Stocks still a poor value?

[OS]

I have an ameritrade account that has sat around with cash for something like 2 years because I haven't seen anything interesting in the stock market. Thinking about closing it, but before I do, I ran though some common stocks to check valuation. Glanced at Intel, GE, Walmart, Cisco and they all have valuations in the 21-22 range. I remember reading somewhere that historically S&P/Dow stocks had ~15 P/E.

Also, I've read that the P/E ratio can also be seen as how long the stock basically takes to pay for itself, so in this case, it's over 21-22 years. I ran a typical P2=P1*e^(r*t) calculation for a simple savings account at 3%, I get almost the same number, 23 years to double the money. With this in mind, why bother even putting money in the stock market?

 

[TheLonelyPhoenix]

I'm no investor, but I think that most people in blue-chip stocks probably aren't looking to make an overnight fortune.

 

[poncherelli2]

put it in index fund if you have nothing better to do with it and you can withstand some fluctuations (dont need total liquidity). A good index fund will far outgrow a savings account. Only use the savings account for money that you may need within the next year or so and cant stand to lose to a market downturn.

 

[Jeff7181]

Woah... 2 years and you can't find a good investment? Don't trade based on news and earnings reports then...

You'd be better off investing in funds than doing nothing... check out EUEYX and EGLRX... both are no load funds and have low minimum investments... and they're both looking damn good right now. I'm in the process of switching my parents' mutual fund that has only gained 11% in the past year to EUEYX, which has gone up about 30% in the past year.

 

[Mill]

Mid-Cap stocks in my play portfolio are up 8% since Jan. 20. Large Caps in my real portfolio are up 3%. The market as a whole is doing excellent right now, but some of the blue chips aren't doing as hot. Tech stocks are still not doing as well, but Oil stocks, Banking stocks, and Retail stocks are doing pretty well.

Exxon Mobile is having an incredible year. HZM and MUR in my mid-cap play portfolio are both doing incredibly well too. Fannie Mae has been a turd, and I unloaded it a while back. Right now is not the best time to buy stocks -- that was in 2001-2002 during the recession.

 

[sundev]

Two words + symbol: Edge Petroleum (EPEX)

 

[OS]

Originally posted by: Mill
Mid-Cap stocks in my play portfolio are up 8% since Jan. 20. Large Caps in my real portfolio are up 3%. The market as a whole is doing excellent right now, but some of the blue chips aren't doing as hot. Tech stocks are still not doing as well, but Oil stocks, Banking stocks, and Retail stocks are doing pretty well.

Exxon Mobile is having an incredible year. HZM and MUR in my mid-cap play portfolio are both doing incredibly well too. Fannie Mae has been a turd, and I unloaded it a while back. Right now is not the best time to buy stocks -- that was in 2001-2002 during the recession.

That's cool but then how do you find the will and time to do all the research and babysit the entire portfolio? Also transaction fees are a pain if you try to tailor and diversify like what you have on your own. I don't think even with a low five figure account I can do something like that and come out ahead.

 

[Analog]

Martha Stewart stock has tripled since last August.

 

[Jeff7181]

Originally posted by: OS

Originally posted by: Mill
Mid-Cap stocks in my play portfolio are up 8% since Jan. 20. Large Caps in my real portfolio are up 3%. The market as a whole is doing excellent right now, but some of the blue chips aren't doing as hot. Tech stocks are still not doing as well, but Oil stocks, Banking stocks, and Retail stocks are doing pretty well.

Exxon Mobile is having an incredible year. HZM and MUR in my mid-cap play portfolio are both doing incredibly well too. Fannie Mae has been a turd, and I unloaded it a while back. Right now is not the best time to buy stocks -- that was in 2001-2002 during the recession.

That's cool but then how do you find the will and time to do all the research and babysit the entire portfolio? Also transaction fees are a pain if you try to tailor and diversify like what you have on your own. I don't think even with a low five figure account I can do something like that and come out ahead.

That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

*EDIT* BTW... Scottrade doesn't charge transaction fee's for mutual funds.

