Investing in the Stock Market.

[Contender]

I'm going to do some investing this summer, before college.

How should I begin?

I want to choose my own stocks, so I need a firm that will just handle my transactions for cheap - that's all; I don't need their advice. I can handle it myself.

What firm offers the best deals? From your experiences, which is the best firm to work with for this summer in my pursuit of profiting from the Stock Market in hopes of getting extra cash for college.

I'm going to subscribe to the Wall Street Journal and the New York Times; what else should I do to stay on top of the Business News?

Please give me some advice to stay on top of the financial market situation so I know when to pull out ASAP to save my profit, and when to invest to reap capital.

 

[Anomalous]

Good luck!

 

[red_headed_stepchild]

Start by establishing a cash account with a couple thousand in it. This is your emergency fund and it's purpose is to prevent from taking money out of your investments should something come up.

Forget stocks. Begin with mutual funds, preferably no load. Unless you have a good $ 25,000 to start with, I wouldn't even think of playing in the market. People do, but I advise against it. If you want to play that game, closed end funds trade like stocks and offer the diversification benefits of a mutual fund.

Begin with an asset allocation fund (variety of investments, usually stocks and bonds but different than a balanced fund), and build that to about $ 5000. Then, move that into 40% value, 20 % international, 20 % small cap, and 20 % corporate bonds. This gives you a balanced, somewhat aggressive portfolio that you can build up to around $ 30-40,000.

Once you have about $ 10K, you can start playing the market. Start by buying options. Buying a call gives you the right to buy a stock at a certain price. Buying a put gives you the write to sell at a certain price. This let's you get used to playing the market without taking on undue risk. You can't lose more than the price you pay for the option.

By now, you should know enough to go into the market and make moves, without being an AMC (Average Market Chump.)

 

[red_headed_stepchild]

Take a few economics classes when you get to college. It makes a valuable minor if you become interested in it.

Read the Journal in this order, everyday. Read the 'What's News' on A1. Turn to the inside page and there is an economics article. Read it until you understand the article then turn to section C. Read 'Abreast of the Market', then credit markets, then the dollar. In whatever order you want, read the mutual fund article, 'Small Cap Focus', The Dollar, and international markets. Then go back and read 'Heard on the Street.' Do this everyday for 1 month and you will be amazed at what you learn. Don't worry if you don't understand everything right away, it will come.

Always remember, go make some money, but don't be greedy.

 

[Bible_Belt]

oil & defense

IBD is better than the WSJ.

 

[WesCottII]

If you've never played stocks before, it's often wise to do a test run.

Give yourself an imaginary sum of money, and play it out like you had to money, just to see where you'd end up.

 

[SELF-MASTERY]

Are we talking long-term or short?

 

[lauke]

Bad time to invest because of the current up and downs. Big Ben Bernanke is having fun with his rate hikes.

IBD 100 is the only thing useful in IBD. Every thing else is garbage. It talks about a "cup with handle" chart pattern, but you see that pattern only after the stock has already soared. Their buy signals are screwed up also.
Get the online wall street journal for news - it doesn't offer much advice in investing like the IBD does, but IBD is bad unless you're a fundamental investor.

Mutual funds = too slow and too many expenses. I'd rather invest my own money than let some body else do it

If you have no idea what I talked about, practice first with simulator.investopedia.com. If you do, try scottrade as a firm.

 

[Contender]

Good luck!

Thank you.

Start by establishing a cash account with a couple thousand in it. This is your emergency fund and it's purpose is to prevent from taking money out of your investments should something come up.

Forget stocks. Begin with mutual funds, preferably no load. Unless you have a good $ 25,000 to start with, I wouldn't even think of playing in the market. People do, but I advise against it. If you want to play that game, closed end funds trade like stocks and offer the diversification benefits of a mutual fund.

Begin with an asset allocation fund (variety of investments, usually stocks and bonds but different than a balanced fund), and build that to about $ 5000. Then, move that into 40% value, 20 % international, 20 % small cap, and 20 % corporate bonds. This gives you a balanced, somewhat aggressive portfolio that you can build up to around $ 30-40,000.

