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Whirlpool
2008-Apr-05, 12:21 AM
Hello Everyone!

Our Company has introduced to us to a "SharePlan" Program and they are offering us to invest in Stocks. I'm interested , but I want to know more about it.
They say you can gain more money or you can lose , it depends on how you monitor the trend in the Market , and you should how to play with it, When to Sell and When to Buy.

Does anyone know how are Stocks played in the Stock market?
Pls share whatever you know , the advantages and disadvantages of it.

Thanks a Lot!

Neverfly
2008-Apr-05, 12:25 AM
Stocks!
http://www.irvinehousingblog.com/wp-content/uploads/2007/07/pillory-stocks.jpg

Or....hang on. Wrong kind. Close though.

HenrikOlsen
2008-Apr-05, 01:05 AM
Simplest thing first, the one people tend to forget.
Only invest money you can afford to lose.
The price includes the emotional stress of looking at them vanishing.

Second: even if you can afford to lose the money, if there may be a time where you need to get them out of the investment fast, DON'T put them in stocks, otherwise you'll end up selling when the stock is down, just because you need the money.

Third: read everything you can about investing in stocks, then make a plan for how you want to do it, then follow that plan.

Fourth: if you're tempted by daytrading, put the money in online poker, you'll lose them slower.

Whirlpool
2008-Apr-05, 01:25 AM
Fourth: if you're tempted by daytrading, put the money in online poker, you'll lose them slower.


What is Online Poker?

Jim
2008-Apr-05, 01:37 AM
I think it was Will Rogers who said, "Making money in the stock market is easy. All you need to do is buy before the price goes up and sell before it goes down."

That said, there are three ways to make money in the market.
1. Handle someone else's investments and take a fee. That way you get paid everytime you buy or sell, regardless of whether the stock does well or not.
2. Become a successful day trader. This will require you to learn the market and watch your stocks closely and make good trades in a timely fashion. If you do this, be sure to follow Henrik's advice about using money you can afford to lose.
3. Invest for the long term. You won't make a lot of money fast, but over time the market will go up and you will see a return.

If you want to invest so you can pay for that vacation this summer, try 1 or 2; but be prepared to stay home this summer.

If you want to invest to make retirement easier, try 3. Don't put all you money into one stock, no matter how good (cough)Enron(cough) it looks. Try a Couch Potato Fund... diversfied investment, little effort on your part, long term gain.

Torsten
2008-Apr-05, 01:41 AM
Buy low, sell high. [/flippant]

First, avoid advice from people who use the term "playing" with respect to the stock market. Players have money to lose.

I've only quickly scanned this site (http://www.fool.com/?source=ifltnvpnv0000001) but the pages starting here (http://www.fool.com/school/basics/basics01.htm) look like they cover the topics well. From here, broaden your reading.

I'm still a few years from retirement, but I plan to fund it primarily from my own savings, most of which have been directed into stocks and equity mutual funds, and more recently, some money market funds. Together, these account for about 80% of my wealth. I invest broadly, and have had more gains than losses over 20+ years, such that I've done better this way than by putting my savings in the bank.

While I watch the markets, I don't react to every burp and bump in the index. Many people can't stomach the ride, and sell in a panic. This illustrates the notion that the market reflects the balance between fear and greed. One of my brothers-in-law, who is a seasoned trader, has scrawled in thick felt pen across the top and bottom of his computer monitor "More fear, less greed". I only do a few trades a year based on my objectives. The money I invest is not money I need next week, or even next year. Remember, "the market can stay irrational longer than you can stay liquid." (Keynes) And yet, over a suitably long term, stock markets produce net gains.

I'm wary of get-rich-quick schemes and I sigh when I hear someone hoping to make a lot of money without knowing what the investment is. I have a friend who earns substantially more than I do but has a weakness for "boiler room tips". He's poured countless thousands of dollars into money-losing stocks and has virtually no profits to show for his years of poor decisions. When Greed > Fear, p(loss of shirt) -> 1.

Whirlpool
2008-Apr-05, 01:45 AM
Those are good points Jim & Henrik .

You see our Company , says that they are in a stable position and always part of the Top Players in the Market , so that means , they never lose so we have nothing to worry about .

I just want to make sure that I won't regret in investing my money in stocks.
Yeah, I need to read more information about the Stock Trading .

HenrikOlsen
2008-Apr-05, 01:51 AM
You see our Company , says that they are in a stable position and always part of the Top Players in the Market , so that means , they never lose so we have nothing to worry about .
Well, there's the warning sign Torsten mentioned, right there:)

Whirlpool
2008-Apr-05, 02:10 AM
Wow Torsten ,the link you gave is very informative , I just finished reading Step 1 and it's really helpful , especially with the Patrice & Bianca example.
One thing I learned, I should be free of debts ( credit cards ) before investing.
hmm..:think: I need to clean myself from debts then .

Yes, Henrik , I saw that, Right after I posted . :doh:
I have to be careful, but In a way , I trust my company but of course , nothing is permanent here on earth, especially in Stock Trading .

Ronald Brak
2008-Apr-05, 02:52 AM
Do you want to spend hours a day researching the stock market? No? Well then you won't be able to do better than investing in stocks completely at random by throwing darts at the stock pages. Don't laugh, throwing darts at the stockpages produces better results than managed funds over time and there is plenty of evidence that supports this. Go get a historical record of share prices, pick stocks at random, and on average you will do better than probably any managed fund you can find. The best way for most small investors to put money into shares is to use an indexed share fund and leave their money in it no matter what the market does:

http://en.wikipedia.org/wiki/Index_fund

Index funds do better than managed funds over time because the fees are so much lower (and there can be tax advantages due to the lack of churn as well). Total fees for an index fund should be under 0.5%. Total fees for a managed fund are often 2% or even higher.

aurora
2008-Apr-05, 02:56 AM
For long term investors (like if you are saving for retirement, or something where you won't need the money for quite a few years), the best thing is to be diversified. A mix of stock funds, bond funds, and cash (interest bearing account).

There's lots more to consider, but that's the basics. Generally, if you need the money in, say, 5 years, then you don't want to put that money in stocks.

I don't know what your company is doing, but in general you don't want to own a lot of stock in the company you work for -- especially if it is money for retirement. That would put too much risk on you -- if you lose your job, you don't want to lose your savings at the same time.

Whirlpool
2008-Apr-05, 03:15 AM
They have ( my company) have a Lock Period of 5 Years, before we can get our money .

Neverfly
2008-Apr-05, 03:17 AM
They have ( my company) have a Lock Period of 5 Years, before we can get our money .

Yeah, that was my first post in this thread...

FriedPhoton
2008-Apr-05, 03:24 AM
Risk management is key. Technical analysis is important, you'll want to learn it. Read a shelf full of books about the stock market and trading if you want to begin to have a clue, read two shelves full if you plan on knowing what you're doing, and devote your life to it if you plan to be an expert. Always keep in mind that the people on the other side of the screen want your money and they are very, very, very smart and quite good at taking it.

After you've learned technical analysis and are good at chart reading, watch stocks that have fundamentals you like and get used to the way they move. When you can reasonably predict what might happen figure out where you want to buy, where you want to sell (if you're going long). Before making any purchase, know ahead of time how low it will go before you sell and how high you expect it to go before you sell. If it hits either limit, sell. If it goes down and hits your low mark, sell. Period. End of story. Bail. The point is, if it hits your low mark you were wrong about the trade in the first place and you have no idea what's going on so get out. Don't wish or pray for an upswing. Don't get into the trap of thinking that it'll go up the minute you sell so why bother selling. It is inevitable that some stocks you sell will go up afterward. It doesn't matter. The point is, up or down, you've preserved what you have and haven't lost more due to a trade behaving in a way you didn't expect.

You have to be very emotionless about trades. Set them up, make them, and get out, hopefully with a profit.

So, all that nonsense I've written is about stock trading. Investing is entirely different and I know little about it.

Neverfly
2008-Apr-05, 03:28 AM
Risk management is key. Technical analysis is important, you'll want to learn it. Read a shelf full of books about the stock market and trading if you want to begin to have a clue, read two shelves full if you plan on knowing what you're doing, and devote your life to it if you plan to be an expert. Always keep in mind that the people on the other side of the screen want your money and they are very, very, very smart and quite good at taking it.

After you've learned technical analysis and are good at chart reading, watch stocks that have fundamentals you like and get used to the way they move. When you can reasonably predict what might happen figure out where you want to buy, where you want to sell (if you're going long). Before making any purchase, know ahead of time how low it will go before you sell and how high you expect it to go before you sell. If it hits either limit, sell. If it goes down and hits your low mark, sell. Period. End of story. Bail. The point is, if it hits your low mark you were wrong about the trade in the first place and you have no idea what's going on so get out. Don't wish or pray for an upswing. Don't get into the trap of thinking that it'll go up the minute you sell so why bother selling. It is inevitable that some stocks you sell will go up afterward. It doesn't matter. The point is, up or down, you've preserved what you have and haven't lost more due to a trade behaving in a way you didn't expect.

You have to be very emotionless about trades. Set them up, make them, and get out, hopefully with a profit.

So, all that nonsense I've written is about stock trading. Investing is entirely different and I know little about it.

Well it seems that Whirlpool is describing investing.

Just about every company I ever worked for urged its employees to buy stock in the company.

Take a look at the 401K stuff. Many companies start sticking other stock options into employee 401K plans, most of which is quite confusing.

ETA: I can easily imagine a corporate hired salesman going around pushing and selling stock options to employees and making it sound delicious.

Whirlpool
2008-Apr-05, 03:29 AM
Friedphoton , what you've written isn't Nonsense to me . I like your advise. I m going to read more about it and learn .
My regret is , why I didn't think about investing in Stocks when I was young .
At 36 , this is way late for me, But I'm still hopeful.

FriedPhoton
2008-Apr-05, 03:50 AM
Friedphoton , what you've written isn't Nonsense to me . I like your advise. I m going to read more about it and learn .
My regret is , why I didn't think about investing in Stocks when I was young .
At 36 , this is way late for me, But I'm still hopeful.

Well, look at it this way. If you really know what you're doing you could get rich in a year or two. Put your money in something safe for a couple years while you study the stock market. Set a future date before which you will not begin investing money in stocks. Learn all you can, make wise trades, and you'll catch up to where you could have been if you'd started sooner.

The reason I say to set a future date is because as you read about stocks and trading you'll get an itch you'll want to scratch. You'll lose money, perhaps all of it, before you really understand anything. The future date will help keep you from impulsively reacting to dreams of getting rich quick.

The stock market will still be there in two years. I'm sure you'll agree that your chances of making up for those two years will be much greater if you spend the two years educating yourself. On the other hand, if you rush in blindly, you may have nothing left in two years.

Torsten
2008-Apr-05, 04:45 AM
I need to clean myself from debts then.

Absolutely. Consumer debt, especially in the form of credit card debt, is an anchor.

Whirlpool
2008-Apr-05, 05:24 AM
Absolutely. Consumer debt, especially in the form of credit card debt, is an anchor.

Yeah , I have One credit card I use for my extra needs and for emergencies.

But still even if its only one, I need to settle it.

Ronald Brak
2008-Apr-05, 07:10 AM
My advice is quite different from FriedPhoton's. Unless you have a huge amount of money to invest, for most people it is simply not worth the effort of becoming an expert on the stock market. Do learn about the stock market and look at what has happened to it in the past, but don't try and pick stocks. Simply invest in an index fund and leave your money in it no matter what happens to the market. Sure your investment will sometimes drop in value, but you simply take the bad with the good. Over time your investment will increase in value. If you are a financial genius, feel free to go ahead and buy and sell stocks, but most people are not financial geniuses, and most people who think they are financial geniuses aren't either. (I eat those people for breakfast with a side order of fried lamb brains. The lamb brains make up for what they lack.)

I'd recommend saving say $5,000 and investing it in an indexed fund as soon as you resonably can, and then make regular contributions to it. The sooner you invest, the sooner you can start getting used to the stockmarket's ups and downs. You may want to keep track of how much better your index fund performs compared to a savings account. That way when the stock market does fall, you will probably be able to see that you are still better off than if you had kept the money in the bank.

I don't really recommend diversifying, although your own house or business can be good investments. Over the long term an index share fund will tend to perform better than most other investments. Just learn to accept that the income of your shares will go up and down. I don't even recommend diversification upon retirement, as you may be retired for a very long time, long enough to gain benefits from staying in the stockmarket, and you may wish to pass on considerable wealth to others when you die.

Van Rijn
2008-Apr-05, 08:47 AM
Friedphoton , what you've written isn't Nonsense to me . I like your advise. I m going to read more about it and learn .
My regret is , why I didn't think about investing in Stocks when I was young .
At 36 , this is way late for me, But I'm still hopeful.

Yes, 36 is better than 46, or 56. Anyway, if you can clear out your debt, you'll be ahead. If you can clear most of your debt and save some money in a bank, you'll be even further ahead. It can be surprising just how far a bit of saving can help. I wouldn't get too far into stocks until you have a margin of safety, but you might consider a little money (and I do mean a little money, not a lot!) in an investment club before that. I see investment clubs as a way to become used to the subject, not so much to make money.

As for myself, I'm a pretty conservative investor, and I don't like to spend a huge amount of time on it. I don't think much of technical investment. I do occasionally try to buy stocks where I think I know something about the company that might not be generally accepted by the market, but generally I buy stocks and funds for long term growth, and don't worry too much about temporary shifts in the market.

Torsten
2008-Apr-05, 04:29 PM
Yes, the time to start is now. You can not make up for lost time, but you should take full advantage of what is left. Start by killing that debt.

As Ronald has pointed out, most people are not financial geniuses, and few professionals are. So the index fund approach is the simplest and surest way to be invested in the broad equity markets, and you don't pay high profit-robbing fees. This is also noted in that series of pages to which I linked.

I hesitate to say anything more detailed than that. Read to get a broad understanding of how things work, and avoid advice from people who are trying to sell you something. Be very skeptical of people making offers of investment schemes promising very high rates of return. At best, these people are dupes repeating hype they've heard, at worst, they are criminals.

Stock investors are fond of saying how equity markets outperform fixed income investments in the long term. But the length of time used in the comparison is important. This chart (http://allfinancialmatters.com/Graphics/SP%20500%2020-Year%20Rolling%20Period%20Returns.pdf) shows the 20 year rolling average return of the S&P 500. You'll see that some 20 year periods were actually quite poor.

Also, find out whether your country provides favourable tax treatment for some kinds of savings. In Canada, for example, when we contribute to a particular kind of account, known as a Registered Retirement Savings Plan, we are allowed to deduct the contribution from our reported income for the year (up to a prescribed limit). Further, any growth in the value of the account is tax exempt until it is withdrawn. This has huge implications for your wealth at retirement time. I believe the US equivalent is the 401(k) (I'm sure I'll be corrected if I'm wrong). Also, growth in the form of interest or dividends earned versus capital gains (the growth in the value of the stocks as recorded at the time you sell them) is taxed differently in this country.

This may sound like a lot of stuff to know, and it is, but approach it systematically, like taking a course, and it can make a very big difference in your wealth.

ASEI
2008-Apr-05, 05:25 PM
I was just investigating this topic myself!

My primary interest lies with long term investing. I am mainly interested in investing long-term as a type of savings for retirement. A regular savings acount is a type of investment instrument - it's just low risk - low return, and filtered through a bank (and FDIC insured). But, since I want to save at least 10x what the FDIC insures you for (which is $100,000) for retirment purposes , I'm looking at stock and bond investmnets.

There are an amazing variety of financial instruments to invest in - almost as many as flavors of ice cream at the grocery store. But it basically comes down to a tradeoff between risk and interest rate.

At the low end of the risk scale, you have bonds. Bonds are basically like being at the other end of a loan - you, through a bank or investment agency, buy a bond which stands for a percentage of a bunch of loans, entitling you to the interest and payments on the loan. The borrowing parties are legally obligated to pay you back at the given interest rate - the risk is mainly in terms of the borrower defaulting on your loan.

Stocks are higher risk. But if you're in it for the long haul, and you avoid nasty incidents like the great depression, you can make somewhere in the neighborhood of 10% annual return with a broad enough investment fund (source: http://www.stockpickssystem.com/pf/stock_market_history.htm).



Table:
Decade Average Return Per Year
1900s 9.96%
1910s 4.20%
1920s 14.95%
1930s -0.63%
1940s 8.72%
1950s 19.28%
1960s 7.78%
1970s 5.82%
1980s 17.57%
1990s 18.17%


Going off that chart, you get something like 12.89% average return and 6.06% standard deviation since 1940.

(I'm still looking for finer data than this, probably related to the S&P500).

But with stocks, you are basically on your own - if the companies lose money, so do you, and no one guarantees your investment value.

In the long run, you also have to consider inflation, which offsetts your nominal interest rate. You can consider real interest to be nominal interest - inflation rate for a give year.



