Personal Development for Smart People^TM Forums

yoopersmith · 11-08-2006, 08:56 PM

Quote:

Originally Posted by Stephen

Hi yoopersmith

I think 'diving right in' in some areas of your life are good, but believe me I have seen it a million times, diving right in buying shares without proper research is a sure way to lose money.

You only need to posit the question- Why did I buy that share?- To understand how little many people know what they have done with their money.

Do they understand the cash position of the company? Its cash flow? Its order book? Its industry outlook? Its board or owners? Its market share? Its price eranings ratio? Have you looked over the company accounts etc etc

If you havent done all of these and more then throwing a dart at the stcok listings in the Financial Times is about as good a strategy as any!

Stephen,

Oh I agree with you too, but you have to admire the willingness to dive in. He will mostly likely lose some money, but hey...its just money, he can make more right? :-)

That's why I pointed him towards Fool.com: Investing, Stock Research, and Personal Finance. It's a great free site to learn everything you need to know about investing. But this kid was ready for some action and had money to burn.

Look at it this way, he could have taken the money and "blown it" in Vegas. At least he WANTS to learn something, which means his heart is in the right place.

I was very timid when I started investing, and I bet you were too, but this guy is not.

BTW...I subscribe to newsletters and buy stocks based on reasearch (mine and others) and recommendations, but I don't know about half of the stuff you were talking about...but that's my choice. I have a core of index funds and dabble a little in riskier stocks, but always based on good companies that have good management and the potential for growth.

My bottom line keeps growing and I stay ahead of the S&P 500...that's all I want from my money.

b__p · 11-08-2006, 11:54 PM

In a similar vein as the current discussion, here's an interesting story about a guy whose parents let him open a brokerage account during his senior year of high school with his bar mitzvah money thinking he'd lose every penny. He turned his $12,500 into $1.6 million and now runs his own hedge fund.

DealBreaker.com

FXTraderWill · 11-09-2006, 06:27 AM

Toasterwater,

what you are doing now is almost bound to fail. I think you're seriously underestimating the amount of commitment required to "make it" in the stock market. It's fun to buy a stock, watch it go up, and pat yourself on the back for being an intuitive genius because you just KNEW it would go up, like you're doing with GE, but trust me when I say it won't work.

You say you've read a lot on the stock market, yet from reading about your approach, I can't help but wonder exactly what you've been reading. You don't seem to have a firm grasp of the most important principles of risk mangement yet. Do you have a stop loss in on your GE trade? If not, at what level will you get out? How much will it go against you?

If you ask the world's greatest traders if they'll win on their next trade they will tell you they honestly don't know. The "game" is just to find a method that you can consistently apply that generates a positive expectancy - you can lose more trades than you win, as most pros do, so long as your winners outnumber your losers by a lot.

Some people will say 'oh but you're just talking about trading principles, this guy wants to learn to invest.' Pooey. Investing is just trading on a long timeframe.

So what can you do to succeed?

First, determine your objectives and align yourself with reality. You will not get a "decent game plan" in 45 days. Learning to beat the stock market is a skill that, once you have, you can leverage and make millions with - annually. It won't come in 45 days. If you want to make a living from the stock market, you'll have to totally change your approach and read some books on trading, then determine your daily ritual and follow it, keeping a rigorous trading diary until you can get the results you want on a consistent basis.

If you want to learn to invest on a longer term, I must say you'll have a hard time beating the regular market and you are best off joining an index fund or using your money to buy a stock that mimicks an index - like SPY. (If you don't know what an Index is, please take all your money out NOW and do more studying). 80% of mutual fund managers - professionals who make a living getting paid to beat the market - fail to outperform the S&P 500. Remember that. It's doable for a small investor - the reasons they fail are mainly that they have too much money to invest and they have to overdiversify, but it's extremely difficult. If you aren't prepared to spend hours reading through company balance sheets, reading SEC filings, looking through insider transaction reports, and determining without cognitive bias the likely future of the company AND how the market is valuing it (remember, the goal is not to buy a good company but to find a company that is mispriced relative to its "intrinsic value" - buying a bad company that the market is punishing too harshly for being bad is more likely to yield you profits than buying a good company that everyone and their mother already owns), you should pursue a passive strategy.

If you just want to have fun, that's fine, but don't lie to yourself and think you're doing anything more than blindly gambling: you're not. It's OKAY, so long as that's what you want.

toasterwater · 11-10-2006, 02:27 AM

Im quite angered with myself now because this is the second time that ive typed up a new post and lost it! I was making it pretty detailed, and in the process got caught up in other things- before i knew it i went to bed and when i woke up it was gone. i will make a couple new posts soon though.

toasterwater · 11-10-2006, 02:38 AM

Okay, this is what i want to try and accomplish with my stock market ventures. I want to use the "pyramid" method of investment. The pryamid method is symply having most of my money in a more conservative investments, and having less money in more risky investments. Pretty basic concept, im just gonna need some help in deciding what is more conservative.

As far as conservative goes, Im thinking Index funds, and maybe some mutual funds. I dont know much about bonds, but maybe someone can enlighten me

.