Once you have about $ 10K, you can start playing the market. Start by buying options. Buying a call gives you the right to buy a stock at a certain price. Buying a put gives you the write to sell at a certain price. This let's you get used to playing the market without taking on undue risk. You can't lose more than the price you pay for the option.

By now, you should know enough to go into the market and make moves, without being an AMC (Average Market Chump.)

It's a good strategy; I'm even a bit lost, but I'm seeking a short term investment, for now - just for the summer.

I had some experience before. I played the Virtual Stock Market Games; I never lost money. I only profitted from the market.

Take a few economics classes when you get to college. It makes a valuable minor if you become interested in it.

Read the Journal in this order, everyday. Read the 'What's News' on A1. Turn to the inside page and there is an economics article. Read it until you understand the article then turn to section C. Read 'Abreast of the Market', then credit markets, then the dollar. In whatever order you want, read the mutual fund article, 'Small Cap Focus', The Dollar, and international markets. Then go back and read 'Heard on the Street.' Do this everyday for 1 month and you will be amazed at what you learn. Don't worry if you don't understand everything right away, it will come.

Always remember, go make some money, but don't be greedy.

I learned my lesson about how self-destructive greed can be from the Stock Market Game ("fake" investments). But, thanks for the advice. I needed to hear it again.

I copied and pasted your approach to reading the Journal to my desktop. Once it starts to come, I will read those recommended sections. Thank you.

P.S. I took A.P. Economics in High School, if that counts. I'm graduating High School this year (June/2006).

oil & defense

IBD is better than the WSJ.

Defense... good point. Our government is investing a ton of money into that, especially since the North Korean iincident ecillated due to prospective Missle tests, that are not supposedly rumors to gain attention from the U.S. government.

Oil, on the other hand, is a little unstable. It's too risky to invest in oil, unless one is a millionaire.

Though, if I lose money... it won't hurt me. But, if I gain money... it'll be awesome. I can get the things I need for college.

If you've never played stocks before, it's often wise to do a test run.

Give yourself an imaginary sum of money, and play it out like you had to money, just to see where you'd end up.

I did. I did fairly well. I made a 10% profit in a week.

Are we talking long-term or short?

This is going to be a short run - lasting as long as this summer. If I do well, I will consider pursuing it throughout college. I'll buy those blackberries with the profit and keep track of the stocks like a soccer game at the World Cup.

Bad time to invest because of the current up and downs. Big Ben Bernanke is having fun with his rate hikes.

IBD 100 is the only thing useful in IBD. Every thing else is garbage. It talks about a "cup with handle" chart pattern, but you see that pattern only after the stock has already soared. Their buy signals are screwed up also.
Get the online wall street journal for news - it doesn't offer much advice in investing like the IBD does, but IBD is bad unless you're a fundamental investor.

Mutual funds = too slow and too many expenses. I'd rather invest my own money than let some body else do it

If you have no idea what I talked about, practice first with simulator.investopedia.com. If you do, try scottrade as a firm.

The Market gained confidence with a recent report that the hikes in IR will not affect CO. profits, hence the surge on Wednesday.

It's not that bad. A wise investment will reap profit, regardless of the economic circumstances - unless there is a depression.
--------

Is it worth the $ to subscribe to investor's business daily?

 

[Bible_Belt]

Having a timeframe of a few months makes you a trader, not an investor.

fwiw, if you started this thread on elitetrader.com, everyone would tell you that you are about to lose all of your money. I wish you success, but the market has a way of smacking down optimistic newbies.

 

[Contender]

Having a timeframe of a few months makes you a trader, not an investor.

fwiw, if you started this thread on elitetrader.com, everyone would tell you that you are about to lose all of your money. I wish you success, but the market has a way of smacking down optimistic newbies.

I'll update this with my results. I'm off to invest this week. I picked a firm to work with. I'm set. And, don't underestimate this newbie.

...to be updated.

 

[Bible_Belt]

Pride is your biggest enemy.

