Anyone into investing?

[Ghost1986]

I have decided to try removing video games from my life. What this means is that I now have a lot of extra free time. Now a lot of that time it will be taken for school but I still have more free time. So I’ve decided to get back in to investing. I do have some basic knowledge that mostly resolves around real-estate and a little about the stock market. Out of those 2 I would like to learn more about the latter. I have little to no interest in real-estate.

So does anyone know any good investing resources? Info on any topic would be great. As stated I want stock market stuff but iam sure other people would be interested in real-estate, the basic foundations of investing, small business or any other investing topic.

Currently I am starting an investopedia account to learn and practice. Additionally in a few weeks I will be going home and I will see if I can find any of my old books.

Ill posts them here when I get them.

With the way the world is, anything to help people survive financially is good.

 

[Artifice Orisit]

Just watched "Capitalism" by Michael Moore.

Needless to say, I'm scared of the stock market now.

 

[Madoness]

I'm a stock owner.... though... for the total value of... I guess... about 20 dollars. Used to have more, though sold most when teh crisis just started.

Maybe in a few years will start investing again, though I'm sure I do not live to my pension age, I'm sure I can get profit. When I sold most of my stocks I had a profit quite a big. Though.... As I'm not conorable with big money, I won't recommend anyone to invest.

 

[Inappropriate Behavior]

A modest portfolio that used to be better a year ago. I really don't know much more than to suggest diversifying in larger companies that aren't likely to crash and burn.

 

[Anthile]

Investing, in its nature, is very much like gambling. If you're not ridiculously lucky, the only way to win is to be the bank. Or to cheat.

 

[Cavallier]

From what I can tell the stock market runs entirely on public perception. Therefore it leaves me feeling edgy.

 

[aracaris]

I haven't done any investing, so I don't really understand the stock market all that well...but, it seems to me, that it would perhaps be a good move to invest a small amount of money in stocks that are not worth very much, but also not highly likely to totally go under (in other words there's not a really huge chance that the company is going to cease to exist, or something along those lines), and then just hold onto those crappy (but not too crappy) stocks until better days?

It basically is a form of gambling, and not a basket I'd want to put a whole lot of eggs in, but maybe just a few.

 

[Nicholas A. A. E.]

I'll be scared of investing until I can understand the basic principle whereby apparently the whole world is unwilling to invest in something that promises short-term loss, but virtually certain long-term gain (or alternately, short-term volatility, long-term stable gain). I DON'T GET IT. I'm pretty sure I'm the one who's confused, not the rest of the world, since my dad was a banker and assures me that there's a good reason but I am still unable to understand.

 

[del]

I'd read everything that George Soros has ever written if I were you.

 

[Nicholas A. A. E.]

I'm not exactly the greatest George Soros fan ever. I think he's a massive tool. Does he have useful things to say anyway?

 

[Artifice Orisit]

Has anyone else ever wondered about cheating the stock market?

Assuming one had the capacity to affect world events in a significant and predictable manner, wouldn't it be possible to make world events work for you, e.g. if someone knew about the 9/11 attacks before they occurred then couldn't they benefit from it by investing in home security companies or non-airline transport?

Sometimes I wonder if this isn't happening already...
A data analyst could probably figure out who.

 

[del]

I'm not exactly the greatest George Soros fan ever. I think he's a massive tool. Does he have useful things to say anyway?

Yeah, I think he has the most realistic outlook of anyone. He doesn't add any flowery bullshit to how markets work like everyone else.

And I agree -- he is a massive tool, but that doesn't stop him from being right about a lot of things.

 

[Cogwulf]

I'm a stock owner.... though... for the total value of... I guess... about 20 dollars. Used to have more, though sold most when teh crisis just started.

Maybe in a few years will start investing again, though I'm sure I do not live to my pension age, I'm sure I can get profit. When I sold most of my stocks I had a profit quite a big. Though.... As I'm not conorable with big money, I won't recommend anyone to invest.

If you intend to start investing again, it would be better to start now when prices are low rather than a few years when they're peaking again

 

[walfin]

babypips.com for forex.

For all else, conditions may vary depending on your local bourse

 

[EditorOne]

Upon attaining the somehow magic age of 59.5, I acquired the ability to convert my company 401K into a rollover IRA. The 401K was doing badly, so I took out about $24,000. It's now up to $38,000 give or take, since February, so I'm doing some things right. However, I'm not looking at the short haul. I've invested in cheap, unappreciated stuff like geothermal energy (the kind that generates major league electricity, not the home 'heat pumps), energy management companies, wind, etc., all of which have appreciated handsomely except for wind energy products and photo-voltaics.

