Hella SoSuave,

I've become really interested lately in investing and making money (who isn't? ).

I came across that silver thread and devoured all ten pages in one sitting - it was really interested because I agreed with a lot of the posters there. Namely, I'm not hugely interested in the stock market. I'm currently involved in an investing club, but it seems to me that unless you have inside knowledge, the stock market is simply a headache and not for the investor who's just starting out.

That said, I would like to invest some money. I haven't got much right now - about 100 Bahraini Dinars (about USD$265). If I can make a significant return on this investment, I may be able to get access to another $3000 dollars set aside in a savings account.

However, I have no clue where to get started! I'd love to hear your suggestions about where to put my cash and what to read.

Thanks,
Amo

I know you're eager, but the amount of money you have is so small, that it's very difficult to do much with it. Your savings account money isn't much, either, and if you put it into an investment with risk, then it's not a "savings" account any more. The thing about stocks, bonds, futures, options, forex, or any investment that tends to move a lot is that it is only appropriate to invest money that you can afford to completely lose, without it affecting your lifestyle. I can tell you from experience that doing so makes the psychological ups and downs a lot easier as well.

Here in the US, the various exchanges publish a lot of free material that covers the basics of investing on their respective exchanges. The agencies that regulate the markets do the same. You can contact them through their various web sites, and they will send you free stuff, or at least let you read for free on their site. Also, if there is a particular company that interests you, then you can call their office and ask for "investor relations." They are always happy to send you a ton of free information about the company, because they want to attract new investors.

There are a lot of web sites where you can "paper trade," which is simulated market trading. Here's one for US stocks: http://www.wallstreetsurvivor.com/

Other web sites I suggest, all of these are about US stock markets:
www.elitetrader.com
www.siliconinvestor.com
www.hardrightedge.com

You are forward-looking to desire to get into investing at your age.

What I would recommend is to put your money into a good, safe dividend instrument like McDonalds MCD or Kinder Morgan KMP while you are educating yourself about investing and wealth creation.

And personally, I do not follow the standard dogma of diversification; diversification is only necessary if you are scared, don't know what you're doing, or desire for your portfolio to suck wind. The perfect example of this is a non-performing mutual fund; for every stock going up there is one going down and your money is flat.

The way to succeed as an investor is to educate yourself, to the greatest extent possible, about all the ins and outs of one or maybe two market sectors. In my case, I am intensely focused on a small group of commodities: gold, copper, potash, uranium, oil. And within that realm, it is the mineral exploration industry that I am surgically focused on. Mineral explorers discover and prove in-ground resource deposits, then sell them to major producers. There is no market sector with greater risk/reward than mineral exploration (but biotech is comparable); you have tiny, financially worthless companies whose only assets are the claims they own and their intellectual capacity to gauge their worth and to discover in-ground resource assets. So these are companies that, metaphorically speaking, go from 0 to 100 in the blink of an eye--if they know what they are doing and, ultimately, if they have it in the ground.

So I had to educate myself about economic geology, about the telltale signs of exploitable minerals, about the life-cycle of mineral exploration companies, etc. That is where you gain leverage as an investor in any industry--the more you know, the better.

Of course, with such an intense focus on one or two industries, there will be many times that you will see a company take off in another industry and feel like you missed the boat. Don't. Companies are always succeeding or failing in every industry, but it is only by maintaining a laserlike focus on a singular industry that you are best able to spot the winners before they win.

And that, my friend, is the key to making money as an investor--you have to have the knowledge, the conviction, and the guts to buy a stock before the rest of the market finds out about it.

I check this link http://money.cnn.com/data/premarket/ every day before the US markets open (also Yahoo Finance, although their news stories are rigged or bogus with many typos/errors, also open up a few other websites, such as providentmetals.com, and one of my favorite traders to follow on youtube, twitter, and other blogs). Always set stop losses. Successful traders minimize their losses over time. Martingaling, or doubling down, may work sometimes, but over the long haul, you'll more than likely lose.

Since you are sooo limited at under $300, and if you are a risky guy, and are willing to lose All of that paltry amount, I'd suggest you try a penny stock with Good volume, Especially one that has to stay above $1 for 10 days to stay listed, a Liberal stock, one that can be manipulated, for whatever liberal cause, by big money makers.

I tried that play in PEIX (Ethanol stock, don't think I'd recommend it now just using it as an example of what I did) last year and lost (but could have gained if I'd sold when it soared on me - I'm dumb as a box of rocks for not taking my profits, getting too greedy plus I was working and didn't really have the TIME, which you have, to access my account and sell, sell, sell).

