getting into stocks and making money

[dingo]

Originally Posted by stracing also learn about tax implications in your country on profits you make, thats probably the hardest to grasp i reckon. in australia, you pay tax on profits and if you lose you make some sort of deductions. but paying tax on profits pisses me off.

there are ways around that, its great making a big profit and then keeping 100% for yourself.

(not that I do this, never know who is reading )

[dangerously_cool]

Capital gains tax--try to hold your stocks for more than a year and you get a discount. Of course if you're in the US, you have marginal tax brackets.

My dad and I have a portfolio, it's really a good idea, and in terms of advice, I'd tend to stay away from the car companies. The only company I'd invest in is BMW. Toyota may be doing well on the surface but they've got negative cash flow just like the big three and they're moving into very risky territory in South America. They're trying to move their vertical integration to be completely in the continent, which will be expensive in the short run and cheaper in the long run.

Halliburton is supposed to be good, and even though everyone loves Google they've lost their momentum. They may do well this quarter but the next two are a bit uncertain.

Also when you diversify think about which industries could see large growth in the future rather than hopping on the wagon with current trends--a lot of times momentum is already lost and you just raise the price which makes money for others not yourself. If you want something that isn't going to get hammered by any world events--really doesn't exist--but chose those companies which sell necessities. They are not very risky, and do not grow very much, but are very stable. Think Grocery chains and the like. Banks also tend to be stable.

Medical stuff is good too, Pfizer is always a strong performer, and defense stocks are seeing a lot of growth, I'm not sure whether or not it's too late to buy Boeing but we had some a while ago. And remember the most important thing: stock price itself is COMPLETELY irrelevant. All that matters is growth; what they were and what they are now. A ten-dollar stock can make as much as an 80 dollar stock. Just because it's expensive doesn't mean it's good. Unless it's Berkshire Hathaway.

Also in terms of brokerage ratings I'm pretty sure Fortune or Forbes has a special month where they rate mutual funds and brokers and the like. I've been meaning to read it, I think it'd help. That's just my two cents.

[jon_s]

I manage a few of my own accounts. I have around £20k with www.tdwaterhouse.co.uk I am also due around £14k of shares when (if) Standard Life float.

I have been trading for a good couple of years now. I came to the markets with £10k and have doubled it in two and a half years.

HOWEVER, I set up my trading account with the view that I was happy to lose everything. I had a clear aim; this was to be a varied, yet high risk account. It accounts for around 5% of everything that the family have invested in the market. The rest is in much safer, managed accounts.

It is ture that you need money to make money. I don't invest anything less than £1500 in any given company. Anything less than this and you need a significant movement to cover your costs. Each trade costs me £12, so to buy into and out of a stock I need to cover £24. Then there is the real killer. The 'spread' of a share. This is the difference between the pice you buy a share at and the price you sell a share at: know as the bid and offer price. This can be anything from .5% to 10%. I have even seen one at 30%!!!! :shock:

Therefore, you need to be confident that a share will move beyond the % of the sperad and the trading costs before you make any money. Then there is stamp duty; but at 0.5% (in the UK), it is not too much of a concern.

The companies that I am in now: -(bear in mind, these are all on the LONDON STOCK EXCHANGE)

Circle Oil (COP) - an irish oil company with exceptionally large acerage which provides a lot of long term potential. Short term, they are currently working on a deal in Iraq, if they announce a deal the share price will easily double as a deal would take COP from a small to a mid tier oil firm.

My biggest winner currently is Colliers (COL). It has just prodced a stonging set of results and the markets have been building up to them. 60% in the last few months. I am waiting on broker upgrades before jumping on my profit.

by contrast, my biggest loser - Public Recruitment (PUG). I bought on the back of them striking a deal to supply staff to the National Health Service. This has not been successful and I have taken a MASSIVE 70% loss. Luckily I only have £1400 invested. I would have got out, but at the time my house was in a state and I had no internet to keep track of things.

Vodafone (VOD) - I have recently bought into VOD. Currently out of favour but finally giving into shareholder pressure. They have sold their Japanese arm (which saw a 10% increase when announced) and they could sell their stake in Verizon (US) which would again benefit. However, this is not without risk. The CEO is still out of favour with many people, so could go tits up.

I recently took profits on Party Gaming (PRTY). Currently issues over the US baning online gambling and the change of CEO has surpressed the share price. If that clears, the share price will rocket!! (They just produced increadible results)

I have others, but you get the idea:
- You win some, you lose some.
- You need money, to make money (cover costs e.t.c)
- You need to research
- You need to learn how to read the markets.

A really good overview of trading:

http://www.incademy.com/pages/home.htm?ginPtrCode=10002

Specific and comprehensive Technical Analysis tutorials:

http://www.incademy.com/training/Tec...on/1031/10002/

http://www.incademy.com/courses/Tech...s/1/1032/10002


My advice? Set up a 'fake' portfolio. In the UK, you can set one up with the www.ft.com It is free, you pretend you have 10k to invest. You buy and sell as if you were trading. I did this for a year before I put any money up. I am sure there are 'paper trading' sites for your country.

[carsightings]

i am greatful for all the help and advice but i would prefer to get into the polls thing for the coming months. can you give me some info on that?

[AlienDB7]

Despite all the "success stories", investing may not be the "get rich fast" scheme that can guaratee a return. Some people may be able to beat the market but it can only be done with increased risks or by using leverage. Leverage basically means that you're borrowing money to invest so you can have higher gain.... and loss.