As oil prices go up, all these become competitive in terms of energy prices, meaning that my grandchildren will be quite wealthy by the time they turn 50 if things keep going where they're going already.

The company 401K only made about two percent on what was left in it, by the way.

 

[Cavallier]

Has anyone else ever wondered about cheating the stock market?

Assuming one had the capacity to affect world events in a significant and predictable manner, wouldn't it be possible to make world events work for you, e.g. if someone knew about the 9/11 attacks before they occurred then couldn't they benefit from it by investing in home security companies or non-airline transport?

Sometimes I wonder if this isn't happening already...
A data analyst could probably figure out who.

A James Bond film in the making.

 

[Infinite Regress]

If you intend to start investing again, it would be better to start now when prices are low rather than a few years when they're peaking again

Depends, some stocks could be low for a reason and may not increase again.

Investing is very much like trading, except its on a longer time frame and the reasons for entry are based on different criteria e.g. fundamental and macro data rather than short term momentum, technical indicators or tape reading.

As a professional trader, my main advice would be to have stop losses...i.e. levels where you will take a loss and admit you are wrong - which is difficult for our "P" function, but necessary for long term success.

The other mantra I'd suggest is to hold onto winners and cut losers quick and early. Many tend to do the opposite. This is where it becomes "gambling" - hoping for a stock that is down to come back

w.r.t to resources to read, its difficult as there are so many styles to investing/trading. It's preferable that you understand them first then choose.

 

[Infinite Regress]

From what I can tell the stock market runs entirely on public perception. Therefore it leaves me feeling edgy.

There are alot of functions in the market.

Alof of the trading by banks and market makers are to provide liquidity
They have no opinion on market direction. Being the dealer they can sell to you at above fair value and buy from you at less than fair value. That spread is then arbitraged via replications using derivative products, so public perception plays a very small role

The market can appear random, hence a lot of the analysis is based on stochastic models. The name of the game becomes risk management, which is what we can control.

 

[Infinite Regress]

I'll be scared of investing until I can understand the basic principle whereby apparently the whole world is unwilling to invest in something that promises short-term loss, but virtually certain long-term gain (or alternately, short-term volatility, long-term stable gain). I DON'T GET IT. I'm pretty sure I'm the one who's confused, not the rest of the world, since my dad was a banker and assures me that there's a good reason but I am still unable to understand.

Opportunity cost.

Capital could be placed elsewhere and earning money, instead of the account being in a drawdown due to short term vol.
The saying goes "the market can stay irrational, longer than you can stay solvent"

 

[Nicholas A. A. E.]

Opportunity cost.

Capital could be placed elsewhere and earning money, instead of the account being in a drawdown due to short term vol.
The saying goes "the market can stay irrational, longer than you can stay solvent"

I sorta understand what you're saying, but I'm sadly not up on the economics lingo. Actually, I do understand what you're saying, yet I'm not drawing the connection between that and my question.

 

[Infinite Regress]

Your question as I interpret it is: Why not invest in something that provides short term loss due to high volatility, when there is guaranteed long term gains?

I'm saying that there are other stocks you could place your money in instead that will be in the green in the short term as well as possibly in the future - opportunity cost.

Also there is the leverage effect, many people utilize margin loans. The greater the unrealized loss, the more margin has to be provided. Sometimes the long term gain may eventuate, but in the short term you may not have the funds to cover your interest payments and margin - so you lose capital before that gain you have been waiting for arrives - the insolvent quote

Another thing is bonuses in companies is based on profits - so any short term losses aren't preferred because people want their bonuses as high as possible, they don't care about the investors.

These are just some reasons why people avoid short term volatility, coupled with the fact that nothing is guaranteed in the long term. Some large fund managers were calling for Fannie Mae and Freddy Mac to appreciate in value back in the day.
Would have been fatal,

There are ways to invest in the stocks you speak about, but it requires the use of derivatives, which are sophisticated beyond the average retail investor. Knowing to buy put options alone won't cover it.

 

[Thoughtful]

I suggest checking out http://www.howthemarketworks.com/

It's says you should expect to fail the first few times, but their stock market game should be able to help you get the hang of it. I've never tried it myself, an acquaintance mentioned it to me.

