Stock question for the experienced.

[MattyMac]

I have never purchased stock before. However, now seems like a decent time to buy a few shares of apple. I'm really considering buying about 50 shares and just sitting on it for a long time.

My question is, what is the best and easiest way to go about buying it. Etrade, sharebuilder, etc, etc.... I haven't a clue!?

What would you recommend? Are there any promotions going on? For example sign up for Etrade and get $50 towards the purchase of your stocks?

Any comments or suggestions would be greatly appreciated.

Thanks!
Matt

 

[themadchemist]

I use Ameritrade and if you're opening an account with that much cash, you'll probably get a bunch of free trades (though that's true of E*trade and others, as well). The free trades probably aren't an issue for you, though, if you just plan on sitting on the shares. I've used E*trade before and I liked some of their research tools a little more than Ameritrade's, but now that I've gotten used to Ameritrade's format, it works great, too. Customer service is, I think, a little better with Ameritrade.

 

[Abstract]

Haven't Apple shares been dropping a lot? I'm not sure, but I'd wait for it to stop doing that.

 

[themadchemist]

Haven't Apple shares been dropping a lot? I'm not sure, but I'd wait for it to stop doing that.

I think that's his point. He wants to buy low. But it's experienced an almost 10% rebound in the last week or so. But I'll steer clear of giving stock advice...It's his money, not ours. Might as well just give the OP what he's asking for, advice on online brokerages.

 

[jb60606]

A little known new brokerage by the name of "Zecco" offers commission-free trades, if that's important to you. I don't know how they'll stack up against the major players in the future, as it's possible that all brokerages will soon go commission-free. But if capital is an issue and you plan on averaging into the stock, it may not be a bad choice.

Either way, in this economy, don't buy all 100 shares in one fell swoop. There will be dips in the stock price, that may often drop below your initial purchase price. This gives you a good opportunity to bring your cost basis down.

I have an account with IB (Interactive Brokers). I chose them because they allow you to code your own trading platform/program with their API. But -- at least when I signed up -- you needed to fund the account with a minimum of $10k - $15k. It's a completely unrestricted account with negligible fees, if any at all.


Apple's share price is extremely volatile right now. Don't buy right away - study the stock, the sector and the market/economy in general (and the relationship/correlation between the performance of the three) if you want to get in at the right price. With enough research, you'll find it's resistance levels.

Also; if you've settled on buying 100 shares, maybe look into an Apple 'option call'? This way you know exactly how much you'll lose ahead of time(the premium: usually a small fraction, compared to if you actually owned the shares), should Apple's stock price not meet your expectations. I won't even attempt to explain this. Consult your broker or financial consultant.

 

[MattyMac]

For some odd reason, the vibes I'm getting here are that it isn't a good time to buy apple stock?? Why?? The price is low.

My plan would be to buy 50 shares and sit on it for a looong time. Simple as that. I feel that apple can gain a huge amount of the computer market over time. By huge I mean 30%-35% total over the next 3-5 years, which is HUGE compared to where they are now. The iPod and iPhone are going to drag people towards the purchase of a mac...simply how it works. Look at me...I got my first iPod in 04, now I have 12 iPods and 2 macs in the house and have switched countless people over to mac and they love it. I'm sure its the same for many of you here. If the trend continues, it seems to me the stock will be worth alot and will probably have split several times over and its definitely a good investment for the long term. I'm not trying to flip it over and make a quick buck or anything. Do you agree?

I don't foresee much more of a drop in stock price....do you?

Also; if you've settled on buying 100 shares, maybe look into an Apple 'option call'? This way you know exactly how much you'll lose ahead of time(the premium: usually a small fraction, compared to if you actually owned the shares), should Apple's stock price not meet your expectations. I won't even attempt to explain this. Consult your broker or financial consultant.

I don't understand the option call. Won't I actually be owning the shares if I purchase them???

 

[jb60606]

For some odd reason, the vibes I'm getting here are that it isn't a good time to buy apple stock?? Why?? The price is low.

