Any tips for a newb on investing?

Any tips for a newb on investing?
Posted by ulee on 07 Nov, 2008 21:40
I want to try buying some stocks while the market is crap and prices are low.
Thinking about sharebuilder.com. Everyone says "diversify," another said money market mutual funds are good because they\'re gov\'t-insured. Anyone have general advice on investing?

#1 Reply
Posted by jocelyn on 07 Nov, 2008 22:04
I think a lot depends on what you want to spend/what your plans are.

Check out this show:

http://www.969wtkk.com/The%20Money%20Show/tabid/86/Default.aspx

Pretty sure you can stream it online. You could also call in.

Unrelated: Holy crap a mosquito just flew into my ear.

#2 Reply
Posted by skalnbyc on 07 Nov, 2008 22:09
Quote from: ulee;210268
I want to try buying some stocks while the market is crap and prices are low.
Thinking about sharebuilder.com. Everyone says "diversify," another said money market mutual funds are good because they\'re gov\'t-insured. Anyone have general advice on investing?

This could be a good discussion I have thought about starting before.

I have had good luck timing so far this year. In a defensive move, held all cash in the portfolio since 2007 (in anticipation of the current mess) and somehow timed the market just right and bought stocks on the lowest low in October and made some nice GGGs within just a week and took those proceeds + principal and bought some high-quality-though-undervalued companies. My dad on the other hand went a step further and had some exposure to an inverse S&P 500 fund (it means the fund performs in the exact opposite direction of the benchmark it is designed to track) right in October 2007 and made money while everyone was losing. Some of what I currently hold will take some time to fully unlock the value, though I think the upside is eventually going to be tremendous, regardless of any near-term downside risk. We could enjoy a rare, best-buy opportunity for stocks that comes along once every few decades. Not sure that all indicators (Coppock Guide) are pointing there just yet.

I plan on doing much more bargain hunting and devoting more weekend time for researching in the near future and wouldn\'t mind tossing around ideas on here. I work in the field, have been a Wall Street Journal subscriber for the last decade and also read some good independent newsletters so I have a little background. Our own Wildcoyote is a financial advisor from what I understand.

Everyone\'s objectives, risk tolerance and market perspectives are unique so it\'s hard to come in and give a point blank recommendation.

I\'m still at work and trying to leave for the weekend so I\'m gonna have to return later on.

#3 Reply
Posted by Wolfman on 08 Nov, 2008 01:27
Al is right, it is all about your goals. If you\'re looking to make some quick cash now at relatively higher risk...
given the current market conditions there are several casino bets that are better than playing stocks right now. If you can learn basic strategy, your best bet is to play blackjack or Spanish 21. If not, just play the pass line ONLY in craps or play baccarat. DO NOT bet on ANYTHING else, you\'re better off throwing a dart at the stock reports in the newspaper. Basic strategy blackjack pays 1:1 49.6% of the time, and the pass line in craps pays 1:1 49.2% of the time, which is way better than your odds in the current stock market.

For casino geeks or math geeks, check out http://www.wizardofodds.com one of my favorite websites.

#4 Reply
Posted by inthewhitelodge on 09 Nov, 2008 20:25
The only investment I might make, if I could of course, is in gold.

#5 Reply
Posted by wildcoyote on 09 Nov, 2008 21:42
Quote from: alexanderzurflu;210273
Quote from: ulee;210268
I want to try buying some stocks while the market is crap and prices are low.
Thinking about sharebuilder.com. Everyone says "diversify," another said money market mutual funds are good because they\'re gov\'t-insured. Anyone have general advice on investing?

Our own Wildcoyote is a financial advisor from what I understand.

Everyone\'s objectives, risk tolerance and market perspectives are unique so it\'s hard to come in and give a point blank recommendation.

Right and right Al.

Ulee- it all depends on your time frame. Is this for eventual retirement? A home purchase? Rainy day fund?

Right now interest in a money market is so low, it\'s just about pointless, and can\'t really even be called and investment. It\'s more or less a parking space for the money.

For long term (10+ years) it\'s great time to get into the stock market. No load mutual funds are great for beginners. Try to mix companies of different sizes and industries. This is the diversification you were told about. Also try to get some exposure to companies outside the US. It\'s going to grow in a 2 steps forward one step back type of way. It is paramount not to panic in the lows.

This is slightly more advanced:
A strategy I\'m trying with my clients right now is to invest in consumer staples. These are companies such as Proctor and Gamble. They make things (tooth paste, toilet paper) people buy no matter what. Even if you got laid off, your still buying tooth paste and toilet paper. These stocks typically pay dividends so you make some money even if the stock price tanks. You can cross-reinvest these dividends into consumer cyclicals. These are companies that make things people only buy when financially secure. Think Home Depot, Harley Davidson. These stock prices take a beating in a bad economy and are a great buy right now. When the economy picks up, so will the stock price, and you bought at a discount.

If anyone has any questions feel free to shoot me an email.

Quote from: inthewhitelodge;210395
The only investment I might make, if I could of course, is in gold.

Why?

Gold prices are at an all time high right now. Buying into a high market is as close to guaranteed failure as someone can get.

#6 Reply
Posted by Wolfman on 09 Nov, 2008 21:59
Quote from: wildcoyote
Why?

Gold prices are at an all time high right now. Buying into a high market is as close to guaranteed failure as someone can get.

