I know the general thing to do is to learn a lot about different companies and investigate different interests and assets they each possess etc.
But what kinds of things do I need to be looking out for?
What types of knowledge will I need? For example, will I have to have a very extensive grasp of mathematics? Is it better for me to read about companies or the theory in general? What kind of information should I be looking at?
Note: I’m not really looking to be a broker myself - more an independant investor. Also, this is more likely to be a long-term thing - so I’m packing in for the long haul.
Help, advice and general information to get me started would be very useful. Plus answering the above questions.
Thanks
How to make a killing? Be a successful daytrader. It’s the “successful” that’s difficult. Or better yet, invest in oil futures. Several years into the future. You know all the rich guys in the oil industry don’t want tp believe that increased demand isn’t going to put a strain on the supply of oil, and they don’t want to believe that oil isn’t an unlimited resource (and prices go up from here) so it’s basically free money until everyone realizes the inevitable. You’ve got a head start on this tip so get going!
Seriously though, a painless way to be a “trader” is to find a big-name stock you know isn’t going to fall a lot, and which oscillates pretty regularly within a range. There are many stocks like this. They rise gradually, but in the space of a few days or weeks they go up and down within a range. So find a reasonable low point, buy the stock, and put in a reasonable sell price, and wait until it sells. Then just repeat this ad infinitum. Most people don’t have the stamina or discipline for this though. They always second guess their rational decisions in a fit of panic.
Otherwise, just pick a company you believe in, that has a good record and invest in it. Big names are usually a good bet. You won’t make a killing though.
Oh, and find a broker with the lowest commissions possible. A penny a share is a good commission.
No mathematics are needed. Just good common sense, which very few people seem to have, judging from the Yahoo investment message boards.
One more thing, do your own research and don’t take anyone else’s word for it, including mine.
Go to Wu-Tang Financial Mutha-#$%^a.
No, honestly, go see a financial advisor. The only time I’ve lost money in the stock market is when I’ve knowingly and deliberately gone against their advise.
Do we have such little faith in our brokers who do this full time for a living? If there was easy money to be made, all the brokers would be in the caymans instead of talking to us. The stock market is gambling plain and simple. Only the fool thinks he has it figured out.
Nonsense. The market as a whole has continuously grown over the long term as the economy grows, even during the Great Depression. That’s why index funds are so fantastic. Of course, they won’t make you rich overnight.
My experience with brokers has been mediocre, and of course, day-trading is just stupid.
Just MHO, but I think a high-yield portfolio is the way to go - assemble a diversified group of stocks with above-market dividend yields and hold them for a minimum period of forever while reinvesting the dividends. See this article and this one for more on the approach.
Advantages of the high-yield strategy over tracker funds, in my view, are that it: by definition creates a portfolio with a higher yield than a tracker; permits a finer-tuned selection of stocks than a tracker; and is less expensive to run as it carries no management charges. (The ideal way to go about it is to hold the stocks in a tax-advantaged account such as an IRA with an execution-only broker to minimize trading fees.)
At least one disadvantage compared to trackers: as the portfolio will contain fewer shares than a tracker, a reduction in or scrapping of a dividend by any one company will have a greater effect on the portfolio’s income than would be the case with a tracker. However, any investor who is in this for the long term should be aware that companies go through bad patches sometimes and that’s just a fact of life.
As far as knowledge, I’d say learn how to read a company financial statement from top to bottom, including the profit-and-loss account, balance sheet and cash-flow statement. Much better to go straight to the source for information than to waste time with analysts’ reports, which really should be viewed as essentially a marketing tool to help brokers sell stocks, IMHO.
The four really rich people that I personally know have all become rich in Florida real estate. They all got their start by buying “fixer-uppers,” living in them while renovating, and then selling and repeating the process.
That’s known as Fundamental Investing and the idea is to guage the value of a stock based on estimates of guesses all crunched into an approximation. It’s bullshit.
The other school of thought is based on Technical Analysis, i.e. chart reading. It’s based on the idea that all the people out there looking for patterns in price movements are’t as quick on the uptake as you are, and you can take advantage of a pattern before they do. It is also bullshit.
To disabuse yourself of the idea that you can make a killing on the market sans luck, read A Random Walk Down Wall Street
Predictable success comes down to buying and holding a broad range of stocks and relying on the upward drift to do the work. This, along with the sorts of index funds to get into, is discussed in the book.
Another vote for index funds. You get all the diversification you need and none of the fees of managed funds. The several index funds I own all charge a .05% fee. A managed fund usually charges a 2.00% fee. Also, the managed funds are usually beaten by the index!
The key is to start young and invest as much as you can. Compounding interest does the rest.
