Stocks, Shares, Investments and all those finacials stuff.

[littlelostboy]

I know there are a lot of old (or not so old) forumers out there. I really want to learn about stocks, shares and investments and dividends and all those finicial stuffs. Not everything about them but more like the meaning about these things, the basic information and the well known "buyer's guide" and how to buy shares and stocks (what the difference?) and knowing how to gauge the market and things like that. I'm going to be 18 and its time I start thinking about my future.

[Ser Clegane]

There might be some differences between "shares" and "stocks" but none that I would be aware of - usually both terms seem to be used interchangeably.

Some "tips" (very general, but I am still declaring that I do not accept any legal responsibilities for them):

Spread your investments (i.e., not only different companies, but different industries, perhjaps even geographies) - this also means that you should not exclusively put your money in stocks, but should also include e.g., bonds.

Define your own "risk profile" - always be aware that potential profit and risk are usually linked.

Be willing to cut your losses (personally, I am not very good at that) - if it turns out that an investment was a mistake, correct that mistake by getting out - even if it means that you made a loss. Usually it's not a good idea to keep a stinker in your portfolio just because you are too "proud" to admit a mistake (unless you have good reason to believe that the situation might improve dramatically in the short-term).
Setting "stop-loss" orders is a good way to be more consequent in this.

"Never catch a falling knife" - sometimes it might be tempting to buy stocks that just plummeted, because they appear to be "good bargains".
"The share price cannot possibly drop any further" is not a good investment argument, unless you have very good reason (e.g., fundamental data) that would support such an argument.

Be careful with jumping on a "bandwaggon" - if everybody and his grandmother invested in a stock and drove the price up, it's usually time to sell and not to buy

Only invest "spare" money in stocks - it's usually not nice if you are "forced" to sell stocks on short notice because you need the money.

Personally, I prefer to invest in stocks of companies I know (i.e. I actually understand what they are doing and how they are doing it).
Also I have a slight preference for companies that pay high dividends as is often (not always) an indication that they are rather undervalued and have a good upside potential and a limited downside potential and you might still get a somewhat attractive return even if the stock price stays flat.

This is what I can think of from the top of my head and it is of course generalizing a bit.

[littlelostboy]

There might be some differences between "shares" and "stocks" but none that I would be aware of - usually both terms seem to be used interchangeably.

Some "tips" (very general, but I am still declaring that I do not accept any legal responsibilities for them):

Spread your investments (i.e., not only different companies, but different industries, perhjaps even geographies) - this also means that you should not exclusively put your money in stocks, but should also include e.g., bonds.

Define your own "risk profile" - always be aware that potential profit and risk are usually linked.

Be willing to cut your losses (personally, I am not very good at that) - if it turns out that an investment was a mistake, correct that mistake by getting out - even if it means that you made a loss. Usually it's not a good idea to keep a stinker in your portfolio just because you are too "proud" to admit a mistake (unless you have good reason to believe that the situation might improve dramatically in the short-term).
Setting "stop-loss" orders is a good way to be more consequent in this.

"Never catch a falling knife" - sometimes it might be tempting to buy stocks that just plummeted, because they appear to be "good bargains".
"The share price cannot possibly drop any further" is not a good investment argument, unless you have very good reason (e.g., fundamental data) that would support such an argument.

Be careful with jumping on a "bandwaggon" - if everybody and his grandmother invested in a stock and drove the price up, it's usually time to sell and not to buy

Only invest "spare" money in stocks - it's usually not nice if you are "forced" to sell stocks on short notice because you need the money.

Personally, I prefer to invest in stocks of companies I know (i.e. I actually understand what they are doing and how they are doing it).
Also I have a slight preference for companies that pay high dividends as is often (not always) an indication that they are rather undervalued and have a good upside potential and a limited downside potential and you might still get a somewhat attractive return even if the stock price stays flat.

This is what I can think of from the top of my head and it is of course generalizing a bit.

Thanks for you advice SC! Your advice makes things a lot clearer to me and I think that I'll follow some of your advice, especially on getting out of a bad stock and "Never catching a falling knife". But what is a 'bond' by the way?

[Ser Clegane]

But what is a 'bond' by the way?

I think I go with the Wiki entry on that one

Bond funds are a good alternative here, especially if you want to invest smaller or medium-sized sums on a regular basis

If you buy individual bonds the "higher potential return = higher risk" also applies. Also if you buy individual bonds you should be aware about the currency it is issued in, e.g., if your local currency is EUR you might not want to invest in a US$-bond or vice-versa - otherwise exchange rates effect your returns more than anything else (currencies are also something to keep in mind when investing in stocks).

