Stocks

[jrhunter]

I've been doing stocks for about 4 years now. I started out not knowing anything and have done a lot of reading and have become comfortable with buyING and selling standard stocks and have a decent sized portfolio. I was just wondering if anybody else does stocks and knows anything about and uses more advanced techniques, like short selling stocks or dealing in options for instance? I've been weary about delving into anything more when I've got a technique that is working despite the recession.

[BurnsFlanders]

Hey jrhunter - I have a lot of interest in this... might just be the two of us. More later

[Anivair]

I'm not there yet. Talk to me when my debt is paid off and I'll be all about it. Debt comes first.

[ZenGwen]

Right now, I would rather put my cash under the mattress. I've been thinking about putting into index funds though.

[Oogiem]

I was just wondering if anybody else does stocks and knows anything about and uses more advanced techniques, like short selling stocks or dealing in options for instance?

We have rather significant investments in stocks. We also pay to have them managed for us as I refuse to spend too much time at it. I don't enjoy it so it's worth it to pay an investment adviser. Overall we are doing well. Our person bases buy and sell on market sentiment, things like bullish percent and similar for a first cut. I follow the weekly news just enough to keep track of what he's doing.

[nicknack]

I do own some individual stocks, but I have to say that for most people buying individual stocks is not necessary, or even wise. I'm big fan of index funds, sold as mutual funds, or exchange traded funds (ETFs). Their advantage is that they invest in the market a whole, proportional to each stock's capitalization, and can do so very cheaply. For example compare the expense ratios for a Vanguard index fund (e.g., maybe 0.17%) to an actively managed fund in which you essentially pay the fund manager to actively pick and choose individual stocks. On average, 75% of actively managed funds fail to beat the market (i.e, justify the additional expense with increased returns). My feeling is that mutual funds or ETFs should be the *core* of your portfolio, with individual stocks as a smaller *explore* components.

Short-selling and options trading can be dangerous if you don't know what you're doing. With basic stock purchases, your loss can't be more than 100% of your investment. With options, your options your losses are potentially unlimited.

BTW, I'm a huge fan of John Bogle, and Vanguard.

[Strawberry Squatcake]

One of my 2012 goals is to get into stocks. And by that I mean, figure out where I want to buy/sell (best site for cheapest trade price, or whatever it's called). I'm fairly intimidated by it because I don't feel I know enough about what's going on to make good decisons. My dad tells me to pick a big company I like that I thik will be around for a long time, and start there and I'll naturally get a feel for it. He's recently started buying short and messing around in futures. Heck, he bought stock somewhere to get a discount on a cruise. :-) But when he talks about what he bought and why, my head spins. I need to keep up with the news more!

Anyway, I'm very interested in this topic. But quite the newbie. Right now my IRA and 401(k) are both in mutual funds, mostly high risk and dynamic, so I'm not scared of the risk.

Oh, and he suggested maybe I start with my 401(k), if I can buy fairly cheap - so buy and let it sit. And then it's tax-free when I sell. Sounds like good advice

[msuroo]

One of my 2012 goals is to get into stocks. And by that I mean, figure out where I want to buy/sell (best site for cheapest trade price, or whatever it's called). I'm fairly intimidated by it because I don't feel I know enough about what's going on to make good decisons. My dad tells me to pick a big company I like that I thik will be around for a long time, and start there and I'll naturally get a feel for it. He's recently started buying short and messing around in futures. Heck, he bought stock somewhere to get a discount on a cruise. :-) But when he talks about what he bought and why, my head spins. I need to keep up with the news more!

Anyway, I'm very interested in this topic. But quite the newbie. Right now my IRA and 401(k) are both in mutual funds, mostly high risk and dynamic, so I'm not scared of the risk.

Oh, and he suggested maybe I start with my 401(k), if I can buy fairly cheap - so buy and let it sit. And then it's tax-free when I sell. Sounds like good advice

If you want to toy around with buying individual stocks for your own portfolio, by all means do it - but do it knowing that you are gambling just like you would be at the casino (especially if you are getting into short positions and options). It can be something fun if you have some dispensable income, but definitely don't plan on meeting actual financial obligations with personal portfolio returns. Your 401k is a different story - you've got such a long time horizon there that you would be crazy not to pick the highest risk/highest return offering in your plan.

[Strawberry Squatcake]

do it knowing that you are gambling just like you would be at the casino (especially if you are getting into short positions and options). It can be something fun if you have some dispensable income

For sure. We did a 'stocks game' in 6th grade. I did the worst in the class (only about 25 kids, but still, last is pretty awful). So I realize you never know what the market's going to do. The bigger companies SHOULD be more stable, but we all know how that works in this economy!

Whatever I do, it would be for long-term. No way I could be a day trader.

[aj_rock]

Just like all investments, they only really work if you're willing to give up your liquidity for a long, long time. If a stock you own drops a bit, you can't just panic and pull out; a stable company WILL go back up eventually (well unless you're RIM...)

Really though, unless you're willing to put a significant amount of time into it, it's not worth doing yourself with serious money. Either do small investments or have somebody manage it.

[Bean]

Warren Buffet is my role model. His investments are always long term.

For those of us with nothing close to his resources, he recommends ETFs (Exchange Traded Funds). If I recall correctly, he has a bet on with an active fund manager that the S&P 500 will outperform the active fund over ten years.

Me personally - if I had the money, I would like to set some aside to just play in the market doing daily trading, but certainly never with my savings.

[msuroo]

Warren Buffet is my role model. His investments are always long term.

For those of us with nothing close to his resources, he recommends ETFs (Exchange Traded Funds).

Or if you do have his resources, you scrounge up an extra $5B here and there to bail out Goldman or BoA while enjoying some Dairy Queen. It's basically the same thing.

[ETFnerd]

nobel prize winner bill sharpe on the arithmetic of active management

[Bean]

Must correct my earlier comment - Buffet bet against a hedge find.

See below

http://www.bloomberg.com/news/2012-03-21/buffett-seizes-lead-in-bet-on-stocks-beating-hedge-funds.html

[nicknack]

nobel prize winner bill sharpe on the arithmetic of active management

This is a very worthwhile thing to read.

[chasely]

For sure. We did a 'stocks game' in 6th grade. I did the worst in the class (only about 25 kids, but still, last is pretty awful). So I realize you never know what the market's going to do. The bigger companies SHOULD be more stable, but we all know how that works in this economy!

Whatever I do, it would be for long-term. No way I could be a day trader.

Yeah, I don't like how schools do the "stocks game". What an awful lesson to teach kids: think short term and take huge risks for huge rewards with your future retirement savings!

[azsf]

i have a problem with stock brokers...

but seriously, i don't understand the stock market at all :/ is it about owning a % of a company, and aiming to have long term dividends cover (and eventually exceed) your investment? does the same thing apply to all these different funds? what's a good starting point for learning about all this?

[Bean]

If you have the time, read "The Intelligent Investor" by Benjamin Graham. An old book, but still one of the better books on genuine value investing.