Funny you should mention that. On Friday at the gym I overheard 3 people talking about investing. They seemed more or less sensible if not somewhat uneducated/naive. Then this guy jumps in the conversation and tells them how he just put all his savings into gold coins. He was explaining why it was the only sensible thing to do, and that you had to physically possess the coins (no gold futures). And the other three were totally fascinated. They thought he was a goddam genius. I started laughing so hard that I had to go work out somewhere else in the gym before they saw me laughing.

BTW I was joking about the casino thing. I hope people realize that. Granted, there might be some truth to the fact that in the very very short run a smart casino bet might be better than a bet on the average stock right now. But please, for the love of god, never ever invest in any casino games! (Unless you are an advanced card counter with a monster bankroll and hundreds of hours with nothing else to do but play blackjack.)

#7 Reply
Posted by jocelyn on 09 Nov, 2008 22:17
I heard about this company called apple, check it out.

#8 Reply
Posted by inthewhitelodge on 10 Nov, 2008 02:39
Quote from: wildcoyote;210398
Quote from: alexanderzurflu;210273
Quote from: ulee;210268
I want to try buying some stocks while the market is crap and prices are low.
Thinking about sharebuilder.com. Everyone says "diversify," another said money market mutual funds are good because they\'re gov\'t-insured. Anyone have general advice on investing?

Our own Wildcoyote is a financial advisor from what I understand.

Everyone\'s objectives, risk tolerance and market perspectives are unique so it\'s hard to come in and give a point blank recommendation.

Right and right Al.

Ulee- it all depends on your time frame. Is this for eventual retirement? A home purchase? Rainy day fund?

Right now interest in a money market is so low, it\'s just about pointless, and can\'t really even be called and investment. It\'s more or less a parking space for the money.

For long term (10+ years) it\'s great time to get into the stock market. No load mutual funds are great for beginners. Try to mix companies of different sizes and industries. This is the diversification you were told about. Also try to get some exposure to companies outside the US. It\'s going to grow in a 2 steps forward one step back type of way. It is paramount not to panic in the lows.

This is slightly more advanced:
A strategy I\'m trying with my clients right now is to invest in consumer staples. These are companies such as Proctor and Gamble. They make things (tooth paste, toilet paper) people buy no matter what. Even if you got laid off, your still buying tooth paste and toilet paper. These stocks typically pay dividends so you make some money even if the stock price tanks. You can cross-reinvest these dividends into consumer cyclicals. These are companies that make things people only buy when financially secure. Think Home Depot, Harley Davidson. These stock prices take a beating in a bad economy and are a great buy right now. When the economy picks up, so will the stock price, and you bought at a discount.

If anyone has any questions feel free to shoot me an email.

Quote from: inthewhitelodge;210395
The only investment I might make, if I could of course, is in gold.

Why?

Gold prices are at an all time high right now. Buying into a high market is as close to guaranteed failure as someone can get.

I was under the idea that gold is relatively stable over the longterm...That is if your investments are curtailed to meet retirement plans.

#9 Reply
Posted by wildcoyote on 10 Nov, 2008 10:23
Gold price per ounce

1970: $37.60
1980: $641.20
1990: $423.80
2000: $272.15
2008: $1,002.00

If you bought in 1970 and sold today you\'re pretty pleased. But what about the guy who bought in 1980, with a target retirement date of 2000? How\'d that work out for him? There is risk with any investment, and it is NEVER wise to buy at the peak of the market.

#10 Reply
Posted by inthewhitelodge on 10 Nov, 2008 13:31
Quote from: wildcoyote;210440
Gold price per ounce

1970: $37.60
1980: $641.20
1990: $423.80
2000: $272.15
2008: $1,002.00

If you bought in 1970 and sold today you\'re pretty pleased. But what about the guy who bought in 1980, with a target retirement date of 2000? How\'d that work out for him? There is risk with any investment, and it is NEVER wise to buy at the peak of the market.

I agree with you. However, I\'ve tended to agree that the actual value of gold is stable, the inflation rate (printing more money devalues our currency) is more the reason that long-term investments will hurt us. Inflation is a huge issue that many people forget to fault our own Federal Reserve for.

#11 Reply
Posted by Mark on 10 Nov, 2008 16:39
Get yourself a few issues of the Investor\'s Business Daily. Any good newstand should have it.

#12 Reply
Posted by Wolfman on 10 Nov, 2008 19:03
Quote from: Mark;210509
Get yourself a few issues of the Investor\'s Business Daily. Any good newstand should have it.

Or Bob Brinker\'s Markettimer.

Or Fortune.

Or Businessweek.

Or a recent prospectus from any mutual fund firm like Fidelity or Vanguard or Janus.

Or read the WSJ for a week.

I guess my point is (with no disrespect to my man wildcoyote who I\'m sure knows what he is talking about) for investing advice, the best advice I could give anyone here would be to get off of .info and read some reputable investment publications.

#13 Reply
Posted by wildcoyote on 10 Nov, 2008 19:24
Quote from: Wolfman;210519
Quote from: Mark;210509
Get yourself a few issues of the Investor\'s Business Daily. Any good newstand should have it.

Or Bob Brinker\'s Markettimer.

Or Fortune.

Or Businessweek.

Or a recent prospectus from any mutual fund firm like Fidelity or Vanguard or Janus.

Or read the WSJ for a week.

I guess my point is (with no disrespect to my man wildcoyote who I\'m sure knows what he is talking about) for investing advice, the best advice I could give anyone here would be to get off of .info and read some reputable investment publications.

:thumbsup: