***Official*** 2014 Stock Market Thread

[richardycc]

anyone playing Mannkind? rumor has it that AstraZeneca might buy them out...this is assuming FDA will approve Afrezza on 4/15?

 

[flunky nassau]

So there's all this news about high-frequency traders "rigging the market," and I'm a relatively new investor. I purchased a few mutual funds years ago, but now I want to try buying a few individual stocks. A few days ago, I tried to buy a few shares of Gilead at like $70/share, but when I got the confirmation a few days later, it actually bought at like $73/share. wtf! I tried to look up "bid price" "ask price" and "sell price," but didn't really understand it. I thought it took only a few seconds to execute the trade. Is this the effect of the high-frequency traders? Where they drive up the price right before your bid gets accepted? Sorry for the ignorance, but we all gotta start somewhere.

 

[SSSnail]

So there's all this news about high-frequency traders "rigging the market," and I'm a relatively new investor. I purchased a few mutual funds years ago, but now I want to try buying a few individual stocks. A few days ago, I tried to buy a few shares of Gilead at like $70/share, but when I got the confirmation a few days later, it actually bought at like $73/share. wtf! I tried to look up "bid price" "ask price" and "sell price," but didn't really understand it. I thought it took only a few seconds to execute the trade. Is this the effect of the high-frequency traders? Where they drive up the price right before your bid gets accepted? Sorry for the ignorance, but we all gotta start somewhere.

Look up "Limit order".

 

[flunky nassau]

Look up "Limit order".

Thanks. So, if the current stock price is $70, I should just place a limit order of $70.25 or something like that? Is that the general idea?

And if the stock price drops to say $68 by the end of the day, can I reset the limit order to $68.50?

 

[dr150]

So there's all this news about high-frequency traders "rigging the market," and I'm a relatively new investor. I purchased a few mutual funds years ago, but now I want to try buying a few individual stocks. A few days ago, I tried to buy a few shares of Gilead at like $70/share, but when I got the confirmation a few days later, it actually bought at like $73/share. wtf! I tried to look up "bid price" "ask price" and "sell price," but didn't really understand it. I thought it took only a few seconds to execute the trade. Is this the effect of the high-frequency traders? Where they drive up the price right before your bid gets accepted? Sorry for the ignorance, but we all gotta start somewhere.

Place a Limit order next time where you set the price. This also avoids a nightmare scenario of potentially placing a Market order during a computer driven Flash Crash scenario.

Take Jim Cramer's advice:
http://www.cnbc.com/id/100765786
http://www.cnbc.com/id/42673538


Btw, HFT front running only deals in pennies. Brokers that deal in millions of shares are more affected than a typical mom/pop transaction.

 

[flunky nassau]

Jesus. Now that I'm reading on this, it seems so elementary. Kinda embarrassing that I didn't even know about it. Thanks guys.
What other 1st grade advice can you give me before I buy my next stock.

 

[Hugo Drax]

Lol

 

[sm625]

Not only that, but as soon as your order fills, you always want to immediately turn around and place a limit order to sell those shares at some mildly outrageous value. For a stock like GILD, $90 sounds about right. If we got a broad market rally I would raise that limit as it approached. But from right here, $90 on Gilead would be a pretty damn good haul. It is not out of the realm of possibility for stocks in that sector to jump 20% and then give it all back just as fast. You definitely want to be in on that action if it does happen. You cant do that unless you spend every second watching the market (and who wants to do that?)

 

[brandonb]

Jesus. Now that I'm reading on this, it seems so elementary. Kinda embarrassing that I didn't even know about it. Thanks guys.
What other 1st grade advice can you give me before I buy my next stock.

The 2nd thing you need to learn about stocks is the stop order/stop limit order.

Specifically, the stop means the trade will sit out in limbo (If its a GTC order --- Use both stop + gtc) until the stop price is hit. Then it turns into a normal stock trade.

