Stocks?

steveinaz

Absolutely get rid of credit debt first, this goes without saying. Once paid off, build up a (liquid) savings account (with the money you were using on the CC payments) to use for emergency funds; at least $6k to $10k.

mystik610

Investing in stocks is NOT gambling. At least it shouldn't be (though a lot of people treat it that way). If you're a speculative type of investor, or someone who invests blindly without understanding/applying the fundamentals of finance, then yes its gambling. The reason so many people lose money in the stock market is because they treat it like gambling. They rely on gut feelings and emotions to decide when to jump in and out of a position, usually ignoring the very basic principle of 'buying low and selling high' in the process.

I used to actively trade stocks when I had time to follow/study the markets, politics, current events etc etc. I made out pretty well during the few years prior the housing market meltdown, and also did well after the housing market meltdown. There's been so much volatility that if you understand where the trends are headed and position yourself accordingly, its pretty easy to do well. I was a financial advisor at the time and had both the time and the motivation to follow/study the markets. Since changing jobs, however, I haven't had the time, and have since relied more heavily on mutual funds. There are a few stocks that I still hold, but they're definitely long-term positions.

steveinaz

^Precisely. It's gambling when you don't know what you're doing; it's calculated risk when you do know what you're doing.

megasat16

DOW is down 250+ today. In a single day! It would go back up a few hundred in a single day and down as much the next day.

In simple terms - stock is not what it used to be. It's driven by fear and hope. It's very much similar to gambling now (except a few commodities based and energy stocks).

Calculated risk is even higher risk (and money of coz) if the risk factors are considered based on a lot of fictional market these days.

steveinaz

A loss is only a loss if you sell low.

megasat16

Don't forget the inflation (or deflation of value of dollar invested) if you are holding stock too long for it to go high again.

Let's say $10 buy you a month supply of food in early 2000s and you invested $10 into stock. And that stock went down to a few bucks due to the recession. And you are able to belly up the losses and keep holding the stock option till it goes back up to $10 in 2010, you are OK based on the value.

But also remember $10 today is probably only worth about $5-$6 from the 2000s. Coz now $10 today would buy you half a month supply of foods. So, you still end up losing. Now, you would be making profit if that $10 stock from 2000s goes up to about $15-$20.

steveinaz

Remember though, while the stocks were low, you were getting more shares per dollar invested--the "semi-silver" lining to stocks being low; and if you don't sell (buy & hold), the losses are "unrealized" losses. Time is the element at play in this scenario. Do you have enough time to make your unrealized losses up.

megasat16

Of coz, time changes everything. Once again, you need to buy at a LOW when time was right. And have enough courage to wait till it rises.

If you bought at a High time and still waiting for it to rise, chances are you would be in the losing side. Coz of the dollar decline and commodity rises. It's simple as it is.

Stock is Money. Money weighted against Gold, Oil, and Grains. And look who is winning.

steveinaz

Courage becomes important when the market is low. Sell everything after a plunge, and you just screwed yourself, twice.

megasat16

That statement I definitely agree, Steve!

gdb

This book is being raved about. I just ordered a copy myself.

http://www.amazon.com/gp/product/1455503304

Interesting article about the author, Gordon Murray:

http://www.nytimes.com/2011/01/21/business/21murray.html

cstmar01

Focus on school and paying off any debt first. Get your eggs in line and then after you graduate and build up a good savings account to have liquid funds and no debt then start to look for things.

Also make sure you think about the long term as well. Do you currently invest in a 401K or IRA of some sort? Do you have other things planned out such as life insurance, etc.

The biggest thing is that seeing you are still in school in order to do a lot of day trading is its not going to be very easy as you should focus on your studies first.

Mutal Funds are a nice way to get into stocks without needing to know a ton about them. There are some things to read up on, but over all if you don't know a whole lot don't start off right away trying to do something like day trading or your going to go nuts and loose a lot of what your putting in.

Investing is good as long as you are smart about it. Certain things will kill you if you don't know what your doing. Also start off small and work up. Loosing 50K is different than loosing 300 bucks. You really do have to know the risk and make an educated decision rather than just a big guess at what your doing.

mystik610

megasat16 wrote: »

DOW is down 250+ today. In a single day! It would go back up a few hundred in a single day and down as much the next day.

In simple terms - stock is not what it used to be. It's driven by fear and hope. It's very much similar to gambling now (except a few commodities based and energy stocks).

Calculated risk is even higher risk (and money of coz) if the risk factors are considered based on a lot of fictional market these days.

