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jumping into the stock market!

wywern209

wywern209

macrumors 65832
Original poster
Sep 7, 2008
1,503
0
do you rly want to know?
I am thinking of investing some money into the stock market. i spoke to my dad and he said to invest in citigroup as they used to be up at 40 bucks and they seem to be going up right now. i was also looking at ford as the stock looks cheap and the company should do better in the future. any other companies i should look into?
 
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Invest in companies whose products you use. Best way to start investing.
 
wywern209 said:
I am thinking of investing some money into the stock market. i spoke to my dad and he said to invest in citigroup as they used to be up at 40 bucks and they seem to be going up right now. i was also looking at ford as the stock looks cheap and the company should do better in the future. any other companies i should look into?
Click to expand...

Would TranSwitch, Diamond Foods and Netgear be promising?

Note: The line of text above me is a question, hence the question mark. I just felt I had to say that before people harshly critique my question.
 
I don't think you are going about this the right way. Why do you feel the need to invest in stocks in the first place? For the vast majority of people, day trading is going to get you 0% gain in the long run. If you are working towards a goal (retirement, college fund, nest egg) there are much safer and risk-averse ways to go about achieving that goal.

The odds of being a successful day trader are stacked heavily against this actually happening.
 
miles01110 said:
I don't think you are going about this the right way. Why do you feel the need to invest in stocks in the first place? For the vast majority of people, day trading is going to get you 0% gain in the long run. If you are working towards a goal (retirement, college fund, nest egg) there are much safer and risk-averse ways to go about achieving that goal.

The odds of being a successful day trader are stacked heavily against this actually happening.
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just testing the waters to see if it is my sort of thing. besides, if a company is doing okay now but the stock price picks up when the economy bounces back, wouldn't i stand to make money that way?
 
wywern209 said:
I am thinking of investing some money into the stock market. i spoke to my dad and he said to invest in citigroup as they used to be up at 40 bucks and they seem to be going up right now. i was also looking at ford as the stock looks cheap and the company should do better in the future. any other companies i should look into?
Click to expand...

Do you or your Dad understand he mechanics of the stock market and how to monitor/protect your investments? It's just not a matter of buy low and sell high. If you don't know what your doing, you can take a bath. Yes if you had purchased Apple in 1994 or so, you'd be rolling in dough now, but that is the exception, not the rule. And you know what they say about hindsight. (If I had foresight just with Apple, I'd be worth about $3M today.)

I know some people including my Dad who like the info they get from IBD- Investors Business Daily (a publication) including how to invest.

As I don't have the time to be constantly watching the market, I've traditionally been in mutual funds. No, you won't make as much money, but you won't potentially lose as much money either and the advantage of a mutual fund is that you have a professional managing a portfolio for you. If you know all this stuff all ready, no offense. ;)
 
miles01110 said:
I don't think you are going about this the right way. Why do you feel the need to invest in stocks in the first place? For the vast majority of people, day trading is going to get you 0% gain in the long run. If you are working towards a goal (retirement, college fund, nest egg) there are much safer and risk-averse ways to go about achieving that goal.

The odds of being a successful day trader are stacked heavily against this actually happening.
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He said nothing about day trading. The stock market can be the best/most lucrative investment one can make. It's all a matter of the amount of risk you are willing to take. The market averages gains around 10-12% wich is much higher than any other investment, but that comes with risk. Depending on your personality and how risk averse you are can determine the kind of investments you should make.

The OP has to decide if he is the type of investor that will stick with it when he sees his stock go way down in hopes that it will, in the long run, go back up and even further up. If he isn't, than investing in mutual funds and bonds is a much better idea.
 
wywern209 said:
just testing the waters to see if it is my sort of thing. besides, if a company is doing okay now but the stock price picks up when the economy bounces back, wouldn't i stand to make money that way?
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Yes, but there are numerous problems with that "strategy."

1) The stock/company might never recover.
2) While you're waiting for it to recover, you effectively cannot touch your funds.
3) Your money could be earning interest or working better for you elsewhere.
4) If you're small-timing it, you're going to have to pay a fee

If you want to try it out, look for an investing simulator.