 

[Ariel]

It can be a fascinating game. You've got to have some strict rules. I use technical analysis, it's more reliable than most so-called financial analysis. My biggest mistake was letting losses accumulate. Now I use pattern analysis, then if price breaks the pattern and moves the "wrong way" then I stop loss (sell it out) and either re-analyze it or move to something else with a more clear pattern.
StockCharts.com has a great "Chart School" that teaches great analysis tools of all sorts. Pick a few that work for you, and go by those.

Good luck and always be careful with it.

And remember, the INTP type when stressed, easily we mis-manage $, so financial investing and trading should likely be set aside during such times.

 

[Infinite Regress]

This was doing the email rounds:

If bullish fundamentals cause
Upward stock price movement
Then surely all we need to do
To guarantee improvement
In our accounts, is find the stocks
With fundamentals glowing
This surely is the way to keep
Our money ever-growing


We'll look for value while they're cheap
It sounds so good in theory
And yet in practice, not so great
It gets a little dreary
To watch a stock stagnate for years
Against our expectations
It should be moving strongly up
Not causing us vexation

Their value's right - they must go up
Is nothing but conjecture
A better bet is look for stocks
That form the strongest sectors

"But fundamentals", you may say
"We really must examine
Otherwise we can't be sure
That we won't buy a lemon"

Well fair enough, but don't you think
That sectors which are climbing
Are full of stocks that shape up well
Their fundamentals shining?

A stock with fundamentals great
Can still spend years in slumber
I see no point in holding stocks
With unimpressive numbers

We're in the game to make some dough
To keep our money moving
We need to buy performance stocks
Whose value keeps improving

And when they stop
We sell them out
And find the next contender
In stocks and sectors climbing hard
We've no time for pretenders

For every stock that goes to sleep
For years, with little movement
A score of others offer us
Substantial price improvement
Our cash is put to better use
By feeding these strong movers
Than feeding dogs who've lost their bite
Why put our cash in losers?

 

[Infinite Regress]

Thought I'd share an idea. I've carried this out for accounts before.

The scenario = long equity.
Two concerns are a) drop in price & b) ranging prices -> opportunity cost

Converting the position via vanilla options leads to the attached profile.
Downside risk is capped, money is made if price ranges while still being able to participate in upside moves.
Conversion can occur on a monthly basis and offset earlier if required.

Enjoy!!

 

[Enola.Grey]

I have decided to try removing video games from my life. What this means is that I now have a lot of extra free time. Now a lot of that time it will be taken for school but I still have more free time. So I’ve decided to get back in to investing. I do have some basic knowledge that mostly resolves around real-estate and a little about the stock market. Out of those 2 I would like to learn more about the latter. I have little to no interest in real-estate.

So does anyone know any good investing resources? Info on any topic would be great. As stated I want stock market stuff but iam sure other people would be interested in real-estate, the basic foundations of investing, small business or any other investing topic.

Currently I am starting an investopedia account to learn and practice. Additionally in a few weeks I will be going home and I will see if I can find any of my old books.

Ill posts them here when I get them.

With the way the world is, anything to help people survive financially is good.

You should get into entrepreneurship. Get into green technology. It would help greatly for the environment and future events.

 

[bluesquid]

so except for Infinite, a whole lot of longwinded "no".

And calling George Soros a tool is like calling spock a crybaby. possibly the most ignorant thing ever said about the man. He is the reason Obama is our president.

Now the way to make money is to follow the money. Its a rigged game with insiders making money off a generalized worldview. Soros being one of said insiders.

I could explain elliot waves, but to me its akin to tarot cards. i could explain fundamental and technical till im tired. If you want some links to learn all about that archaic art, pm me.


so, you have two aspects of investing in the most simplistic forms.

Outside investors.


Bubbles.


If you dont know what a bubble is at this point, dont invest. A outside investor is the dumb money that flows to projects in the initial phase's of a project, right up to the "completion date'. many times the completion date is the point where outside investors are left holding the bag on a bad investment. Typically a bad project happens inside a bubble, here or abroad. The project is sold cheap to someone else. The shell game continues.

so what do you do? read. read, read , read. Put all the puzzle pieces together. Look for early bubbles, phase 1 as Jim Rogers does. Invest. Get out before the project collapses. before its sold at a loss.

