Any place to start investing for a n00b? $500 base, $50 more per week...

[Shockwave]

Originally posted by: Hector13

Originally posted by: Shockwave
Thats the worst advice I've heard yet.
Out of the 8 stocks I have been following, 5 have went up, 2 went down and 1 has been hovering.
Mutual funds will nickel and dime you to death on fees.
I use my 401k for funds, and my own investments for stocks.
And, had I put 1000 into each stock I was looking at (8000 total) I'd have... around 15k probably. Ballpark. Thats in...ohhh...2 months time.

yeah, that's great. Your 2 month experience in whole 8 names isn't worth sh*t. Especially considering that you didn't even invest in those names. You can't look at return alone, you need to see how much risk you would have taken over that period. It would have been simple to lever 10 to 1 and buy SPY and make a good 300% over the past 2 months, but that doesn't mean anything... you might as well put all your money on red at the casino.

I have to agree fully swith skoorb on this: picking individual stocks is asking for trouble. There are tons of people on the street who have access to much better information and tools than you will ever have (I am one of them, this is what I do for a living!!) and they can't consistently beat the market. And that is their full time job! What makes you think you will be able to?

Your safest bet is to stick with some passive mutual funds, which won't nickle-and-dime you to death (they will actually pay a hell of a lot less in commissions for trading than you and I ever will). Look at something like the s & p 500 or russell 1000 or russell 2000 (small cap names).

What makes me think I can do better? Thats quite an easy answer.
Research and diversify. Granted, I have a bit mroe time then most to research, and I have good tools and people to ask questions of. So, for the easy way, yes mutual funds. But this isnt just "investment"! This is planning for your future. And I'll do both "investment" with 401k's and mutual funds as well as "gamble" a bit in the market.

And to the crap "You didnt even invest in them!"
Oh contraire.
I didnt invest in all of them. But what I did go for turned out aight. (4 times profit on one, slight gain on another, rest holding steady with slight upward trends)

 

401k
roth ira
mutual funds.

 

[Hector13]

Originally posted by: Shockwave

What makes me think I can do better? Thats quite an easy answer.
Research and diversify. Granted, I have a bit mroe time then most to research, and I have good tools and people to ask questions of.

I guess you didn't fully read my post. People, like me, who get paid to "beat the market", will always have access to much better research and tools than you will. When is the last time a broker visited you to give your their newest "trading platform" or to present their latest research on what factors help predict returns in europe?

And you know what? Most of us can't beat the market consistently. Again, what makes you think you can do what the rest of us can not?

And to the crap "You didnt even invest in them!"
Oh contraire.
I didnt invest in all of them. But what I did go for turned out aight. (4 times profit on one, slight gain on another, rest holding steady with slight upward trends)

Again, the fact that you don't even consider or mention the risk you took investing in these names tells me that you don't know the first thing about "portfolio theory". It's nice to throw out words like "diversify", but when you are investing in 5 names, you are in no way diversified at all.

Like I said before, anyone could have taken a huge levered bet on the market this year and be up 1000+%, but that doesn't mean they beat the market (on a risk-adjusted basis). It just means they loaded up on their risk.

 

[DaveSimmons]

Professional, full-time mutual fund managers with research staff and direct access to corporate executives tend to do worse over time than a passive index fund such as an S&P 500 fund (Vanguard's VFINX is one of the best). So for 99% of investors it's beeter to listen to Skoorb than Shockwave.

Vanguard.com might have a good plan for investing steadily over time like you plan to. Again, I'd recommend putting money into VFINX as a starter fund.

A Roth IRA is good for you since you can invest $3K a year and it grows tax-free (you pay $0 in tax when you retire) while a Traditional IRA saves on your current-year taxes but you must pay taxes on the investment (including all growth) when you take the money out.

You can also keep putting money into a Roth IRA (unlike a Traditional IRA) even after you go on a company 401K so you can keep up your steady investment.