For example: Let's say you buy some IBM (I dont' know the price but using this as an example) 1000 shares at $100. Let's say the price goes up to $110. You could put a stop order in to sell your 1000 shares at $105. Now. This doesn't actually sell your shares for $105. What it does, is put insurance on your trade, that if the price goes back down to $105, it will turn the order into a sell at MKT value. This will guarantee that your order will sell if the price drops too much. That way you will pocket $5 per share profit, but you don't sell until it drops to that amount. This allows you to leave the door open for the stock price to continue to go up. (And if it does, you can cancel your stop order, and replace it at a higher price). You can keep doing this forever to make sure you have guaranteed income.

The 2nd it hits your stop, you sell, and your profits end up in your account.

Stop limits are the same thing, but when it hits the stop price (which causes the trade to go active) the order sells at the LIMIT price, rather than MKT price.

 

[Miramonti]

...


Btw, HFT front running only deals in pennies. Brokers that deal in millions of shares are more affected than a typical mom/pop transaction.

It's a function of liquidity. If you are a small trader but are trading a less popular less liquid stock/instrument, you'll get jerked around too. If you're a swing trader in a highly liquid stock or eft, and try to get in when others are diving in too, you'll all get jerked around to excess as well. The size of the front-running is a function of the size of the market participation and flow imbalances. Ultimately, you'll always want to use limit orders and never need to get in or out urgently. And once you have a position, put your closing order in even if you think it doesn't have a chance to get filled, as sm625 said. This gives you an opportunity to capitalize on unforeseen volatility, as other market participants are trying to execute orders aggressively and getting jerked around in price to do so. I have gotten numerous freakish awesome fills this way, altho not enough to make up for the impact of getting jerked around so many times.

 

[Miramonti]

Jesus. Now that I'm reading on this, it seems so elementary. Kinda embarrassing that I didn't even know about it. Thanks guys.
What other 1st grade advice can you give me before I buy my next stock.

Measure twice, cut once, and trade with money like you can't afford to lose it. If you trade with money like you can afford to lose it no problem, you probably will, no problem.

There can be a million rules tho, just learn from your experiences, and of course always understand the risks you're taking under different market scenarios.

 

[dr150]

Other basic advice is to never (at least most of us never use it anyways) open a Margin account. Always have it as a CASH account.

If you currently have a Margin account because you naively clicked the "Yes" to Margin Acct. box when opening a brokerage account, quickly call your brokerage and ask them to change it back to a CASH account.

The reason for this is that under bankruptcy law, if your account was tagged "Margin" (even if you never used it), your money is entangled with the bank's money. For crissakes, imagine being mixed up with Bear Stearns or Lehman Bros. failings.

By having a CASH account, your account remains separate from the bank's bankruptcy. No creditors can come after your money in an effort to get some of the bank's money from the liquidation.

http://www.bogleheads.org/forum/viewtopic.php?t=20582


.....BTW, it's also good to have your money in different banks/pots just in case one of them ends up in a clusterfuck Murphy's Law scenario...

 

[Reasonable Doubt]

Other basic advice is to never (at least most of us never use it anyways) open a Margin account. Always have it as a CASH account.

If you currently have a Margin account because you naively clicked the "Yes" to Margin Acct. box when opening a brokerage account, quickly call your brokerage and ask them to change it back to a CASH account.

The reason for this is that under bankruptcy law, if your account was tagged "Margin" (even if you never used it), your money is entangled with the bank's money. For crissakes, imagine being mixed up with Bear Stearns or Lehman Bros. failings.

By having a CASH account, your account remains separate from the bank's bankruptcy. No creditors can come after your money in an effort to get some of the bank's money from the liquidation.

http://www.bogleheads.org/forum/viewtopic.php?t=20582


.....BTW, it's also good to have your money in different banks/pots just in case one of them ends up in a clusterfuck Murphy's Law scenario...

But you can't short stocks without a margin account though.

Also how safe do you think Scottrade is?

 

[richardycc]

some brokers won't let you buy/sell options without being in a margin account...but that's more risky than you want to get into, so yes, stick with cash account then.

 

[debian0001]

Can someone point me in the direction of dividend investing.

My question is how much money do you need to make it work it?

For example, I just did a test scenario of using 10,000 dollars spread across 5 companies (2,000) each and my dividends came out to 435 bucks.