So heres my request: What is your favorite Index fund and why?

Thanks again for all your help, ill post more soon

**
As far as what is currently invested in stocks, i plan on selling, and redistributing so that i have maybe 1000-2000 in "the game" and the rest in more conservative, such as index funds etc.

toasterwater · 11-10-2006, 03:09 AM

My latest update

Symbol____Qty____Last____Change__Mkt Val_____Maint Req___Cost_____Gain($)__Gain(%)
GE________58_____35.29___-0.29___2,046.82____619.09______2,031.16___15.66___ _0.77
JNPR______50_____19.65____0.96_____982.50____280.3 5_______983.50___-1.00___-0.10
LU________42______2.52___-0.01_____105.84____105.00_______103.32____2.52____ 2.44
NOVL______20______6.67___-0.07_____133.40_____50.00_______129.80____3.60____ 2.77
SUNW______19______5.42___-0.03_____102.98_____47.50_______101.65____1.33____ 1.31
F_________13______8.56___-0.07_____111.28_____39.27_______112.45___-1.17___-1.04
INTC_______6_____20.42___-0.29_____122.52_____37.28_______126.53___-4.01___-3.17
Q_________13______8.45___-0.14_____109.85_____33.50_______114.76___-4.91___-4.28
WIN________8_____13.56___-0.03_____108.48_____32.62_______110.16___-1.68___-1.53

Okay, so out of my total invested 4000 (a couple hundred is sitting in the account, not invested in stock, for those math wizzes out there

) Im currently worth 4,023.90.

Henry · 11-10-2006, 05:27 AM

Quote:

Originally Posted by toasterwater

Okay, this is what i want to try and accomplish with my stock market ventures. I want to use the "pyramid" method of investment. The pryamid method is symply having most of my money in a more conservative investments, and having less money in more risky investments. Pretty basic concept, im just gonna need some help in deciding what is more conservative.

As far as conservative goes, Im thinking Index funds, and maybe some mutual funds. I dont know much about bonds, but maybe someone can enlighten me

.

So heres my request: What is your favorite Index fund and why?

Thanks again for all your help, ill post more soon

**
As far as what is currently invested in stocks, i plan on selling, and redistributing so that i have maybe 1000-2000 in "the game" and the rest in more conservative, such as index funds etc.

I like the S&P 500 index and the Small-cap index from Vanguard.

I like them because the SP500 is the benchmark that's compared to all mutual funds and I like the small-cap because it's more volitile than SP500. Hence, a slightly higher return.

toasterwater · 11-10-2006, 07:03 AM

Okay, quick question.
After looking up the S&P 500, it appears that there may be more than 1... I may be wrong, but these are the symbols i got when looking up S&P500:

$NJG.X $NME.X $NME.EU $NME.NV $NME.TC $LSW.X $SPNY $SPSY $SPLY $NJG.EU $NJG.NV $NJG.SO $NME.SO $NJG.TC PLFSX PLFIX PLFNX PSPJX PLFPX

someone please explain this to me: Is the S&P500 a single index fund, or are there many versions of it? And if it is a single fund, what is the symbol for it?

Stephen · 11-10-2006, 08:38 AM

Quote:

Originally Posted by toasterwater

Okay, quick question.
After looking up the S&P 500, it appears that there may be more than 1... I may be wrong, but these are the symbols i got when looking up S&P500:

$NJG.X $NME.X $NME.EU $NME.NV $NME.TC $LSW.X $SPNY $SPSY $SPLY $NJG.EU $NJG.NV $NJG.SO $NME.SO $NJG.TC PLFSX PLFIX PLFNX PSPJX PLFPX

someone please explain this to me: Is the S&P500 a single index fund, or are there many versions of it? And if it is a single fund, what is the symbol for it?

Hi toasterwater

If I were you I would move all my money back into cash and learn a bit about financial investments before its too late.

To ask a question like, "Is the S&P500 a single index fund, or are there many versions of it? And if it is a single fund, what is the symbol for it?"

basically shows that you are not ready for this. I dont mean to be harsh but just being brutally honest.

The S&P 500 as we all know is an index (not a fund). It is comprised, (just like the DJ30, FTSE100 etc), of 500 companies by market capitalisation. If the sentiment for a company goes down, the index goes down (weighted) all things being equal and vice versa.

You can never buy an index, but only buy the shares or a fund that mirror the index, but because you will liable for trading charges, the market will always outperform you if you are trying to mirror it.

However for passive, worry free medium to long term investing, to buy into an indexed fund is the best option.

toasterwater · 11-10-2006, 02:30 PM

Quote:

Originally posted by Stephen:
You can never buy an index, but only buy the shares or a fund that mirror the index, but because you will liable for trading charges, the market will always outperform you if you are trying to mirror it.

Okay, so if i can only buy a fund that mirrors an index, and not the index itself, then what is a good fund to invest in that mirrors the S&P500?

