First time stock buyer - need input

[SweetTooth]

Can someone explain the ins and outs (no not that you perverts! ) of stock buying?
I mean what do you get out of stocks? If I buy a share and it goes sky high and is huge,
what do I as a stock buyer get outta it? Money? Isnt that what stocks are all about?






Thanks for any input

 

[Napalm381]

Essentially:

1. You buy a stock for x dollars.
2. Later on, you sell that stock for y dollars.

If you're good, y>x, and you make a profit equal to y-x, minus any fees and commissions.

 

[Philosopher]

If you are serious...invest for long term profits.

If you don't care and like gambling...try to make as much money in as little time as possible.

 

[GoldenTiger]

Longterm, stocks will always make money. The economy goes up; the stocks go up along with them. If you keep them even through the dumps, they will eventually come back up past where you bought it at. It may be hard to resist "selling it while you still can", but it is best in the long run to keep it. Long-term investing = best.

 

[GoldenTiger]

For "quick" cash, do a 3, 6, or 12 month CD with your bank... 7%ish return, guaranteed.

 

[Yzzim]

<< Longterm, stocks will always make money. >>



umm, that couldn't be further from the truth. A la internet stocks
Wish I would have known about short selling during those days, I would have definetly done some major stock investing.

SweetTooth, before you invest make sure you know what you're doing, especially with today's economy. Before you do any major stock investing, I'd get a broker until you definetly know what you're doing.

 

[SweetTooth]

Some more question's for my anandtech homes'




1. What's the youngest you can be?

2. What's the cost for a first timer?

3. Where do I go to trade? LOL



I'm such a newbie

 

[UNCjigga]

Two methods real investors use:
1. Fundamental analysis: P/E ratios, profits (and expectations), growth, market share, etc. figure in to what investors believe the price should be.
2. Technical analysis: Look at the stock's performance over a given period of time and look for trends in the graph to predict the future price.

I would suggest reading Peter Lynch's &quot;One Up On Wall Street&quot; if you really wanna get serious about stock market investing--it is NOT a difficult read and is one of the top recommendations for those just starting out. You'll learn more than you thought possible.

As far as online brokerages go, I use DLJdirect (oops...its now CSFBdirect.) In my biased opinion they are number 1 in this department and offer the best balance of services. They aren't the cheapest, but then again you probably SHOULDN'T be a high-volume trader when you're just starting out. I signed up for an account with them just because it was free (no minimum trading balance required!) Within two days I received a phone call from a REAL LIVE broker who said he'd be my phone support for the website and for trading in general. I was impressed. In addition, I had free access to some of the best research tools imaginable for 45 days. Believe me...this was worth it. After 45 days you have to maintain a minimum $100,000 balance in order to access these tools for free! These guys are serious and are not playing silly games with your money!

 

[SweetTooth]

Hey dont get me wrong, I'm not looking for hardcore stock's. I was just looking to do something small, something cheap, and something that returned me some denero

 

[Maetryx]

Maetryx here,

Do yourself a huge favor and buy this book. In spite of the cheesy title, The Only Investment Guide You'll Ever Need by Andrew Tobias is the best beginner's book period.

Because it does more than answer your stock market questions: it forces you to decide *if* you should be buying and selling stocks at all, or if there are a ton of other *common sense* strategies you should employ first i.e. pay off your high interest credit card debt first.

Now for some answers to your actual questions.

A corporation is a &quot;taxable entity&quot;. To the U.S. government (and state governments) all individuals and corporations are the same thing: IRS customers. Corporations are incorporated (literally made into a body) by filing appropriate paperwork with appropriate agencies. See an attorney, I have no idea.

A public corporation, run by a board of directors (a bunch of guys) and a CEO (the biggest guy) may have a meeting and say, &quot;Shit. We don't have enough money to buy a new building, put an ad on the SuperBowl XXXX, give ourselves outlandish salaries, and hire a personal intern for each member of this board!&quot; So, they get together with some attorneys and accountants and create a zillion shares. With approval from the SEC (Securities and Exchange Commission) they sell their shares on the open market i.e. Wall Street.

What you are buying is a small part of that corporation. The board of directors, under the leadership of the Cheif Executive Officer, is *your* employees now. And a lot of other people. They are responsibe to *you* to make sure they are making money. Becuase that's why you bought their stock. Buy enough stock in the company, and you can put yourself on the board of directors, or vote to kick the current CEO out the window.

There are two basic ways to make money on a stock, or rather, two reasons you would buy a stock. The best reason to buy a stock is because every quarter (3 months) the corporation adds up its total sales, subtracts off total expenses, and has a net profit. Guess what? That profit belongs to (drum roll) THE STOCK HOLDERS!!! So they pay a dividend. They take the $47.00 they made that quarter and divide it by the zillion stocks they issued, and send $0.00001 to you for every stock you own.

