Stock Market help...

[OHgolfnut]

Hello everyone,

I'm not sure if a topic like this has been posted yet. If it has, I'm sorry for making another topic. I tried searching but didn't find anything.

OK...where do I begin? I'm 26 years old and have a few K to play around with. Anyways, I've done some research online and got a lot of different opinions. At this time in the economy, should i consider investing in the stock market? Mutual Funds?.....retirement? What are the basics of the market? Blue-Chip stocks, etc.? I'm clueless, sorry. Or should I consider some other method of investing?

Any help would be greatly appreciated! Thanks a bunch!

[Pinseeker81]

If you're debt free and have an emergency fund already, go with a Roth IRA in growth stock mutual funds with at least a 10 year track record. Right now stocks are way down (which for those of us who don't freak out about such things means they're on sale ), but 100% of 10 year periods in the market have made money. Even with 9-11, and even with the great depression.

Best thing about a Roth is that it grows tax FREE.

If you have debt other than a mortgage, paying that off or down would be a far better investment.

[OHgolfnut]

Nope, no debt or house payment, etc.. That's why I want to invest. I heard the same thing about stocks being on "sale". Say you pick up a few and then 10-20 years from now they sky rocket. That wouldn't be a bad investment, eh? I do know that a lot of people do freak out during bad times. BUT, they knew that the market has it's ups-n-downs and although it may take a few years to get back on track, it'll get back on track.

[Fraser]

As someone who works (or more accurately, has worked until recently!) in the financial and investment planning business Pinseeker's advice is wise.

Things aren't looking great at the moment, and even though the major indices have shown a bit of a run over the last couple of weeks the fundamentals of the economy aren't great, it is more as a result of a change in the stance the government is taking with TARP (Google the term) and banks and companies in trouble.

As a young guy like yourself (I'm only just 25) I'm not too worried about the markets in general, well other than I'd like to be earning money so I can dump more cash into the market! Short term things don't look great but it always evens itself out and you end up on top. We aren't out of the woods by any means yet but a lot of stocks are cheap. I was talking to someone yesterday who has invested in a KBR. They are trading in the $13 level, yet have something like $7/share in cash! That's the kind of silliness that's going on at the moment.

The key is to find broken stocks, not broken companies. Even watching something 'Mad Money' on CNBC which does have more of a day trading focus to it rather than long term investing will give you some good basic ideas on things like diversification, investing with companies that have good shareholder dividend yields, reading up and analysing the facts about companies rather than buying on hype. Sometimes though even common sense works! In a recession when everyone's credit cards are being reined in and people are tightening their belts is it a good idea to buy tons of Apple stock, a company that relies on discretionary spend? I suspect there are better places to put your money...The President Elect has made it clear that there is to be a large investment (I've heard over $1 trillion mentioned) in natural gas and also an update of the transport infrastructure so consider looking up and reading on various companies that could benefit from that.

You mention you have a "few K to play around with". Usually I'd recommend a dollar cost averaging approach (you don't buy in chunks but might spread it across a few months to minimize risk) to both buying and selling stocks, particularly in markets like this where you can see double digit percentage losses in one day. However, since you are investing a small amount of money you could be killing yourself in commissions through the buying phase, even with a small number of companies.

[OHgolfnut]

  Fraser said:

As someone who works (or more accurately, has worked until recently!) in the financial and investment planning business Pinseeker's advice is wise.

Thanks again for your input. I actually picked up the December issue of "Money" magazine. I think that it's a really good issue. They're actually talking about what we're talking about. Buffett was actually talking about buying stocks at a fraction of the cost, and so on. I could be wrong, but I think that I read something a while back about a "melt down" in I think it was '73...? Something like a 40% loss...? It took like 3 1/2 years just to get back to where they first started, and then the profit(s) "took off". Like I said, like you said, I/we're young. Even if there is a economic crisis in the market, or whatever, even if it takes 20 years, I'm sure that it'd be worth it. Granted, a person who's older than we are may be worried about investing now. Most of them are like "Sell...sell...sell" but...you can't think like that. This may be off topic, but, say "you" break your neck, or your arm or something, or had some major surgery..."you" wouldn't expect to be back to tip-top shape the next day now would "you"...no, it'd take time. Although "you'd" be in a lot of pain, "you'd" be thinking to "yourself" "It's going to take some time but I'll be OK", it just takes some time to heal. Again, look at '29. Everyone thought the world was going to end. Some people hung in there and those people were probably glad they did.

[DaveLeeNC]

Don't invest in the stock market until you have done enough research to answer the very questions that you have asked. I would start with the following two books.

