Thinking of getting into the stock market

[Mike Lowe]

I'm in the early stages of *thinking* about getting into the stock market. I do not have much to really put in and am actually thinking of spending the next few months "simulating" putting money in; seeing what I would have/could have made.

For starters, I'm looking for 3 things:

1) Advice on do's and do not's especially for those just starting out

2) Stock Market simulation software which I could use to practice

3) Software that could be used to monitor stocks much like you can buy software to help with fantasy football, for comparison sake, once I begin to buy/sell for real.

*Perhaps 2 and 3 could be the same software?

I'd also be interested in hearing thoughts on mutual funds etc.

[Cringer]

pork bellies, go all in

[Vinatieri for Prez]

Now's not the best time if you're thinking short term. Try the bond market. Seriously, unless you are thinking long term with growth stocks right now, tread carefully. It doesn't sound like you are though since you are going to try a 2-3 month simulation period as a test.

[terpkristin]

Stocks really are for long-term investing, so if you want stocks, plan on playing the game long-term.

Invest in things that pay dividends, and set it up so that the dividends re-invest in the parent company.

Fool.com is your friend. They have a ton of tools for new & experienced investors alike, and programs for both (such as the Project GreenLight program for newer investors, and the 10 Years to a Million for more experienced investors).

Morningstar.com is your other friend. It rates stocks, funds, etc and gives a feeling for how they'll do in the long term.

/tk

[st.cronin]

Standard advice I give everybody: Think about the product whatever company you are considering investing in makes. Is it one you use, or would use if you had the need? If the answer is no, SELL. If the answer is yes, BUY. Working from the other end, think about a product you wish you invented/owned. Buy the company that makes that product.

A company that makes a good product can eventually figure out how to make money; a company that doesn't make a good product probably never will, and will probably lose money in the long run.

[terpkristin]

Originally Posted by st.cronin

Standard advice I give everybody: Think about the product whatever company you are considering investing in makes. Is it one you use, or would use if you had the need? If the answer is no, SELL. If the answer is yes, BUY. Working from the other end, think about a product you wish you invented/owned. Buy the company that makes that product.

A company that makes a good product can eventually figure out how to make money; a company that doesn't make a good product probably never will, and will probably lose money in the long run.

On a similar vein, if you find yourself investing in one type of stocks (from one "side" of the market, one niche as it were), try to find websites/magazines/journals related to the trade/industry. You can get a good feeling for how things are flowing/trends are going by following the trade publications in the industry, which can help.

/tk

[Flasch186]

also if you must get in look at ETF's as a way of getting diversified with very little money.

[Desnudo]

I'm sorry to keep popping into your threads with negative advice, but here it is:

1. Simulation does not reflect reality, don't bother
2. Take a few college courses in finance or economics if you are seriously interested in investing

[twothree]

For a stock market simulation there is always the shareware game, Wall Street Raider by Ronin Software.

[QuikSand]

There is a ton of information available out there on what sort of "fundamentals" to look for in an individual stock, if it's something that interests you. The transition you seem to have in mind -- transferring the sort of attention that you pay to things like fantasy sports into playing the market doesn't sound unreasonable to me.

If you are interested in playing the market short term (which it sounds like) the first rule for you is that you should do so with money that you can afford to lose. I don't know what you mean by "not much" but I agree that there's rather little value in simulations, as most people find that until it's real money, they simply aren't willing to dedicate real attention to things.

I personally don't see much harm in some trading as a side activity (not necessarily "thinking long term") as long as it's with resources that you could do without.

And I generally am inclined to disagree with almost any single bit of advice that wraps up in something that just seems to simple to follow as "do this, not that." If rules for successful investing were as simple as that, it wouldn't be a challenge. But it is.

I do agree with one comment above that a very user-friendly site to start out with is fool.com -- a lot of their content is user-driven (pros and cons there) but it does a good job of being pretty digestible if you're new to the game.