And thanks Stephen for the knowledge, its that kind of knowledge that will help me succeed in my stock market ventures. Once again, I'm going to have to reject your advice to get out, but once again, I will rearrange my investments based on your advice. Thanks again, and keep the advice rollin

Stephen · 11-10-2006, 02:50 PM

Quote:

Originally Posted by toasterwater

Okay, so if i can only buy a fund that mirrors an index, and not the index itself, then what is a good fund to invest in that mirrors the S&P500?

And thanks Stephen for the knowledge, its that kind of knowledge that will help me succeed in my stock market ventures. Once again, I'm going to have to reject your advice to get out, but once again, I will rearrange my investments based on your advice. Thanks again, and keep the advice rollin

Hi toasterwater

I am a Financial planner in Ireland and previously the UK. I have no knowledge of US funds apart from Templeton, from my own investing.

United States--Franklin Templeton Investments -

Here's an article that should be of interest to you

Beat the market with a mix of index funds - MSN Money

and here is the type of fund you might be looking at or similar

https://flagship.vanguard.com/VGApp/...FundIntExt=INT

I imagine the US has many such funds. We call them trackers - as they 'track' an particular index, in this case the S&P500. Because trackers are just that -they track, they are all more or less the same. They are managed by computers and not managers. In this way, you should not worry much about anything else other than what the tracker provider charges for the priviledge of buying the fund. Charges make a huge dent in your future returns. Shop around.

RT Wolf · 11-10-2006, 05:43 PM

The thing about comparing index funds is that you should simply look for hte one with the lowest Management Expense Ratio. On the other hand, Vanguard came up with the index fund investing concept, so you may consider just buying into them.

There's two ways to invest in index funds. One is to buy index fund units exactly like you do with mutual funds. The other is to buy Exchange-traded Funds (ETFs). Hope this helps. Someone else may be able to point you to a good index fund they invest in. But I can look something up if you'd like.

mattinglot · 11-10-2006, 06:46 PM

I've fallen in love with ETFs, I find the convienence they present in terms of trading, quotes, etc to really be worth it. That being said I haven't bought into indexes any other way, so I can't provide an honest review against other entry methods. They just seem great for someone like me who is most familiar with stocks.

kmr321 · 11-11-2006, 12:24 AM

hey hows it going, i dont mean to hijack your thread but i am in a similar position to yourself.turned 20 and saved $5000 which i plan to purchase new (stocks)

Anyway ive read a bunch of warren buffet, peter lynch, rich dad poor dad, think and grow rich! books and im still some what clueless in actually picking a stock.

Firstly, any recommended stock research or portfolio software which could help personally?

2. This is more of a guidline to how i think towards shares at the moment so i d like to know if im on the right track and feel free to add in stuff that im missing.

Goal - invest medium term in stocks 6 months to 2 years.

- Step 1 picking a stock - choose a stock you trust or already know about. ( Confident in its People, Price and Product)

- STep 2 - Do you homework(ratios+financial statement analysis)

- Step 3 - make some future market predictions but dont place any reliance on them.

- Step 4 - compare to other similar stocks in the industry to see if you can buy a stock which is similar at a cheaper price?

Please Add in anything im missing here,

RT Wolf · 11-11-2006, 12:50 AM

^ You've sorta got it.

Step 1 - Find a stock to research. You can get stock tips from people you trust, by doing screens to find stocks with certain characteristics (high rate of return, low P/E, no debt, whatever).

Step 2 - Do your research. This usually involves having a gander at any analysts reports (to get facts, not opinions), perhaps perusing Value Line (Buffett-accredited source, expensive but awesome, if you're in uni or college, they may have a subscription you can get your hands on), checking the SEC (or comparable) for whatever they've got, including annual reports, 10-Ks, quarter reports, and so on.

Step 3 - Value the company's stock. Develop an idea of what the stock/company is worth. Basically, see if there's a good margin of safety between your idea of intrinsic value and what the cost of the shares is. There's a couple of ways to do that, including dividend discount model, Discounted cash flow analysis, relative valuation (which is what you're talking about in step 4), and many others. I'd suggest reading... (I'll get the name to you later). The name escapes me at the moment, but it's a good book with a good overview of investing and includes a good start on the nuts and bolts of valuation. Valuation is really what's the core of value investing. Buffett's genius is largely in valuing franchises.

Step 5 - buy?

I may make a little mind map of value investing as well. This assumes you're into value investing, of course. I'll add more later.

Pagoda · 11-11-2006, 02:24 AM

Toasterwater,

you need to do your own thing when it comes to trading. That doesn't mean you shouldn't read and learn as much as you can. It just means what works for some people may not work for you.

From what you have said, it sounds like you are willing to take some serious hits to your $4,000 in cash just to jump in and start trading. There is nothing wrong with that as long as you know this up front. And if you really do feel this way, then forget divesification. Your trading costs are going to kill you when your 45 days are up. Sell all those stocks and get down to only 1 stock in your portfolio before then.

Now, based on your trading style, your limited capital and where you live, I would consider trading Forex, instead of stocks. Forex trades 24/7 so you can monitor your "daytrades" better. Forex can be traded using just technical analysis and an awareness of when major news events are going to occur (you don't seem the fundamental analysis type anyway.) Forex doesn't require a lot of capital (but there are considerable trading costs - don't let the "no commissions" ads fool you.) Pick one currency pair and become an expert in that trade.