Average StdDev
1937-Present 3.94 3.34
1970-Present 4.71 2.93
1980-Present 3.85 2.56
1990-Present 2.91 0.89


(raw data source: http://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx)

Eventually, I want to do a few monte carlo simulations involving my investment goals and what my mutual fund's historical performance has been to see the distribution of where I'm likely to end up in 20-30 years with regard to retirement.

In any case - in the long run, it's far better to be on the recieving end of interest than the paying end - you want to have your money working for you, not you working for your debt!

PS - Look into Roth IRAs - they're tax free - as long as you don't try to withdraw money from it before retirement.

ASEI
2008-Apr-05, 05:29 PM
(oops - double posted)

ASEI
2008-Apr-05, 05:32 PM
Oh, and start early!

Another useful chart:
Say you invest $1 per year with an average return given in the chart, how many dollars do you end up with? (Scale to your investment rate)



Interest Rate
Year 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
0 1 1 1 1 1 1 1 1 1 1
2 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.31
4 5.10100501 5.20404016 5.30913581 5.41632256 5.52563125 5.63709296 5.75073901 5.86660096 5.98471061 6.1051
6 7.213535211 7.434283382 7.662462181 7.898294481 8.142008453 8.39383765 8.654021093 8.92280336 9.200434676 9.487171
8 9.368527268 9.754628431 10.15910613 10.58279531 11.02656432 11.49131598 11.97798875 12.48755784 13.02103644 13.57947691
10 11.56683467 12.16871542 12.80779569 13.48635141 14.20678716 14.97164264 15.78359932 16.64548746 17.56029339 18.53116706
12 13.80932804 14.68033152 15.61779045 16.62683768 17.71298285 18.88213767 20.14064286 21.49529658 22.95338458 24.52271214
14 16.09689554 17.29341692 18.59891389 20.02358764 21.57856359 23.27596988 25.12902201 27.15211393 29.36091622 31.77248169
16 18.43044314 20.01207096 21.76158774 23.69751239 25.84036636 28.21287976 30.8402173 33.75022569 36.97370456 40.54470285
18 20.81089504 22.84055863 25.11686844 27.6712294 30.53900391 33.7599917 37.37896479 41.44626324 46.01845839 51.15909045
20 23.23919403 25.78331719 28.67648572 31.96920172 35.71925181 39.99272668 44.86517678 50.42292144 56.76453041 64.00249944
22 25.71630183 28.84496321 32.4528837 36.61788858 41.43047512 46.99582769 53.4361409 60.89329557 69.53193858 79.54302433
24 28.2431995 32.03029972 36.45926432 41.64590829 47.72709882 54.864512 63.24903772 73.10593995 84.70089623 98.34705943
26 30.82088781 35.34432383 40.70963352 47.0842144 54.66912645 63.70576568 74.48382328 87.35076836 102.7231348 121.0999419
28 33.45038766 38.79223451 45.2188502 52.9662863 62.32271191 73.63979832 87.34652927 103.9659362 124.1353565 148.6309297
30 36.13274045 42.37944079 50.00267818 59.32833526 70.76078988 84.80167739 102.0730414 123.345868 149.575217 181.943425

ASEI
2008-Apr-05, 05:43 PM
Absolutely. Consumer debt, especially in the form of credit card debt, is an anchor. Credit card debt is nasty! Get rid of it! Pay the thing off every single month!! A 15-20% interest loan, which is what a credit card amounts to, is practically slavery.

I use mine for transaction security, nothing more. They're safer to use than debit cards, since illegitimate transactions can be challenged, and the credit card company will take care of the offending parties (whereas someone can drain your checking account with a compromised debit card and walk away scott free). But don't use them to borrow money - go to a bank for that!

Moose
2008-Apr-05, 06:17 PM
I want to point something out: company investment schemes often use something called "restricted stock". It means that even if the price skyrocketed, you can't sell it for some amount of time, and it'll be measured in years.

You need the details, in writing, before you reach for your chequebook. If you can't immediately get full disclosure in writing, give it a pass.

A company I once worked for pulled precisely that stunt. And to my shame, I fell for it. They did not inform us ahead of time time the stock was restricted, and they also did not inform us ahead of time that they intended to use the company restricted stock offering to depress the price a bit for the following month when they issued a mass of unrestricted stock, which they snapped up at a bargain.

My only comfort is that I didn't put in money I couldn't afford to lose, and the company share price tanked to roughly a tenth of its issue price, and stayed there until they got de-listed. Couldn't happen to a 'nicer' bunch of people.

CodeSlinger
2008-Apr-05, 07:11 PM
Some great tips and links here! (I've bookmarked fool.com, and am slowly working my way through its pages)

I would like to learn more about index funds. There seems to be quite a few of them, and I'm wondering if some are markedly better than the others. Are there any good resources for comparing them side-by-side?

FriedPhoton
2008-Apr-06, 02:33 AM
Some great tips and links here! (I've bookmarked fool.com, and am slowly working my way through its pages)

I would like to learn more about index funds. There seems to be quite a few of them, and I'm wondering if some are markedly better than the others. Are there any good resources for comparing them side-by-side?

I could dig out dozens of links but www.stockcharts.com has some great technical analysis tutorials and very powerful charting. It is also one of the very few places you find Point & Figure charts which are a useful way of determining supply and demand without a lot of other noise.

Even though StockCharts is a great site and have awesome charts I've grown so accustomed to www.bigcharts.com that I still use it years after discovering StockCharts. The charting capabilities aren't as powerful but it has what I need in a format my eyes are comfortable with.

There are great professional software packages for charting but they cost an arm and a leg. I never felt a strong enough need to buy one, although I would have loved to if they were cheaper.

Also, a word of caution about Motley Fool. They give advice. Take all advice with a grain of salt no matter who it comes from. Never make a trade based solely on something you read there. Way too many people out there are lazy, don't want to do any work but want to get rich quick, so they take other people's advice, then lose money.