[Mike Lowe]

Thanks for all of the advice everyone it has been very helpful. Fool.com is a terrific site and I've spent some time reading up. Basically, compounding seems to be what is drawing my interest and although short-term gains would be nice, setting aside 10% of my check isn't anything that would be too dificult and is something I could do with the $1,000 or so I was thinking of starting with.

[Grammaticus]

Get a broker and let them do what they do best.

[Mike Lowe]

Originally Posted by Grammaticus

Get a broker and let them do what they do best.

What type of fees do they charge? What % do they usually get to keep? Is that even how it works?

[QuikSand]

If your total amount of investment is something like $1,000, then you really aren't well suited to get into individual equities. Buying and selling stocks involves some level of transaction charge - even if you do all the homework yourself (which is not that difficult to do) you're going to pay in the neighborhood of $10 every time you buy or sell. If you split your $1,000 into, say, five stocks, you'd be paying at least $10 every time you buy or sell $200 worth of stock, and the transaction costs become at that point really too high to bear. If you chose to follow the advice above and go with a full-service broker, you may find yourself paying $30 or $40 a trade, and they will (1) have you as just about their lowest-priority client due to your portfolio amount, and (2) have a permanent incentive to keep you trading, rather than making one or two wise purchases and holding them.

It's your call what you want to do. For lots of people, the wisest investment for the long term is mutual funds, or even ETFs as mentioned above. If what you want is to engage in the challenge of picking equities and "playing the market" then you won't get any of that sort of reward by this sort of "hand it over" strategy. You need to make the call with what you want to do... realizing that there are some practical impediments to some options just as a function of transaction costs.

[QuikSand]

Here's a thought... maybe a contest here might make a "trial" worth doing. Here's a site that lets you set up a portfolio... I think they also let you run contests as well. Perhaps if there were a contest set up here, we might get a dozen people to play and would take it fairly seriously... which is the real hurdle when you're playing with fake money.

http://www.investopedia.com/

[terpkristin]

Originally Posted by QuikSand

If your total amount of investment is something like $1,000, then you really aren't well suited to get into individual equities. Buying and selling stocks involves some level of transaction charge - even if you do all the homework yourself (which is not that difficult to do) you're going to pay in the neighborhood of $10 every time you buy or sell. If you split your $1,000 into, say, five stocks, you'd be paying at least $10 every time you buy or sell $200 worth of stock, and the transaction costs become at that point really too high to bear. If you chose to follow the advice above and go with a full-service broker, you may find yourself paying $30 or $40 a trade, and they will (1) have you as just about their lowest-priority client due to your portfolio amount, and (2) have a permanent incentive to keep you trading, rather than making one or two wise purchases and holding them.

It's your call what you want to do. For lots of people, the wisest investment for the long term is mutual funds, or even ETFs as mentioned above. If what you want is to engage in the challenge of picking equities and "playing the market" then you won't get any of that sort of reward by this sort of "hand it over" strategy. You need to make the call with what you want to do... realizing that there are some practical impediments to some options just as a function of transaction costs.

To piggyback, some investment sites charge you up to $25 for a trade unless you have a certain amount invested, then they knock it down to 10 or 11, so if you're going to do this online, you should check out the terms...

I agree with all of QuikSand's advice, but I stand by my suggestion of investing in things that pay dividends.

/tk

[Grammaticus]

Originally Posted by Mike Lowe

What type of fees do they charge? What % do they usually get to keep? Is that even how it works?

Usually commision based like .11% or per trade around $20 to $40. A good one will talk to you about your goals and manage accordingly.

[BYU 14]

One book that I would say is a MUST read is "How to trade in stocks" by Jessie Livermore. The book was written before 1940 and has been reprinted with some added material a few times over the years, but still holds up. He was like a Donald trump character in his time and actually was able to foresee the crash of 1929, which helped him carry close to 100 Million dollars into the depression.