How many guys sold and got rich before the .com bubble burst. The housing bubble? Dubai?

Its all about timing.

if titilated at all, ask and I will add to this post.

 

[Infinite Regress]

bluesquid - always interested to hear others opinions

w.r.t to "outside investors" - I don't completely agree, I interpret this as those who buy the tops and sell the bottoms - i.e. taking the other side of "smart money" [those who invested in the initial phase of the project and have come to a point where the risk outweighs reward and decided to bank their gains].

 

[sporeza]

Hi

I've tried various forms of investing over the last 10 years.

Stock investing

I got lucky in the pre-tech bubble - I invested in a new company that just had their IPO and was still climbing - made about 10% in three months (mind you it was small fry money - about $200 total invested - still it was exciting).

And then I thought "Hey, this is easy" - One year later, after the bubble had burst, I was still lucky - I broke even.

Went to uni and studied stocks and options (risk management degree ironically). Learned about the leverage of options and thought "Wow, I can make so much money," so I started playing in options (I call it playing now, but at the time I thought I was serious). I learned leverage works down as well as up. And what Infinite said about holding onto winners and cutting your losses (and what most people do being the opposite) - well I held onto some losers as I was sure it was going to come back up -> all the way to $0. Lost $1,000 on that adventure.

Read Financial Freedom Through Electronic Day Trading by van Tharp (which I'd recommend for anyone thinking about trading / forex / derivatives), and realised I didn't have a system and had let my emotions rule. While I do know how the markets work and even derivatives like options and futures, I'm not willing to put my own money on the line unless I know I'm going to commit to it.

Real Estate


Bought my first property in 2005, and at the same time invested in a rental property. Thought I knew something. The rental property only just broke even on rent, but on my other property I was living in, the mortgage ate almost 40% of my take home pay.

A year after buying, I relocated so I decided to sell both properties. I got lucky as the property market was still on the up. I paid off my student loans with the gains.

Haven't since invested again - I realised that I was a 'speculator' and not an investor as I bought and 'prayed' that the price would go up. I feel there is still money to be made in real estate, but I have resolved to do it either as a 'parking of capital' (for long-term growth) or if I can add value to the property in some way through a time investment (like renovation or rezoning).

Business

I'm currently focusing on business. While I'm not yet 'soaring like an eagle' financially, I've committed to this course of action and I'm sure I'll be successful and not just lucky (but I like being lucky too).


So, summing up this rather long post, my philosophy on investment is thus:

1. If you don't know who the patsy is, you're it (learned from online poker / stock/options 'investing' a.k.a. gambling). Said another way, while you're swimming with the big fish, if you don't know who's for dinner, its you.
2. Add value.
3. Be the shark. Be the biggest fish in your market - if you can't find a niche in which you can be the best, be content with being average.

Oh, and here is a cool YouTube video from Will Smith on wisdom and mentality (2:37 into the video: "don't be afraid to die" ):

YouTube- Will's Wisdom


Leon

p.s.

Assuming one had the capacity to affect world events in a significant and predictable manner, wouldn't it be possible to make world events work for you, e.g. if someone knew about the 9/11 attacks before they occurred then couldn't they benefit from it by investing in home security companies or non-airline transport?

Sometimes I wonder if this isn't happening already...
A data analyst could probably figure out who.

Thought about this as well since I've worked as a data analyst till I heard that they tracked some financial backers of the 9/11 terrorists by checking financial transactions that looked out of place.

 

[LAM]

I started to use a online "fake" stock trading market thingy. I only began okay D: . Its at wallstreetsurvivor.com and basically you get a fake 100 000$ and you get to spend how much you want of it on real value trading shares (of course you get fake ones but the value is the same as the real market.) It teaches you the basics and has loads of charts and experts telling you what buy.
It even teaches you how to do stuff like short-selling which is betting that the share prices are going to go down instead of up. Then you get money if they do go up. (You don't actually bet, you buy the shares then sell them then buy them back then sell them to broker for the amount you got from him.) To me as a newbie I can safely say this is all extremely complicated.
Summary: at the website wallstreetsurvivor.com you will get to be able to do everything as you are able to do in the real market and the values are the same and such except that you are buying fake shares and have fake money. Helps you learn and continually test out your "strategies". EXTREMELY HELPFUL. I would recommend it to anybody else.
Note: the reason I am doing this is because I am pressured into getting a job so I decided I would get a job where I would be payed when I didn't work. So my other options are also running a website. (Course I have no idea how to do that but I will learn if it means getting out of senseless manual labour.)