Unless you're holding very speculative, short-term positions, the movement of the market in a single day shouldn't make or break you.

Stocks are always driven by fear and hope to a certain degree....that's what causes the day to day volatility even when times are good. That doesn't mean that behind all the madness that the fundamental metrics aren't still in place. Are the metrics perfect indicators of where the market or a stock are going? Of course not. But they are enough to make calculated decisions that, on an ongoing aggregate level, make sure that your money continually grows (whether the market as a whole is growing or not).

mystik610

cstmar01 wrote: »

Focus on school and paying off any debt first. Get your eggs in line and then after you graduate and build up a good savings account to have liquid funds and no debt then start to look for things.

I disagree with this to some extent. A lot of my friends, most of which have recently finished their undergrad and/or graduate studies, subscribe to the philosophy of prioritizing paying off debt over building savings/investments.

You'd honestly be better off paying low interest debt (student loans) more slowly to set some money aside to save and invest, than you would be if you were to put all your effort into paying off debt without setting money aside. For young people starting out the "cost of waiting" can be pretty substantial when you consider the time horizon of someone fresh out of school. For most people, waiting 4-5 years to start investing can 'cost' them tens of thousands of dollars in the long run...that's 4-5 years of lost front-end compound interest.

Secondly, I really think its important to establish the habit of prioritizing building savings over everything else early. I don't think anyone should ever wait to start saving and investing, as there will always be other financial obligations/excuses to wait. If it isn't student loans, its car notes, and mortgages, and private school, and college tuition etc etc...next thing you know you're 10 years from retirement with very little 'wealth' in your name (though you might be very proudly debt free). I used to see that scenario all the time.

I'm not saying that people should take on too much debt or prioritize debt (you should obviously always spend within your means), but if you're saving and investing smartly, using and carrying debt can actually be an instrument that increases the availability of liquid cash, and in the long run, increases wealth.

megasat16

mystik610 wrote: »

Unless you're holding very speculative, short-term positions, the movement of the market in a single day shouldn't make or break you.

Yes, it is likely true that you won't be effected unless you are going short or day trading.

But my point is how volatile the stock market now is and how deeply the market is driven by hope and fear. Look at the amount of loses or gains Stock make on daily basis. The bottom line is that DOW could go back up to 14K in a few months or down to under 10K again. The stock is based on the fundamentals and now the fundamentals are very unstable. The stock now is more driven based on hope and fear (speculations).

Stocks are always driven by fear and hope to a certain degree....that's what causes the day to day volatility even when times are good. That doesn't mean that behind all the madness that the fundamental metrics aren't still in place. Are the metrics perfect indicators of where the market or a stock are going? Of course not. But they are enough to make calculated decisions that, on an ongoing aggregate level, make sure that your money continually grows (whether the market as a whole is growing or not).

I mostly agree. As I understand it, playing Stock is a calculated risk based on the fundamentals. Calculated risk makes a healthy stock market and a real growth for the country (not just money) for all of us. I might be punching a wrong bag now but now I think the Stock is more speculation and than the fundamentals.

I don't want to get into political side but there are a lot more to talk on this subject. And printing money as we need to pay for deficit, interest, stimulating economy, bailing out Corporations all got to do with the Stock market now.

slammin86

Back in the crash of 2008 I decided to invest. I put $1000 in a scottrade account and picked out a handful of stocks to divide my money up into. Since then, 2 of my companies have went bankrupt, one had a 20:1 reverse split (leaving me with 6 shares). But, at it's high my account was worth $7500 (about 4 months ago). Today my account is worth $5300.

It has been a very fun ride, and a big learning experience. I am 29 years old, and I can now say that every crash I see I plan to put more money in and buy more stocks.

Right now I am actually looking at silver (almost bought some last year but some life events happened). I have been watching the silver spot prices for a few weeks and am just waiting to pull the plug. I have about $15 face value that I have collected over the years and am looking to add 50 to 100 oz of bars and rounds.

cstmar01

mystik610 wrote: »

I disagree with this to some extent. A lot of my friends, most of which have recently finished their undergrad and/or graduate studies, subscribe to the philosophy of prioritizing paying off debt over building savings/investments.

You'd honestly be better off paying low interest debt (student loans) more slowly to set some money aside to save and invest, than you would be if you were to put all your effort into paying off debt without setting money aside. For young people starting out the "cost of waiting" can be pretty substantial when you consider the time horizon of someone fresh out of school. For most people, waiting 4-5 years to start investing can 'cost' them tens of thousands of dollars in the long run...that's 4-5 years of lost front-end compound interest.