He said nothing about day trading.
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The entire post reeks of ignorance. Clue in on the words "Citigroup" and "Ford."
 
Ford has been falling all year. So it's either a great time to buy, or a stock to stay away from. ;)

miles01110 said:
Yes, but there are numerous problems with that "strategy."

1) The stock/company might never recover.
2) While you're waiting for it to recover, you effectively cannot touch your funds.
3) Your money could be earning interest or working better for you elsewhere.
4) If you're small-timing it, you're going to have to pay a fee
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This sounds like FUD to me. The stock market can be very lucrative. It can also be very risky. As long as the OP knows and is OK with the risk, there's no reason they shouldn't test the waters by investing.

Besides which, point 2 is simply untrue. Point 3 is a bit of a joke with interest rates as low as they are, and point 4 is true, but the fees on discount brokerage firms are pretty reasonable and leave plenty of room to make significant gains if you buy and sell wisely.
 
wywern209 said:
just testing the waters to see if it is my sort of thing. besides, if a company is doing okay now but the stock price picks up when the economy bounces back, wouldn't i stand to make money that way?
Click to expand...

miles01110 said:
Yes, but there are numerous problems with that "strategy."

1) The stock/company might never recover.
2) While you're waiting for it to recover, you effectively cannot touch your funds.
3) Your money could be earning interest or working better for you elsewhere.
4) If you're small-timing it, you're going to have to pay a fee

If you want to try it out, look for an investing simulator.



The entire post reeks of ignorance. Clue in on the words "Citigroup" and "Ford."
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I agree. There are many examples of bad companies with rising stock and good companies with sinking stock and I agree with Miles, there is no guarantee your stock will come back. These days, unless you are extremely lucky at guessing, a long term, buy and forget strategy is stacked against you. It requires constant vigilance and most investing advice I've read never suggests you ride a stock down with the hope of it coming back.

There are three things going on with a company, it's fundamentals which should, but don't always prevail and the emotion of the market, people in there driving stocks up and down based on "a feeling" and trading computers controlled by institutional investors, that make huge buys and sells driving the market up and down based on market indicators. If you invest you are just along for the ride, and you have to know what your doing.
 
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OP- What you should do, if you decide to take the plunge, is to read over quarterly calls (like the one Apple just had) and really get a good idea about where the company is going, how they are doing financially and what their outlook for the future is. This should be done for anyone investing in stocks, but this will give you a better idea instead of possibly just throwing money away.
 
Besides which, point 2 is simply untrue.
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No, it's not. Ok, it's untrue if you're an idiot and want to sell your stock at a loss.

Point 3 is a bit of a joke with interest rates as low as they are
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Earning 1% interest is better than losing 30% on a stock. Plus, whether you go with a 5-year CD or a 30-year mutal fund depends on your goals. In the long run a mutual fund or similar long-term investment will perform the same if not better than all the time one wastes researching, buying, and selling individual stocks (unless you manage to defy the laws of statistics).
 
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Just keep in mind when playing the stock market, never buy a stock if you can't afford to lose it all.

I personally do not buy "safe" stocks, it's really no point in buying a company that might give you a 20% return, that's if you are lucky. High risk, high reward. One or two of those every few years and you are golden.
 
miles01110 said:
Earning 1% interest is better than losing 30% on a stock. Plus, whether you go with a 5-year CD or a 30-year mutal fund depends on your goals. In the long run a mutual fund or similar long-term investment will perform the same if not better than all the time one wastes researching, buying, and selling individual stocks (unless you manage to defy the laws of statistics).
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He said he wants to invest in the stock market not simply invest. Yes there are safer investments out there, we all know that. If you are not comfortable with the stock market then that is fine but some of us are.
 
wywern209 said:
I am thinking of investing some money into the stock market. i spoke to my dad and he said to invest in citigroup as they used to be up at 40 bucks and they seem to be going up right now. i was also looking at ford as the stock looks cheap and the company should do better in the future. any other companies i should look into?
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There's nothing wrong with investing in the stock market, but you need more than the bolded words to make it a good bet.