I work with people who have enough money to mess around in the market and I shiver at the decisions I hear them making. They talk about trading stocks that I can see are horrible with a ten second glance at a chart. They're throwing their money away. It sad but it happens all the time.

All it takes to be a stock trader is a brokerage account and money. One thing most people don't realize is that EVERYONE else in the market is against you. They are all trying to take your money from you. It's you against all of them.

ASEI
2008-Apr-06, 04:06 AM
All it takes to be a stock trader is a brokerage account and money. One thing most people don't realize is that EVERYONE else in the market is against you. They are all trying to take your money from you. It's you against all of them. Well, there is the long term positive sum situation where a company actually buys real equipment with their investment money and makes a profit - but that's in the long run.

FriedPhoton
2008-Apr-06, 04:40 AM
Well, there is the long term positive sum situation where a company actually buys real equipment with their investment money and makes a profit - but that's in the long run.

I should have been more clear. I was referring to the other people who also invest in the market. The only way you make money, aside from dividends, is by selling your stock to someone else at a price above what you paid for the stock.

The object is to take as much money from other people as possible.

Maksutov
2008-Apr-06, 05:08 AM
[edit]Also, a word of caution about Motley Fool. They give advice. Take all advice with a grain of salt no matter who it comes from. Never make a trade based solely on something you read there. Way too many people out there are lazy, don't want to do any work but want to get rich quick, so they take other people's advice, then lose money....Another one to be wary of is Jim Cramer. His recent track record is less than stellar (http://www.moneybluebook.com/cnbcs-jim-cramer-advises-investors-bear-stearns-is-fine-dont-be-silly/).

BTW, about that "ripped last paragraph" where you talked about not being exactly successful in the market for the past five years: if a seasoned pro like yourself can't turn a profit, how can a n00b expect to do any better?

:think:

RalofTyr
2008-Apr-06, 05:27 AM
Stocks!
http://www.irvinehousingblog.com/wp-content/uploads/2007/07/pillory-stocks.jpg

Or....hang on. Wrong kind. Close though.

My first thought...

FriedPhoton
2008-Apr-06, 06:18 AM
Another one to be wary of is Jim Cramer. His recent track record is less than stellar (http://www.moneybluebook.com/cnbcs-jim-cramer-advises-investors-bear-stearns-is-fine-dont-be-silly/).

BTW, about that "ripped last paragraph" where you talked about not being exactly successful in the market for the past five years: if a seasoned pro like yourself can't turn a profit, how can a n00b expect to do any better?

:think:


Personally, if I was a moderator I'd boot your butt for a while for this little stunt. You couldn't possibly have any other reason for bringing up something I deliberately edited out other than to take a dig at me. What you have said is not only a blatant ad hom, it's a misrepresentation of what I said, and it also rehashes something I deliberately took out because I said IT WAS TOO PERSONAL.

I didn't think people would want to read about my personal misfortunes over the last five years. Misfortunes that have nothing to do with stock trading but that I mentioned because they have affected my ability to remain in the market because I needed the money for other things. Initially I brought it up in an attempt to be bluntly honest about where I stood but then I decided that it was simply too much information and had no relevance to anything I've said in other posts.

Maksutov
2008-Apr-06, 09:36 AM
Personally, if I was a moderator I'd boot your butt for a while for this little stunt. You couldn't possibly have any other reason for bringing up something I deliberately edited out other than to take a dig at me. What you have said is not only a blatant ad hom, it's a misrepresentation of what I said, and it also rehashes something I deliberately took out because I said IT WAS TOO PERSONAL.Please calm down a bit, FriedPhoton.

There was no "stunt" nor a misrepresentation, as evidenced by what you wrote in your second paragraph.

I don't see where anything in my post is an ad hom since, first, it's a general reference to something you did post and which I read and remembered (please note I didn't mention your personal misfortunes at all).

Second, it's not a personal attack, but rather a question that applies to those new to the market.

Specifically, if a seasoned pro has trouble being successful in stock trading, what're the chances for a new person?
I didn't think people would want to read about my personal misfortunes over the last five years. Misfortunes that have nothing to do with stock trading but that I mentioned because they have affected my ability to remain in the market because I needed the money for other things. Initially I brought it up in an attempt to be bluntly honest about where I stood but then I decided that it was simply too much information and had no relevance to anything I've said in other posts.To repeat, the relevance is, if a seasoned pro has trouble being successful in stock trading, what're the chances for a new person (other than luck)? Those new to the stock market will have problems (stock-related and non-stock-related) which will affect how they are able to handle their business transactions.

I really don't see where referring to you as a seasoned pro could be considered an ad hom. It was obviously meant as something positive. If you saw otherwise, then please accept my apology.

Meanwhile, what's your view of Jim Cramer?

FriedPhoton
2008-Apr-06, 04:25 PM
Please calm down a bit, FriedPhoton.

I really don't see where referring to you as a seasoned pro could be considered an ad hom. It was obviously meant as something positive. If you saw otherwise, then please accept my apology.

So, with that in mind, you wouldn't be offended if I refer to you as a genius in a future post.

However, I will assume I took your comment the wrong way and in interest of keeping the peace, drop the matter.


Meanwhile, what's your view of Jim Cramer?

I do not pay much attention to "analysts" who try to advise me on stock selections. I have heard bad things about Cramer, but those have mostly been unsubstantiated and are probably angry comments by people who followed his comments and lost money.

As a rule, I assume that everyone who has anything to say about any stock could have an ulterior motive. It may be an incorrect assumption but in the context of stock trading it is better to not trust than it is to trust. If you read comments by someone like Cramer, verify them before acting on them. I mostly ignore them. I have my methods, which have evolved through trial and error augmented by a lot of reading. Where trading is concerned I can't truly trust anyone but myself so it doesn't make sense to waste a lot of time listening to analysts.

