How to buy a stock?

[Skyline]

I wanted to start my first investment in stocks. I was looking at Toyota, despite a bit of a bump, because I know they're planning to release the next generation Supra either this year if not next year.

How do I buy/sell a stock?

 

[synergy1]

First - You will get a lot of different information and suggestions from people who post here. This is because everyone has a different background, different attitude towards risk, and different skill sets. What works for me might not be what works for you. For example, there are a few people here who use something called "options" ( Basically insurance for stocks) that even I would stay away from, and I have made money in the stock market.

Second- Buying stocks, like anything else requires one thing. Time. The one common thread between myself, or anyone else is that we all put the time in to understand what we are investing. For you since you do not understand the stock market, should put time into answering a few basic questions

1. How can a business raise money?
2. What is a publicly traded company?
3. What does a stock certificate represent in simple terms?
4. If I was to invest in a friends new company, what would be important for me to look at?

third- Once you have some knowledge of stock background, you need a broker. You can get a regular broker, or sign up for a discount broker ( TD ameritrade, Merrill edge etc). These will charge a commission for every trade you do.

fourth- Start doing your homework. Read some books. If you like a company, delve into its annual reports. A stock isn't a price that goes up and down ( unless you are a technical trader of sorts), its a company. People put a ton of time into researching the cars they buy, the houses they purchases, but virtually none into the stock market.

last- If you really want to get into the stock market, my only recommendation for someone is to invest in index funds. These funds are an agglomeration of all the major stocks in a major index. In the long term, these out perform mutual funds, most hedge funds, holding cash, or bonds. Other than that, I will not make recommendations.

And oh yeah, you will lose money. Make sure it is money that you can afford to ( at least temporarily) lose.

 

[Tenacity]

I wanted to start my first investment in stocks. I was looking at Toyota, despite a bit of a bump, because I know they're planning to release the next generation Supra either this year if not next year.

How do I buy/sell a stock?

Just curious, but why do you want to invest in something that you don't understand? Is it because you HEARD it was an efficient investment?

synergy covered a lot of information but make sure to understand the statement that's near the end of his response, and it's in reference to LOSING MONEY.

Tenacity has never lost money doing any investment because I never (absolutely never) invest in something that I don't know everything about. When I say everything, I mean everything. I also don't invest in anything I can't control.

With Stocks, you can do all of the research known to man on the companies you are going to invest in, and variables outside of your control can cause your stock prices to decrease.

With Bonds, as long as you hold it until maturity and the company doesn't go bankrupt, you are pretty much guaranteed the return of principal and on time payments of interest.

With Stocks, after going through the volatility cycles of up and down, up and down, up and down, the theory is that over time (10 year period, 20 year period, etc) you should have a net POSITIVE return of 6% - 12%. But as synergy said, it's all about the right TIMING. You could be about to invest in Stocks when they are about to head into a down cycle, in which they ARE, because the moment the Fed Rate increases the Party is over for Equities in terms of this massive growth. Stocks are way OVERVALUED right now.

But nevertheless, the BEST investment you can make is starting a small profitable business. If you are within good timing, take your 6% - 12% per year average Stock Market returns over time and take your 5% - 8% per year average Bond returns over time, and they are NOTHING compared to operating a profitable small business.

So you invest $5,000 into a small business that generates $10,000 in revenue in one year. That's a $5,000 profit or a 100% return. Do this same thing over and over each year, you are getting a 100% return each year.

So I promote the concept of Investing In Yourself through owning a small business and doing things to get career promotions (like another certification, license, degree, etc).

The returns from Investing In Yourself will always be higher than Stocks, Bonds and Real Estate (unless Real Estate is operated as a business as well which technically counts as Investing In Yourself since you are operating that business).

Me personally, I invest in a business office that I operate as well as in Bonds and CDs. I do not invest in Stocks AT ALL. I do not like the up and down shyt, I do not like the fact that my investment is devalued due to dumb shyt occurring in another industry sector of the Stock Market that has nothing to do with my companies, I don't like the fact that my companies are devalued based on what other investors think of them even if their analysis might be totally OFF...etc, etc, etc.

I personally am sick of the Financial Community only promoting the Stock Market or Bonds, and totally avoiding other type of investments. Understand that the richest people in the country (Millionaires and Billionaires) DID NOT get that way through Stock Trading or Buying/Holding Stocks. They did it through OWNING BUSINESSES.

 

[Skyline]

Thanks for the response guys, I still have a lot to read on but I was just curious on how it actually worked.

 

[The_flying_dutchman]

Bruh, I would first do some fantasy stock trading to get yourself familiar with it. You can google fantasy stock websites which gives you monopoly (play) money to simulate transactions.

Once you feel comfortable and are ready to invest real money, the next step would be to open an account with a brokerage like Merill or Charles Schwabb etc....

