots of hard work, time spent on research, and the iron discipline to cut losses. This is why I gave it up and put my retirement money back into mixed no-load funds. I didn’t want to spend the time it took to manage a portfolio.</p>

<p>There’s a simple book on investing that I read (and at times ignored to my loss) when I was doing individual stocks. If I’d followed his rules faithfully I would have gotten out at the peak of the market in the early 00s. Like most people, I stayed in too long and lost part of my earnings. Unlike some, I still got out without losing principal…</p>

<p>Anyway. The book is called “How To Make Money In Stocks,” by William O’Neil. The parts to re-read six times and underline are the ones on selling. Most investors don’t sell very well. (I’ve never thought about this before – in real estate you make or lose your money on the day you buy a property, but in the stock market the expert sellers are the ones who do the best. That’s just my theory, by the way, but I can tell you that I make more mistakes selling than buying.)</p>

<p>Could I suggest putting half your investment money into an S&P 500 index fund and use the rest to learn about the market? The half you put into the index fund will still keep you well ahead of your peers. </p>

<p>Good luck.</p>

6

<p>Please wait 6 months. The market is insane right now. Watch and learn how the market responds to a new world ecomony and how the Fed and US gov’t can try to control it. Even the experts are flummoxed and can’t agree on anything. Bernake gave a great speech this last week on the ecomonic downturn. It is a primer and short history lesson on the last 6 months.</p>

7

<p>being in the business. Here’s some advice take it or leave it.</p>

<p>Warren Buffet gives the best advice about basic investing… If you don’t know the company or industry, don’t drop a dime in there until you do. Remember he turned DOWN microsoft for many years (and Bill is like his son now) and still made money. He didn’t invest in MS till he knew MS. Look around, what companies do you know? What products hold their value? What do you use? What do your peers use? How steady is it? </p>

<p>You’re going to hear people say no load, low load and so on… why are they a better deal? That’s like looking at the tail of an elephant for the first time and nothing else and describing the beast… If those no load, low load folks are such a deal for us, why are they(fund guys) making sooo much money??? </p>

<p>Expenses.</p>

<p>LOADS happen once. EXPENSES HAPPEN EVERYDAY, EVERY YEAR YOU HAVE MONEY INVESTED. You only pay a sales charge once. </p>

<p>That is probably the greatest magic trick of all time getting people to focus on the left hand (sales charge) while ignoring the right hand (expenses).</p>

<p>You have to figure out what is a reasonable combination of sales charges and expenses to pay for a product. There is no free investment.</p>

<p>It comes down to deciding how you want to pay for your investment, on the initial amount (sale charge) or ongoing on the balance (accumulation). no loads, low loads work best for short term investing. Long term you may end up paying more as your balance grows. </p>

<p>Then there are those who say then move it every few years… which introduces a new expense “friction” the cost of moving money… </p>

<p>Sometimes you have to apply your observation skills to picture… if the fund guys no load and load attend the same country club…aren’t they both making a killing off somebody? The fidelity guys aren’t eating at denny’s, even if their advertising makes you think they are… </p>

<p>a pencil and paper and scratch it out and figure out what seems reasonable based on how much you have to invest, how often, how long you want it invested, what risk are you willing to take and what’s it for? </p>

<p>It could very well be several things as each time you change one of those parameters, the best choice will change too. </p>

<p>Investing is like picking a favorite flavor of ice cream, everybody’s got a favorite and a reason that works for them. In other words there isn’t a “right” answer, there’s your answer.</p>

8

<p>krnpsychopath , do you want to learn about the stock market and stocks or do you just want to be passive and participate in the stock market?</p>

<p>Since you have done some virtual trading, my guess is you want to be hands on. If that is so, you do want to trade online. You don’t want a full service broker.</p>

<p>The best way to start is to buy a stock with money you don’t really need, but will not be happy to lose. When you have money on the line, you learn more and a lot quicker. :wink: Virtual trading doesn’t cut it.</p>

<p>I have traded over 200,000 times. I have lost money over 100,000 times. What do you want to know?</p>

<p>BunsenBurners’ rules are very good.</p>

9

<p>dstark: I want to trade but I don’t want to be as involved since I have school. I’m not a business major or anything like that. I’m a film production major trying to invest for the future since I hear many stories about artsy kids working at diners after college.</p>

<p>sax: That’s advice I heard everywhere and the best advice. I will wait several months for the economy to pick up. and the S&P 500 doesn’t seem to be doing well at the moment. </p>

<p>I guess for now I should keep learning using my virtual portfolio and keep doing my research for good brokerage firms or online trading sites. </p>

<p>BunsenBurner: Uncle Sam sure loves my wallet. ahaha</p>

<p>BTW I was thinking about investing about $2-3,000</p>

10

<p>$2 to 3,000 to invest at your age is very good.</p>

<p>“I’m a film production major trying to invest for the future since I hear many stories about artsy kids working at diners after college.”</p>

<p>That amount to invest and your likely investment income are not going to be enough to cover you so you don’t have to work in diners after college. ;)</p>

<p>I would look at Scottrade, Ameritrade, Schwab or Fidelity if you want to invest in individual stocks. However, I don’t believe these firms pay much interest on that kind of money. You may want to compare what these firms pay in interest with the institution that has your money now.</p>

<p>Trading and investing are not the same. I’m a little confused because you are practicing how to trade and you are talking about investing. </p>

<p>You can’t trade and not be involved.
You can invest with less involvement.
If you really want very little involvement, you should look at funds.</p>

<p>If you need the money in 3 years, you should probably just skip the stock market.</p>

<p>I like William O’Neil’s book too. Peter Lynch has written a couple of good books on investing. I haven’t read her books, but I like Suzy Orman’s advice. I’m sure there are other good books. </p>

<p>Reminiscences of A Stock Operator is a great book on trading. The Market Wizard books are good too.</p>

<p>[url=<a href=“http://www.amazon.com/Reminiscences-Stock-Operator-Marketplace-Book/dp/0471059706]Amazon.com:”>http://www.amazon.com/Reminiscences-Stock-Operator-Marketplace-Book/dp/0471059706]Amazon.com:</a> Reminiscences of a Stock Operator (A Marketplace Book): Books: Edwin Lef</p>

11

<p>If you are sure you want to put money in equities and you are convinced that the S&P is doing poorly now, why wouldn’t you buy in tomorrow? The biggest problem with “buy low, sell high” is that people hate to buy low when things look bleak, and hate to sell high when their portfolio has been going up. Many, many investors end up buying high and selling low.</p>

<p>If you don’t want to spend the time to do the research it takes to invest in individual stocks, put your money in an index fund and don’t ever look at its value. When you’re 60, it will be worth a lot more than it is today.</p>

<p>You might also think about buying in slowly. Google on “dollar cost averaging.” It’s a powerful concept for a young adult.</p>

<p>Oh, and Opie made a good point about fees. My best-performing mutual fund buy ever was one on which I paid a sales commission.</p>