Set your stop loss points and stick to them, or else one loser will wipe you out. I was a broker at a day trading firm, and I got to help guys lose their money. Commissions, spread, slippage, keyboard errors, Internet outages, education - all of these cost money. But what wipes everybody out is the one stock that they are just certain is a "good company," so they hold a bigger and bigger loser. If it goes down past your stop, sell it and move on. One big win pays for several small losses. Each trade should have at least a 3/1 reward:risk ratio. Stop losses keep good traders in business. Not sticking to stops is a glaring sign of an amateur. Pro traders get fired for letting losers run.

Again, good luck.

 

[red_headed_stepchild]

If you're going to play the trading game, go learn options. Those are probably your best bet. By August, this market's gonna break out, one way or the other. I'm strongly leaning towards down. We'll know after the August Fed meeting. Buy some spreads that go out until at least October. You'll profit if the market takes off or tanks. If you want to go all out, go short some stock and buy some calls to protect your downside. You'll make a mint if the market tanks.

 

[Contender]

Pride is your biggest enemy.

Set your stop loss points and stick to them, or else one loser will wipe you out. I was a broker at a day trading firm, and I got to help guys lose their money. Commissions, spread, slippage, keyboard errors, Internet outages, education - all of these cost money. But what wipes everybody out is the one stock that they are just certain is a "good company," so they hold a bigger and bigger loser. If it goes down past your stop, sell it and move on. One big win pays for several small losses. Each trade should have at least a 3/1 reward:risk ratio. Stop losses keep good traders in business. Not sticking to stops is a glaring sign of an amateur. Pro traders get fired for letting losers run.

Again, good luck.

Thank you for the great suggestion. That was my biggest problem in the Stock Market Game... I never knew when the best time to sell, and due to that greed I lost a large sIf you're going to play the trading game, go learn options. Those are probably your best bet. By August, this market's gonna break out, one way or the other. I'm strongly leaning towards down. We'll know after the August Fed meeting. Buy some spreads that go out until at least October. You'll profit if the market takes off or tanks. If you want to go all out, go short some stock and buy some calls to protect your downside. You'll make a mint if the market tanks.um of money (approx. 2,000 in one day).

I'll be sure to set a limit as to when I should sell a stock if it's falling.

If you're going to play the trading game, go learn options. Those are probably your best bet. By August, this market's gonna break out, one way or the other. I'm strongly leaning towards down. We'll know after the August Fed meeting. Buy some spreads that go out until at least October. You'll profit if the market takes off or tanks. If you want to go all out, go short some stock and buy some calls to protect your downside. You'll make a mint if the market tanks.

Very good point. The Fed is also meeting very soon, too. I'll stay tuned to the news to see which direction the market is likely to turn, and hope for the best if there are good reasons to believe it will lean in a particular direction.

 

[red_headed_stepchild]

Chicago futures are estimating the odds of a June Fed inncrease at 100 % and August at 79 %. I heard them mention 3 rate hikes for the first time yesterday. The question is not if the Fed will or will not raise. The question is if the economy will be able to handle the increases.

 

[DrMetallica]

Don't invest in individual stocks. You'll learn an expensive mistake, lol. I suggest reading more about the stock market, how corporations create value and increase their share price, and even what a stock is and what it means. For a newb you should check out Vangaurd and talk to one of their representatives. I think the minimum for their funds range from $1,000 to 3,000 to 25,000 to 100,000 investments, so obviously if it's your first time get one with the lowest minimum investment possible. If you get a good, diversified fund, you can probably expect 10%, which is the market rate. Good luck!

 

[Call_Me_Daddy]

How much money have you investors made? How did you guys get started... if not the market?

 

[madgame]

How much money have you investors made? How did you guys get started... if not the market?