My plan would be to buy 50 shares and sit on it for a looong time. Simple as that. I feel that apple can gain a huge amount of the computer market over time. By huge I mean 30%-35% total over the next 3-5 years, which is HUGE compared to where they are now. The iPod and iPhone are going to drag people towards the purchase of a mac...simply how it works. Look at me...I got my first iPod in 04, now I have 12 iPods and 2 macs in the house and have switched countless people over to mac and they love it. I'm sure its the same for many of you here. If the trend continues, it seems to me the stock will be worth alot and will probably have split several times over and its definitely a good investment for the long term. I'm not trying to flip it over and make a quick buck or anything. Do you agree?

I don't foresee much more of a drop in stock price....do you?




I don't understand the option call. Won't I actually be owning the shares if I purchase them???

No you'll be owning the *right* to buy the shares.

A standard American call option is a contract that gives you the right to buy a stock(usually 100 shares) at a pre-determined price within a specified time frame. If you don't exercise the contract (the stock didn't go up, so you don't buy the 100 shares prior to the contract's expiration date) you lose what you paid for the contract (the "premium"). That premium would likely be substantially less than what you would you lose if you actually owned 100 shares.

http://en.wikipedia.org/wiki/Call_option

It's not necessarily *bad* to buy stock right now. It depends on what kind of investor you are. If you want immediate returns, then yes; it's probably a bad time to buy Apple. If you're a buy-and-hold *value* investor, your risk drops a bit -- time is on your side and Apple has a GREAT track record.

I bought shares in Apple when it hit the low 130s, but I'm going to wait a bit longer before I increase my position in the stock. I'd like to see how they're going to handle this problem with the unlocked iPhones (they're costing Apple a small fortune and market sentiment). If they have a bad quarter, or poor near-term outlook -- I'll probably buy more when the price drops.

Their market share won't increase 30%-35% within 5yrs. That's unrealistic and a near impossible feat, especially considering the price of their computers, the state of the economy, and the fact that they don't have any business-class computers and limited server options. However, it's very possible that they can increase their share of the personal home-computing market within a similar time-frame. 30-35% is still a bit of stretch, but their lower end products that are aimed at the home user are well placed/priced.

 

[jb60606]

and yes, Apple can continue to drop if they don't have a great quarter (beat estimates) and improve their near term outlook to improve market sentiment towards the stock.

 

[asxtb]

No you'll be owning the *right* to buy the shares.

A standard American call option is a contract that gives you the right to buy a stock(usually 100 shares) at a pre-determined price within a specified time frame. If you don't exercise the contract (the stock didn't go up, so you don't buy the 100 shares prior to the contract's expiration date) you lose what you paid for the contract (the "premium"). That premium would likely be substantially less than what you would you lose if you actually owned 100 shares.

http://en.wikipedia.org/wiki/Call_option

It's not necessarily *bad* to buy stock right now. It depends on what kind of investor you are. If you want immediate returns, then yes; it's probably a bad time to buy Apple. If you're a buy-and-hold *value* investor, your risk drops a bit -- time is on your side and Apple has a GREAT track record.

I bought shares in Apple when it hit the low 130s, but I'm going to wait a bit longer before I increase my position in the stock. I'd like to see how they're going to handle this problem with the unlocked iPhones (they're costing Apple a small fortune and market sentiment). If they have a bad quarter, or poor outlook -- I'll buy more when the price drops.

Their market share won't increase 30%-35% within 5yrs. That's unrealistic and a near impossible feat, especially considering the price of their computers, the state of the economy, and the fact that they don't have any business-class computers and limited server options. However, it's very possible that they can increase their share of the personal home-computing market within a similar time-frame. 30-35% is still a bit of stretch, but their lower end products that are aimed at the home user are well placed/priced.

What he said about options...

But usually options are for the more experienced traders and used for hedging your losses. Also I think you need to have a margin (borrowing money to purchase stocks) account to deal with options. (I could be wrong about that. In fact, as I type this it seems less and less likely. Someone set me straight!!! )

Just to throw out another company name! I use Scottrade and have been happy with them. Of course, I'm a little bit biased since I used to have an internship there.

 

[Much Ado]

I wouldn't play around with options in this environment. Just buy some stock and sit on it.

