View Full Version : Investing for dummies
AngelsSix
10-18-2006, 16:47
I was wondering if anyone here does day trading or online investing in the stock market. I am looking for some advice about who to use (TD Waterhouse, E-Trade, etc) and who to stay away from. Thanks!!
Warrior-Mentor
10-18-2006, 18:15
Are you looking for investing advice or gambling?
Perhaps, in accordance with the title of this thread, I would be remiss if not to recommend "Rich Dad, poor Dad" as the first book on a reading list for the novice "Investor". It provides the overall big picture of how money works without getting lost in micro details.
As for day trading, Warren Buffett, the second richest man in the world, recommends against it. Perhaps he'd be a good guy to get investing advice from...
AngelsSix
10-18-2006, 19:30
I will say I have talked for a few folks that have made some cash in trading, although none of them is a millionaire. I know every investment has it's risks. I am not a gambler, per say but I have jumped out of a few airplanes and off a few boats if that answers your question, sir.
;)
Surf n Turf
10-18-2006, 20:14
AngelSix,
Big difference between “Day Trading” and “Investing”.
"Day Trading" is like going to the Casino, with about the same odds.
If you want to read about how to best use these “trading firms”, They all have an introduction section on their web sites that discuss their investment philosophy, costs, minimum investment amounts, Margin requirements, and brokerage services, including research.
Prior to “getting in the game”, I recommend the following books:
One Up On Wall Street – Peter Lynch
The Intelligent Investor (Revised Edition) Benjamin Graham (Preface by Warren Buffett)
A Random walk down Wall Street – Burton G. Malkiel
All about Index Funds – Richard A. Ferri
Common Sense on Mutual Funds – John C. Bogle (in fact ANYTHING by Bogle is good).
Hope this helps -- good luck
SnT
x SF med
10-19-2006, 07:02
Try "Investing for Dummies" or take a few Corporate finance courses, or join your 401k - that way you only have yourself to blame for any 'errors in judgement'. Any personal investing is your responsibility, in all ways.
Team Sergeant
10-19-2006, 09:41
AS,
See a (big name) professional.
Investing is not a game unless of course you can afford to lose it all. There are some investments that are safer than others, some include high risk and some are out and out scams. It all depends on what you want and what level of risk you are willing to accept.
TS
And remember what Will Rogers always said:
"...out here I had been putting what little money I had in Ocean Frontage, for the sole reason that there was only so much of it and no more, and that they wasn't making any more..." April 13, 1930 (Note: this is the line that is often paraphrased to say: put your money in land, because they aren't making any more of it. This is the most "famous" of the Will Rogers quotes on land or real estate.)
Angel Six, when I am not a Rigger in the national guard, I am a Broker with UBS Financial Services. Feel free to PM me if you have any questions I can help you with.
82ndtrooper
10-19-2006, 12:32
First, day trading was a "Fad" that went by the wayside after the "Dot.Com" bubble burst and the technology sector plunged following that incident. Every single day trader relied on "CHEAP" trade execution costs due to turning their positions on a daily basis. This is not "INVESTING" it's gambling. All be it, with the help of firms like "E-Trade" "Fidelity" and "Schwab" that exploited the "Do it yourself " mantra for their personal gain with little or no concern for the investors/traders well being.
I would start with any book that explains the basics of investment theory, not a "how to" on reading charts, trends, and forecasting earnings growth with a simple PC related software program that was also promoted by the same company that exploited the "Do it yourelf" mantra. It's takes CFA's 3 years of study and testing and CFA board approval to obtain the "Certified Financial Analysts" designation, something that can not be done by reading a simple "How to trade" or "Get rich quick" paperback from Amazon.com.
Simple terms like "dollar cost averaging" and "asset allocation" will be covered in any book that is an investment theory driven writing by the author. Most with a 401-k will understand that investing is a long term goal, not a short term solution to financial woes.
Like Cj13, I have spent the last 18 years of my adult life with two major investment firms, Morgan Stanley and Merrill Lynch. One thing I do know after all this time, is that investing is not about "gambling" or " getting rich quick" It's about financial health, financial state of mind, and meeting clearly defined and outlined financial goals. In 18 years as a practitioner in the industry I have sold as many term life insurance policy's as I have traded large blocks of shares of fortune 500 companies.
82ndtrooper
10-19-2006, 14:43
AS,
See a (big name) professional.