If you are not interested in Forex, and want to stay with stocks, than here is some advice that will really get these message board screaming. Trade Options. Options are a completely different animal than stocks, but if I had to choose between trading 500 shares of some no name $1 stock or a single at the money contract GE, than I would choose options every time. Options have the advantage of requiring very little capital to make money. And if you really have this urge to trade with only $4,000 dollars, than options give you a chance of making real money that won't be eaten up by trading costs. optionsXpress will also let you virtual trade for a while to learn a bit too.

Pagoda · 11-11-2006, 02:55 AM

By the way, before everyone starts yelling at me that I don't know what I am talking about and I am sending Toasterwater to the slaughter, let me say this.

There are many ways to lose considerable amounts of money in the market. Buying and holding an index fund during an unstable inflationary economic cycle is one. (This can be quite risky in the short term, so those on this board giving that advice should be honest about it.)
Dying the death of a thousand tiny cuts is another. And this is quite common with small accounts that like to trade. They get eaten up by commissions and fees because they are so afraid of losing money that they diversify like crazy and chase hot stocks or mutual funds and watch their account dwindle to nothing.

This is what I struggled with for many years, until finally I said forget what others are telling me to do. I am not a buy and hold person and trying to be one is failure. I trade stocks, and I know how to make money from these specific kinds of trades. So when the market is in the right position, and my stock are in the right setups, I put my money on the line. And I take on as much risk as I am comfortable with in these situations (and it is more than the books will tell you to do.) And when the market is not in the right position, and my stocks aren't setting up, then I have zero money in the market (and that isn't what a lot of the common advice tells you what to do either).

But it works for me.

Find your own way, Toasterwater and enjoy the ups and downs.

kmr321 · 11-11-2006, 04:51 AM

thanks very much RT wolf that is exactly what i was looking for.
I am in fact a uni student and so have limited funds but if you were to recommend some tools to begin trading

what would you recommend?
i was thinking picking up an investing magazine per week
maybe some type of software to manage the information of stocks.

Out of curiousity does
short term trading or long term pay off more?

toasterwater · 11-11-2006, 10:35 AM

Okay, here it is. I started this whole thing less than a week ago, and i think ive already reached my conclusion. Im getting out. Now, i know what alot of you are probably thinking: "wow, i thought you said you werent gonna quit, what happened, lose a little money and get scared?". Nope. Thats not it at all. I am currently working full time, taking 2 college classes, and i have a fiance who lives on the other side of the world (long distance relationship= lots of time on the phone). On top of this, I have lots of personal development to work on. I figure that if im spending time working on investments, then im missing out on time that i could be investing into my intellect. I would like to get a little more into it someday, but right now it really just doesnt align with my goals.

However, I dont want to completely abandon the stock market. I do need an investment with a little more return than my savings account. So i think ill just put the money into an index fund or something.

So just to summerize: my new goal is to find an investment for my extra money that will yeild more than a bank account (or a lame CD- im looking for something closer to 10%/year) and that i dont have to invest much time into (id really like to use the "get it and forget it" strategy.

So if you have suggestions on how to go about doing this, Im all ears! (and i know that there are lots of suggestions previously, but i would like to divert the rest of this threads interests into that)

Thanks for all of your help!

kmr321 · 11-11-2006, 10:46 AM

ay so im still interested in what you did learn if anything from your time in the stock market

RT Wolf · 11-11-2006, 03:19 PM

Quote:

Originally Posted by kmr321

thanks very much RT wolf that is exactly what i was looking for.
I am in fact a uni student and so have limited funds but if you were to recommend some tools to begin trading

what would you recommend?
i was thinking picking up an investing magazine per week
maybe some type of software to manage the information of stocks.

Out of curiousity does
short term trading or long term pay off more?

There's very few investing magazines targetted towards value investors (of what I am, and so is Peter Lynch, Buffett and so on). One of them Outstanding Investor's Digest, but it prints on an on and off basis and it isn't cheap, it's great for interviews, though, and sometimes stock tips. Check out "You can be a stock market genius, too" by Joel Greenblatt. He's a very easy to read writer and at the end of the book, he lists a lot of good sources and practical information.
I use Excel to combine in the information and/or plug in the information into a specific valuation model.

A note about valuation models: you use different ones for differnt kinds of stocks. Kinda like if you're building a house, you wanna have different tools for different jobs, you want different valuation models for different kinds of companies. Or you can just choose to specialize in one.

Your question of what pays better, short term or long term investing is tricky. It depends on who you are and what your skill level is. My opinion is that long-term investing pays out a lot more (and that's why I'm in it). Others hold other opinions, clearly, depending on their preferences and so on. It's called incentive-caused bias.

Charlie Munger is a great thinker and speaker on matters of investing and models nad so on. I think teh following shold be mandatory reading for everyone:
Losch Management - Berkshire Hathaway's Holdings

BTW, Pagoda, getting out when the market is not right is a great thing to do.