Same story about "flipping" real estate properties, the reason why it's such an attractive "investment" for some people is its leverage. By paying a small downpayment, you can potentially earn a very high return for the amount you invest. However, if the real estate market does go down and it certainly will sooner or later, you'll be stucked with mortgages to pay and a huge loss.

For example, if you put down $50k down payment and borrow $450k from the bank for a $500k apartment, if the price goes up by 10% (i.e. to $550k), you have gained $50k, which means it's 100% return on the money you put down. However, if the price goes down by $50k, you basically lost all your money!! This of course didn't take into account the commission, interest payment and all other costs involved... so it's not really as simply as you think.

With the $100 you planned to invest, I would suggest putting it into a no-load mutual fund (i.e. no commission to pay) from a manager with a good track record. The money may grow 10-20% annually but the most important part is, you get into a habbit of saving up and have the money growing at a rate higher than the inflation.

In my experience, it's not worth investing in a reasonably safe stocks unless you're going to put down at least $1000 otherwise the commission alone would eat up most of your profits. Of course there're stocks that went up more than 50% over the past year but there're also ones that went down the same amount. Penny stock is another story, but that's more about speculation than investing

Afterall, the best way to earn money is to either get a job or open your own company. Forget about the polls and "free money" online, I've learned my lesson back in the .com boom (when I was your age). Sometimes it feels like it's .com 2.0

[graywolf624]

I would suggest putting it into a no-load mutual fund (i.e. no commission to pay) from a manager with a good track record.

Id like to add if you do go this way you should also keep a close eye on the funds expenses as they can consume most of your profits. Also stick to passive funds. Over the long run a fund that runs an index has lower expenses and tends to beet actively managed funds. In other words look for an index fund.
I still think with your knowledge youd be better off with a cd.. In fact if I were you id drop my entire savings except what I need near term into a 5 percent cd from one of the internet banks(ING comes to mind). Its secured by the federal govt so you cant lose money (The only loss is theres a penalty for withdrawling early), you dont have to watch it closely.. and 5 percent is 100 x better then most savings accounts. Hell even in terms of savings accounts an online bank would give you 4 percent instead of the .2 percent at a regular bank. Also consider govt bonds.
Everything indicates to me you should stick to those secure options until you get more cash.

On a side note.. Current market indicators show signs of a recession comming. Im sitting on a nice bit of money in secure investments since Id rather jump in during a recession in a solid stock then jump in at a peak.

[AlienDB7]

The problem for index fund is, it's fully invested all the time and quite often a certain stock can become overweighted in an index. So index funds are usually good during a bull market but the loss tends to be higher during a bear market. Some funds did outperform the index over period of last 7+ years but they can be hard to find. So with limited knowledge about the financial market, there's a high probability to pick a bad active fund than a good one. If you're talking about a 10+ years time frame, index funds should do well.

The problem for government bond, or any bond is that case, is the minimum requirement of $1000. Aside from that, the cost of buying bonds is relative high for a small account so it may not be worth is. Given today's interest rate, I personally prefer a low MER (< 0.2%) *short term* bond index fund with good diversification in both government and corporate bonds. Corporate bonds tend to be more risky but do provide higher yield, so diversification is very important.

Like graywolf said, there's a high likelihood that US may get into a recession within the next couple of years so it doesn't hurt to be a bit more defensive and stay away from the overvalued stocks such as Apple or Google.

Good luck and taking it as a learning experience

"The first rule is not to lose your capital and the second rule is not to forget the first rule" -Warren Buffett

[carsightings]

thanks for all the help!

i will probally do what you said

but i still want to do these polls. What ones do you know about?

thanks

[graywolf624]

The problem for index fund is, it's fully invested all the time and quite often a certain stock can become overweighted in an index. So index funds are usually good during a bull market but the loss tends to be higher during a bear market. Some funds did outperform the index over period of last 7+ years but they can be hard to find

There are a few that have outperformed over 7+ years.. the problem is, no manager has ever managed consistantly to always beat the market. Just cause he beat it the last 7 years doesnt mean he will the next 7. From a statistical standpoint the only conclusion you can make about active managers historically is if they are poor, they generally stay poor. I take my chances with the index funds and use dollar cost averaging. (that is hold onto them and invest straight through, if you dont pull it out ultimately it will be worth more cash)

The problem for government bond, or any bond is that case, is the minimum requirement of $1000.

I guess you have different regs then we have here. I can buy a govt ibond(one that is adjusted to inflation and currently makes 6.71 percent in any denomination down to 20 dollars) off of the us govts website. No commissions, no fees.. Takes 2 seconds to register. Try: TreasuryDirect.com No state or local taxes on them either. The only fear is if the national inflation rate tanks.. But if you fear that do t-bonds... Same concept but not pegged to inflation.

I personally prefer a low MER (< 0.2%) *short term* bond index fund

I agree, just remember the bonds generally move counter to the stocks.. So if you have a good deal of money youd get more diveristy doing both.

[graywolf624]

also, there can be fees if you dont trade a certain amount during a quarterly period.

Stay away from etrade.. They are theives... They are the only one with quartly fees if I recall (I know Scottrade doesn't and I dont think ameritrade does).. they instituted it in the middle of the stock market crash, screwing all their previous customers.

if you only want to invest 100 bucks, go buy 100 1 dollar scartch tickets!!

Why dont you tell him to set his money on fire lol?