Investing is not a game unless of course you can afford to lose it all. There are some investments that are safer than others, some include high risk and some are out and out scams. It all depends on what you want and what level of risk you are willing to accept.
TS
And remember what Will Rogers always said:
"...out here I had been putting what little money I had in Ocean Frontage, for the sole reason that there was only so much of it and no more, and that they wasn't making any more..." April 13, 1930 (Note: this is the line that is often paraphrased to say: put your money in land, because they aren't making any more of it. This is the most "famous" of the Will Rogers quotes on land or real estate.)
TS
Will Rogers quote addresses one simple concept..........."Supply and demand" Real estate, at least in the last 7-10 years has enjoyed a "HIGH" demand feature within the market place. the markets (Stocks) have enjoyed little growth over that same time period, hence the "Trend" factor in capital investments. As of yesterday the Dow Jones Industrial average hit an all time high of 12,000, but many investors in the markets are looking at their brokerage statements and wondering why they have not participated in that milestone. The answer is complex, but can be put into simple terms. If you didn't own any of the Dow Jones Industrial Average stocks, then it's likely you were out in OUTER SPACE trying to capture a market trend and overweighting your assets in sectors of the market place that only held "Promise" not real earnings and cash flow. At least not yet.
Every millionare, at least on paper, has the majority of his or her capital tied up in real estate and stocks. Real estate being the major holding. Cash flow is king, and rental property's and sales of raw land for development have made many more millionares than any one stock, that is unless you've been lucky enough to have been granted a stock option for 25,000 shares of your company that were exercisable at a much higher price that was actually relized at the time the option was exercisedand the shares were sold at the time of their exercise. Moral of the story. Real estate holds promise for the very reason that Will Rogers states. Theres no more being made, and if you own enough of it, your going to be offered something for it in the future and, in most cases, at a much higher price than originally payed.
IIRC, When asked how long he holds a stock, Warren Buffet replied, "Forever."
Something to consider.
82ndtrooper
10-19-2006, 16:06
IIRC, When asked how long he holds a stock, Warren Buffet replied, "Forever."
Something to consider.
That he does !!! He's currently a 38% share holder in Berkshire Hathaway, and with that ownership he's able to hold the seat of Chairman of the Board. He also holds major stakes in both Coca Cola and Gillette, both of which had suffered huge on paper losses despite his unwillingness to sell his shares. He also admits to "Missing" the "Dot.com" and "Tech" boom during the 90's. But, has said if he cant "SEE" the company and it's balance sheet into the next 10+ years, it's just not his gig.
'The Oracle of Omaha" As he's greatly called, still lives in a home he purchased for $31,500 and enjoy's cheesburgers and quotes Mae West.
AngelsSix
10-19-2006, 16:08
Thanks to all of you for your advice. I was curious how many people actually used a firm as opposed to "going it alone". Seems like most folks feel more secure using a firm (seems to take away the personal responsibility in the decisions). I would rather decide where to put my money myself if at all possible. Seeing what happened when the bottom dropped out of the market still creeps me out. But we aren't talking larg sum of money here. I only have a few thousand; I thought I would give it a whirl and see what happened.
Thanks to all of you for your advice. I was curious how many people actually used a firm as opposed to "going it alone". Seems like most folks feel more secure using a firm (seems to take away the personal responsibility in the decisions). I would rather decide where to put my money myself if at all possible. Seeing what happened when the bottom dropped out of the market still creeps me out. But we aren't talking larg sum of money here. I only have a few thousand; I thought I would give it a whirl and see what happened.
AS-
Go with a frim, it still your money you still get to choose where you put it.
Day trading it fun, but you have to have someone still tell you what is good. Us common people don't get all the Info. I did it with Yahoo back in 96, but haven;t done it much since.
Go with a frim or a friends wife or husband, and PM cj13. Rich Dad, Poor Dad is really good and simple reading. Check out your libary for it.
Surf n Turf
10-19-2006, 19:41
I was curious how many people actually used a firm as opposed to "going it alone". Seems like most folks feel more secure using a firm (seems to take away the personal responsibility in the decisions).
AngelSix,
Using a firm, and “going it alone” are not in conflict.
I use two firms (Vanguard / Schwab), and make all my investments decisions (both good and bad) myself.
I do my own research, selections of stocks / bonds, allocation / Account Balancing, etc.
I use the Broker only to execute an order (to Buy or Sell) – never to decide what I buy or sell.
SnT
Sacamuelas
10-20-2006, 10:36
I imagine you have already taken care of this issue A6.... but I will post it anyway just in case.
The smartest investment you can make is to MAX out ALL your retirement plan avenues before you put any money into other investments. You automatically make (aka save) your income tax portion of that money you would have paid to Uncle Sam. Just this can range anywhere from (15-35%). On top of that, it grows tax free. There are VERY few investments that will beat uncle sam's tax portions plus the interest the money makes while invested in your retirement account. I know.. it's not sexy and fun... but it is the first baby step to take before trying to "play the market", IMO.
I just had this conversation with my neighbor. He was wanting to put a few K into something that sounded profitable and interesting, yet he wasn't saving anything into his 401k this year.:rolleyes: To me, that is just pretending and being naive.
Good luck A6.
82ndtrooper
10-20-2006, 10:55
I imagine you have already been taken care of this issue A6.... but I will post it anyway just in case.
The smartest investment you can make is to MAX out ALL your retirement plan avenues before you put any money into other investments. You automatically make (aka save) your income tax portion of that money you would have paid to Uncle Sam. Just this can range anywhere from (15-35%). On top of that, it grows tax free. There are VERY few investments that will beat uncle sam's tax portions plus the interest the money makes while invested in your retirement account. I know.. it's not sexy and fun... but it is the first baby step to take before trying to "play the market", IMO.
I just had this conversation with my neighbor. He was wanting to put a few K into something that sounded profitable and interesting, yet he wasn't saving anything into his 401k this year.:rolleyes: To me, that is just pretending and being naive.
Good luck A6.
Agree !! Assuming one is maxing out his or her company sponsored retirement plan, and company stock purchase program, then "Playing the market" with some extra cash might or might not be a wise idea. If your not insured (Life) then that extra cash flow shoud be budeted to a life insurance policy that fits your personal needs. Protection of income or loss of income protection is first on my list when evaluating ones financial make up. Life insurance and disability insurance (loss of income insurance) is not sexy, but in the spirit of responsible financial decisions, it's the one financial intrument that you just might find your self needing more that sexy stock that your neighbor tipped you on during your Saturday afternoon at the kids soccer game. I have yet to see an insurance company not PAY UP when a death claim is filed, or a sudden disability hits your family income earners by surprise. It's all preparation for what we dont see that makes the difference.
As Sacamuelas states, the tax benefits of the 401-k plan are two fold. Most of your contribution, or at least half if your maxing out your contribution limit are deposited on a before tax basis from your income earned and all capital gains and investment income derived from the 401-k are tax deferred until retirement. People often over look the tax deferral of investments that have thrown off income from dividends and capital gains should you take profits by selling one of your options in the plan durint the calendar year. Where else can you cheat the IRS and it's perfectly legal ??
Just my .02
BMT (RIP)
10-20-2006, 11:21
If the DEFEATOCRATS regain power just put you money in high yield CD's. :D
BMT
Sacamuelas
10-20-2006, 11:35
If the DEFEATOCRATS regain power just put you money in high yield CD's. :D
BMT
NO way... When that happens, I am going to sue somebody or some company which has more money than I do, go on disability because of my soon to be diagnosed chronic depression over the progress of the war and the direction of the country, receive food stamps, start using the ER as my family practitioner for routine visits, and obtain HUD housing with cable TV. I will then get a no interest GOV loan with a fat grant to startup a low income small business. I can then hire a bunch of illegal aliens to work there for sub-par wages and increase my profits. I will probably be able to live nicely with a family of four after all the "public assistance" programs they will enact take effect. :rolleyes: LOL
Surf n Turf
10-20-2006, 13:48
NO way... When that happens, I am going to sue somebody or some company which has more money than I do, go on disability because of my soon to be diagnosed chronic depression over the progress of the war and the direction of the country, receive food stamps, start using the ER as my family practitioner for routine visits, and obtain HUD housing with cable TV. I will then get a no interest GOV loan with a fat grant to startup a low income small business. I can then hire a bunch of illegal aliens to work there for sub-par wages and increase my profits. I will probably be able to live nicely with a family of four after all the "public assistance" programs they will enact take effect. :rolleyes: LOL
Sacamuelas,
To late, there are already 12+ Million ahead of you in line -- and their relatives are coming soon.
SnT