 

[MattyMac]

Im not interested in the call option. If I buy the stock straight up...I own it. Correct?

JB...the price is in the low 130 now. Similar to when you bought, so why would you say it is a bad idea.

What about sharebuilder. I have an ING account so I think sharebuilder would be best. Using their real time stock purchase of course. $9.95 a trade. What do you all think about sharebuilder.

Also, once you own the stock, do you have to stay with the same "broker" you used (say etrade or something) or can you carry it around with you to wherever you want. What Im trying to ask is...are they part owner or something? Or or they just the middle man who has the power to purchase the stock for you. Once you pay them their $9.95, they are out of the picture...correct?

 

[obeygiant]

I have never purchased stock before. However, now seems like a decent time to buy a few shares of apple. I'm really considering buying about 50 shares and just sitting on it for a long time.

My question is, what is the best and easiest way to go about buying it. Etrade, sharebuilder, etc, etc.... I haven't a clue!?

What would you recommend? Are there any promotions going on? For example sign up for Etrade and get $50 towards the purchase of your stocks?

Any comments or suggestions would be greatly appreciated.

Thanks!
Matt

I love Scottrade. Trades are executed very quickly, within seconds. You can use me as a referral and get three free trades. Also there are 3 Scottrade store fronts within about 5 miles from where I live.

Check the fine print on Etrade, I think there might be some fees for a balance under $2500.

 

[jb60606]

Im not interested in the call option. If I buy the stock straight up...I own it. Correct?

JB...the price is in the low 130 now. Similar to when you bought, so why would you say it is a bad idea.

What about sharebuilder. I have an ING account so I think sharebuilder would be best. Using their real time stock purchase of course. $9.95 a trade. What do you all think about sharebuilder.

Also, once you own the stock, do you have to stay with the same "broker" you used (say etrade or something) or can you carry it around with you to wherever you want. What Im trying to ask is...are they part owner or something? Or or they just the middle man who has the power to purchase the stock for you. Once you pay them their $9.95, they are out of the picture...correct?

I didn't say it was a bad idea. Only a bad idea if you're looking for profit in the short term. I bought it with the intention of, like you, holding onto it for a while.

You can transfer your shares to a different broker. I once had an account with Fidelity. I transferred them to Interactive Brokers when I opened and account there.

And ETrade is probably on the verge of being bought out, just so you know. They got hammered this year.

Last I checked (couple years ago), Sharebuilder only allowed you to buy shares every tuesday(?). And they charged you a monthly fee (on top of commission). I'd rather go with Zecco or Scottrade for immediate execution and low/no commission. I could be wrong - I don't know much about them.

Al discount brokers are roughly the same. People are pretty satisfied with Scottrade, but from what ive heard, their research tools are a bit lacking. I bet the same can be said for other DBs though.

 

[jb60606]

What he said about options...

But usually options are for the more experienced traders and used for hedging your losses. Also I think you need to have a margin (borrowing money to purchase stocks) account to deal with options. (I could be wrong about that. In fact, as I type this it seems less and less likely. Someone set me straight!!! )

Just to throw out another company name! I use Scottrade and have been happy with them. Of course, I'm a little bit biased since I used to have an internship there.

yep - you do need a margin account. And one strategy is to hedge your losses with them, but thats not all they're good for. I made a boat load off of AMD years ago just buying the calls outright.

 

[asxtb]

I love Scottrade. Trades are executed very quickly, within seconds. You can use me as a referral and get three free trades. Also there are 3 Scottrade store fronts within about 5 miles from where I live.

Check the fine print on Etrade, I think there might be some fees for a balance under $2500.

Last I checked (couple years ago), Sharebuilder only allowed you to buy shares every tuesday(?). And they charged you a monthly fee (on top of commission). I'd rather go with Zecco or Scottrade for immediate execution and low/no commission.

Yes! Check the fine print on all the companies. A lot of them do charge a monthly fee or a fee for having less than a certain amount of money.

Again, not trying to spam but Scottrade is only $7 commission and no monthly fee. But obviously choose whichever company you think is best for you.

