Stock Market

[Dream Seller]

I know a lot of you guys deal in stocks and shares, so I thought I'd ask the question here.

I was thinking of getting into the stock market, and I want to start out trading shares with a small amount of money. I was wondering what the best way to start this would be? I have minimal knowledge in this field, so any books or other recommendations would be much appreciated.

I was going to start an online shares portfolio with help from an investor. From what I've heard, you can hire guys online to make a portfolio for you so that you can start trading and get your feet wet whilst learning the business. What's the best way for a guy just starting out to get involved in this?

Any help would be much appreciated.

Cheers,

 

[Dream Seller]

It'll fail, like you. GTFO

This is a positive forum for self improvement. Stop posting negative rubbish that doesn't help anyone.

 

[jon3947]

Stocks are at an all time low take advantage of this now before its too late

 

[classy broadside]

Buy coal. Right now. Why? Read the first few pages of James River Coal Company's earnings call transcript here: http://seekingalpha.com/article/96528-james-river-coal-company-q2-2008-earnings-call-transcript

Summary:

1. China's building coal plants by the HUNDREDS, if not more. They want coal, and America's exporting to China. Other coal exporting countries are constricting their exports significantly to fuel their own growth (Russia, Vietnam, etc.)

2. Coal supply contracts with power companies are expiring. Usually these last for a few years. So right now, they've locked in prices from earlier in this decade. But once they expire, coal companies can negotiate much sweeter deals with today's market in mind.

3. US stockpiled supply is dwindling fast.

4. Winter's coming.

Disclaimer: I do own coal industry stock, but not in James River/JRCC.

 

[classy broadside]

I'm getting too excited for myself, but --

Here's the meat of the international coal market (from JRCC transcript):


---
On the international market as I mention we see a lot from China, we
see a lot from India, but its happening around the world. Alstom, I
didn't talk about it, but on the last slide on the international
market Alstom is one of the largest builders of coal fire generation
and their backlog continues to go up and up and up and they discussed
it on their calls and they discussed in their press release; its
coming from around the world, it's not just a China and India issue.

As some of you know, I was in Europe in May for a couple of weeks.
What I would startled by was how many plants are currently under
construction and I sat down with somebody from India had dinner with
them one night and they laid out for me all of the numbers on the
plants that are being built today, that will come online in 2011 and
2012 and it really is stunning when you look at the numbers and you
realize just how much coal it's going to take to fuel those power
plants.

Then this last bullet, Resource Nationalism; this really came from an
interview with a Minister of the government of Vietnam and he did an
interview back in February or March and what he said in essence was
they were cutting their exports to China and when the interviewer
asked him why, he said that's our coal. We need our coal and China can
get their coal somewhere else.

I don't know if there was something that was lost in the translation
or what, but it was incredibly stark with the message that he was
sending that they are building coal fire generation in Vietnam and the
China will no longer be able to rely on Vietnam for as much coal as
they had in the past. So, as I was reading that the term that came to
mind for me anyway was Resource Nationalism and as I've traveled
around and talked to people around the world, that theme keeps coming
back again, again, again. "

 

[Alle_Gory]

Unless you know what you're doing then DON'T TRADE STOCKS!

If you want to get started I recommend a virtual portfolio.

I use the free portfolio web-app provided by the Globe and Mail. It keeps track of your trades, and it doesn't cost anything since its not real money.
To get some knowledge of stocks, go to Investopedia and start reading.

Until you are good at predicting market trends, don't buy stocks. Learn the rules first. Then play the game.

And don't take advice from people on the internet. Make your own judgements on which stocks to pick, and when.

 

[Alle_Gory]

Stocks are at an all time low take advantage of this now before its too late

... so you can piss away all your money since you don't know what you're doing.

There you go. You missed the other half of the sentence.


Never mind that its a general statement that has no meaning. There are thousands, upon thousands of stock options available. And only a few dozen to a few hundred are low.

Tell me. What does YOUR portfolio look like?

 

[classy broadside]

Unless you know what you're doing then DON'T TRADE STOCKS!

If you want to get started I recommend a virtual portfolio.

I use the free portfolio web-app provided by the Globe and Mail. It keeps track of your trades, and it doesn't cost anything since its not real money.
To get some knowledge of stocks, go to Investopedia and start reading.

Until you are good at predicting market trends, don't buy stocks. Learn the rules first. Then play the game.

And don't take advice from people on the internet. Make your own judgements on which stocks to pick, and when.

Investing is like dating:

1. Investments are about taking risks. Never forget that.

2. The fastest way we learn is when heed the lessons derived from getting burned/lose money.

3. There are no rules in investments. Each stock's different. Look at the trends, the industry, the cashflow, the balance sheets, the technicals. Learn how they operate.