You have until April '04 to pay into an account the year-2003 $3K limit. If you need more than $500 to start at Vanguard you could keep saving until as late as April to meet their minimum.

 

[SuperMachoMan]

Originally posted by: Skoorb
Why the average person feels that they should be buying single stocks is totally beyond me, and outside of the realm of sound investing.

Buy into a mutual fund or index fund or something like that; let the professionals handle your money.

The financial planning industry is in large part a scam. Eighty percent of mutual funds actually underperform the market.

For most people, it makes the most sense to go with a low fee index fund.

Some people however enjoy the process or researching and picking their own stocks, and controlling exactly where their money is going to. And for those who are willing to take the time to educate themselves and properly research their investments, the stock market can be an extremely satisfying and lucrative hobby.

 

[tokamak]

i'm a total n00b when it comes to this stuff, but i was under the impression that how mutual funds work is that they are managed by some suit on wall-street that makes 7 figures and went to school for many years to learn how to do it well. gotta figure that guy knows more about it than i do....

 

[Shockwave]

Originally posted by: Hector13

Originally posted by: Shockwave

What makes me think I can do better? Thats quite an easy answer.
Research and diversify. Granted, I have a bit mroe time then most to research, and I have good tools and people to ask questions of.

I guess you didn't fully read my post. People, like me, who get paid to "beat the market", will always have access to much better research and tools than you will. When is the last time a broker visited you to give your their newest "trading platform" or to present their latest research on what factors help predict returns in europe?

And you know what? Most of us can't beat the market consistently. Again, what makes you think you can do what the rest of us can not?

And to the crap "You didnt even invest in them!"
Oh contraire.
I didnt invest in all of them. But what I did go for turned out aight. (4 times profit on one, slight gain on another, rest holding steady with slight upward trends)

Again, the fact that you don't even consider or mention the risk you took investing in these names tells me that you don't know the first thing about "portfolio theory". It's nice to throw out words like "diversify", but when you are investing in 5 names, you are in no way diversified at all.

Like I said before, anyone could have taken a huge levered bet on the market this year and be up 1000+%, but that doesn't mean they beat the market (on a risk-adjusted basis). It just means they loaded up on their risk.

Read SuperMachoMan's post. He got to it before I did
Funds generally DO underperform the market. Am I diversified? Not as much as I want to be. Thats due to limited funds more then not wanting to though.
Stocks outperform funds in general. Stocks can easily make you money. You'll say they wont? Lets be serious man, if the stock market couldnt return money, NO ONE would buy individual stocks. I know alot of people who have made ALOT of money. Granted, they've had their share of losses as well. I cant name 1 person who hasnt lost money along the way. But, we dont look at things in the short term. And over a long course of time, you can have a pretty good return on investment. And it doesnt take alot of work. Hell, snatch any 5 stocks off the "Top Rated" list and hold them for 6 months. Most likely you'll do ok.

Me? I go for the long shots though. Why not? I have a 401K for my "safe" investments. Might as well take some play money and give'r hell right?

 

[Winchester]

Where can I find "Top Rated" lists?

Im 21 and would like to start investing as well, but no real "investing experience." I have about 4Gs I can mess with.

I think AT needs a Financial forum!

 

[Hector13]

Originally posted by: Shockwave
Read SuperMachoMan's post. He got to it before I did
Funds generally DO underperform the market.

these are "active" funds. Ie, funds managed by people exactly like you (in other words, they think they can beat the market). When people say "beat the market", they mean beat something like the s&p 500 (ie, beat the SPY or another index fund). What we recommended above was passive, index funds, which are the "market" (close enough to it). Let me state that again: passive, index funds do not underperform the market; they are the market.

Stocks can easily make you money. You'll say they wont? Lets be serious man, if the stock market couldnt return money, NO ONE would buy individual stocks.

You realize that these stocks are what go in to the "market" and into index funds, right?