Pagoda · 11-11-2006, 09:12 PM

Quote:

Originally Posted by RT Wolf

BTW, Pagoda, getting out when the market is not right is a great thing to do.

Value investing is a great thing to do to. It just isn't me.

Stephen · 11-11-2006, 09:16 PM

Quote:

Originally Posted by Pagoda

Value investing is a great thing to do to. It just isn't me.

Yes. Buffett, consistently outperforms the market.

He does this as a full time job.

I invest in the whole market (index)

It costs me NO time at all.

reuben · 11-11-2006, 09:27 PM

I have been trading stocks too. However i traded that for forex which i now do exclusively.

Someone might have already pointed to this but if you are a complete noobie when it comes to any form of investment or speculation i suggest getting yourself a demo account first. When i started out i spent more than a year on the demo account before i commited any real money. Its a great way to see if your really into trading, if after a year of playing and learning you are still around maybe the stock market or other markets might be something for you

Any other fx traders here?

kmr321 · 11-12-2006, 08:21 AM

i have read a little about FX trading.

Mind sharing your experience and explain a little about this?

reuben · 11-12-2006, 09:45 AM

Starting with what?

kmr321 · 11-12-2006, 12:58 PM

the beginning

umm say the FX engine and the idea of FX trading.

reuben · 11-12-2006, 01:49 PM

Your request could be a life time study

I suggest that anyone interested should read the very basics at maybe investopedia.com or babypips.com.

Here is a link to "forex" from wikipedia Foreign exchange market - Wikipedia, the free encyclopedia

One more thing i want to stress. Never buy any online courses, pdf's or whatever. If the author claims that he can teach you to make say a 100% a month hes obviosuly a liar. Not because such returns are impossible, but because that if he could really do it he would be a billionaire in a year or two, and he certainly wouldnt bother to sell any online courses.

Everethying you need to know to be a part time, small scale investor/speculator is available for free on the internet.

Colin · 11-13-2006, 05:39 PM

Quote:

Originally Posted by kmr321

the beginning

umm say the FX engine and the idea of FX trading.

I actually just wrote a little intro to forex on another thread, so instead of doing a cut and paste job, here's a link!

I recommend babypips.com as a good place to start as well.

Colin · 11-13-2006, 05:49 PM

Quote:

Originally Posted by reuben

One more thing i want to stress. Never buy any online courses, pdf's or whatever. If the author claims that he can teach you to make say a 100% a month hes obviosuly a liar. Not because such returns are impossible, but because that if he could really do it he would be a billionaire in a year or two, and he certainly wouldnt bother to sell any online courses.

Everethying you need to know to be a part time, small scale investor/speculator is available for free on the internet.

The forex marketing out there is a mind field. Reuben is correct that you should tread very careful and be hyper critical of any claims you see made.

There are some gems of knowledge out there, so don't be afraid to look for them.

Before spending any money on anything, do some research and get some testimonials and valid reviews from other users of the product. Make sure they offer a money back guarantee, and you have read reports of people actually getting their money back when they found out the product or system wasn't for them.

Be doubly careful of all the systems and marketing associated with anything you catch on tv infomercails associated with trading. They generally want you to plonk thousands down for a 'simple' system, that generally ends up being not suitable for your own psychology, has poor support, and takes forever and a day to get your money back off of.

If you can't find a review of something that you see advertised and you want to find out more about it, just ask on a trading or forex forum, as there plenty of them out there. Forex Factory, Trade2Win, EliteTrader, MoneyTec, etc.

It can all seem a bit over whelming at first, but there is plenty of good, useful information out there. It can just be a bit like searching for a needle in a haystack to find the info that is appropriate for you. If you get bitten by the trading bug, then you will persevere, and come out enlightened, and hopefully a better person at the end of it all. Learning to trade can truely be a life altering experience.

11-08-2006, 11:54 PM	#32 (permalink)
b__p Junior Member Join Date: Nov 2006 Posts: 7	In a similar vein as the current discussion, here's an interesting story about a guy whose parents let him open a brokerage account during his senior year of high school with his bar mitzvah money thinking he'd lose every penny. He turned his $12,500 into $1.6 million and now runs his own hedge fund. DealBreaker.com __________________ Value Investing Strategy - Rule1Numbers.com

11-10-2006, 02:27 AM	#34 (permalink)
toasterwater Senior Member Join Date: Nov 2006 Location: San Diego, California Posts: 211	grrr Im quite angered with myself now because this is the second time that ive typed up a new post and lost it! I was making it pretty detailed, and in the process got caught up in other things- before i knew it i went to bed and when i woke up it was gone. i will make a couple new posts soon though.

11-10-2006, 02:38 AM	#35 (permalink)
toasterwater Senior Member Join Date: Nov 2006 Location: San Diego, California Posts: 211	Plan Okay, this is what i want to try and accomplish with my stock market ventures. I want to use the "pyramid" method of investment. The pryamid method is symply having most of my money in a more conservative investments, and having less money in more risky investments. Pretty basic concept, im just gonna need some help in deciding what is more conservative. As far as conservative goes, Im thinking Index funds, and maybe some mutual funds. I dont know much about bonds, but maybe someone can enlighten me . So heres my request: What is your favorite Index fund and why? Thanks again for all your help, ill post more soon ** As far as what is currently invested in stocks, i plan on selling, and redistributing so that i have maybe 1000-2000 in "the game" and the rest in more conservative, such as index funds etc. Last edited by toasterwater; 11-10-2006 at 03:11 AM. Reason: more clarification

11-10-2006, 03:09 AM	#36 (permalink)
toasterwater Senior Member Join Date: Nov 2006 Location: San Diego, California Posts: 211	Update My latest update Symbol____Qty____Last____Change__Mkt Val_____Maint Req___Cost_____Gain($)__Gain(%) GE________58_____35.29___-0.29___2,046.82____619.09______2,031.16___15.66___ _0.77 JNPR______50_____19.65____0.96_____982.50____280.3 5_______983.50___-1.00___-0.10 LU________42______2.52___-0.01_____105.84____105.00_______103.32____2.52____ 2.44 NOVL______20______6.67___-0.07_____133.40_____50.00_______129.80____3.60____ 2.77 SUNW______19______5.42___-0.03_____102.98_____47.50_______101.65____1.33____ 1.31 F_________13______8.56___-0.07_____111.28_____39.27_______112.45___-1.17___-1.04 INTC_______6_____20.42___-0.29_____122.52_____37.28_______126.53___-4.01___-3.17 Q_________13______8.45___-0.14_____109.85_____33.50_______114.76___-4.91___-4.28 WIN________8_____13.56___-0.03_____108.48_____32.62_______110.16___-1.68___-1.53 Okay, so out of my total invested 4000 (a couple hundred is sitting in the account, not invested in stock, for those math wizzes out there ) Im currently worth 4,023.90.

11-10-2006, 07:03 AM	#38 (permalink)
toasterwater Senior Member Join Date: Nov 2006 Location: San Diego, California Posts: 211	S&p500 Okay, quick question. After looking up the S&P 500, it appears that there may be more than 1... I may be wrong, but these are the symbols i got when looking up S&P500: $NJG.X $NME.X $NME.EU $NME.NV $NME.TC $LSW.X $SPNY $SPSY $SPLY $NJG.EU $NJG.NV $NJG.SO $NME.SO $NJG.TC PLFSX PLFIX PLFNX PSPJX PLFPX someone please explain this to me: Is the S&P500 a single index fund, or are there many versions of it? And if it is a single fund, what is the symbol for it?

11-09-2006, 06:27 AM	#33 (permalink)
FXTraderWill Junior Member Join Date: Nov 2006 Posts: 22	Toasterwater, what you are doing now is almost bound to fail. I think you're seriously underestimating the amount of commitment required to "make it" in the stock market. It's fun to buy a stock, watch it go up, and pat yourself on the back for being an intuitive genius because you just KNEW it would go up, like you're doing with GE, but trust me when I say it won't work. You say you've read a lot on the stock market, yet from reading about your approach, I can't help but wonder exactly what you've been reading. You don't seem to have a firm grasp of the most important principles of risk mangement yet. Do you have a stop loss in on your GE trade? If not, at what level will you get out? How much will it go against you? If you ask the world's greatest traders if they'll win on their next trade they will tell you they honestly don't know. The "game" is just to find a method that you can consistently apply that generates a positive expectancy - you can lose more trades than you win, as most pros do, so long as your winners outnumber your losers by a lot. Some people will say 'oh but you're just talking about trading principles, this guy wants to learn to invest.' Pooey. Investing is just trading on a long timeframe. So what can you do to succeed? First, determine your objectives and align yourself with reality. You will not get a "decent game plan" in 45 days. Learning to beat the stock market is a skill that, once you have, you can leverage and make millions with - annually. It won't come in 45 days. If you want to make a living from the stock market, you'll have to totally change your approach and read some books on trading, then determine your daily ritual and follow it, keeping a rigorous trading diary until you can get the results you want on a consistent basis. If you want to learn to invest on a longer term, I must say you'll have a hard time beating the regular market and you are best off joining an index fund or using your money to buy a stock that mimicks an index - like SPY. (If you don't know what an Index is, please take all your money out NOW and do more studying). 80% of mutual fund managers - professionals who make a living getting paid to beat the market - fail to outperform the S&P 500. Remember that. It's doable for a small investor - the reasons they fail are mainly that they have too much money to invest and they have to overdiversify, but it's extremely difficult. If you aren't prepared to spend hours reading through company balance sheets, reading SEC filings, looking through insider transaction reports, and determining without cognitive bias the likely future of the company AND how the market is valuing it (remember, the goal is not to buy a good company but to find a company that is mispriced relative to its "intrinsic value" - buying a bad company that the market is punishing too harshly for being bad is more likely to yield you profits than buying a good company that everyone and their mother already owns), you should pursue a passive strategy. If you just want to have fun, that's fine, but don't lie to yourself and think you're doing anything more than blindly gambling: you're not. It's OKAY, so long as that's what you want.