4. Nobody can predict where a stock's ultimately going to go. We're all just educated gamblers.

5. Selectively take advice from people on the internet. I sold stock once based on hunch and a random, totally untrustworthy post on a Yahoo! stock board. That act made me incur a 17% loss, but saved me from a 99% loss.

 

[Alle_Gory]

1. Investments are about taking risks. Never forget that.

Calculated risk. Not knowing anything about investing is like going to play blackjack at the casino. And you don't know what blackjack is.

2. The fastest way we learn is when heed the lessons derived from getting burned/lose money.

So you're recommending that someone who has no idea about investing should begin to invest money blindly so that they will learn lessons on what not to invest in.

Smart.

3. There are no rules in investments. Each stock's different. Look at the trends, the industry, the cashflow, the balance sheets, the technicals. Learn how they operate.

I agree.

4. Nobody can predict where a stock's ultimately going to go. We're all just educated gamblers.

5. Selectively take advice from people on the internet. I sold stock once based on hunch and a random, totally untrustworthy post on a Yahoo! stock board. That act made me incur a 17% loss, but saved me from a 99% loss.

Thanks for the anectodal evidence. But this is an individual judgement call. I would only take advice from;
a) A qualified investor who's history I know.
b) General consensus from a large group of less qualified investors.

 

[Teflon_Mcgee]

So you're recommending that someone who has no idea about investing should begin to invest money blindly so that they will learn lessons on what not to invest in.

I think that's fair. Once you learn the basics then you are wasting major time by playing with "virtual trades."

All education has a price. Put up your money, go in with real expectation (i.e. you know you probably going to lose), and pay close attention to your mistakes and success.

One book I read a while back was a profile of common millionares. One major consensus was that you just have to start doing. That's how you learn.

Experience is a b!tch but it provides the best lessons.

 

[Alle_Gory]

I think that's fair. Once you learn the basics then you are wasting major time by playing with "virtual trades."

No. The virtual trades are a test to see if you know what you're doing. If a trader can only rack up losses, do you recommend he begin spending his hard earned money?

One book I read a while back was a profile of common millionares. One major consensus was that you just have to start doing. That's how you learn.

Too vague. Which book is this?

Experience is a b!tch but it provides the best lessons.

That is true. But the whole point of trading stocks is to make money. Not to throw it away on dozens of trades in a row that only lose money.

Yes its risky. But the risk is minimized once you know what you're doing.




To the OP:

1. Begin reading Investopedia, and get a general idea.
2. Make a virtual portfolio and begin trading using your basic knowledge.
3. In the meantime, get some quality books and publications on business and the market.
4. Once you see that you can make some money in the virtual account, then begin to spend your money. I recommend an online discount broker for this. Some are shady so do your homework.

 

[Hooligan Harry]

I know a lot of you guys deal in stocks and shares, so I thought I'd ask the question here.

I was thinking of getting into the stock market, and I want to start out trading shares with a small amount of money. I was wondering what the best way to start this would be? I have minimal knowledge in this field, so any books or other recommendations would be much appreciated.

I was going to start an online shares portfolio with help from an investor. From what I've heard, you can hire guys online to make a portfolio for you so that you can start trading and get your feet wet whilst learning the business. What's the best way for a guy just starting out to get involved in this?

Any help would be much appreciated.

Cheers,

OK, a lot of odd advice in this thread which seems to have missed the point.

If you are looking to learn the best way to do it is to start reading as much as you possibly can. Remember that investing in the markets is complex. You have shares, forex, commodities, futures, etc. So it can get a little complicated. The equity market is something part time investors need to avoid. Dont have the time to do the research required.

That does not mean you dont invest in equities. If you want to invest in the local stock market immediately I would suggest you look at managed funds. These are funds that are managed by the banks and other experts. A good one would be to invest in the top 500 companies for example. You can do this with a monthly contribution just like paying your car or rent. You spread your risk and your money moves up and down based on the performance of all of them.

For example, you could decide to put your money into mining stocks. Or retailers. You choose the index and you throw money at it like a savings account. If extra cash comes in you pump it into there.

There are a lot of free online trading simulators around. Use google and see what you can find. Some will be a pay for service but it would be worthwhile. This will show you how trading works and allow you to practice

My advice is that all amateurs need to leave the equity market alone. You want access to it buy into managed funds. Speculation will cost you money. Forex and commodities should be considered. A little easier to manage yourself. You can concentrate on the movements of a few currencies (just the majors for example) or a few commodities. You trade on the movements.

The difference is that buying managed funds is a long term thing. Trading on forex and commodities would be something you do 5-6 times a day. If you buy equities buy to hold.