I know alot of people who have made ALOT of money. Granted, they've had their share of losses as well. I cant name 1 person who hasnt lost money along the way. But, we dont look at things in the short term. And over a long course of time, you can have a pretty good return on investment. And it doesnt take alot of work. Hell, snatch any 5 stocks off the "Top Rated" list and hold them for 6 months. Most likely you'll do ok.

Again, you make all these statements about people making "alot of money", but you fail to mention anything about the risk they are taking or how these returns compare to what a passive investment in the market would have done.

 

[Shockwave]

Originally posted by: Hector13

Originally posted by: Shockwave
Read SuperMachoMan's post. He got to it before I did
Funds generally DO underperform the market.

these are "active" funds. Ie, funds managed by people exactly like you (in other words, they think they can beat the market). When people say "beat the market", they mean beat something like the s&p 500 (ie, beat the SPY or another index fund). What we recommended above was passive, index funds, which are the "market" (close enough to it). Let me state that again: passive, index funds do not underperform the market; they are the market.

Stocks can easily make you money. You'll say they wont? Lets be serious man, if the stock market couldnt return money, NO ONE would buy individual stocks.

You realize that these stocks are what go in to the "market" and into index funds, right?

I know alot of people who have made ALOT of money. Granted, they've had their share of losses as well. I cant name 1 person who hasnt lost money along the way. But, we dont look at things in the short term. And over a long course of time, you can have a pretty good return on investment. And it doesnt take alot of work. Hell, snatch any 5 stocks off the "Top Rated" list and hold them for 6 months. Most likely you'll do ok.

Again, you make all these statements about people making "alot of money", but you fail to mention anything about the risk they are taking or how these returns compare to what a passive investment in the market would have done.

Ok Chief. You do it your way, I'll do it mine. We'll both come out ahead I'm sure. I dont want to flame over this. Hell, people have been investing in "your" way and in "my" way since we could invest.

 

[BaboonGuy]

Trade stocks via Scottrade. Buy ATI (ATYT) today and you'll have a lot more money pretty soon.

 

[Shockwave]

Originally posted by: Winchester
Where can I find "Top Rated" lists?

Im 21 and would like to start investing as well, but no real "investing experience." I have about 4Gs I can mess with.

I think AT needs a Financial forum!

msn.com -> Money (By the hotmail tab) -> Investing -> Stocks (Below the Investing tab)

I agree!! I'd love to see an ATOT Financial Forum!!

 

[GTaudiophile]

If you don't have one, start with a simple savings account or Certificate of Deposite, something you can't touch for a year or two...just to get use to the idea of having money around that can't be touched. You'll only earn like 3% interest...then move it from there to something more aggressive.

 

[SuperMachoMan]

Originally posted by: tokamak
i'm a total n00b when it comes to this stuff, but i was under the impression that how mutual funds work is that they are managed by some suit on wall-street that makes 7 figures and went to school for many years to learn how to do it well. gotta figure that guy knows more about it than i do....

Well it is true that they are managed by Wall Street suits making 7 figures, but that does not necessarily mean he can outperform a well informed individual investor. The majority of these funds of the "actively managed" variety, with fund managers constantly trying to "buy low" and "sell high" so as to lock in their gains and justify their salaries. These funds prove to be more costly over the long run as they tend to incur higher management fees and result in fund managers constantly outguessing themselves with respect to "market forecasts" (which have proven to be entirely unpredictable).

An index fund such as the S&P 500, is really nothing more than a mutual fund consisting of 500 high profile stocks that involves very little buying and selling. This fund has consistently beaten eighty percent of mutual funds since its inception. Bear in mind that, over the long run, the stock market has drastically outperformed every other type of investment known to man. So if you are investing for the long run, there is really no reason to settle for anything less than the returns offered by the "market" meaning index funds.

Investors such as Warren Buffett aim to outperform the "market" through more of a "buy and hold" approach to investing, which involves identifying companies with sound valuation and good long term earning potential. He basically buys stock in these companies and just lets it grow, thereby minimizing management fees and protecting the earnings from taxation. The key to this approach is taking the time to properly research your investments and having the discipline to execute accordingly without regard to the popular influence of the masses.