The companies I picked are

CM ($58) 35 Shares, QTR Div Rate .87 = $121.8
JNJ ($96.54) 21 Shares, QTR Div Rate .66 = $55.44
F ($15.63) 130 Shares, QTR Div Rate .12 = $65
IRT ($8.89) 225 Shares, MTH Div Rate .06 = $162
SCC ($30) 65 Shares, QTR Div Rate .12 = 31.2

Doesn't seem like much. Need more money to make more money.....

 

[brianmanahan]

dividend investing isnt a magical money-printing machine. if it was, everyone would be doing it.

true, some sectors or companies are most likely or able to give you more dividends, but in part they do this at the expense of growth (raising prices). and the current tax laws are better for long-term capital gains than they are dividends.

%4.35 in dividend yield is higher than many of the high-yield mutual funds current yields, but it doesnt seem unreasonable. expecting much higher than that probably is getting on the risky side - some companies might give you more, but you'd have to check to see if they are just returning capital to shareholders. if that continues too long, eventually the stock will be worthless.

here is a couple of interesting counter arguments to dividend investing:

http://www.etf.com/sections/index-investor-corner/21278-swedroe-the-dividend-etf-trap.html

http://www.cbsnews.com/news/why-a-high-dividend-stock-strategy-isnt-a-good-approach/

 

[Kwatt]

Can someone point me in the direction of dividend investing.

My question is how much money do you need to make it work it?

For example, I just did a test scenario of using 10,000 dollars spread across 5 companies (2,000) each and my dividends came out to 435 bucks.

The companies I picked are

CM ($58) 35 Shares, QTR Div Rate .87 = $121.8
JNJ ($96.54) 21 Shares, QTR Div Rate .66 = $55.44
F ($15.63) 130 Shares, QTR Div Rate .12 = $65
IRT ($8.89) 225 Shares, MTH Div Rate .06 = $162
SCC ($30) 65 Shares, QTR Div Rate .12 = 31.2

Doesn't seem like much. Need more money to make more money.....

Get the list of "Dividend Aristocrats", "Dividend Champions", and "Dividend Contenders"

Read a article or 10 about them.

Also check out "DRIP" investing. Look for "drip" programs that are low or no cost.

"DRIP"ing has worked real well for me. I started in 1999. I reinvested all the dividends until 2011. Now I get a check every quarter from both stocks for 90% of the dividends and reinvest 10%. I get a small increase every quarter for growth. And both companys raise the dividend every year.



***
When asked to name the greatest invention in human history, Albert Einstein simply replied "compound interest." [Hartgill, 1997]




.

 

[Kwatt]

The way I think about it is.

I have read that you should spend no more than 4% of your retirement every year. If you are recieving 4% or more on your retirement fund. And the dividend goes up every year you never have to spend any of the base. You also have a fighting chance against inflation.


If a company is raising the dividend every year. And you have a few years till retirement even if the current dividend is less than 4% it should be more than 4% when you get there.

.

 

[glenn1]

Some beatdown names were a bit too tempting today. Built back up my position in EVOL which I still love long-term. Initiated a new position in the 'big data' space as FUEL has gotten hammered lately so I grabbed some at 35.65 a couple minutes before the close. I'll buy more if it continues to drop and am eyeing up DATA with a target of $60 or less; although it's still expensive everyone and their mother will be using Tableau before long and the share price will reflect that as the low-information retail buyers start learning about it.

 

[brandonb]

I made it through the YHOO earnings with 500 shares (bought in at the $33 levels), and now up $1500 or so on the investment. Only bought in a week ago. Not too shabby. Analysts are all over it though giving PT of $40-50. I think I'm going to hold and see if it goes up. Currently at $36.40ish. Very tempted to sell though.

 

[zephyrprime]

Bought some vix today.

 

[rockmyroad]

What company do you use to do your stocks? My company suggested E-trade but are there any others that you would recommend?

 

[debian0001]

I use tradeking.

 

[FelixDeCat]

100 shares of PLUG :|

 

[brandonb]

What company do you use to do your stocks? My company suggested E-trade but are there any others that you would recommend?

I use Wellstrade. Only because I have a Wellsfargo checking account. I can easily transfer money in and out of my brokerage account (as quick as 20 minutes) with no fees. It is functional, but honestly, pretty much sucks otherwise.