1) A Random Walk Down Wall Street by Burton Malkiel
2) The Four Pillars of Investing by William Bernstein

Good luck.

dave

[ganjagolfer]

watch "mad money" with jim cramer to learn about the stock market, he's the greatest

[ganjagolfer]

bernanke and the fed needs to listen to cramer

[Fraser]

  ganjagolfer said:

watch "mad money" with jim cramer to learn about the stock market, he's the greatest

I think it is unfair to tar Cramer with the idiot brush on the basis of a handful of bad calls and the fact he likes to liven up his show a bit. This guy is on TV every every weekday giving people advice on certain stocks, it's natural to make a few goofs.

He had Bob Steele of Wachovia on the show and asked him about the bad mortgages WB had. Steele vastly underestimated the value of those bad loans so Cramer recommended it as a buy...then a few weeks later the truth came out and Cramer had to take it back as the stock went to the dogs, even more!

[OHgolfnut]

Well, here's what I found out so far:

I spoke to a reputable advisor today. She said that the best thing to do now would be to invest in a long term CD(s) or something, which would still gain a profit. From opening the CD(s) to the end of the CD(s) term, keep a very close eye on the market and study "this and that". Then, IF the market is looking good, take the investments from the CD's and invest in the market.

So, I guess that I have a lot of thinking (AND reading...thanks DaveLeeNC for suggesting some good books. I'll have to see if I can get a hold of those.) to do. I could always do that but still take like a small amount of what I have set aside to invest, and throw that small amount in the market. Just to take that chance.

[Shindig]

  OHgolfnut said:

So, I guess that I have a lot of thinking (AND reading...thanks DaveLeeNC for suggesting some good books. I'll have to see if I can get a hold of those.) to do. I could always do that but still take like a small amount of what I have set aside to invest, and throw that small amount in the market. Just to take that chance.

Suggestion: do NOT invest in individual stocks unless you have a very good idea of what you are doing. Mutual funds are the way to go. I'm a bit younger than you and I've been putting spare money into Vanguard indexes. My plan is to keep them in my Roth IRA until at least I'm 60.

[Fraser]

  Shindig said:

Suggestion: do NOT invest in individual stocks unless you have a very good idea of what you are doing. Mutual funds are the way to go. I'm a bit younger than you and I've been putting spare money into Vanguard indexes. My plan is to keep them in my Roth IRA until at least I'm 60.

Well that depends on the mutual fund and the investor.

If you want to be hands off and can get a low load one with good consistent performance then fine but some of them are so diversified you might as well get an ETF. If the fund is just a middle to low performing one (and with just a few K you don't have enough to spread it around) then you could be killing yourself in fees and not really beating the market.

[ScruffyScraper]

Buy Krugerrands.

The market is no better than a roulette wheel in good times.

[OHgolfnut]

  Shindig said:

Suggestion: do NOT invest in individual stocks unless you have a very good idea of what you are doing. Mutual funds are the way to go. I'm a bit younger than you and I've been putting spare money into Vanguard indexes. My plan is to keep them in my Roth IRA until at least I'm 60.

Yeah, I was thinking long term as well.

BTW...I've heard about and seen commercials for that Mad Money. Well, today, I decided to watch the show (it's on now). This guy, Jim...WHOA! lol, he probably drinks like 12 cups of coffee and drinks a case of Red Bull's before he goes on air.

[Ben]

Anyone know where I can find a list of stocks listed by price?

I recently opened an account at ShareBuilder and I have money to buy, but I want to pick up some inexepensive ones.

Thanks.

[DaveLeeNC]

  Ben said:

Anyone know where I can find a list of stocks listed by price?

While I don't have a ShareBuilder account, I have no doubt whatsoever that you can look up stock prices at their website (with an account number).

No offense, but it really doesn't sound like you have the knowledge to be a good investor in individual stocks. For example, if you think that a stock priced at $5/share is "cheaper" than a stock priced at $10/share, then you are not ready for the stock market (yet). dave ps. FWIW, I've done a fair amount of research and came to the conclusion that I am still not ready to invest in individual stocks.

[Ben]

I said "inexpensive" not "cheap." And no, I don't think $5 is cheaper than $10, its just that I have a limited amount of funds, and want to make the most of what I have.

That's why I'm looking for a list [by price] that I can look at. I miss the days of stocks listed in the Business section. So the question still stands, anyone know where I can find such a list?

[BCEagles722]

  Ben said:

I said "inexpensive" not "cheap." And no, I don't think $5 is cheaper than $10, its just that I have a limited amount of funds, and want to make the most of what I have.

I think what you're missing is that if a stock goes up 10%, you make just as much money if you have 5 shares at $100 or 100 shares at $5.

Obviously there is a better chance for a $5 stock to double or tipple over a few years (or to be bought out), but there is also just as much of a chance that the $5 stock will be cut in half or more. There are lots of bargains to be had right now. Do your research and you will be able to find a lot of relatively safe, profitable investments.