Invested $324 in AMD stocks a few days ago

[puffff]

Originally posted by: Garuda
There are only 2 investing strategies that work (and you have to employ both of them): buy & hold, and diversification.

The folks in the finance industry don't want you to know that. They make a big hype out of usually meaningless day-to-day stock price movements, stock trading, etc. because they make money off people trading stocks. They don't want you to put your money in the stock market and leave it there. That's not very profitable for them.

Previous stock prices mean absolutely nothing. They are completely irrelevant. They have no bearing on future stock prices, dividends, etc.

That said a lot of uneducated investors do look at past stock prices. This is called "technical analysis" and it has been debunked many times over.

What you should be looking at are things like the company's P/E, forward P/E, divident payout, profit growth, dividend payout, etc. You should look at these figures in the context of news reports about the company and their business strategies, analysis of the sector that the company does business in, and the same stuff with regards to the company's competitors. That's how you make an educated decision on when to buy stock.

And it goes without saying - don't buy stock if the transaction cost is cost prohibitory! I invest in $300 increments and I've been using Sharebuilder which charges $4 per trade to make it worth my while. I plan on holding these stocks for a good 10 years or so.

yes.. finally, someone who knows what they're talking about 🙂

:beer:

 

[adelphi]

read mark cuban's blog, he has a long commentary on why not to buy stocks

 

[neonerd]

Originally posted by: Garuda
There are only 2 investing strategies that work (and you have to employ both of them): buy & hold, and diversification.

The folks in the finance industry don't want you to know that. They make a big hype out of usually meaningless day-to-day stock price movements, stock trading, etc. because they make money off people trading stocks. They don't want you to put your money in the stock market and leave it there. That's not very profitable for them.

Previous stock prices mean absolutely nothing. They are completely irrelevant. They have no bearing on future stock prices, dividends, etc.

That said a lot of uneducated investors do look at past stock prices. This is called "technical analysis" and it has been debunked many times over.

What you should be looking at are things like the company's P/E, forward P/E, divident payout, profit growth, dividend payout, etc. You should look at these figures in the context of news reports about the company and their business strategies, analysis of the sector that the company does business in, and the same stuff with regards to the company's competitors. That's how you make an educated decision on when to buy stock.

And it goes without saying - don't buy stock if the transaction cost is cost prohibitory! I invest in $300 increments and I've been using Sharebuilder which charges $4 per trade to make it worth my while. I plan on holding these stocks for a good 10 years or so.

thx 🙂

i'm learning a lot from this thread, even though not my original intention, I'm very glad people are posting all of this. :thumbsup:

 

[Krk3561]

Originally posted by: Garuda
There are only 2 investing strategies that work (and you have to employ both of them): buy & hold, and diversification.

The folks in the finance industry don't want you to know that. They make a big hype out of usually meaningless day-to-day stock price movements, stock trading, etc. because they make money off people trading stocks. They don't want you to put your money in the stock market and leave it there. That's not very profitable for them.

Previous stock prices mean absolutely nothing. They are completely irrelevant. They have no bearing on future stock prices, dividends, etc.

That said a lot of uneducated investors do look at past stock prices. This is called "technical analysis" and it has been debunked many times over.

What you should be looking at are things like the company's P/E, forward P/E, divident payout, profit growth, dividend payout, etc. You should look at these figures in the context of news reports about the company and their business strategies, analysis of the sector that the company does business in, and the same stuff with regards to the company's competitors. That's how you make an educated decision on when to buy stock.

And it goes without saying - don't buy stock if the transaction cost is cost prohibitory! I invest in $300 increments and I've been using Sharebuilder which charges $4 per trade to make it worth my while. I plan on holding these stocks for a good 10 years or so.

P/E is not always a good indicator. In the case of high growth stocks, a high P/E is normal and does not necessarily mean a stock is overpriced, like yahoo for instance, has 134 P/E or something like that. Now, if a steel company has that P/E, that company's stock would be overpriced.