 

[Infinite Regress]

And then I thought "Hey, this is easy" - One year later, after the bubble had burst, I was still lucky - I broke even.

This was what bluesquid referred to "outside investors" and identifying bubbles. You didn't bank any gains at all during this whole period?

Went to uni and studied stocks and options (risk management degree ironically). Learned about the leverage of options and thought "Wow, I can make so much money," so I started playing in options (I call it playing now, but at the time I thought I was serious). I learned leverage works down as well as up. And what Infinite said about holding onto winners and cutting your losses (and what most people do being the opposite) - well I held onto some losers as I was sure it was going to come back up -> all the way to $0. Lost $1,000 on that adventure.

Not having a dig at you, but all traders go through losing money during the initial stages - its part of the baptism of fire. Once you know what you are doing - its not "playing". I wanted to make this clear, so others who read this don't get deterred and think of this as gambling.

The only folk who consider it gambling are those who have lost money and don't know why.

To be fair, you've only traded with a $1k account for options. I can't see any other strategy there other than loading up on calls for a stock you thought was going to rise.
Anything else such as spreads, vol bets, kurtosis bets, touch probability etc. - can't be executed efficiently with anything < $10k. Also if one were serious about trading as a business, you'd need at least $200k of starting capital.

Summary: at the website wallstreetsurvivor.com you will get to be able to do everything as you are able to do in the real market ...

Paper trading is useful to a point, there stills needs to be extensive back-testing to ascertain whether there is any "edge" in you strategy or if it is result of luck.
Not to mention that slippage, commissions, liquidity, position sizing etc. and psychological stress when in drawdown with real money all need to be factored in when doing this.

 

[sporeza]

You didn't bank any gains at all during this whole period?

Nope, I kept everything in the market

Also if one were serious about trading as a business, you'd need at least $200k of starting capital.

Part of the reason I'm not into it at the moment - it would require some serious commitment that I'm not willing to invest at the present moment.

An anecdote that Robert Kiyosaki talked about that I think illustrates my reluctance to playing, is of a high-school / college football player, who might have been good at school level, suddenly getting flattened by a professional NY Giants player. This is the big leagues - 'you're not in Kansas anymore Dorothy'. If you get what I'm trying to say...

 

[Infinite Regress]

Nope, I kept everything in the market

Ah, too bad your risk management courses came after...

An anecdote that Robert Kiyosaki talked about that I think illustrates my reluctance to playing, is of a high-school / college football player, who might have been good at school level, suddenly getting flattened by a professional NY Giants player. This is the big leagues - 'you're not in Kansas anymore Dorothy'. If you get what I'm trying to say...

I work for a hedge fund, so on the buy side.
What the big boys are doing i.e. Goldman Sachs, Citi etc are primarily sell side activities - high volume, discount arbs, working order flows etc.
Very different from what a retail trader will be trying to accomplish
But atm it sounds like you're unsure of the market and how it works, so good thing to stand aside

Plus, I suspect Kiyoaski, like many wealth "gurus" make money from selling seminars, rather than from the methods they advocate. Though I agree with the general advice of using income efficiently to generate more passive CF.
His dissing of obtaining an education is a bit discerning - that would make the majority of INTPf members here idiots? lol

 

[sporeza]

Hedge fund huh? A question for you then: Do you believe in the efficient market hypothesis?

 

[Infinite Regress]

Well I'd believe if the big boys always play fair - i.e. didn't manipulate . Plus there are these annoying things called slippage and commissions in the real world
Though I will not deny the role of chance in the market

When I was on the sell side trading options - price was treated as random, I wonder how we made money?....
And no, forecasting price is not the answer ...

 

[Interest Flux]

Well, I have a good place for you to start.

Get yourself a copy of the Intelligent Investor by Ben Graham. The last edition was published in 1972, but a new and revised edition was published recently, 2005, by Jason Zweig. Read it.

If you at first do not understand the material, read it again. Do not memorise the material, rather try to understand it. You will know that you understand it when you can apply the knowledge of 1972 to the here and now.

I found that it is the only certain way to investing vs speculating(hedge fund).

Ben Graham was also the professor of legendary investor Warren Buffett, so if he could learn something from Graham then you can to.

Hope it helps and enjoy.