One that I made money on end of last year was BWEN (wind energy). I would not necessarily buy it right now, but I'd monitor it IF I only had $250, and make a decision when to jump in. It's one that has to be above $1 for 10 days before the end of a date in March (I forget). I have no position in either of these pennies currently, and you could lose ALL of your money in anything so, be careful. But if you don't take risks, you don't learn a damn thing in life. "Nothing ventured, nothing gained" - an older friend of mine used to say all the time.

I made the most money when I bet Against (shorting) the market last year than when I went long on anything. This year may be different. People have been calling what's going on now in this low volume stock market, a "melt upward." With little volume (down 27% from January of last year, and 38-40% from January of '10), the markets can be skewed easier by big money and the High Frequency Traders (70% of all trades made in nano-nano seconds by extremely sophisticated computers employed by investment banks).

Before you follow the excellent advice from these other guys, make sure that you read Rich Dad Poor Dad by Robert Kiyosaki. That short book will prime your mind for the more advanced material mentioned above.

Vice said:

Before you follow the excellent advice from these other guys, make sure that you read Rich Dad Poor Dad by Robert Kiyosaki. That short book will prime your mind for the more advanced material mentioned above.

Click to expand...

21 years of age and you know it all. Amazing. That book was part of the scam that was the late 90's. That book is the reason so many men are broke.

Connections, come from the right sperm, and/or sleep with the right older men. That is how you make it in America or ANY country on this planet.

BigJimbo said:

21 years of age and you know it all. Amazing. That book was part of the scam that was the late 90's. That book is the reason so many men are broke.

Click to expand...

Care to elaborate on this?

Vice said:

Care to elaborate on this?

Click to expand...

I can elaborate where he cannot.

Kiyosaki's central thesis was using credit to purchase properties and to build wealth (as equity) by renting them out and thus allowing your renters to pay for the principal.

Kiyosaki's book was correct for the time, but it was only an effect--not a cause--of the housing bubble. It was through government manipulation of interest rates and credit, and such entities as Fannie & Freddie, that the housing bubble was caused. When a central bank mandates interest rates and money supply, it (intentionally, in the case of housing) creates a distortion of the market by essentially forcing money into one asset class or another. The predictable result, from the crash of 1921 to the crash of 1929 to the recessions of the 50's to the stagnation of the 70's to the housing crash of 2008, time and time again, is the boom and bust cycle. Sometimes it's stocks, sometimes it's commodities, and this time it was real estate.

So Kiyosaki and the people who jumped into the real estate business--whether it was mortgage brokers or banks or house flippers or residential builders--were not the cause of the housing bubble, they were just doing exactly what the government wanted them to do.

I dislike Robert Kiyosaki as well as he promotes dangerous and erronious practices. He also disparages education and even promotes insider trading. "rich dad" never existed. he wrote a fabricated story to make money. The text reads as if it is trying to create a cult following and has no actual advice. For example, he recommends buying a stock that pays dividends. he says very little beyond this. To each their own.

For a younger person who is set on investing, I'd suggest they get a grasp on the basics and learn how to do due diligence. Understand the mechanisms of the stock market, how to purchase equity, how to research a company, and what matters to you in a purchase. Everyone's metrics are different, so while he is saving some money to invest, he can be learning and understanding the mechanics of the market. Buffetology, and Intelligent investor outline principals for good fundamental value investing. I read those and learned a lot.

My advice right now is to:
-Don't try to "play the market": never play a game you don't fully understand. If you know exactly why these penny stocks are soaring or imploding every day, then feel free. Otherwise you're just a lucky guesser. Even more, if you lose 100% of the money (which is possible and likely), you won't even gain experience from it because it's just too fast, too complicated. I'd say only try the super-risky stuff if you are a REAL expert.

- Pick a couple of companies that have solid assets (so they can't just evaporate in a week), and analyze what they've been doing the last couple of years. Look at their products, are they good and in demand? Also analyze their yearly brochures (I don't know the exact English name), does their business plan sound good to you?

- Always remember that stocks don't represent the current value of a company, but only what most people THINK. So your No.1 goal is to somehow find a company that is just about to start making great profits. Some time will pass until the company is in the news and everybody knows it. If you are confident in the company, you MUST buy before this time is over. Then the stock will rise, AFTER everybody gets the news.

- Read up on stock psychology. Generally, most amateur investors will intuitively make very bad decisions, trade at the wrong times, etc. Read some articles on the subject and you know what I mean.