You can't buy stock directly, like, say, buying a lottery ticket, you can only buy them through a brokerage.

 

[Bible_Belt]

There's a good simulator on this web site: http://www.wallstreetsurvivor.com/

 

[Billtx49]

Knowledge is power which in all instances equals money when utilized
Properly. If you have to ask for
Knowledge on this forum, you are bass ackwards.

 

[logicallefty]

There's a good simulator on this web site: http://www.wallstreetsurvivor.com/

I'd like to try this out. Any suggestions on what to do first in there?

 

[Bible_Belt]

My gf took a college class that used it. I just told her what stocks to pick.

It was a summer course, so in a 6-week period the class competed to have the best return on their fake investment. Everyone in the class ended up about plus or minus 1%. Her account was up 10%. Take that, random walkers.

Scanning is what you want to practice, picking out the stocks that meet your criteria. cbsmarketwatch has a good site, yahoo has a little bit for free. Scottrade used to give away a free real-time scanner.

I was taught to trade only off technicals. The problem with fundamental research is that anything you can learn is going to be factored into the price already. And when there's news, the stock will always move before the news, even when your news comes from the same expensive Dow Jones or Bloomberg service that everyone else has.

I look at a list of 52-week highs, priced $2-10, decent volume, and then start looking at charts. Sideways consolidation a little off the high is a good thing. It's also a positive if the price has been much higher in previous years. Every position has a stop loss in mind; if it goes up, the stop price will trail it upward to try to lock in profits. Short positions are the opposite, taken from 52-week lows.

 

[taiyuu_otoko]

check out investors business daily (investors.com).

It's got a pretty good system that I've used for a number of years with plenty of success.

However, getting your hands dirty is the best way, as experience is the best teacher.

I'd recommend spending a couple K as your tuition (money you "invest" with, and plan to lose, just to get experience) while at the same time reading anything you can on the markets. That way you can "test out" any system.

However, given the current economic conditions, the idea of buying the next Home Depot or Dell is not very likely. So you're going to have to be VERY NIMBLE (e.g.get OUT when you need to) if you want to make money, or more importantly PRESERVE YOUR CAPITAL.

 

[Tenacity]

check out investors business daily (investors.com).

It's got a pretty good system that I've used for a number of years with plenty of success.

However, getting your hands dirty is the best way, as experience is the best teacher.

I'd recommend spending a couple K as your tuition (money you "invest" with, and plan to lose, just to get experience) while at the same time reading anything you can on the markets. That way you can "test out" any system.

However, given the current economic conditions, the idea of buying the next Home Depot or Dell is not very likely. So you're going to have to be VERY NIMBLE (e.g.get OUT when you need to) if you want to make money, or more importantly PRESERVE YOUR CAPITAL.

I don't think he should plan to invest anything just to lose it to gain what some people call "experience," if you are going to invest to lose, then do what everybody else does and go invest it in the titty bar. Take that couple grand that you refer to and go buy you some tail with it, AT LEAST you get a good time in the process and don't just lose your money to a very flawed "financial casino" that is the Stock Market.

There are sound investment strategies that can be followed (even with investing in stocks) that make it so that you don't LOSE any of the principal.

What it comes down to is efficient learning, too many people are so quick to rush out and start "investing" without actually taking the time to know what the heck they are even investing in. This is what I got into it with over at City Data with their Investment Community. Their mantra was, spend 5 minutes online comprehending the definition of a stock and a bond, then go open a Brokerage account and get started today! I was literally the only guy on that Forum that had an alternative voice and of course, they didn't like that.

Again I don't do stocks, but I do know that if you are buying sound companies at a discount, tying options to them and other sound management going forward, it's rare that you are going to just up and lose your principal with a very conservative strategy like that. If you are just running out and throwing money into companies because, well, you "use" their product or you LOVE their product, without looking at the fundamentals of said company...you are pretty much on the road to losing money.

 

[prison/con.net]

read that paper and William ONeal's book, HOW TO MAKE MONEY IN STOCKS. Open several bottom dollar brokerage accts, Use their free services as far as they will let you, then close each one out and move your $ to some other such outfit and repeat. Do this for at least 6 months. "Paper trade", without actually buying stocks, just track what WOULD have happened, for at least 6 months, a year is a LOT better, cause many things are seasonal, even once per year sort of events. Use your library's interlibrary loan and E books to read lots of books about investing. ALWAYS have an exit plan, as in a -10% of buy in price "stop-loss' sales order entered. Move that stop loss price as needed when the stock price goes up, or have it set as a %, if your brokerage offers that option. you buy on both fundamentals and the charts, and you sell by the charts. Main thing is NOT LOSE ANY capital. If you can do that during the "lows", and just make halfway decent other decisions, you'll make money. But there can be years when it's not wise to be in the market AT ALL