 

[OS]

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

 

[Jeff7181]

Originally posted by: OS

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

A mutual fund will never drop like a rock... but...

I like EUROX and VGENX... the latter requires a 25k minimum investment though I believe... but it's been doing very well. It's an energy fund.

 

[poncherelli2]

avoid real estate for now. with interest rates climbing and the fed showing no signs of it stopping in the near future, expect real estate to stagnate or decline

 

[OS]

Originally posted by: Jeff7181

Originally posted by: OS

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

A mutual fund will never drop like a rock... but...

I like EUROX and VGENX... the latter requires a 25k minimum investment though I believe... but it's been doing very well. It's an energy fund.

Is EUROX some kind of european index fund? Wouldn't most of the gain be from the decline in USD vs the euro? Is the dollar still gonna fall that much more against the euro? It's already fallen a lot.

 

[Jeff7181]

I use technical analysis for selecting funds or stocks... I don't concern myself with earnings reports or news events or any other speculation about what direction the market is going to go. Technical analysis shows what happened and what is currently happening and what will most likely happen, short of another stock market crash like back in the 20's or whenever that was.

 

[Mill]

Originally posted by: OS

Originally posted by: Mill
Mid-Cap stocks in my play portfolio are up 8% since Jan. 20. Large Caps in my real portfolio are up 3%. The market as a whole is doing excellent right now, but some of the blue chips aren't doing as hot. Tech stocks are still not doing as well, but Oil stocks, Banking stocks, and Retail stocks are doing pretty well.

Exxon Mobile is having an incredible year. HZM and MUR in my mid-cap play portfolio are both doing incredibly well too. Fannie Mae has been a turd, and I unloaded it a while back. Right now is not the best time to buy stocks -- that was in 2001-2002 during the recession.

That's cool but then how do you find the will and time to do all the research and babysit the entire portfolio? Also transaction fees are a pain if you try to tailor and diversify like what you have on your own. I don't think even with a low five figure account I can do something like that and come out ahead.

Well, I didn't pick any of my blue chips -- my broker did and I hold for the long run. FNM is the first thing I've sold in awhile. I've been sitting on MSFT since 93, and Walmart since 96. With Blue Chips you want to hold and reinvest the dividends. As far as diversifying into small/mid caps, I used MSN Money, and looked at stocks that had a high rating(8 or higher) under StockScouter. Using that method I picked 6 mid-caps and two small-caps. 6 of the 8 have a gain since Feb 2, with a very good return. I "play" invested about 181k, and it is now worth 193k. So, about a 12k gain in a tad over a month's time. Not bad at all.

 

[Jeff7181]

Originally posted by: OS

Originally posted by: Jeff7181

Originally posted by: OS

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

A mutual fund will never drop like a rock... but...

I like EUROX and VGENX... the latter requires a 25k minimum investment though I believe... but it's been doing very well. It's an energy fund.

Is EUROX some kind of european index fund? Wouldn't most of the gain be from the decline in USD vs the euro? Is the dollar still gonna fall that much more against the euro? It's already fallen a lot.

"U.S. Global Investors Eastern European Fund seeks long-term growth of capital. The fund normally invests at least 65% of assets in equities of companies located in the emerging markets of eastern Europe. Eastern European countries may currently include Russia, Poland, the Czech Republic, the Slovak Republic, and Hungary."

 

[Jeff7181]

My Grandfather is big into investing in the stock market. Seeing how well he's done on his own inspired me to learn about it too. He still has some money invested with a stock broker, but for the past 5 years, his own investments have done much better than his stock broker is doing for him. So little by little he's been taking some of his assets out of the hands of his broker, and investing it himself.
Funds are the way to go if you can't "babysit" your investments daily. Just look for long term trends and never trade against the trend.

 

[Mill]

Originally posted by: OS

Originally posted by: Jeff7181

Originally posted by: OS

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

A mutual fund will never drop like a rock... but...

I like EUROX and VGENX... the latter requires a 25k minimum investment though I believe... but it's been doing very well. It's an energy fund.