11-10-2006, 05:43 PM	#42 (permalink)
RT Wolf Senior Member Join Date: Nov 2006 Location: Toronto, Canuckland Posts: 1,729	The thing about comparing index funds is that you should simply look for hte one with the lowest Management Expense Ratio. On the other hand, Vanguard came up with the index fund investing concept, so you may consider just buying into them. There's two ways to invest in index funds. One is to buy index fund units exactly like you do with mutual funds. The other is to buy Exchange-traded Funds (ETFs). Hope this helps. Someone else may be able to point you to a good index fund they invest in. But I can look something up if you'd like. __________________ Mind-Manual New: How to Build an Abundance Mindset!

11-10-2006, 06:46 PM	#43 (permalink)
mattinglot Junior Member Join Date: Nov 2006 Posts: 20	I've fallen in love with ETFs, I find the convienence they present in terms of trading, quotes, etc to really be worth it. That being said I haven't bought into indexes any other way, so I can't provide an honest review against other entry methods. They just seem great for someone like me who is most familiar with stocks. __________________ Tilted Pixel \| My Blog

11-11-2006, 12:24 AM	#44 (permalink)
kmr321 Member Join Date: Nov 2006 Posts: 41	a guideline. hey hows it going, i dont mean to hijack your thread but i am in a similar position to yourself.turned 20 and saved $5000 which i plan to purchase new (stocks) Anyway ive read a bunch of warren buffet, peter lynch, rich dad poor dad, think and grow rich! books and im still some what clueless in actually picking a stock. Firstly, any recommended stock research or portfolio software which could help personally? 2. This is more of a guidline to how i think towards shares at the moment so i d like to know if im on the right track and feel free to add in stuff that im missing. Goal - invest medium term in stocks 6 months to 2 years. - Step 1 picking a stock - choose a stock you trust or already know about. ( Confident in its People, Price and Product) - STep 2 - Do you homework(ratios+financial statement analysis) - Step 3 - make some future market predictions but dont place any reliance on them. - Step 4 - compare to other similar stocks in the industry to see if you can buy a stock which is similar at a cheaper price? Please Add in anything im missing here,

11-11-2006, 12:50 AM	#45 (permalink)
RT Wolf Senior Member Join Date: Nov 2006 Location: Toronto, Canuckland Posts: 1,729	^ You've sorta got it. Step 1 - Find a stock to research. You can get stock tips from people you trust, by doing screens to find stocks with certain characteristics (high rate of return, low P/E, no debt, whatever). Step 2 - Do your research. This usually involves having a gander at any analysts reports (to get facts, not opinions), perhaps perusing Value Line (Buffett-accredited source, expensive but awesome, if you're in uni or college, they may have a subscription you can get your hands on), checking the SEC (or comparable) for whatever they've got, including annual reports, 10-Ks, quarter reports, and so on. Step 3 - Value the company's stock. Develop an idea of what the stock/company is worth. Basically, see if there's a good margin of safety between your idea of intrinsic value and what the cost of the shares is. There's a couple of ways to do that, including dividend discount model, Discounted cash flow analysis, relative valuation (which is what you're talking about in step 4), and many others. I'd suggest reading... (I'll get the name to you later). The name escapes me at the moment, but it's a good book with a good overview of investing and includes a good start on the nuts and bolts of valuation. Valuation is really what's the core of value investing. Buffett's genius is largely in valuing franchises. Step 5 - buy? I may make a little mind map of value investing as well. This assumes you're into value investing, of course. I'll add more later. __________________ Mind-Manual New: How to Build an Abundance Mindset!

11-11-2006, 02:24 AM	#46 (permalink)
Pagoda Member Join Date: Nov 2006 Posts: 66	Toasterwater, you need to do your own thing when it comes to trading. That doesn't mean you shouldn't read and learn as much as you can. It just means what works for some people may not work for you. From what you have said, it sounds like you are willing to take some serious hits to your $4,000 in cash just to jump in and start trading. There is nothing wrong with that as long as you know this up front. And if you really do feel this way, then forget divesification. Your trading costs are going to kill you when your 45 days are up. Sell all those stocks and get down to only 1 stock in your portfolio before then. Now, based on your trading style, your limited capital and where you live, I would consider trading Forex, instead of stocks. Forex trades 24/7 so you can monitor your "daytrades" better. Forex can be traded using just technical analysis and an awareness of when major news events are going to occur (you don't seem the fundamental analysis type anyway.) Forex doesn't require a lot of capital (but there are considerable trading costs - don't let the "no commissions" ads fool you.) Pick one currency pair and become an expert in that trade. If you are not interested in Forex, and want to stay with stocks, than here is some advice that will really get these message board screaming. Trade Options. Options are a completely different animal than stocks, but if I had to choose between trading 500 shares of some no name $1 stock or a single at the money contract GE, than I would choose options every time. Options have the advantage of requiring very little capital to make money. And if you really have this urge to trade with only $4,000 dollars, than options give you a chance of making real money that won't be eaten up by trading costs. optionsXpress will also let you virtual trade for a while to learn a bit too.