 

[Luveno]

It's been shown that on average, mutual funds have the same returns as lay-investors. That means despite the experience and education of mutual fund managers, they are no better at picking stocks than John the drycleaner down the street. Of course, mutual funds charge you for their services...

You won't make a dime if you listen to news reports on the next big stock: by the time the news covers it, the price has already hit its peak. Too little, too late.

The best thing to do is to invest in things that you are already interested in or have experience in. For instance, if you are a pharmacist, you would have a better idea about which pharm company to invest in. You would be able to compare their drugs and policies in an accurate manner. If you're a mechanic, look for companies that are creating things that you think would be useful for a mechanic or machine operator. Read their policies and reports, and compare them.

Before you do all of this, you have to find a good book that'll give you the basics on the market. The best one by far is "The Intelligent Investor" by Ben Graham. Nevermind this "Rich Dad, Poor Dad" crap - that's just motivational speaking. The Graham book is the best investment book written. It goes in depth. It makes logical arguments. There is no fluff contained within its pages. If you have a hard time reading it, you don't really care that much about investments and making money. Make the effort!

Never invest blindly. Never invest money you don't have. Never invest money you need for living. Never have an emotional attachment to your investments....sounds kind of the same as dealing with women, no?

 

[SmoothTalker]

Those toy accounts can be pretty useful. But be careful, in my experience people always do better in the toy accounts than they will with real money.

Not sure if that's because you aren't executing actual orders, so there are no delays, etc, or just because you think more rationally since its not your real money. But if you start a practice account and do really well, don't jump into betting your life savings right away for real.

 

[guywhoneedshelp]

Buy stocks now, yes, but don't expect to see that money for awhile...

Well, the economy SUCKS right now, which has resulted in a decrease in consumer spending, and stocks like General Mills seem to be doing better and better because people are only spending money on the necessities (for the most part.) and cereal is an inexpensive breakfast alternative.

Well, stocks like AIG and FNM (Fannie Mae) as well as FRE Freddie Mac are ridiculously low, and because of the bailout we may one day see they rise again. Is it time to buy? Absolutely, but...

1. Not everyone will recommend you to buy low stocks because these companies may not even be around for much longer if this bailout doesn't go through as planned. Washington Mutual's stock right now is at 16 cents a share, and they just got bought by JP Morgan and Chase. Less than a year ago, investors who got in at $30 a share are losing terribly now.

2. If you want to invest in something, invest in a Gold stock. Gold is the only thing that is really guaranteed to rise in value, because of inflation and the fact that unlike paper money, it actually is limited.

Bottom line - great time to invest. But, don't expect to see your money for awhile. It wont be by Christmas. As a shareholder in AIG and Gamestop I know that I'll eventually make money off of buying low but it wont be any time soon.

 

[Alle_Gory]

If you want to invest in something, invest in a Gold stock. Gold is the only thing that is really guaranteed to rise in value, because of inflation and the fact that unlike paper money, it actually is limited.

Platinum is great too.

 

[Dream Seller]

Buffettology

Thanks for the advice so far, guys. It seems everyone has their own particular investing style and that no one system is flawless.

I've started off my quest by reading Buffettology about Warren Buffett's investing strategy. His style really resonates with me and seems to make a lot of sense.

What he does is he looks for companies with what he calls a "durable competitive advantage." These are companies who are managed well and will naturally rise back to the top even after taking hits in the market. Companies that have a brand recognition that have been operating for a long time (Coca-Cola, Nike, H&R Rock, etc).

He then waits for these companies to take a hit (like in a bear market, industry recession or something) and he invests as much as he can in them. This investing strategy is what has made him the richest man in the world. He exploits a downturn in the market when other investors are following the make a quick buck now, bandwagon style of Wall Street.

I figure this style makes a lot of sense in the current market. Everyone's taking a hit, so I guess if I invest in durable competitive advantage companies that have proven track records, then they'll eventually rise back up and I'll make increases on my initial investment. Sounds like a really good strategy, especially in these troubled times.

Anyone read Buffettology?

I know it's only one system for investing, but does it make sense to the more experienced investors on the forum?

Oh, and I'm looking to invest in the British stock market, so any specific advice relating to that particular market would be much appreciated.

Cheers,

 

[Teflon_Mcgee]

If your goal is to trade then this is not a good way.
If your goal is long term investments then I don't see a problem.

It's really hard NOT to make money using a strategy like this over a period of 5, 10, or 20 years. You have the history of the market on your side.

Of course, diversification is still important. Look at some of the giants that went under or are sinking fast right now. Some have been around a 100 years and were prime targets for Buffet style investing.

Thanks for the advice so far, guys. It seems everyone has their own particular investing style and that no one system is flawless.