BTW, investment funds would also be an alternative to buying individual stocks, especially if you
a) don't want to select stocks yourself
b) don't have the money to spread you risk adequately by buying various stocks

[littlelostboy]

I think I go with the Wiki entry on that one

Bond funds are a good alternative here, especially if you want to invest smaller or medium-sized sums on a regular basis

If you buy individual bonds the "higher potential return = higher risk" also applies. Also if you buy individual bonds you should be aware about the currency it is issued in, e.g., if your local currency is EUR you might not want to invest in a US$-bond or vice-versa - otherwise exchange rates effect your returns more than anything else (currencies are also something to keep in mind when investing in stocks).

BTW, investment funds would also be an alternative to buying individual stocks, especially if you
a) don't want to select stocks yourself
b) don't have the money to spread you risk adequately by buying various stocks

Thanks!

[Samurai Waki]

Ser Clegane got it spot on, if you do have any questions about investing in stock it might be appropriate to ask a Stock Broker about your best options at the moment, mind you, it's not always garaunteed money when investing so you need to have excellent foresight, and enough money not invested in case something does happen you aren't stuck with 2 million dollars in debt.

[doc_bean]

Generally, it's a lot like betting, don't invest money you can't afford to lose.

Don't believe the hype, like SC said, don't invest in just one industry even if it seems like a golden cow. Spread the risk !

Stock market profits are usually only made in the long term, don't bet on getting extremely high revenues in the short run.

Stock brokers and so called professionals can't pick stocks better than apes, and a lot worse than little children.

If you don't know what a bond is or such basic things I suggest reading a few decent books on economy and the stock market.

EDIT: why is my post all the way to the left ??????
EDIT2: okay now...

[Papewaio]

You could use the housewife stock chosing method... buy stocks in things that you use around the home that you find useful. This way you at least know the products themselves.

Find out as much as you can about the company you are buying from. Larger investors like Warren Buffet place a huge amount of emphasis on having trusty worthy management.

Bonds in general are like loans to the government in which the government pays you interest for borrowing money from you.

[littlelostboy]

Thanks guys!

[King Edward]

Bonds are usually government issued istruments with a fixed life time. they offer a fixed rate of return (eg Hellenic 21.02.2007 4% would be a greek govenment bond which matures on the 21.02.2007 and offers a 4% fixed rate of coupon interest for the life of the bond).

They are considerd 'risk averse' as they are guarenteed by the government of the issuing country. It can get a lot more complicated when you get involved with hedging with things like precious metals, commodities IRS' (interest reate swaps) but that would take me hours to explain in full.

Stock and shares are where you generally invest in Listed (on the stock exchange) companies and are considered a higher risk investment as there are many more factors that determin the performace of the shares, both economic and on a personal level. this risk is offset by them generally making much higher income as well as capital returns (Income return = dividends payments and the like. capital return = the increase in valuse of your inital investment eg if you buy 100shares for £100, at a price of £1 and in 6 months decide to sell them as the preice has risen to £1.20 a share you will recieve £120 back and therfore have a capital return of £20).

Right is Saturday and im boring myself with work talk - That's a very VERY brief into into Bonds and Equities (another name for stocks and shares) hope its of soem use

Just saw a comment on Funds above - funds are basically a Hedge. you pay a fund manager to look after a portfolio of equities bonds or both and he uses his market knowledge to invest with a low risk and high return as possible. Its a way of not having all your eggs in one basket, as i fund can be worth millions (Sometimes billions) invested over all sorts of things where as if you only have say £50,000 to invest, you are going to be very limited in the number of investments you can make and very suceptable to the performance of those idivdual investment.

[Epistolary Richard]

Just to make that above post clear, BTW, not all bonds are issued by governments. A large proportion are issued by companies. Government bonds (UK ones are referred to as Gilts) are considered zero-risk and therefore the 'reward' (interest rate - referred to as a bond's 'coupon') is commensurately low.

Unless you're a high net worth individual you're very unlikely to get direct access to these markets. You'll most likely have to go through a bank or other financial product retailer.

My advice to you:
- If this is investing for your future, then make sure you take advantage of all the existing tax breaks - get an Individual Saving Account (commonly referred to as an ISA) that gives you a tax break on interest on your savings and you can add up to £7k each year
http://www.hmrc.gov.uk/stats/isa/int...on_jun05v2.pdf

- If you have some spare cash and just want to play around on the markets for fun then I suggest you sign-up to a couple of websites where you can construct a 'fantasy portfolio' then see how you do. Be aware that banks pay extremely intelligent people obscenely large amounts of money in order to be the first to any opportunities going in the market. You can guarantee that the market will have corrected itself before you get to hear anything of financial impact - so you essentially have to gamble in order to stand any chance of making money. Oh, any every transaction you do, your broker is going to take a commission, which means if you buy something for £100 you may have to sell it for £110 just to get your original £100 back after you pay the commission to buy or sell the item. As has been said above, don't put in any money that you can't lose, because this is the kind of thing that can happen when you get in over your head.