I can recommend any book by Peter Lynch on the stock market. This is for safe and long-term investors. Pick the youngest books, but although the electronic age has accelerated the stock market, the information there still applies.

Julius_Seizeher said:

I can elaborate where he cannot.

Kiyosaki's central thesis was using credit to purchase properties and to build wealth (as equity) by renting them out and thus allowing your renters to pay for the principal.

Kiyosaki's book was correct for the time, but it was only an effect--not a cause--of the housing bubble. It was through government manipulation of interest rates and credit, and such entities as Fannie & Freddie, that the housing bubble was caused. When a central bank mandates interest rates and money supply, it (intentionally, in the case of housing) creates a distortion of the market by essentially forcing money into one asset class or another. The predictable result, from the crash of 1921 to the crash of 1929 to the recessions of the 50's to the stagnation of the 70's to the housing crash of 2008, time and time again, is the boom and bust cycle. Sometimes it's stocks, sometimes it's commodities, and this time it was real estate.

So Kiyosaki and the people who jumped into the real estate business--whether it was mortgage brokers or banks or house flippers or residential builders--were not the cause of the housing bubble, they were just doing exactly what the government wanted them to do.

Click to expand...

However, I believe to say that it was a scam is kind of wrong, since you said that his thesis worked at that time.

Hell, it STILL works TODAY. I see people do it every day.

Those burned by the housing crash were speculators and those who failed to have a basic understanding of said boom and bust cycles. I've noticed that the ones who remain, are the ones who got into the business AFTER the crash, or were the ones who have been in business long before the crash.

However, I do sense a hint of ulterior motives in some of Kiyosaki's writing.

A homework assignment for the fledgling investor: perform DD (due diligence) on Canadian potash explorer Allana Potash and tell me what you learn, and what you can infer about the future of this company from what you learn.

Vice said:

I do sense a hint of ulterior motives in some of Kiyosaki's writing.

Click to expand...

Making a book dumbed down enough with enough feel good garbage that everyone and his dog owns a copy and so he can sell his overpriced garbage advice and make more money.

Excellent businessman. Kind of sleazy but it works.

Alle_Gory said:

Making a book dumbed down enough with enough feel good garbage that everyone and his dog owns a copy and so he can sell his overpriced garbage advice and make more money.

Excellent businessman. Kind of sleazy but it works.

Click to expand...

All I know is that his material opened the door for me for the more sophisticated material, I started learning when I was 18 and honestly needed "dumbed down" material.

Kind of like when I first started learning pickup; first it was stuff like Mystery Method and this website, then David DeAngelo, then RSD, then the material that THEY used to create their material.

A good book to read is "Leverage" by Karl Denninger. It won't tell you how or in what to invest, but it will give you an understanding of the dangers of abusing credit/debt.

I wouldn't bother if I were you.

Investing works if you have money, its generally lousy if you don't have much.

I wouldn't make a play in the metal or equity markets with anything less than $5000 or better $10,000.

You will likely never get rich or wealthy from stock market investing, or metals for that matter.

Even a 1,000% increase, still only turns your $1,000 into $10,000.

-----

I don't invest in metals as a means of making money. I choose to put a portion of my savings into the market instead of into a bank account. You tend to barely break even with a bank account including all hassles, fees, and inflation.

I get 10-20% interest in my investment portfolio the past few years.

--

For a person with a little knowledge, common sense and who isn't afraid to take a little risk, its a superior place to store money. Passive investing, I only check a few times a year now.

Investing works if you have money, its generally lousy if you don't have much.

Yeah, that was my story for a long time, trying to catch the tech boom stocks of the 90's without having any money of my own.

Other people's money is the way to go when you have nothing, but if you're not exceptionally well qualified or well connected, it's a long crawl to get there. I eventually got up to about a million bucks of OPM in intraday buying power, and it was a lot of fun.

But then my third employer in a row went out of business, because the markets changed. Computers doing program trading started taking over the daily volume. Trading against humans is fun, because you can see when they get emotional and do stupid stuff, and then you can exploit them for a profit. Trading against computers, unless possibly you are a computer, is no fun at all.

The easiest OPM to find will be in whatever scene is booming. People are more likely to trust you with money that is their recent profits. It's like playing with 'house money.' The other thing about a boom is that it attracts a lot of dumb money. When you aren't qualified to be in charge of someone's money, you can still do it by being one of their foolish investment decisions. Then you will get your shot, which is all that matters. Otherwise, you should go to an Ivy League college and major in math and probability.