 

[dullard]

Originally posted by: puffff
but let's look at a few more stocks. lets take Gap Inc (GPS). pretend we're back in 1995. GPS chart. by your logic, in 1995, you could've said Gap never traded above $17 (split adjusted). cutting out 1999-2002 levels when stocks were overpriced across the board, look at the prices today. it consistently trades above the $18 point, going as high as $25 in the past 52 weeks.

or Intel (INTC).. pretend we're looking at it in 1995 as well. the stock hovered around $10, and had been at that level for the past two years.INTC chart. investors saying INTC is going just going to fluctuate around the $10 level would have been wrong. again, cutting out the bubble years, fast forward to today, INTC trades at $20 a share.

another example, Nokia (NOK)NOK chart. lets say we're in 1998. the past year or so, from 1997 to 1998, nokia too was hovering around the $10 point. today, even down from the high's of the bubble, nokia trades at around $14 a share. levels it had never reached until after 1998.

back to AMD. it's possible that AMD today is near the point on the graph akin to 1995, 1998 levels of the 3 previous stocks i mentioned. it has never gone above $16 in the past year, but it very well might in the near future, just like how Intel never rose above $12 in 1995, but today, trades well above it.

Absolutely none of those are equivalent to AMD's situation. Why?
[*]You are talking about a period (1990s) where virtually all stocks rose. The period from the early 80s to 2000 stocks went up, up, and up. I'm talking about a period (~2000 to now) where stocks are pretty much flat across the board. Thus the two situations are completely different.
[*]Lets look at Gap. You can look at chart from the mid 80s to today and (excluding the jump you mentioned) fit a straight increasing line. In general, GSP has increased year, after year, after year. There are no consistant and repeatable highs and no consistant and repeatable lows. Thus what I said doesn't apply to Gap. Gap doesn't have a market cap (AMD is producing at or near its capacity), Gap has been producing income pretty consistantly (AMD hasn't), Gap's income per share has been tracking stock prices very well (AMDs earnings per share don't have much pattern with respect to stock price), etc. The situations are no where near the same.
[*]INTC. Very much the same as GPS. From early on until 2000, INTC went up, up, and up. There were no consistant lows and no consistant highs until the year 2001. Thus my logic doesn't apply. Since 2001, I think it may apply, but we don't have enough data yet. But if we did attempt to apply my logic, I'd look here and say I'd probably sell in the low 30s, buy at ~20 (assuming no major negative news) and hold in between. Intel also isn't market capped (if they chose to cut prices in half, AMD would be toast barring intervention from governments). Intel has consistanly brought in profits, etc. Thus, Intel stock will not perform like AMD stock in the mid-term period.
[*]NOK is similar to INTC. It went up, up, and up for quite some time. Taking data in the 90s when everything is going up is not the situation I described (when everything is flat). But in the last 4 years, it is quite sporadic. I see a consistant low at about $10, so that is a good time to buy (assuming no major negative news). But there is no consistant high. My logic of a channeling stock doesn't apply. Recent highs were about: 35, 25, 20, 23, and 14. No pattern of consistant highs, so my method cannot tell anyone when to sell.
[*]AMD is 100% different than all of the above. Since the mid 80s (when the splits stopped), AMD has had consistant highs, and consistant lows. AMD's earnings per share doesn't have a clear pattern with AMD's stock price (its price is more correlated with technology sector in general). For example, AMD's stock price was about the same when losing 3 cents per share as it was when losing 40 cents per share or even when losing $2.50 per share. There is no recent major news from AMD for huge profits or losses, so I see no reason the pattern will change. AMD can't bust out of its caps (market share, etc) in the near term. As long as the overall stock market is moving sideways, I fully expect AMD's stock to move sideways. I'd personally sell around 16 and above and I'd buy at 9 and below. In between, you'd have to be moving quite a few shares (not the thread topic) to get me to do much else.

 

[Zebo]

for that amount (actually almost any amount until you can move the stock with your trades or know something that you should'nt), the whole stock market is a waste. I look at my portfolio as a savings/retirement account not a money maker. If it makes money bonus that's it.

You're a much better investment!

Get yourself a toro lawnmower for $370 and make that back every weekend for a year having $19,240 or 5200% payoff! Thousands of other examples rather than giving schwab $50 and the crooks on wall street your pennies.

 

[dr150]

You should have put it into Google seeing the rally of late.

 

[brxndxn]

I put all my play money into AMD a few years ago and I've pretty much broken even.. I'd say that's not bad considering I road through the horrid 9/11 and the dotcom burst..

But, my comission was only $9 on Datek (now Ameritrade). Schwab ripped you off badly.

 

[DaWhim]

put away your stocks.

 

[masterxfob]

neonard? more like neoTARD!

 

[Eli]

dullard, puffff.. thanks for the interesting information. 🙂

I hope you both realize that you're both right, it's just two different styles.... and I think they're both valid. You just have to apply them to the appropriate stocks.