[Major Robert Dump]

gold. gold gold gold gold gold. stay away from companies like wal-mart, too much of a roller coaster. if you have kids and a wife make sure you go to a probate attorney and get a living will so your estate isnt gutted when passed to the kids

[rasoforos]

Ideally, and if you really like this sort of stuff, go and study Finance or Financial Economics. Its worth it!

Ok here is my suggestions:



Get a job in a firm that will float in the stockmarket in 5 or so years and gives employees share options, and buy everything you can. Sweep all the shares u can get...

...if the firm is healthy then thats the fastest and best way of making capital gains.

Having said that, its not ideal to go for capital gains, you better see the stock market as an alternative to puting your money in a bank. Invest in companies that have high profitability and give you high dividents ( firms give part of their profits back to the shareholders every year...if they have profits that is) and keep your goal into getting high dividents. Chances are that capital gains will come but they should never be your main target...

...people who went for that lost a lot of money.

Also, dont see such forms of investment as fast paced. Yes you can be in front of a computer all day exchanging Interest rate options for coffee forward contracts and shares in the next big pharmaceutical research company but...

...you will need a lot of capital, and there will always be people out there with vastly more and better information than you or your broker. See investment more like a 5 year plan. Put some money in , ivest in low risk companies, invest in some good mixed bonds and get some profit and hopefully an extra bonus when you sell.

Also do a lot of 'fantasy' investments. This way you will be able to see if you are geting better at predicting the market.

At the moment my modest portfoglio has only 2 main shares ( a bank and a construction company), its been like this for 5 years and it gives me some piece of mind and I could theoretically sell and makes some CG's at the moment. I suggest you aim at something like that or maybe throw a bond in it as well.

[ztrain909]

I know there are a lot of old (or not so old) forumers out there. I really want to learn about stocks, shares and investments and dividends and all those finicial stuffs. Not everything about them but more like the meaning about these things, the basic information and the well known "buyer's guide" and how to buy shares and stocks (what the difference?) and knowing how to gauge the market and things like that. I'm going to be 18 and its time I start thinking about my future.

I happened to run across this post and was just wondering how you were doing or have done with your investing since we are pretty much 10 years removed from the onset of this post?

I wanted to give you this gem of a video that will sum up any advice you might have received or never even heard of before.

Follow these 25 rules, and over the long haul you will succeed.

[Fragony]

Be very carefull and distrust eveything. My advice, go safe, and only go for people you really like. Called instinct; If something feels wrong, it is.

[Shaka_Khan]

http://www.thestreet.com/video/13410...&cm_ven=YAHOOV

China Worries Spark Global Markets Selloff; GM Pours $500M Into Lyft

What a way to ring in the New Year. U.S. stocks opened sharply lower on the first trading day of the year as a selloff in China stocks fanned fears of slower global growth. China's benchmark Shanghai Composite index fell 7 percent on Monday. The declines were so deep, circuit breakers kicked in to halt trading. Fresh manufacturing data showed further declines in China's manufacturing sector. Meanwhile back in the U.S., General Motors (GM) announced a $500 million investment in car service app Lyft, a smaller competitor to Uber. The new investment now values Lyft at $4.5 billion, a drop in the bucket compared to Uber's $62.5 billion valuation. Tesla (TSLA) shares were lower after the company said it delivered 17,400 vehicles during fourth quarter. While that's up from the nearly 12,000 sold during third quarter, it was at the low end of its guidance, which ranged from 17,000 to 19,000. Finally, it was another blockbuster weekend for Disney's (DIS) latest hit ‘Star Wars: The Force Awakens’ as the film topped the box office in North America for the third weekend in a row. TheStreet’s Scott Gamm has details from Wall Street.

[Shaka_Khan]

Be very carefull and distrust eveything. My advice, go safe, and only go for people you really like. Called instinct; If something feels wrong, it is.

Yes. Don't fall for speculation. My dad fell for it once and he lost a lot of money.

[ztrain909]

Yes. Don't fall for speculation. My dad fell for it once and he lost a lot of money.

I find it so funny. Everyone always has a story of a friend of a friend of a friend who lost big money in the " markets."

Do you understand the concept of speculation?

Do you understand risk?

Without accepting risk, there will never be potential for reward. That is true in many endeavors, trading or anything else.

If you can understand the concept of this video, then you can understand the concept of trading the markets. Maybe then your father will not lose his shirt next time.



As for your first post, I'll let you in on a little secret. You can actually make money in a down market, it's called " shorting." Just an FYI.

[Shaka_Khan]

If you can understand the concept of this video, then you can understand the concept of trading the markets. Maybe then your father will not lose his shirt next time.

