The Stock Market
I have a ING checking account that started with a 4.00+% APY and has dropped to sub-1.50%. I am beginning the process of investing/trading because I want to make more money with my money. I just signed up for Etrade but have not transferred any money just yet.
I get the basics of the stock market, but do not want to assume anything (since this all regards real money). Has anyone read anything about stocks/trading that was particularly helpful? Do you have any sites that are good for news/research about future investments?
I am really trying to drop all naivety here. Not only is this serious stuff, but I want to understand and succeed at this. So I’m moving slowly. But I want to make purchases soon because I have a feeling some companies are preparing to bounce back in 2010 from the current economic troubles.
Comments
You can read up on basic sites like CNBC, Bloomberg, etc. But the best advice on stocks is to buy what you know, buy what you like, and buy what you use and in companies that you trust. That’s much better than actually trying to follow trends that are being read by thousands upon thousands of other people who will follow the same advice based off of them reading the same news article as you are.
I would hold off for now on buying anything since the market is on somewhat of an upswing. And unfortunately I think it’s a false upswing because after the market crashed, companies adjusted their forecasts and laid off more people so that led to not as dismal numbers as many people had thought. So ultimately the market is high because a lot of companies said “Hey, we didn’t do SOOOOOOO badly this past quarter!!!!!” but the fact is that 1) The numbers were still bad, and 2) Once you’ve gone to the well of lay offs and productvity once, it’s harder to sustain and you still need sales, etc.
So I think things are going to go down again within the next 3-6 months. So I would avoid buying until you hear the general mood start to get a little more sour.
Paris — my boyfriend is a financial advisor for AARP and he loves all that stock stuff. I just handed over my Roth IRA information so he can help me make better choices and guide my financial future. If you’re interested, I can shoot you his email and you two can talk shop.
That all sounds good. My timeline for purchasing was definitely was definitely set to start in 2010 sometime. So I’ll spend this fall and winter just casually reading and getting cozy with what’s happening.
You’re still young and can risk losing your money. So daytrading may not be the worst thing. But it’s certainly not a safe thing. And possibly not even a smart thing, unless you have a lot of money to play with and you can absorb a lot of loss.
Mutual funds are the way to go. They do the research and spread your money out over a number of stocks. You can get records of how various funds have performed and pick the ones that are right for you. Some are obviously going to take more risks than others, but these are more likely to reap big rewards. These are also the ones that killed me in September’s crash (i’m in five funds all together). Keep an eye on Goldman Sach’s fund. They’re the only one that didn’t hurt me in September and they’ve got people in every level of government (an ex-GSer currently is running the treasury).
If there were one stock I’d say you should invest in, it’s Apple. It’s a little high right now and may drop again, but many analysts are calling for it to triple in three years’ time. If it hits 145, or even 150, I’d say dump some money into it. I would right along side you if I had any spare cash to do so that isn’t going to be tied up in house downpayments and whatnot.
But yes. Mutual funds. They’re safe, smart, and as close as you can get to a guarantee for returns. Currently, I’m up 25% for the year on my mutual funds. That’s a hell of a lot more than your 1.25% in ING.
You can go with safe stocks that always do well, McDonalds, Coca Cola, Exxon or something like that, but you probably won’t see huge returns. You could also throw it all into Berkshire Hathaway (Warren Buffets company), but I think even a single B share is like $3,500, and doesn’t do as well as the A shares, which are more like $100k each. The CNBC folk are often yacking about ETF’s, which are like a mutual fund index that is then traded on the market. They have those for all levels of risk, length, price, etc.
Another thing I should add is that you should invest for the long-hual. Unless you like gambling and are trying to make a quick buck, find some investments that have good ratings over long periods and dump your money in there. Then forget about it. Don’t even look at it. You’ll be too tempted to take it out in a decline.
Also, put your money in whatever place you’ll be trading now. It will sit in the equivalent of what would probably be a money market fund which is about the same return as a basic savings account. And when the time is right it makes it easier to buy.
The last thing you want is to be ready to buy, have the market go down to the point where it makes sense to buy something, but then have to wait a few days to transfer the money to be able to trade.
John said:Another thing I should add is that you should invest for the long-hual.
I’m defnitely in for the long-haul. But not that long. For most of the money that I hope to make, I’d like to use for purchasing a house. However, I do not expect to buy a house for a few years.
Kevin said:Also, put your money in whatever place you’ll be trading now.
I was just reading that at Etrade and did it.
If you get a few stock picks in mind that you have your eye on, watch where they go. Most brokerage places show their quotes with things like 6 month and 1 year highs and lows. If you see something inching towards either of those benchmarks but it’s still a reliable stock, then you might want to consider buying. Especially if the dip in price is the result of a general market decrease.
For instance, I bought both Jones Soda stock and Intel stock on the same day at their 52 week lows. The Jones Soda is tanking and that’s a company that is not particularly established and could risk going out of business altogether and me losing my money. The Intel however is such an established company that when it hit that low along with the market it really had no place to go but up and there was/is no danger of them completely tanking.
Subscribe to and read the wall street journal for a few months. Read articles, take notes, keep an eye on the stocks discussed. After a while you’ll get a better sense of the market and particular companies.
J-Man, did you ever end up taking the plunge? I am in the same boat right now, and grappling with all of the same questions. I have a few stocks I am interested in, but I’m hesitating to pull the trigger for some reason I can’t explain. Is it even worth it to start an ETrade account with like $5k, or should I be dumping more in?
Trying to pick stocks like that simply does not make sense. You’re gambling. Pick a mutual fund of some sort that diversifies your money and put it in there. You’re much closer to a guaranteed 10% gain on the longterm than you are with buying individual stocks. Sure if my dad had kept the Apple stock I made him buy back in 2003 and bought the Google stock I told him to buy when they first went public, he’d have made a shit-ton of money. But he has also invested in individual stocks that went kaput and he ended up breaking even — much less than he would have had he invested in mutual funds from the start.