I will also offer the same warning about book authors. I have been unable to find a single book on stock trading that covers all the important details very well, you have to read a lot of them to get the big picture. I also have not found one that deals adequately with the corrupt practices that are commonplace. Nothing would be more interesting to me than detailed information from a market maker on how they conduct business. I know they bend the rules all the time, I have watched things occur that could not have been anything other than deliberate manipulation.

Small things happen all day long every day. But other strange things are hard to notice. For instance, by nothing but sheer coincidence I found two stocks that had nearly identical chart movements over a period of three months. They followed in lockstep but were totally unrelated stocks. (This can happen in many legitimate instances but this wasn't one of them). The two companies were different in almost every way with the exception of the fact that they were both under $5/share. (Note: I strongly recommend staying away from stocks under $10/share because they are too easily manipulated by people with a lot of money.) So I watched these two companies, noted which one led the other, and traded accordingly. I have no idea why they were in lockstep for that long period of time but it unfortunately did not go on very long after I noticed it. I wish I had seen it a month sooner, I would probably be retired by now.

One problem that really ticked me off was the practice of naked short selling. I have not followed the problem much in the last year or so, so I can't say if it is still a big deal or if the problem has been corrected. In a nutshell the practice is illegal for anyone but market makers and they have set boundaries in which they can conduct a naked short sale, but violating those boundaries was a routine practice. It became so bad the SHO list was invented. Regardless, the practice continued as evidenced by the number of companies on SHO lists published by various exchanges. The CEO of Overstocked.Com had a huge public fit over the practice and brought it into the public eye. I believe he quickly lost his desire to fight the problem after he realized the nature of the beast he was up against (my conjecture). Anyway, if you stay away from cheap stocks and penny stocks you'll probably not run into many problems related to naked shorting.

Another problem that isn't talked about and bilks many average joe's out of their life savings is the deliberate, and legal, theft that is commonplace in the penny stock markets. Down at that level companies can be created with the sole intent of separating you from your money by selling you stock that can or will mysteriously lose value overnight (literally) and put you in a position where you either can't sell the stock you bought (because they reverse-splitted all your shares away) or you sell at a huge loss. I made the mistake of investing in one of these companies and lost a nice chunk of my hide. I started looking into what happened and how it could happen and unraveled a scheme that spanned a dozens of people, many of whom were CEOs of their own penny stock companies.

I conducted an armchair investigation in my free time using only the Internet. I started with the CEO of the company that soaked me and through public records found the CEO held other positions in other companies, found his personal properties, and most interesting, his "associates". I then methodically did the same with each of his associates, and then with his associates associates. What I found was an unbelievably complex web of interaction between these people and clear evidence (to anyone with a brain) that they were collaborating on many levels. I followed trails that many people might not think of, such as who created their websites, that revealed not only that many of them used the same company but also led me to find others in their "ring" by searching for other customers of that web design company.

All of the things these people were doing were perfectly legal. But the end results of every company they owned was the same; they all became defunct within a year or two and the assets dribbled away to none other than the associates in the group. These corporations were set up in such a way that it is impossible to gain control of them by purchasing a majority share on the market. The CEO always, through his preferred shares, could outvote the entire float, and was immune from accountability to stockholders. Once you invest in a company like this and the share price drops your money is gone.

I probably could write a book on this myself if I had the time. Just writing this post is bringing back a lot of memories of the moral obligation I felt to conduct that armchair investigation and warn people. Somewhere along the line I stopped thinking about it much. I did prepare a huge document and forwarded it to the proper authorities when I finished, but I never heard a word back from any of them and never followed up. I had little hope when I sent it that anything would happen because everything these people did was legal with the exception of what I perceived as a clear conspiracy to bilk investors. Either all those CEOs were the WORST businessmen on Earth or their intent from the start was to create companies that failed.

Blah, blah, blah... I've gone on too long about this... I went off on an extreme tangent I had no intention of getting into when I started the post.

RalofTyr
2008-Apr-06, 07:00 PM
So what you're saying is that I could start a small coproration, get lots of investors and funding. And if my small business fails or runs into misfortune, I will not be ruined and unable to start up again?

Moose
2008-Apr-06, 07:05 PM
It depends on how it's set up, Ral. I'm not prepared to claim conspiracy, but I've seen plenty of businesses sink where everybody but the 'captain' went down with the ship. The bigger the business, the less likely the CEO is to so much as get his shoes wet.

Ken Lay was very much the exception, not the rule. My very first gut reaction to reading about his death was to note the reporter did not say who'd reported the death, nor listed a single unimpeachable witness who'd seen and identified the body. The timing and circumstances were 'convenient' enough to justify a bit of gut suspicion, I think.

I never did see satisfactory evidence, come to think of it.

FriedPhoton
2008-Apr-06, 07:43 PM
So what you're saying is that I could start a small coproration, get lots of investors and funding. And if my small business fails or runs into misfortune, I will not be ruined and unable to start up again?

Yes, that is exactly what I'm saying. You would need a group of people to do it, each of them starting off with buying a delisted and worthless corporation (a shell corporation). You clean up any existing issues with the stock, generally by doing a reverse split (1000:1 or whatever it takes) that will assure any outstanding shareholders will be eliminated as potential trouble. You issue new preferred stock to yourself with voting rights that make you dictator of the corporation with no chance of being aced out. You also issue common stock to sell to the public and raise money for your business endeavor. You then use preferred stock to sell to your partners in crime, exchanging stock for assets, services rendered, cash, whatever. Your partners then find a way to short the stock (which is not something individual investors can do with pink sheet stocks) to offset any possible loss when the common stock takes a dive. Then you hire people to tout the stock on message boards who will make all sorts of outrageous claims about the company and convince lazy, get-rich-quick, traders to buy in. The stock price rises and attracts attention. A feeding frenzy starts and ordinary people with a little bit of money to spend and big dreams will buy in. What none of the new owners of the common stock know is that behind the scenes not only is the CEO dumping shares, the partners, with their stocks converted to common stock are dumping as well. This drives the price down as the market is saturated. Driving the price down is the whole point... remember the short sale offsets? Now you and your partners have brought in cash by selling common stock AND short selling. If the short selling is done through naked short selling practices you get even more bang for the buck because you never have to borrow shares to start out with. If you can drive the company into the ground, those short sales never have to be covered.