I've started off my quest by reading Buffettology about Warren Buffett's investing strategy. His style really resonates with me and seems to make a lot of sense.

What he does is he looks for companies with what he calls a "durable competitive advantage." These are companies who are managed well and will naturally rise back to the top even after taking hits in the market. Companies that have a brand recognition that have been operating for a long time (Coca-Cola, Nike, H&R Rock, etc).

He then waits for these companies to take a hit (like in a bear market, industry recession or something) and he invests as much as he can in them. This investing strategy is what has made him the richest man in the world. He exploits a downturn in the market when other investors are following the make a quick buck now, bandwagon style of Wall Street.

I figure this style makes a lot of sense in the current market. Everyone's taking a hit, so I guess if I invest in durable competitive advantage companies that have proven track records, then they'll eventually rise back up and I'll make increases on my initial investment. Sounds like a really good strategy, especially in these troubled times.

Anyone read Buffettology?

I know it's only one system for investing, but does it make sense to the more experienced investors on the forum?

Oh, and I'm looking to invest in the British stock market, so any specific advice relating to that particular market would be much appreciated.

Cheers,

 

[Dream Seller]

ETFs

So, in my research, something that is continuously coming up is the subject of ETFs (Exchange Traded Funds). A lot of people seem to hold these up as the hidden gem of the investing world. Anyone have any experience with these? Is the rumour true that they are the holy grail for guys investing with small amounts of money.

They basically track an index on the stock market and invest small amounts into thousands of companies. I hear the Vanguard one is like investing in the entire stock market. So I was thinking maybe that's a good idea right now with prices in the stock market so low. Is it a good idea to get on the ETF bandwagon now when the prices are so undervalued, because they will get back up to their previous values? Seems to make a lot of sense.

Any ideas?

Cheers,

PS, here's a link to an article about starting out investing $100 in ETFs: http://articles.moneycentral.msn.com/Investing/StartInvesting/StartInvestingWithJust100.aspx?page=1

 

[GQ_Confidence_1]

I know a lot of you guys deal in stocks and shares, so I thought I'd ask the question here.

I was thinking of getting into the stock market, and I want to start out trading shares with a small amount of money. I was wondering what the best way to start this would be? I have minimal knowledge in this field, so any books or other recommendations would be much appreciated.

I was going to start an online shares portfolio with help from an investor. From what I've heard, you can hire guys online to make a portfolio for you so that you can start trading and get your feet wet whilst learning the business. What's the best way for a guy just starting out to get involved in this?

Any help would be much appreciated.

Cheers,

I got into trading and stocks in 98, 99. And have been interested/been improving since. Some advice:

-Read about all the great investors. Even if you don't agree with them. Even if you don't think you can learn anything from them. Not everyone, but some investors are too closed off.

I read about Buffett, Charlie Munger (his partner) and Jim Rogers mostly. Just got the latest book on Buffett, "Snowball" today. 800+ pages. I skimmed a little of it earlier tonight.

One of the big things I take away from Buffett is, stop trying to know everything all the time. He doesn't try to predict the economy, oil, the FED, the Euro, etc. Key distinction...you can be successful with just a few decisions. You don't have to be doing something all the time.

-98% of what's written on the market is junk. It's overly simplified. Too much false precision. Thinking everything is nice and knowable and neat.

Technical analysis wouldn't tell you what's on Fannie Mae's balance sheet or Lehman brothers balance sheet. Looking at past trend lines or volume. It wouldn't have predicted these big decline lately.

There's so much dangerous information out there that gives you false comfort.

-Read historical books about the market, pre 1980. You'll gain perspective. Intelligent Investor is good. Reminscinces of a Stock Operator is good (written about the market in the early 1900's).

"Money Game" saved me alot of money. Written about the market of the 60's (it's considered a classic). Eerie parrallels to the 90's and 00's. Stuff you won't hear about on CNBC or the mainstream media.

-Focus on avoiding mistakes. If you buy a stock like AIG or a subprime lender and they go from $40 to $2, it's hard to make your money back. That's why all the big investors say, "rule #1, don't lose money".

-The market is mostly efficient. It's like geography and real estate.

California has beaches, great weather, mountains, movie stars in hollywood, etc....and 35 million people have figured it out already. Vs a little town in Arkansas where real estate is cheaper.

All the easy stuff is taken. If apple is doing well, and ipods are selling well...the stock is going to be high.

I would mostly focus on avoiding mistakes. Good books I've gotten things from...

Market Wizards
Reminiscences of a Stock Operator (considered an all time classic)
Any book by Jim Rogers
Poor Charlie's Almanack by Charlie Munger
Money Game - it's awesome.