And yes, you own the shares outright. But many companies will hold the certificates for you. Unless you want the actual certificate. You can request it.

Edit:
And Just to add to what jb said, Scottrade's research tools aren't the best. And the human broker isn't allowed to give you any advice. That's probably the same with others. If you want human advice, you'll need to go to a place like Edward Jones, etc.

 

[IJ Reilly]

For some odd reason, the vibes I'm getting here are that it isn't a good time to buy apple stock?? Why?? The price is low.

Nobody really knows when it is a good or a bad time to buy any stock. The key here is to think like an investor, not a trader. If you believe that Apple's prospects over the long term are good, and you have the funds to invest which you won't need for a while, then act on your instincts and buy. I'd stay away from options -- they are not a novice's investment instrument.

FWIW, if I wasn't already over-invested in AAPL, I'd seriously consider buying in at the current price. I have yet to see a dip that wasn't a good buying opportunity, though not necessarily in the short term. The fact is, AAPL is a tough stock to cut your teeth on as a novice investor. It's very volatile stock, and investing in it takes nerve and patience. You'll want to keep these things in mind if you do decide to pull the trigger.

 

[asxtb]

yep - you do need a margin account. And one strategy is to hedge your losses with them, but thats not all they're good for. I made a boat load off of AMD years ago just buying the calls outright.

Good so I'm not crazy!

And, yeah, I know options are good for more than just hedging.

 

[IJ Reilly]

yep - you do need a margin account.

Are you actually advising a first-time stock buyer to invest on margin?

 

[Much Ado]

yep - you do need a margin account. And one strategy is to hedge your losses with them, but thats not all they're good for. I made a boat load off of AMD years ago just buying the calls outright.

Or, if you decide to activate your brain cells, you might decide not to go anywhere near margins.

Buy stock in the old fashioned "hello I'd like to buy some stock" way.

 

[MattyMac]

Or, if you decide to activate your brain cells, you might decide not to go anywhere near margins.

Buy stock in the old fashioned "hello I'd like to buy some stock" way.

I was only considering buying stock straight up. "Give me 50 shares please" "Heres my $7000...see you later"

Then I'm an owner

Easy as that right?

Scottstrade seems like the best.

 

[Much Ado]

Easy as that right?

Yup.

 

[Dr.Gargoyle]

For some odd reason, the vibes I'm getting here are that it isn't a good time to buy apple stock?? Why?? The price is low.

There is an old market saying "Never try to catch a falling knife" i.e. never buy a stock when it is falling. Wait until it stops/increase.

IN general, it is not a good time to buy stocks right now period. The FED has cut the interest due to fear of a recession (hard landing). Most people "guess" that the recession will hit soon, if and when it does, stocks will drop.
I would stay away from stock and real estate market until things calm down.

 

[IJ Reilly]

Or, if you decide to activate your brain cells, you might decide not to go anywhere near margins.

Buy stock in the old fashioned "hello I'd like to buy some stock" way.

Exactly. Investing on margin is just begging to get burned, especially if you're new to the game and don't know the meaning of "margin call."

Not only should you invest with your own money, you should invest your own money that you won't be needing any time soon.

 

[jb60606]

Are you actually advising a first-time stock buyer to invest on margin?

hell no. actually - I dont really recommend options at all for his situation. Just letting him know it's an 'option' (NPI).

 

[IJ Reilly]

There is an old market saying "Never try to catch a falling knife" i.e. never buy a stock when it is falling. Wait until it stops/increase.

IN general, it is not a good time to buy stocks right now period. The FED has cut the interest due to fear of a recession (hard landing). Most people "guess" that the recession will hit soon, if and when it does, stocks will drop.
I would stay away from stock and real estate market until things calm down.

In general I agree with the falling knife adage, but the reality is you don't get good buying opportunities when everybody else is piling in, you get them when everybody is rushing out. I feel like a broken record on this, but I guess it bears repeating: invest like an investor, not a trader. Worry less about this week, this month, or even next month. If you think about next year and the year after that, and don't invest on margin or with money you'll need soon, in the end you'll usually come out fine, and without worrying about falling knives.