Ok, I have a grand that I am going to invest in stocks and what not. I do not know anything about the stock market really. I do have some mutual funds and other small investments but I want to try out the riskier side of the market. I was thinking about maybe trying out day trading or some other, maybe less risky venture.
What should I look at as possible areas to inject this cash? Should I buy a big pile of stocks that cost a few cents and sell them if they go up at all? You figure that they only need to go up a few cents to double my money.
Are there websites that cater to people like me who want to risk the big money on stocks that have potential to go big?
Like I said, I am prepared to lose this money and it is not going to hurt anymore than my pride if I lose it all in a few days. Any advice, other than put it somewhere safe? Where do I start? Can I do it all from Etrade or some similar site?
I’ve got a really great bridge for sale over in Brooklyn. By a strange co-incidence, I am asking exactly $1000.
No checks. Small bills only.
And, just to be a pal, I’m gonna cut all yer legal expenses, & omit a written contract. Because I’m looking out for ya, kid. And, because I trust you. :wally
Buy an index fund. Possibly the Wilshire 5000 or Russel 2000. Since you don’t know too much about individual stock investing I’d stay away from stock picking. Sure there are some good values out there, but most companies are still way above their historic P/E’s. Stick to an index fund.
Index funds are a great idea for the new investor as Swimmingwithchickens said but it sounds like you want to be a bit riskier. I recommend The Motley Fool Investment Guide as an excellent book to read in order to begin to learn about investing. They out line strategies from the conservative to the very risky and teach you how to value companies.
Well, it sounds like you wanna do something really aggressive and risky, so I won’t advise you to put your money in an index fund; buy value stocks, etc.
If you really wanna gamble in the stock market, you might try some “risk arbitrage.” Find some small companies whose fate is tied up in one big uncertain transaction: A drug company whose main drug may or may not get FDA approval; A small government contractor who may or may not get a big contract; a company whose main patent may or may not get invalidated in court; a company that is the target of a hostile takeover attempt, etc.
Then guess which way you think the event will turn out, and buy or short the stock accordingly.
Here’s what you do: you go out and open an account at Ameritrade or one of the other discount brokers that give you free trades or some kind of bonus when you sign up. That way you’re already ahead!
Next, find a company that you like that is hinging on something - let’s take, for example, Martha Stewart’s company (MSO). You may think she is guilty of insider trading :o , you may, however, think she will get off anyway because she’s got good lawyers and that her stock will recover from $8-ish back to $20-ish. Sooner or later there will be an announcement and bingo! you’re a winner or loser (though, the company would probably survive without her. The Motley Fool’s Tom Gardner says they will probably be trying to create a bunch of mini-Marthas now! :eek: Imagine, cookie-cutter Martha’s, “who can tell their friends and so on and so on and so on…” [oops, sorry, 70’s flashback])
Anyway, that is not meant as financial advice, it is just an example, but do check out the Motley Fool like Hajario recommended. They usually don’t talk about stocks that cost less than $5 however.
Use Datek or E*trade. Either one will suffice. If you truly are looking for a risky equity avenue to go down, then maybe you should trade in delisted stocks, or perhaps penny stocks. The risk is enormous, and I’ll be you dollars to donuts that you don’t make a dime, but there’s always a chance to double your money- if someone will buy the stock from you that is (Penny Stocks have extremely thin volumes.)
I think Don Penny is still operating, try his site. www.donpenny.com
Consult a broker.
I’m interning for one, and between rounds of “Watch-the-other-brokers-jump-out-of-their-office-windows” brokers are available to give you advice. I would, but, apparently, I could get in trouble for providing advice without a licence.
This is necessary to keep people from pushing stocks they own, so then they can sell them for
a profit & laugh as the price drops…
I once wondered what it would cost to buy one share of every company on the Dow. that would be
kind of fun cause each day you would know exactly what you made.
That would be prohibitively expensive. One share of Berkshire a alone will run you 70 grand. Aside from that, even at a deep discount broker, you’d pay around $7 a trade for each share that you bought. Many of stocks aren’t even worth half of the brokerage fee.
I don’t understand how doing that would give you any better idea what you made than if you just bought a few hundred shares of Intel.
You seem to be under the impression that Berkshire Hathaway is included in the Dow, and that a large number of companies are included in it. The Dow-Jones industrial average has 30 companies in it. It would still be silly to buy one share of each, but it would not be prohibitively expensive. In fact, since the Dow is computed by adding up all the share prices and dividing by a fixed divisor, if you know what the current divisor is, you would know the total from the day’s Dow quote.
The divisor started out at 30 back in the old days, hence the term “average”. But, to maintain continuity, it has been adjusted every time the companies comprising the average have changed, or one of the Dow companies has split. The divisor is currently something less than 0.2, so the total prices of all the Dow is something in the vicinity of $1500, give or take a few hundred.
Options are really risky. On some of them you can lose more than all of your money. Others have infinite upside. Not for the faint of heart. A pretty quick way to potentially make or lose a lot of money.
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In my waste-of-time Economics class in high school (because we had a teacher who only knew what was in the handouts, and not much more, and every answer was “c”) we had a project where we started with a theoretical $2000 and “invested” and had to follow the price of a couple of stocks for a couple of weeks, buying and selling as we pleased. I guess I got lucky, because I came out of it with a approx $1500 profit But I don’t remember what stocks I bought, not that I can afford it if I did! hehe!
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Think WorldCom stock. It’s less than a buck a share, and if they come out of bankruptcy without being liquidated by their lenders, they will have some pretty good assets, customers, less debt than their competition and once a recovery starts to happen in telecom, boom, they could rock.
On the other hand, if the creditors decide they can get more from forcing a liquidation or merger with another player, you lose everything. Either way, you’ll have fun watching events unfold.
If memory serves, it is the Series 7 license. Mine lapsed long ago, but I’m no longer in the business of giving selling stock for a living.
It’s easy to invest in the Dow. Amex (American Stock Exchange, not the charge card) sells an exchange-traded fund composed of the DJIA. http://www.amex.com/?href=/etf/EtMain.jsp
From the way you wrote, I’m guessing that you know the Dow is equity-weighted (started out as one share of each of the 30 constituents). However, through stock splits and other corporate events, it isn’t always 1 share of each of the 30 stocks. If I had home access to a Bloomberg, I could get details on current weighting, but I don’t, so sorry. For those who don’t know, most indices are cap(ital)-weighted, meaning that the bigger the company, the greater it’s influence on the index. The Dow is an exception to this (and relevant only because it’s the number quoted on the nightly news).
and that her stock will recover from $8-ish back to $20-ish. Sooner or later there will be an announcement and bingo! you’re a winner or loser (though, the company would probably survive without her. The Motley Fool’s Tom Gardner says they will probably be trying to create a bunch of mini-Marthas now! :eek: Imagine, cookie-cutter Martha’s, “who can tell their friends and so on and so on and so on…” [oops, sorry, 70’s flashback])
But I don’t remember what stocks I bought, not that I can afford it if I did! hehe!