roadkill

I've finally saved enough money to start a modest 10k investment in the stock market. Any one know what some good sites to watch for ideas on buying are?

I rember a few years ago I read a story in the news about some guy that just could pick the right stocks from what he read and what not. And so apperently he has got a website somewhere I can't rember it though. Any ideas on what that guy might be? Or any other good ideas on starting to save for retirement.

Phory

Be extremely wary of anyone who has a website and claims to be able to pick stocks. In fact you should be wary of anyone who claims to be able to pick stocks and beat the market. The vast majority of the best professionals in the world cannot pick stocks that outperform the market as a whole over the long-run. Most of those who have are probably just lucky.

Getting excess risk vs. reward is difficult. Contrary to the online brokerage commercials picking stocks successfully is difficult and takes a lot of work and research.

Here are a few tips:

(1) Since it is very difficult to beat the market, one good idea is to just buy the market. The cheapest and easiest way to do this is to buy Echange Traded Funds (ETFs) These are baskets of stocks that trade as one symbol. Here are some examples:

SPY - the S&P 500 index.
IWM - The Russel 2000 index
QQQQ - The Nasdaq 100 index
OIH - Oil Industry Holders index

(2) Small and midcap stocks outperform the large cap stocks over the long-run. However these might end up being more volatile over any particular stretch of time. If you are young, I would weight your portfolio towards smaller capitalizatoin stocks.

One easy way to do this would be to put say 60% of your money in IWM (the stocks in the Russel 2000 are small cap stocks). And put the other 30% in SPY. (The stocks in the S&P 500 are large cap stocks).

(3) Dollar cost average. Unless you spend a lot of time researching and learning you are unlikely to be successful timing the market. Even if you do devote a lot of time to learning and researching, odds are that you still won't be very successful at it. This is how dollar-cost averaging works. At fixed intervals, you deploy a portion of your capital. Figure out how much money you can afford to invest each month, and invest that same amount every month. Work in the 10 grand you allready have in with that over say 6 months maybe.

James Altucher recently wrote an article on realmoney.com, where he showed that anyone who started dollar-cost averaging in the SPY or the IWM at the height of the market in 2000 would have a positive return at the time of the article's writing. Even if you'd invested in QQQQ, you'd only be down a little bit.

(4)
If you want to try to time the market. Bob Brinker's newsletter is pretty good.
http://www.bobbrinker.com/
I don't personally use it, but my Mother who is a Financial Planner, uses it for investing her and her clients' money. He also has a radio show which I listen to occasionally and have always liked. His approach is to attempt to time the market using portfolios of ETF's, and he keeps various model portfolios for various investment objectives.

Relmoney.com has several stock-picking newsletters that are ok. By ok, I mean I don't think the authors are trying to rip you off. Whether any of them can make you money in the long term remains to be seen. They are the Jim Cramer's Action Alerts, Stocks under 10 dollars, and their Options Newsletter. These newsletters are probably a little more advanced (and will require more active trading) than brinker's newsletter.

Both bob-brinker's service and the advisery services you can get from realmoney.com cost money to subscribe to. Don't expect to get good stock-market analysis for free.

(5) Here's some good books to read about investing:

None of these books give actual strategies except Practical Speculation (in sort of an abstract sense), Trade like a Hedge Fund, and Trade Like Warren Buffet. The reason for reading these books is to learn how the stock market "really" works, and so you will know what you are up against. They can also help you to sort of develop an "overall philosephy" about the markets. I listed them in order I would read them in.

Confessions of street addict - Jim Cramer
Practical Speculation - Niederhoffer
Fooled By Randomness - Telab
Trade Like a Hedge Fund - Altucher
Trade Like Warren Buffet - Altucher

(6) One of the best ways to improve your odds in the stockmarket is to pay less commission. There's no reason to pay more than a buck to make a trade these days. This is the absolute cheapest retail broker there is:

www.interactivebrokers.com

DISCLAIMER: Much of the advice I've given I don't actually follow myself... (Except for the book and brokerage recommendations)

soma

I have an account at Interactive brokers and scottrade. If you're not going to buy and sell actively, I would recommend a more user friendly broker like scottrade or ameritrade. Nothing wrong with IB though...

Be very skeptical of websites. Think about it. If they know how to make money so easily, why are they selling their services?

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Having Girl Problems?

BigBen

An old and rich man once told me "Invest in what makes your life better..."

Long story short: Look around you and find things that you use, THAT MAKE YOUR LIFE BETTER, and invest in the company that makes them.

I use google all the time. therefore GOOG
I use my cellphone all the time. Therefore Motorola

et cetera, ad infinitum. Do you like the pizza place down the street? Ask if they need capital.

Stock markets can be volatile, and have large short term fluctuations. I would recommend an indexed fund, or a real-return bond. The rate is pegged to the interest rate or the CPI, and therefore you are always doing better than inflation.