I started at 14 or 15 years old..I know it sounds strange ..but my dad was amazed by the stock market and all (like every adult at some point in their lives I guess) and I remember..I bought like one share at first...for a few hundred bucks...and to be honest I have no idea what made me buy that stock (?!?!) anyways..it was kinda funny b/c it's price hardly changed for months..it basically stayed the same for several months...then i sold it..and got more money b/c of a ...I dont know what its called in english, but here theres this event which ppl have at 14 or 15 and they get money like on a birthday but usually a lot more...so I had several hundred bucks to start with.. combined.. that time I read a lot lot lot more about the whole thing before I got started and had grasped the main principles (stop-loss prices, using diversified portfolio, some forms of charting technique (exp.) to determine my stop-loss prices and recognize trends in which to buy in etc.) and basically I ended up buying stocks like Nokia, Dell and internet stocks like AOL and yahoo over the years, which went basically up through the roof and multiplied their prices (and were WAY overrated at some point in time)..plus of course some stocks which didnt go that well, but in those cases I cut my losses using stop-loss prices.........and then also sold the stocks which I was successful with keeping most of the gains I had made, before it was too late (some stocks like yahoo...and a WHOLE LOT OF other internet stocks for example went pretty much all the way back down, if I remember that right).

Afterwards I tried investing/trading (I was never really a long-term investor, nor a real short-term trader) again, did have some success overall (definetly modest compared to that internet stocks time of course...), but after selling the last 2 stocks I was invested in (made gains with one of them, and slight losses on the other one..), I haven't started again, b/c I figure right now I have around 6000 dollars left (AND have had a lot of useful experience for the future), which right now can make a lot of my wishes (travelling) come true, whereas when I start to work after college, I assume 6000 dollars might be a nice amount of cash, but definetly not worth as much to myself, as it is now...

Plus, I've come to realize, that I can't count on having nearly as much success as i did with those internet stocks again, any time soon...but hopefully my experience will help me make decent gains when I have a job and enough money to start investing again. Basically, I think I need to find a system which does prove to work over the long haul (so you know it's not just luck)...and I have to admit, that I'm not sure I have such a "system" yet (though I think I have some decent approaches/ideas)...and I can't really focus on that too much at the moment, because I have to study for college and all that and dont have the energy for that...plus I don't need to be invested in the market in order to find such a system, because it should be able to be done by using past stock market data and/or investing in hypothetical portfolios (exp?I mean by that portfolios which you put down on a paper or a certain website sort of thing, without having any money invested)...and if you can make that work, you're gonna be able to make it work with real money, too (without depending on luck)...and if you can't you don't really need to be invested in individual stocks (in that case I think a combination of GOOD funds, mostly things like a dow jones or s&p 500 fund would be the way to go).

I honestly do believe though, that by applying some basic principles (as in a "system") to the stock market should allow one to outperform the market in the long run. For example..according to probabilities and statistics...if I bought 10,000 random stocks right now (just a wild example) without doing anything else or thinking about the stocks I bought, I should perform exactly as well as the market (I assume 10,000 is definetly a high enough number...its all technical after all). So if one can apply principles, like using stop-loss prices..and figuring a good way out to set them (there are different ways to do that...using technical analysis for that is my favorite, though I'm not a firm believer in most of the 1000s of concepts of technical analysis...or just saying soon as it drops 20% under its highest price, etc.)...plus combining that with the right sort of stocks (volatile vs. long-term or middle-term ones..where as i prefer the middle-term ones), I think one should be able to outperform the market over the long haul (by which I do NOT mean double your money every year ;-)).

Plus, I'm studying economics and will specialize in statistics/econometrics, which I hope will allow me to be able to detect such principles, that will allow me to do that (statistical regression analysis for example deals with exactly that sort of problems..as in you try to find out which things have an influence on the outcome of something and how heavily they influence them etc...i know people do apply that to the stock market already, though I dont know how many are successful with it). I see that as one of the most promising ways of outperforming the market, actually...

 

[Bible_Belt]

I worked for the two largest proprietary trading firms after getting a series 7 from a boiler room stock brokerage. Both of my employers eventually went out of business after the stock market volatility died down. I made enough to justify my small paycheck, but not much more. I was a little too late to begin trading and missed the best days in 1996-99. When you trade firm money, you pay commissions to them. The rate is not especially low, but someone with no money of their own can't complain. I had a lot of fun with that $300,000 account. We did a lot of volume. My average nyse trade lasted a few minutes because it is a slower system, but my average nasdaq trade lasted less than a minute. Those were the days...

 

[sanyo7878]

invest in chinese companies!!