Many people got in the same situation as my dad, so it's a bit understandable. Also, he was a beginner. People learn from their mistakes.

As for your first post, I'll let you in on a little secret. You can actually make money in a down market, it's called " shorting." Just an FYI.

I know that there are people who buy when stocks become cheap. People do that with real estate, too.
I just posted that news article because it was newsworthy.

Anyway, we could be facing another global financial meltdown as people have been predicting about for years.

[ztrain909]

I know that there are people who buy when stocks become cheap. People do that with real estate, too.
I just posted that news article because it was newsworthy.

Anyway, we could be facing another global financial meltdown as people have been predicting about for years.

Unfortunately, you do not understand what " shorting " is. It is not buying something cheap to sell back later at a higher price, like with real estate or normal stock buying.

It is selling something high first, then buying it later at a lower price. In the instance of your article, if there is a global market meltdown coming as your experts predict, then you could sell stocks now and make money as they fall in price. That's shorting. Or better yet, since I am no good orator. http://www.investopedia.com/university/shortselling/

As far as your article is concerned, it has happened before and will continue to happen as long as there is a market place.
https://en.wikipedia.org/wiki/List_o...d_bear_markets

[Shaka_Khan]

Unfortunately, you do not understand what " shorting " is. It is not buying something cheap to sell back later at a higher price, like with real estate or normal stock buying.

It is selling something high first, then buying it later at a lower price. In the instance of your article, if there is a global market meltdown coming as your experts predict, then you could sell stocks now and make money as they fall in price. That's shorting. Or better yet, since I am no good orator. http://www.investopedia.com/university/shortselling/

That was what I meant. Who said anything about selling later at a higher price? When I mentioned real estate, I wasn't talking about selling when the price is higher. You're jumping to conclusions.

My dad had someone who convinced him to buy those stocks. From what I heard, the way he said it made it sound as if the stocks would continue to go up. That was what I meant when I said 'speculation.'

As far as your article is concerned, it has happened before and will continue to happen as long as there is a market place.
https://en.wikipedia.org/wiki/List_o...d_bear_markets

Duh, I know that. I've witnessed markets go up and down numerous times. What does this have to do with me posting that article?

And notice that I typed 'we could be facing', not 'we will be facing.' There's a huge difference. I mentioned that because I saw numerous articles that predicted another financial meltdown for this year.

[ztrain909]

That was what I meant when I said 'speculation.'

What does this have to do with me posting that article?

I mentioned that because I saw numerous articles that predicted another financial meltdown for this year.

You do realize that most of life is speculation, correct? We are always believing or trying to make things more in our favor at a future time.

" I'd really like that car now, but it's too expensive. I'll wait until the price is reduced. "
" I want to go to college to get a job in the future"
" If I vote for this candidate for political office, he/she will make everything better"

These are just very basic examples. The point is only in trading/investing is " speculation" a very bad word, yet people speculate every day of their lives.

When you read your articles, do you ever really pay attention to the words or when listening to news to do ever really hear what they are saying?

Like your article, for instance. The writer is Scott Gamm. Do you know who he is? Do you know what his angle is? Here is his website
http://helpsavemydollars.com/
He is a big believer in saving money. Now saving may be safe and nice, but when your only getting 1/10 th of 1 percent, I'd say that looks very bleak for your money to grow. He's also a big 401k/mutual fund type of guy. Ask anyone how their 401k's/mutual funds were doing at the end of 2008 and start of 2009?

I want you to do a little exercise. I want you to REALLY pay attention to the financial headlines. For instance, the major indices have been down all this week, I want you to listen to the reasons that the media say it's down. Then when the market reverses, even for a day or two, it doesn't matter, listen again to their reasons. I promise they will either contradict or will be something entirely off the wall.

I promise you if you really listen and understand what they are saying you will find it hilarious. You will constantly hear them contradict themselves and their stories. It is absolutely priceless. One week they will blame the market going up on the price of oil going down. The next week they will blame the market going down on the price of oil down. I'm telling you, it is so funny.

You will then begin to understand that all those writers of new articles, and Tv anchors, and larger than life stock pickers have absolutely NO REAL REASON or explanation why markets do what they do.


The reason is, no one does. The markets always have been and always will be made up of people. People have emotions and feelings. Those feelings include greed, hope and fear. Those feelings are constantly changing in the form of supply and demand. That is why it's important to have a well disciplined self approach. To not rely on someone else.

One thing our enjoyment of the Total War series should have taught us is about history. Caesar and Napoleon were some of the best self propagandists out there. Don't think for one minute it doesn't happen these days with filters.

[Ser Clegane]

Holy **** - I cannot believe that it has already been 10 years that I posted in this thread...

[KukriKhan]

Haaaaaa