11-11-2006, 02:55 AM	#47 (permalink)
Pagoda Member Join Date: Nov 2006 Posts: 66	By the way, before everyone starts yelling at me that I don't know what I am talking about and I am sending Toasterwater to the slaughter, let me say this. There are many ways to lose considerable amounts of money in the market. Buying and holding an index fund during an unstable inflationary economic cycle is one. (This can be quite risky in the short term, so those on this board giving that advice should be honest about it.) Dying the death of a thousand tiny cuts is another. And this is quite common with small accounts that like to trade. They get eaten up by commissions and fees because they are so afraid of losing money that they diversify like crazy and chase hot stocks or mutual funds and watch their account dwindle to nothing. This is what I struggled with for many years, until finally I said forget what others are telling me to do. I am not a buy and hold person and trying to be one is failure. I trade stocks, and I know how to make money from these specific kinds of trades. So when the market is in the right position, and my stock are in the right setups, I put my money on the line. And I take on as much risk as I am comfortable with in these situations (and it is more than the books will tell you to do.) And when the market is not in the right position, and my stocks aren't setting up, then I have zero money in the market (and that isn't what a lot of the common advice tells you what to do either). But it works for me. Find your own way, Toasterwater and enjoy the ups and downs.

11-11-2006, 04:51 AM	#48 (permalink)
kmr321 Member Join Date: Nov 2006 Posts: 41	thanks very much RT wolf that is exactly what i was looking for. I am in fact a uni student and so have limited funds but if you were to recommend some tools to begin trading what would you recommend? i was thinking picking up an investing magazine per week maybe some type of software to manage the information of stocks. Out of curiousity does short term trading or long term pay off more?

11-11-2006, 10:35 AM	#49 (permalink)
toasterwater Senior Member Join Date: Nov 2006 Location: San Diego, California Posts: 211	conclusion Okay, here it is. I started this whole thing less than a week ago, and i think ive already reached my conclusion. Im getting out. Now, i know what alot of you are probably thinking: "wow, i thought you said you werent gonna quit, what happened, lose a little money and get scared?". Nope. Thats not it at all. I am currently working full time, taking 2 college classes, and i have a fiance who lives on the other side of the world (long distance relationship= lots of time on the phone). On top of this, I have lots of personal development to work on. I figure that if im spending time working on investments, then im missing out on time that i could be investing into my intellect. I would like to get a little more into it someday, but right now it really just doesnt align with my goals. However, I dont want to completely abandon the stock market. I do need an investment with a little more return than my savings account. So i think ill just put the money into an index fund or something. So just to summerize: my new goal is to find an investment for my extra money that will yeild more than a bank account (or a lame CD- im looking for something closer to 10%/year) and that i dont have to invest much time into (id really like to use the "get it and forget it" strategy. So if you have suggestions on how to go about doing this, Im all ears! (and i know that there are lots of suggestions previously, but i would like to divert the rest of this threads interests into that) Thanks for all of your help!

11-11-2006, 10:46 AM	#50 (permalink)
kmr321 Member Join Date: Nov 2006 Posts: 41	ay so im still interested in what you did learn if anything from your time in the stock market

11-11-2006, 09:27 PM	#54 (permalink)
reuben Junior Member Join Date: Nov 2006 Location: Poland/Sweden Posts: 13	I have been trading stocks too. However i traded that for forex which i now do exclusively. Someone might have already pointed to this but if you are a complete noobie when it comes to any form of investment or speculation i suggest getting yourself a demo account first. When i started out i spent more than a year on the demo account before i commited any real money. Its a great way to see if your really into trading, if after a year of playing and learning you are still around maybe the stock market or other markets might be something for you Any other fx traders here?

11-12-2006, 08:21 AM	#55 (permalink)
kmr321 Member Join Date: Nov 2006 Posts: 41	i have read a little about FX trading. Mind sharing your experience and explain a little about this?

11-12-2006, 09:45 AM	#56 (permalink)
reuben Junior Member Join Date: Nov 2006 Location: Poland/Sweden Posts: 13	Starting with what?

11-12-2006, 12:58 PM	#57 (permalink)
kmr321 Member Join Date: Nov 2006 Posts: 41	the beginning umm say the FX engine and the idea of FX trading.

11-12-2006, 01:49 PM	#58 (permalink)
reuben Junior Member Join Date: Nov 2006 Location: Poland/Sweden Posts: 13	Your request could be a life time study I suggest that anyone interested should read the very basics at maybe investopedia.com or babypips.com. Here is a link to "forex" from wikipedia Foreign exchange market - Wikipedia, the free encyclopedia One more thing i want to stress. Never buy any online courses, pdf's or whatever. If the author claims that he can teach you to make say a 100% a month hes obviosuly a liar. Not because such returns are impossible, but because that if he could really do it he would be a billionaire in a year or two, and he certainly wouldnt bother to sell any online courses. Everethying you need to know to be a part time, small scale investor/speculator is available for free on the internet.

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

Personal Development for Smart PeopleTM Forums

Personal Development for Smart People^TM Forums