Once the company is on it's last leg and dying, your partners, who loaned you money for the only real assets the company has, foreclose on the property or you sell it to yet another partner in a similar game.

You can jerk around investors for a long time by switching things around. You can take anybody, like say your girlfriend, and replace yourself as CEO with her and make wild claims about how she intends to turn the company around. Then the whole business starts again. You can pull this off a bunch of times with the same company. You reverse split to wipe out the investors, change the company name, get a new ticker, replace the CEO with your girlfriend or other cohort, and make wild new claims.

The group of people I scrutinized had many very clever tricks up their sleeves. They were all rich and living extremely well, and the only work they did was figuring out their next moves. I did find instances where they brought in outsiders who didn't play nice and legal battles occurred, but I never figured out if those things were part of the game as well. It's possible they could have been. So and so leaves the company, sues company, wins big money, company tanks, blah, blah, blah. What happened to the money? It's still circulating in the group.

I really don't understand all the ins and outs of all these methods that are used, I'm just relating what I observed and I'm pulling it from memory from several years back. I'd have to dig through a lot of old records to get it all fresh in my mind again. I wasn't striving for accuracy in this post, just getting out a general idea of the way I think it works.

HenrikOlsen
2008-Apr-06, 08:49 PM
To get back to a point mentioned earlier, if you have any debt, the most profitable way you can invest any money you have is by paying off that debt

FriedPhoton
2008-Apr-06, 08:58 PM
To get back to a point mentioned earlier, if you have any debt, the most profitable way you can invest any money you have is by paying off that debt

I completely agree. Earning 10-20+ percent on investments is hard. Paying 10-20+ on debt is easy (in the sense that you can find plenty of ways to end up paying 10-20+ percent). Most people don't think about it that way. They'll throw money into an investment thinking it's doing them some good, but they won't realize that what they are earning is probably being offset by debt interest payments elsewhere.

Maksutov
2008-Apr-07, 09:09 AM
So, with that in mind, you wouldn't be offended if I refer to you as a genius in a future post.LOL! Feel free to do so! http://img137.imageshack.us/img137/566/iconwink6tn.gif
However, I will assume I took your comment the wrong way and in interest of keeping the peace, drop the matter.Thanks.
I do not pay much attention to "analysts" who try to advise me on stock selections. I have heard bad things about Cramer, but those have mostly been unsubstantiated and are probably angry comments by people who followed his comments and lost money.[edit] Blah, blah, blah... I've gone on too long about this... I went off on an extreme tangent I had no intention of getting into when I started the post.Not really. The whole thing about naked short selling and penny stocks resonates with the statistical part of me that spent over 30 years in quality control. Plus your investigations of that CEO and associates reminded me of an Ishikawa diagram with many branches.

Both seem to be classic examples of a median that's where it should be, but with a standard deviation that is way too large.

farmerjumperdon
2008-Apr-07, 06:10 PM
I only read the first page because the advice seemed to be repeating, and very good. Day-trading is gambling, unless you have insider information, then it is a crime.

The only group that consistently makes money day-trading are the people who collect a fee whether they help you make or lose money.

Invest for the long term, via mutual funds, and ignore the ups and downs. The only exception is to move towards more conservative vehicles as you near retirement.

That's all the non-professional investor needs to know.

RalofTyr
2008-Apr-07, 07:25 PM
Believe it or not, I'm actually more interested in creating a company that produces something of value for society, like solar power or agriculure, than screwing over my investors and running of to Aruba with the profits.

I'm just concerned about losing my shirt and being one of those homeless people.

Whirlpool
2008-Apr-08, 02:06 AM
I only read the first page because the advice seemed to be repeating, and very good. Day-trading is gambling, unless you have insider information, then it is a crime.

The only group that consistently makes money day-trading are the people who collect a fee whether they help you make or lose money.

Invest for the long term, via mutual funds, and ignore the ups and downs. The only exception is to move towards more conservative vehicles as you near retirement.

That's all the non-professional investor needs to know.

Our company explained to us that we are investing via a Mutual Fund , so we dont have to worry.
They have given us 2 choices :
1. The Classic - where we can invest up to 25% of our gross annual income and have dividends every end of the year ;
2. The Leverage - where we can invest only 5% of our gross annual income and no dividend .

And they have this 5 Year Lock Period for Retention. I asked them why to they have to a 5 yr lock period, well they answered , its part of the Law , Umm.. FYI... we are connected with our European Company , so which they means , this Law is under the Eurpoean Government. Maybe someone knows what this means?

With your advises guys, ,You are really helpful in giving ideas and insights of the risks I am about to enter.

FriedPhoton
2008-Apr-08, 02:39 AM
FYI... we are connected with our European Company , so which they means , this Law is under the Eurpoean Government. Maybe someone knows what this means?

My guess is that either they have a one package fits all employees set up so the package has to abide by all laws in all jurisdictions or the benefits originate in the European subsidiary and are completely under EU law (which would essentially be the same as above because the laws where you are would still have to be adhered to).

FriedPhoton
2008-Apr-08, 02:41 AM
I only read the first page because the advice seemed to be repeating, and very good. Day-trading is gambling, unless you have insider information, then it is a crime.