 

[cessna152]

Index Funds are a good choice. But you usually need a larger base.
www.fool.com

 

[glenn1]

THAT was it! Sharebuilder!

Sharebuilder is good. buyandhold.com is better. Same principle as Sharebuilder, but more stocks to pick from, cheaper roundtrips, and if you set up a monthly systematic investment, they don't charge an IRA custodial fee. Sharebuilder does have a "cleaner" looking website though. Not that it would probably matter since they're both very popular, but buyandhold.com also has a stronger parent broker/dealer underpinning it, Fahnnestock, so they're less likely to fold than Sharebuilder which is an independent company. Doubt either one will go under, but it's a consideration.

[disclaimer] I'm a registered rep for a broker/dealer firm, but for neither of these companies, nor does my company provide services for either. I just have examined both and found in my professional opinion that buyandhold is the superior one of the two by a small margin. Either one is far superior to the vast majority of other broker/dealers out there. [/disclaimer]

 

[gopunk]

Originally posted by: Shockwave

Originally posted by: Hector13

Originally posted by: Shockwave
Thats the worst advice I've heard yet.
Out of the 8 stocks I have been following, 5 have went up, 2 went down and 1 has been hovering.
Mutual funds will nickel and dime you to death on fees.
I use my 401k for funds, and my own investments for stocks.
And, had I put 1000 into each stock I was looking at (8000 total) I'd have... around 15k probably. Ballpark. Thats in...ohhh...2 months time.

yeah, that's great. Your 2 month experience in whole 8 names isn't worth sh*t. Especially considering that you didn't even invest in those names. You can't look at return alone, you need to see how much risk you would have taken over that period. It would have been simple to lever 10 to 1 and buy SPY and make a good 300% over the past 2 months, but that doesn't mean anything... you might as well put all your money on red at the casino.

I have to agree fully swith skoorb on this: picking individual stocks is asking for trouble. There are tons of people on the street who have access to much better information and tools than you will ever have (I am one of them, this is what I do for a living!!) and they can't consistently beat the market. And that is their full time job! What makes you think you will be able to?

Your safest bet is to stick with some passive mutual funds, which won't nickle-and-dime you to death (they will actually pay a hell of a lot less in commissions for trading than you and I ever will). Look at something like the s & p 500 or russell 1000 or russell 2000 (small cap names).

What makes me think I can do better? Thats quite an easy answer.
Research and diversify. Granted, I have a bit mroe time then most to research, and I have good tools and people to ask questions of. So, for the easy way, yes mutual funds. But this isnt just "investment"! This is planning for your future. And I'll do both "investment" with 401k's and mutual funds as well as "gamble" a bit in the market.

And to the crap "You didnt even invest in them!"
Oh contraire.
I didnt invest in all of them. But what I did go for turned out aight. (4 times profit on one, slight gain on another, rest holding steady with slight upward trends)

the percentage of investors like you that can beat the market in the long term is very very small. people that can beat the market in the short run are a dime a dozen.

 

[gopunk]

An index fund such as the S&P 500, is really nothing more than a mutual fund consisting of 500 high profile stocks that involves very little buying and selling. This fund has consistently beaten eighty percent of mutual funds since its inception. Bear in mind that, over the long run, the stock market has drastically outperformed every other type of investment known to man. So if you are investing for the long run, there is really no reason to settle for anything less than the returns offered by the "market" meaning index funds.

not to nitpick, but the s&p 500 is an index. there are index funds that mirror the s&p 500, most notably the one offered by vanguard. you're exactly right about the long run... it is *extremely* unlikely that you will beat the market over a period of say, 40 years.

 

[fonzinator]

I think we should start an ATOT mutual fund. We've already got the perfect ticker symbol.

 

[Winchester]

Sounds nice