Is EUROX some kind of european index fund? Wouldn't most of the gain be from the decline in USD vs the euro? Is the dollar still gonna fall that much more against the euro? It's already fallen a lot.

Do you have any other holdings? I'm currently heavily in the US market, so I'm currently looking into funds that invest in Asia, Europe, and Australia. Not because I expect those markets to do better than the US(except maybe for Asia), but because I want a hedge against US stocks doing badly. Diversification into other areas of the global economy to me is something that is smart to do. I wouldn't invest in individual stocks because of the risk, but a good fund such as the EAFE(http://www.armchairmillionaire.com/portfolio/eafe.shtml)

 

[Jeff7181]

I looked into the Foreign Exchange market a year or two ago and that is very interesting, but I guess to make good money you need to trade on margin, which increases the risk quite a bit since it doesn't take a very big move to completely wipe out your investment. Which is why I like funds... there are no big moves like that, and you don't need to trade on margin to make 30-60% in a year.

I don't have a lot of money to invest (yet)... so currently the only two funds I own right now are EUEYX and AEMGX.

 

[OS]

Originally posted by: Mill

Originally posted by: OS

Originally posted by: Jeff7181

Originally posted by: OS

Originally posted by: Jeff7181
That's why I suggested mutual funds. If you pick good ones, they're VERY stable. You don't get the whiplash effect like you do with stocks. I check mine about once every other week because that's about how much time it takes to see a definate change in the trend. I also shoot for an investment of no less than 6 months, but a year or more is better because some mutual funds will charge redemption fee's unless you hold it for at least a year.

Those two you suggested are real estate funds though, which IMO is a disaster waiting to happen. What else are you looking at?

A mutual fund will never drop like a rock... but...

I like EUROX and VGENX... the latter requires a 25k minimum investment though I believe... but it's been doing very well. It's an energy fund.

Is EUROX some kind of european index fund? Wouldn't most of the gain be from the decline in USD vs the euro? Is the dollar still gonna fall that much more against the euro? It's already fallen a lot.

Do you have any other holdings? I'm currently heavily in the US market, so I'm currently looking into funds that invest in Asia, Europe, and Australia. Not because I expect those markets to do better than the US(except maybe for Asia), but because I want a hedge against US stocks doing badly. Diversification into other areas of the global economy to me is something that is smart to do. I wouldn't invest in individual stocks because of the risk, but a good fund such as the EAFE(http://www.armchairmillionaire.com/portfolio/eafe.shtml)

Besides 401K, it's basically all cash. I'm not a baller like you yet, but I'm working on it. 😀

 

[OS]

Originally posted by: Jeff7181
I looked into the Foreign Exchange market a year or two ago and that is very interesting, but I guess to make good money you need to trade on margin, which increases the risk quite a bit since it doesn't take a very big move to completely wipe out your investment. Which is why I like funds... there are no big moves like that, and you don't need to trade on margin to make 30-60% in a year.

I don't have a lot of money to invest (yet)... so currently the only two funds I own right now are EUEYX and AEMGX.

Yeah I knew someone that worked for some kind of forex fund. She pretty much kept an eye on her work around the clock, 7 days a week.

I don't know too much about it, but I got the impression from her that basically if you blinked at the wrong time you could get pretty screwed over.

 

[Jeff7181]

Originally posted by: OS

Originally posted by: Jeff7181
I looked into the Foreign Exchange market a year or two ago and that is very interesting, but I guess to make good money you need to trade on margin, which increases the risk quite a bit since it doesn't take a very big move to completely wipe out your investment. Which is why I like funds... there are no big moves like that, and you don't need to trade on margin to make 30-60% in a year.

I don't have a lot of money to invest (yet)... so currently the only two funds I own right now are EUEYX and AEMGX.

Yeah I knew someone that worked for some kind of forex fund. She pretty much kept an eye on her work around the clock, 7 days a week.

I don't know too much about it, but I got the impression from her that basically if you blinked at the wrong time you could get pretty screwed over.

Yeah, if you think stocks give you whiplash, watch the ForEx market when Greenspan makes a speech. 😉