The only group that consistently makes money day-trading are the people who collect a fee whether they help you make or lose money.

Invest for the long term, via mutual funds, and ignore the ups and downs. The only exception is to move towards more conservative vehicles as you near retirement.

That's all the non-professional investor needs to know.

Day trading is gambling if you have no idea what you are doing. Most unsuccessful day traders were gamblers, the successful ones know what they are doing or are unbelievably lucky.

Aside from that, I agree with this entire post.

FriedPhoton
2008-Apr-08, 02:46 AM
Believe it or not, I'm actually more interested in creating a company that produces something of value for society, like solar power or agriculure, than screwing over my investors and running of to Aruba with the profits.

I'm just concerned about losing my shirt and being one of those homeless people.

The hard thing to imagine is what sort of scum would be interested in fleecing people in the way I described. These people don't do this by accident, they know exactly what they are doing and they know the consequences to the people they are doing it to. They don't care. I can't even begin to understand that unless they were so abused as children that they have no morals or compassion at all.

I have spoken with a few of them. They actually justify what they do by saying "I didn't make anyone buy the stock... they're adults... I didn't make them spend their <life savings/nest egg/settlement money> on my company".

They're sick.

Van Rijn
2008-Apr-08, 03:00 AM
Our company explained to us that we are investing via a Mutual Fund , so we dont have to worry.
They have given us 2 choices :
1. The Classic - where we can invest up to 25% of our gross annual income and have dividends every end of the year ;
2. The Leverage - where we can invest only 5% of our gross annual income and no dividend .


Is this only one mutual fund? Or a limited selection of mutual funds? Or can you pick the mutual funds you want within an account?

The more restricted it is, the riskier it is. It also depends on the type of fund or funds available.

Whirlpool
2008-Apr-08, 06:34 AM
Is this only one mutual fund? Or a limited selection of mutual funds? Or can you pick the mutual funds you want within an account?

The more restricted it is, the riskier it is. It also depends on the type of fund or funds available.

They already chosen One Mutual Fund , its already set. I don't remember the name but its a company's tie up with them .

Van Rijn
2008-Apr-08, 07:20 AM
They already chosen One Mutual Fund , its already set. I don't remember the name but its a company's tie up with them .

Ah. Before you put any money in it, you'd want to check out the type of mutual fund, its track record, and how long the managing company has been around. Definitely don't put money in it that you can't afford to lose.

But, I will note that it's surprising how a relatively small investment can, with a half decent fund, add up significantly. If your company is kicking in a decent share, and the fund checks out, it might be worth considering putting some in - just don't depend on it, or put all your savings in that one investment.

Neverfly
2008-Apr-08, 07:25 AM
But, I will note that it's surprising how a relatively small investment can, with a half decent fund, add up significantly. If your company is kicking in a decent share, and the fund checks out, it might be worth considering putting some in - just don't depend on it, or put all your savings in that one investment.

Had I done that with Roto-Rooter... And stayed with the Company 30 years- I could have retired a Millionaire:neutral:

RalofTyr
2008-Apr-08, 07:25 PM
I do like the idea of issuing the prefered stock to myself and keeping my voting rights. If I start a company, I'd really like to be the one running it.

I've been thinking that maybe I should start a corporation, just for starters. Nothing fancy, just maybe, say, an import/export company so I can travel.

Take baby steps at first, just for the experience and the fun of it. I'll probably go to the library today and read, "Corporations for Dummies".


The hard thing to imagine is what sort of scum would be interested in fleecing people in the way I described. These people don't do this by accident, they know exactly what they are doing and they know the consequences to the people they are doing it to. They don't care. I can't even begin to understand that unless they were so abused as children that they have no morals or compassion at all.

I have spoken with a few of them. They actually justify what they do by saying "I didn't make anyone buy the stock... they're adults... I didn't make them spend their <life savings/nest egg/settlement money> on my company".

They're sick.

It's human nature. People are only out for themselves. That and people who do that are very selfish or take pleasure from tricking people.

But you have to look at things from a perspective. Taking someone's life savings is bad, however, there are much, much worse things people can do to other people than that, like take their life for $100 cash.

FriedPhoton
2008-Apr-09, 12:43 AM
I do like the idea of issuing the prefered stock to myself and keeping my voting rights. If I start a company, I'd really like to be the one running it.

I've been thinking that maybe I should start a corporation, just for starters. Nothing fancy, just maybe, say, an import/export company so I can travel.

Take baby steps at first, just for the experience and the fun of it. I'll probably go to the library today and read, "Corporations for Dummies".



It's human nature. People are only out for themselves. That and people who do that are very selfish or take pleasure from tricking people.

But you have to look at things from a perspective. Taking someone's life savings is bad, however, there are much, much worse things people can do to other people than that, like take their life for $100 cash.

I don't think that rationalization is valid. Where do you draw the line? There have been people who were responsible for millions of deaths and most serial killers don't measure up. Should we be lenient because they weren't AS bad as the worst?

Torsten
2008-Apr-09, 06:43 PM
Another one to be wary of is Jim Cramer. His recent track record is less than stellar (http://www.moneybluebook.com/cnbcs-jim-cramer-advises-investors-bear-stearns-is-fine-dont-be-silly/).


And yet (newsflash!): Jim Cramer gets more Mad Money (http://www.globeinvestor.com/servlet/story/RTGAM.20080409.wcramer0409/GIStory/)


The agreement, filed with U.S. securities regulators Wednesday and retroactive to Jan. 1, will give Mr. Cramer a salary of $1.3-million (U.S.) in 2008 up from $1-million in 2007 rising to $1.56-million next year and $1.87-million in 2010.

He also is getting a $100,000 signing bonus, and will be eligible for an annual target bonus equal to 75 per cent of his salary, based on reaching unspecified financial targets the company will determine.

I've never seen or heard the guy.