Blind investment is never a path to success. You should spend some time researching a host of factors, not just the companies you want to buy. Ultimately I think 90% of us don't have the intuition to beat diversified mutual funds. I would much rather get my feet wet in that pool first, so my penchant for risk aversion can be accurately measured and so I get some time to keep learning.
 
miles01110 said:
No, it's not. Ok, it's untrue if you're an idiot and want to sell your stock at a loss.


Earning 1% interest is better than losing 30% on a stock. Plus, whether you go with a 5-year CD or a 30-year mutal fund depends on your goals. In the long run a mutual fund or similar long-term investment will perform the same if not better than all the time one wastes researching, buying, and selling individual stocks (unless you manage to defy the laws of statistics).
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Your entire argument rests on the assumption that the stock is only going to fall. And while it's true it's impossible to predict with certainty what's going to happen (barring some insider trading scenario, I suppose), it's entirely possible to make money on the stock market. So your entire argument is fallacious.

That being said, in the long run, a well diversified portfolio is the best way to make a good return. But that shouldn't stop anyone investing in a few stocks to play around, as long as they're aware of and accept the risks.
 
Start with a good index fund. Slow and steady.

Then when you understand the market, and how it works, venture into individual stocks with some of your savings.
 
Don't listen to what the experts and professionals say. They are there to make money for themselves, not their clients. Often times they are in a direct conflict of interest in that regard. No offense to anyone on this board, but mutual funds are for losers.

I trade only stock options with about 70k and I can rely on making about 3k per month over time. This means there are some months I can't rely on that 3k but I know that usually over a year that money will be there. This is because I am making almost all my gains through time decay. This may sound like an enormous return to the lay person but I assure you it is quite conservative. The underlying securities don't even have to go up for me to make money. If I were actually taking what I considered risky bets then I could be pulling in many multiples. But then I would risk losing enough to where I couldn't rely on a steady income. I would then have to go find a job or something. I think you can very easily beat the so-called pros. You just have to find what makes sense to you and keep learning.

A good starting point would be reading Reminiscences of a Stock Operator. It is the fictionalized autobiography of Jesse Livermore, one of the best traders of all time. I think he made $100 million in 1929 when everyone else was losing. An although his experiences took place 100 years ago, it is just as relevant today. History and people always repeat the same mistakes.

I don't think stocks are a good place to make money at this time. Commodities are a much better option. You have to begin thinking cyclically. Stocks were in a bull market from 1982 to 2000. It is currently in the middle of a bear market, no matter how much the politicians try to boost it up. Commodities were in a bear market for a couple decades, but now it is in the middle of a bull market. Take gold for example. Everyone is sure it is in a bubble because they look at the high numerical value. But then those same people look at 10 yr treasuries pulling in less than 2% and figure the world simply is flying to US debt for safety. Not a peep of a bubble. I personally believe US debt could be the biggest bubble in history. And since we are looking at the gold price in terms of dollars, what effect would a deflating of US treasuries have on gold? Well you're simply taking the denominator and shrinking it. You don't have to a math whiz to figure that out.
 
itcheroni said:
Don't listen to what the experts and professionals say. They are there to make money for themselves, not their clients. Often times they are in a direct conflict of interest in that regard. No offense to anyone on this board, but mutual funds are for losers.
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Wow! Good stock brokers are there to make money for their clients, not just themselves. If they didn't, they wouldn't have clients and would be out of business. There are so many regulations and compliance issues stacked against a broker these days (at least in Canada) that it is very difficult to burn a client. My wife is head of compliance for a couple of different offices of her company. If I can't get away with any BS at home, no broker is getting away with any at the office.

As for mutual funds, they are generally a safe and long term bet for those who can't afford investing large amounts at any given time. Small regular investments are best for Mutual Funds. For a long term hold, MF's can be very attractive. They may not suit your style, but for regular people who work for a living and are trying to save for an unclear future, they are one of the better vehicles to invest in.
 
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