The other way to make money on a stock is to look at the 52-week hi's and lo's and say to yourself &quot;Shit! This stock was selling for $120 a share 40 weeks ago, and now it's selling for $0.375 a share!&quot; And you happen to know that the company is NOT going to go bankrupt and in fact, is recovering from some very bad times or whatever, or you just know that MCI Telecom is about to buy that company for a bazillion gazillion dollars or whatever. So you speculate. And you buy it even though they haven't paid out a dividend since the A-Team was blasting across the boob tube in hi-fi camouflage.

Where do you buy a stock? It's not like you can go to Gay-Mart or E-Gay or Gay'n Pak. You go to a stock broker. The best, cheapest stock brokers in the world are online stock brokerages like Ameritrade, Etrade, Datek and the like.

Because buying and selling stocks costs money COMING and GOING. Most online brokerages charge about $10 to $8 per trade. Charles Schwabb was still charging $29.95 per trade a couple years ago, those morons, so I left and I personally use Ameritrade. It's $8 a trade.

The basic strategy is, and always will be, BUY LOW, SELL HIGH. Add to that, Buy What You Know. For example, Anandtech readers are some of the worlds savviest tech folks. They are probably well suited for buying technology stocks. But probably not so good at energy stocks or other industries.

But seriously, read that book first. You can probably get it at a library.

--Maetryx

 

[Hamburgerpimp]

What has been the best investment vehicle the past 90 years?? Returning 11% a year on average??? Hold on I know..........The Stock Market. I wouldn't put my money in just yet, though. Wait a bit to see.

 

[UNCjigga]

If you don't want to get into the nitty gritty of buying stocks, then in my opinion you really shouldn't be dealing with individual stocks in the first place. Mutual funds can also be deceiving and picking one right for your needs is difficult (especially with the pressure sales pitches.) Try looking into individual index funds. I read a book titled &quot;A Random Walk Down Wall Street&quot; by Burton Gordon Malkiel and it was a good reference on index fund investing for beginners.

 

[satori]

Don't forget you have to pay taxes on your capital gains. So, an 8% yearly gain (which would be pretty damn good with the outlook so far this year) would be more like a 5% gain. I dunno. With the way the market is these days, unless you've got like 100-200k in the market, it'd be more worthwhile to do some consulting on the side. Lesse:

200k in the market. 8% gain. 16k profit.

You'd get the same amount if you consulted for 6 hours a week @ $50 an hour.

Of course, if you're in it for the long haul and paying long-term capital gains, it skews it a bit.

Sat

 

[RossMAN]

It sounds like you want something which is cheap, easy and fast? I doubt you'll find it with stocks. I believe you have to be at least 18 years of age to own stock, I could be wrong though.

How much money do you have to initially invest?

Remember that you blow that all on one or several stocks you could potentially LOSE ALL YOUR MONEY if the stock goes down, down, down, down.

If you are at least 18, have enough money and insist on buying stock then you might as well get something out of it. You could open an eTrade account and receive a free $100 Buy.com Gift Certificate.

Best of luck!

 

[hans007]

oh my god, i've gone through hell with the stock market. Believe it or not the actual best i was doing was when i was daytrading at 6 AM every day. When i followed older people's advice and held on to stocks i ended up losing all my money. Damn those old people, they were losing money, why did i listen?? Oh well, tell you what this is what i'd do if you dont want to get screwed. The market is pretty dead right now. You can get intel at a P/E of 18 which is really good considering they are profitable and will be for the forseeable future. Get some AMD too, but not too much the analysts really hate them since they got burned so many times in the past, they are really volatile even though they've got a P/E of something like 6 or 7 (15 is what most people say is fundamentally a good choice, so less is better, but for technology stocks this kinda doesnt hold so you can go to say 30 p/e or higher and depending on the stock it depends). Anyways get some MSFT microsoft and buy it now. Stocks will not drop much lower than right now, i think the nasdaq is hovering around a 2 year low. PC sales should really start picking up this summer and the analysts should pick up on this and start buying for the long haul. WHy you ask? By the middle of the summer emachines will be bankrupt. This will push PC prices up since the big boys will still be alive. The release of win XP and office XP will drive PC sales and also force many to upgrade because of the higher hardware requirements for both pieces of software. Thus all 3 of those should go up. Anyways, if you lose money on this, its not my fault...

I dont think age matters. If you go to a place like datek i think that minimum balance is $1000 or maybe they dont even have it. Per trade should be around $8-10 at most discount brokers.

Damn, i'm a CS major. Damn they dont have something like this to major in here.

 

[RossMAN]

By the middle of the summer emachines will be bankrupt.

Finally, it's about sometime. Now I wonder what all those idiots at work will say when they complain about their eMachines, I'll tell them &quot;told ya so, shoulda bought a Dell or Gateway&quot;.