Real good read, with the charts Livermore used and a succinct breakdown of all his strategies included.

[Marc Vaughan]

Personally I'd be interested if anyone knows of any Chinese company shares (or similarly linked stocks) which are available (and if applicable how to purchase them).

With the current situation these seem pretty much a no brainer to me ..

[Logan]

I'd tell you to do one of two things...if you really want this to slowly grow into something with small contributions, do it as an IRA. Or do your research and find a company you really like and throw your $1K into that. As Quik said, dividing that amount into smaller stocks is gonna kill you when it comes to the fees, even if you go with Scottrade at $7/trade. Buying and selling 5 stocks has erased 7% of your value before you've gained anything. Factor in taxes on any gains and the 4.5% or so you can get if you just left the $1K in a high-yield savings, and you have a lot of work to do to catch up. So again, I'd say as option 2, buy $1K in a company and hope that grows into something nice.

[Flasch186]

Originally Posted by Marc Vaughan

Personally I'd be interested if anyone knows of any Chinese company shares (or similarly linked stocks) which are available (and if applicable how to purchase them).

With the current situation these seem pretty much a no brainer to me ..

only if you can ride out what is coming in the way of corrections. I would suggest China or east asian ETF's that spread the wealth around the eastern ring a bit. I own PGJ a China ETF and hope to hold it for awhile (unless the real estate takes us down a road where I have to liquidate but dont worry Im well clear of that.....for now ). do your own due diligence.



To reiterate what someone said above Q1 and Q2 could be very turbulent and you could easily see losses within a week of getting in so be careful.

[damnMikeBrown]

I am a broker. I work for one of the major industry players.

Look at what Quck and Logan said.

From just what you've written, if I were talking to you, I would discourage you from your chosen course of action. If you are trying to "beat a game" and completely willing to loose your $$, fine, go for it. If this is investing, if you want this $$, if you want to see growth then you should probably not be looking to be looking to this sort of unrivaled aggressive/risky strategy.

It really depends on a handful of different factors. What is the $$ for? What is the time frame? What is your risk tolerance? How self directed do you want to be?

The only truly pitiful investing stories that I've witnessed begin like this

[QuikSand]

Originally Posted by Marc Vaughan

Personally I'd be interested if anyone knows of any Chinese company shares (or similarly linked stocks) which are available (and if applicable how to purchase them).

With the current situation these seem pretty much a no brainer to me ..

While I am no expert, I can point you toward a few potential stocks to check out. A fair number of major Chinese companies have shares traded on the US markets, usually through a capital exchange or holding company arrangement.

I personally am long Focus Media (FMCN), but probably the single biggest China play out there is (well, has been) the "Chinese Google" company called Baidu (BIDU). Both are traded in the US markets (both NASDAQ).

Here's an article about FMCN that gives a little insight into the sort of mechanism that a company like Focus Media has used to become a US equity:

http://www.businessweek.com/magazine...6/b3959403.htm

[bignej]

On Motley Fool there is a free game called CAPS where you pick stock and track them VS. the S&P 500 performance. The idea is if you can't beat the S&P, you should be buying index funds. Its a good way to test stock ideas and its very fun as well.

[Vinatieri for Prez]

Also, go with the tried and true strategy of putting the stock listings on a dart board and start picking your stocks with each throw.

[Mike Lowe]

Well, since a bot gave this thread a bump, I figured I'd update. I ended up going rather simple, but it seems to be working well. Then again, I guess the market has done rather well collectively.

Since 2007 I've been maxing out a separate ROTH IRA each Jan 1st to go along with my work's match of my 401K (separate account). I bought 5 index funds and just disperse my contributions accordingly and reinvest any dividends.

These are the (unrealized) % gains of those 5 index funds followed by the total of all 5 since 2007.



So I guess a bit of diversifying diversity? It's amazing to see from where it started, especially since this account would be in addition to my actual retirement investment through my work (and previously a 403B when teaching).