Secondly, I really think its important to establish the habit of prioritizing building savings over everything else early. I don't think anyone should ever wait to start saving and investing, as there will always be other financial obligations/excuses to wait. If it isn't student loans, its car notes, and mortgages, and private school, and college tuition etc etc...next thing you know you're 10 years from retirement with very little 'wealth' in your name (though you might be very proudly debt free). I used to see that scenario all the time.

I'm not saying that people should take on too much debt or prioritize debt (you should obviously always spend within your means), but if you're saving and investing smartly, using and carrying debt can actually be an instrument that increases the availability of liquid cash, and in the long run, increases wealth.

never said to pay off all student loan debt. Its never going away anyways as student loans still stick through BK, ect. CC debt or other personal loans should be paid off before any time of investing.

why should you stick money into a market and only make 5% return compared to paying off a 15% interest (or higher) CC. There is really no gain to be had in this as your will be paying a butt load of interest.

Also Save before you invest. Sorry but if your car breaks down and you have to buy a new part or have a medical problem arise quick liquid cash needs to be there. If you were throwing everything into a stock and that stock drops and now is worth crap. Well hello problems ahead.

Savings is good and investing is good. But if you throw everything into a stock and have nothing left over to pay a bill its a pain if you owe anything to a creditor and trust me we like to be paid.

Tour2ma

slammin86 wrote: »

... one had a 20:1 reverse split (leaving me with 6 shares).

AIG???

More and more good advise in the financial planning vein, pay off CC debt, etc. Only thing I haven't seen mentioned yet is the emergency fund... most advice centers around six months expenses at a minimum. This, conservatively invested, is your life cushion. As circumstances, personal or global, dictate more may be required.

[EDIT: cstmar just posted the emerg fund thing...]

Couple points of contention with some posts...

Investing is only gambling if you make it so, i.e., if you don't put in the work. And work includes self-education...
(gdb, just put local library's copy of Investment Answer on hold... I just wonder how complete an answer can be in 88 pages... )

Buy and Hold is dead... Not to beat the Jim Cramer drum (he's more than capable of doing that for himself), but one of his core disciplines is "Buy and Homework" and it's a good one. His rule of thumb is one-hour of homework per stock owned per week.

Investing is not easy, but work makes it doable by almost anyone. In investing it is very true that the harder you work the luckier you get.

steveinaz

Buy & hold "dead?" We'll have to agree to disagree on that point. Could I have better earnings dickin with it everyday?---probably, but I don't want to be in it at that level; nor do I have the knowledge/expertise to kid myself into thinking I could.

I mentioned the emergency fund quite a few posts back.

Tour2ma

On a slightly different note...

Do any of you know of a good entry to mid-level book on technical analyses?

I've a handle on many of the basics, and have done pretty well basing trades on my analyses, but I know there is a bunch more to learn.

gdb

Tour2ma wrote: »

On a slightly different note...

Do any of you know of a good entry to mid-level book on technical analyses?

I've a handle on many of the basics, and have done pretty well basing trades on my analyses, but I know there is a bunch more to learn.

See post #42

Tour2ma

steveinaz wrote: »

Buy & hold "dead?" We'll have to agree to disagree on that point. Could I have better earnings dickin with it everyday?---probably, but I don't want to be in it at that level; nor do I have the knowledge/expertise to kid myself into thinking I could.

I mentioned the emergency fund quite a few posts back.

Obviously missed your emerg comment...

We can probably also agree that there's a great deal of room between Buy and Hold, and "dickin everyday".

=====================
EDIT:
Just to set terms, once upon a time folks bought AT&T and/or Fidelity Magellan and/or whatever and literally held it forever... that's the traditional Buy and Hold I think is a dead investing approach.

Even if you're doing as little as quarterly reviews of your holdings, and you rebalance your assets based on that review, you are not Buying and Holding.

Tour2ma

... and a Lowell George, double wink back at ya, gdb...

Tour2ma wrote: »

(gdb, just put local library's copy of Investment Answer on hold... I just wonder how complete an answer can be in 88 pages... )

Don't think the above book deals with chart analysis.

apphd

I do not have much faith in the stock market for the average common man, unless it is in mutual funds, 401k type of investments. IMHO you need a pretty good chunk of disposable income to get started. Unless you are just doing it for the fun of it. While you probably can make some money with a little luck and lots of personal time investment, it is not enough to make it worth my time. To me the whole concept of stocks is little more than a pyramid scheme. Sure they are real investments and there are dividends, but I have a low risk tolerance.

TECHNOKID

phipiper10 wrote: »

Not to be a downer but $20-$50 will not even cover the cost of the trades. I think you might seriously have to consider some other alternative method to increase your cash flow.

Exactly my take on this.

mhardy6647 wrote: »

If you wish to speculate, treat the stock market like any other form of gambling. Risk only what you can afford to risk and play off of your winnings.Never sell, or buy in a panic - the weirdest, dumbest thing about the stock market is how many people are exactly out of phase with its movement; buying high and selling low. Don't do that!

:-)

Agreed here too! What you can afford should mean that you can afford for that money not to exist for you. This is not the case of the OP. The OP says he wants to gamble in order to improve as he is only getting by. This is IMHO a NO-NO!

DarqueKnight wrote: »

If you want a good supplementary revenue stream that you can have fun with, find a good or service that is in demand in your area, that is under served and that you can do part time.

Good luck with your sideline hustle.

Great advice here! You can even bid on business and/or government surpluses, buy cheap and take the time to resell at your desired profit margin. I use to do this when I was a single parent, I would bid very low on about 15 - 20 lots and potentially win maybe 1 or 2. When the kids were away, I would go to the flea market and resell at profit. Usually my first weekend (usally Saturday) would repay for my inital investment and then some and any additional weekend was pure profit, that helped me keep the house I would have lost otherwise.

squeeb wrote: »

I have been in Finance for over 20 years, MBA, worked for a Finance professor in college, blah, blah, blah ...

You have been given very good advice - especially for an audio forum.

Here is another way to look at things. If you have debt - pay it down or pay it off with your extra money. Whatever rate you are paying on it - 10%, 15% or 20% - that is your GUARANTEED return as you pay it down. Not too many investments out there will give you a guaranteed return.Next, you say you are renting. After paying off debt, start saving for a down payment for a house. I am still a big advocate of home ownership. By all reports, the cost of renting is going to go up.Those strategies are not nearly as glamorous as day trading; but they are proven and time tested. Good luck.

Best advices so far! You are actually investing in your self when doing such, not in or through strangers. One beauty of the advices you giving above is you omitted it tax free!!! Yes, your government will NOT tax the saving you have made through paying your high interest debts! Owning a hoe versus renting, means there is an elastic band on your money!!! However, carefull as when the elastic band brings it back at you you will notice that the return is heavier! Housing go up and rarely goes down, no better ways to beat inflation!!! Since housing goes up, renting also goes up so even if your home is not totally paid, you will notice with time that the price of renting will eventually get higher than your mortgage payment. While my home is not fully paid yet, I am garanteed never to pay more than any rental place which will never offer as much for the same dollar as my home does (I believe I am now paying roughly 300 - 400$ less a month for my mortgage than I would for the same rental place).

steveinaz wrote: »

Education of market returns is a must. Look at the histories, and diversify to buffer from serious losses. Typically (but not always) when stocks drop, bonds tend to rise--it makes for a good offset.

Get your learn on, I'm no guru by any means; I know just enough to stay out of trouble.

Same here, knowing just enough to stay out of trouble should mean no lost or very minimal.

megasat16 wrote: »

...But my point is how volatile the stock market now is and how deeply the market is driven by hope and fear. Look at the amount of loses or gains Stock make on daily basis. The bottom line is that DOW could go back up to 14K in a few months or down to under 10K again. The stock is based on the fundamentals and now the fundamentals are very unstable. The stock now is more driven based on hope and fear (speculations)...
.

Exactly, the stock market is now a gamble even more then it ever had been. You have to be able to afford to gamble. The OP admits to be struggling at the present time so stock is definitely not a good idea for him.

cstmar01 wrote: »

never said to pay off all student loan debt. Its never going away anyways as student loans still stick through BK, ect. CC debt or other personal loans should be paid off before any time of investing.

why should you stick money into a market and only make 5% return compared to paying off a 15% interest (or higher) CC. There is really no gain to be had in this as your will be paying a butt load of interest.

Also Save before you invest. Sorry but if your car breaks down and you have to buy a new part or have a medical problem arise quick liquid cash needs to be there. If you were throwing everything into a stock and that stock drops and now is worth crap. Well hello problems ahead.

Savings is good and investing is good. But if you throw everything into a stock and have nothing left over to pay a bill its a pain if you owe anything to a creditor and trust me we like to be paid.

To me, a big reality check here is the past generation never heard much about saving as the big thing was RRSPs and other investments of the sort. That quite suited the banks and other institutions ruling over money. Give us your money to make money with while get in debts so we can make money out of you. Your money will more likely work best if invested in your self rather than in others or through others. Unless a debt you have has such a low interst that is near zero, you are better to pay your debts rather than invest with risk in order to make a potential small gain.

Buy a used car as cars are not an investment and new car are savings killer since you must pay interest for some that loose value. Get rid of that car payment before you think investment!

Buy your own home, you are investing in your self, not in strangers. You give less to the bank, you save big on interest, your savings are non taxable and you do not have to pay a broker for that investment!

Matter of fact, wouldn't it be time for US citizens to invest in properties since the market is potentially at its all times low?

Budget a portion of your income as saving but that saving must be totally inexistant for you during years (unless it can be invested in such a place where its value can not go anywhere else but up).

gdb

Tour2ma wrote: »

... and a Lowell George, double wink back at ya, gdb...



Don't think the above book deals with chart analysis.

I think/have read that the contents of the book outlines the way to lessen the need for such analyses. It is after all "The Answer" !!:biggrin: The wait que at my library......88 ahead of me:eek: you'd think it was a Sue Grafton fer crapsake.:rolleyes:

shack

I have never been a fan of technical (trend) analysis when looking at stocks. Fundamental analysis is a completely different exercise. There was a time when history was considered an excellent predictor of future movements...but the influencing factors were fewer and more preditable. Now, too many unrelated "things" affect the stock that never existed in the past. Even "back when" there were questions as to the viability of technical analysis as a tool. We played a game where one group picked a few stocks based on the trends and the other picked by throwing darts at a Wall Street Journal quotes page and followed them the entire semester. The dart bunch won decidedly.

I would rather look at the key ratios of the company to determine the underlying value of the stock...not the trends.

inspiredsports

Big Dawg wrote: »

If you need the money to live over the next few months (food, rent, etc.), then you cannot afford to invest in the stock market.

I was a portfolio manager for a few years and have an MBA in Finance. I understand very well how the markets work and the potential risks and rewards. Please do not be insulted by what I am about to say.

Based on the questions you are asking, you need to learn a lot more before you invest a single cent. If you decide to day-trade and want to make money, you need to win often enough, and in high enough amounts, to offset your losses plus your expenses. Sound easy? Everyone in the stock market is trading with the expectation of making money, yet every trade has someone buying what they believe is an undervalued stock from someone who believes that the stock has reached or exceeded fair value - and both pay a commission to make it happen.

Phipiper10 asked many of the right questions. You need to understand what he's asking and what your own answers may be.

There is a lot of money to be made investing in stocks, and a lot of money to be lost day-trading.

Frankly, if you are looking for fun and excitement with potential financial rewards, learn how to play poker. The odds of winning (short-term) are much better, and you'll have a better time.

If you are still planning to plunge ahead with this idea, and would discuss this with me, I'd be happy to speak with you.

What he said. . .

slammin86

Tour2ma wrote: »

AIG???

Yes it was AIG.

My picks were
LVS (paid less than 2.50, has hit 55 recently)
C (paid less than 2.00, has hit 5)
Siri (paid like 19 cents, has hit $1.80)
PIR (paid 60 cents, has hit 11.20)
AIG (lost money)
GM (bankrupt)
Some small crap bank (bankrupt)

jflail2

shack wrote: »

I have never been a fan of technical (trend) analysis when looking at stocks. Fundamental analysis is a completely different exercise. There was a time when history was considered an excellent predictor of future movements...but the influencing factors were fewer and more preditable. Now, too many unrelated "things" affect the stock that never existed in the past. Even "back when" there were questions as to the viability of technical analysis as a tool. We played a game where one group picked a few stocks based on the trends and the other picked by throwing darts at a Wall Street Journal quotes page and followed them the entire semester. The dart bunch won decidedly.

I would rather look at the key ratios of the company to determine the underlying value of the stock...not the trends.

And there it is. Those key ratios tell the true story. Debt/Total Cap, EV/EBITDA, various NOIs, dividend payout ratios, liquidity ratios; all tell a good story about how sound the company's books are. Forward pricing multiples, credit ratings, yield calcs, earnings growth; so much good information to take in. And necessary if you want to make good valuations as a whole.