Only invest what you are willing to lose. If you can't afford to throw the money away, I would suggest a secure tool like GICs or term deposits.

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3.141592654
Hey, if you are impressed with my memorizing pi to 10 digits, you should see the size of my penis.

pan6467

I have to agree with this, however if stock is what you want to buy, a nice buy right now to have for when the economy improves is Cedar Fair or Six Flags, as there are rumors that Cedar Point's owner (Cedar Fair) maybe buying rival Six Flags.


Everyone has their own way of deciding how to buy, when I was a stockbroker in the early 90's I used this criteria for my clients and did ok for them: PE under 20, not heavily in debt or leveraged, good emploer/employee relations and small but growing. I specialized in finding stocks under $10/share to invest in.

There are some great companies that match that criteria and can boom and make you decent returns.

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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

soma

I think this approach makes perfect sense, but it alone is IMHO not nearly enough to make a sound decision. See, a company can make a brilliant product, but that doesn't ensure earnings will be steadily increasing, quarter after quarter. If a company can't improve earnings, their stock price will not likely go up, which is not a good thing.

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Having Girl Problems?

Lewis

Firstly, wait. Until you know what you're doing and you have spoken to loads of people. Secondly, as has been said, invest in things that work for you. Thirdly, only do it when you feel absolutely comfortable and are willing to burn the money if it doesn't work without turning into a psycho.

Personally, because I didn't know much about investing in stocks, I got some training and found that Forex is by far the easiest and quickest route to reasonable profits. Presently, I'm getting about 25% ROI every week. That means you are pretty qickly playing with the market's money and not your own.

NoSoup

I may just be jealous, but a 25% ROI per week seems absolutely ridiculous. I'm not saying it doesn't happen ever - but consistantly on a weekly basis - everyone and their mother would be fully invested in the Forex...

I consider myself pretty savvy when it comes to investment opportunities, and I've never heard of anything like 25% ROI consistantly in recent times...

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I have an aura of reliability and good judgement.

Just in case you were wondering...

Lewis

I know, I get this all the time. It's the disbelief that keeps people away. I've just introduced my technique (which is part mindset and part a completely new way of using the Fibonacci) and written a book about it. I've got friends who are doing the same. Frankly, I get a bit bored telling people because the mindset is so fixed out there that I spend all my time trying to convince them. I'm giving that up now! They can take it or leave it.

Tamerlain

You have to be careful with Dollar-Cost-Averaging a lump sum of money, as illustrated here.

Dollar-Cost-Averaging is great when you want to deduct x dollars from your pay cheque automatically and have it go into an established investment (such as your lump sum), but you're generally better off to avoid DCA if you have a lump sum of money you can invest immediately.

As has been said already, your best bet is to inform yourself. Find out as much as you can about what you want to invest in, and then find out some more.

-Tamerlain

Yakk

You wrote a book about this technique?

By Forex, you mean foreign exchange right?

May I ask how hard you are leveraged? What is your leverage secured against?

I mean, I can make an investment that doubles in a day! It is rather easy. I simply go to a casino, and bet on black on the roulette table...

Shucks, if I take 100$, borrow another 50,000$ against my home, then play exponential roulette until I win 200$, I can double my money with a high chance of success! Of course, there is a chance I'll lose 50,100$, but who pays attention to that...

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

Lewis

Yes, Forex is foreign exchange.

Personally I'm doing 200:1 but you can do up to 400:1.

Sorry, don't understand the question about security.

Are you likely to get 95% positive results at the casino - in which case, I'd go for it!

Yakk

Yes, you are likely to get a 95% positive result at the casino.

Of course, the other 5% of the time you'll lose your house.

At 200:1, you are borrowing 200$ for every 1$ you put in. Which means a drop of 10% in one of your investments would cost you 20 times your "investment".

If you invest 100$ and borrow 20,000$ (200:1) at 7%/annum, then make 25$ over the week, what was your rate of return?

A> 25% per week!

B> [25$ + 26$] / (20,000 + 100) = 0.25% per week
(the 26$ is what was required to pay off the interest, and when you worked out your 25$ profit you included the interest cost)

C> [25$ - 26$] / (20,000 + 100) < 0% per week
(if you didn't factor in your interest payments, deferring them to another time)

D> 7% per year (B's result, which is about 14% per year, minus the 7% per year cost of interest on carrying that debt)

In effect, if I expose myself to enough credit danger, I can turn 1$ into 100$ with nearly 100% certainty over a single week. The trick is the hidden cost of the danger to my credit.

Are your trades done from within a limited liability corperation? Are there any assets within the LLC that are used to leverage your investment with?

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

Lewis

Yakk, I really don't know what you're getting at. I'm not here to convince you, I'm just telling you I am doing something that works really well, and at minimal risk.

PM me if you want actual details.