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Getting into stock trading

MissionHockey 124 34 August 2, 2013 at 10:53 AM
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Hello everyone,

I'm interested in getting into stock trading. I'm much more of a lurker than a poster on this forum so many of you might not recognize my username. I'll be up front and honest that I do not know much at all about stocks or stock trading. I would like to educate myself more on this before getting my feet wet. Does anyone have any good recommendations on books, web sites, or articles to read that will help me develop more of an understanding? I have been reading what I've been able to find on the internet and have posted here in hopes someone could give me some good insight. I am not getting into this in hopes of "getting rich overnight," but more to educate myself on something that interests me and maybe lose or make a few extra bucks in the process. Any input is appreciated, thank you.

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#2
This isn't exactly an answer to your question. But just a suggestion:

I like the strong dividend paying stocks. The big boys that have been around forever, and increase dividends each year. Stocks like Proctor Gamble, Exxon, Pfizer, etc. There's typically a list of like "top 25" that you can search for, and then read about each one. You will NOT get rich quick with them, but you also have a much lower risk of losing it all. Typically, over the long-haul, they are slow, steady earners, grinding out dividends with some stock price appreciation over time.

IMO - The key to this is the DRIP plans -- Dividend Reinvestment Plans. That means that any dividends the stock pays out, goes into buying you more shares, so your portfolio keeps growing. For this, I would recommend using E*Trade, because they will allow you to set up almost any stock as a DRIP plan. (Unlike my previous online broker, Scottrade, which does not. Oh, I know, they recently introduced a type of DRIP, but it is very lame.)

Anyway, that's just some food for thought. I do like the whole E*Trade thing, though, regardless of what you buy.
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#3
Over time your chances of beating the market are about zip. Put the money in low-cost index fund ETF's and hold them.
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#4
tennis8363, any suggestions?
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#5
Just buy SPY with a DRIP setup and don't think about it anymore.
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Quote from tennis8363 View Post :
Over time your chances of beating the market are about zip. Put the money in low-cost index fund ETF's and hold them.
Quote from SP33DFR34K View Post :
Just buy SPY with a DRIP setup and don't think about it anymore.
This is good advice but your should diversify your portfolio with bonds and international stocks. The boglehead 3-fund portfolio or a target date retirement fund makes an easy, diversified portfolio.

Read more here:

http://www.bogleheads.org/wiki/Th..._portfolio

http://www.bogleheads.org/wiki/Va...ment_Funds
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#7
Quote from MissionHockey View Post :
tennis8363, any suggestions?
I am in my early 30's and "all-in" on equities right now, so the bulk of my portfolio consists of:

Vanguard Fund Ticker
Emerging Markets VWO
Europe VGK
REIT VNQ
S&P 500 VOO
Total Stock Market VTI

Fidelity (free iShares ETF's)
EFA
IJR
IVV
SCZ

All of these funds are about as low as you can go for their sector when it comes to expense ratio.
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#8
Wu Tang Financial.
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#9
The Intelligent Investor, by Benjamin Graham, one of the few authors who actually outperformed the market.

One Up On Wall Street, by Peter Lynch, one of the few authors who actually outperformed the market.

Value Line or Morningstar for summaries of companies and their stocks. There are free versions, but many libraries offer access to the pay versions for their patrons, either online or inside the library building.

The Mark Hulbert columns at MoneyWatch.com, New York Times, and Forbes (must go way back with Forbes - 1980s and 1990s) because he evaluates the performance of investment newsletters. Basically he's discovered that very, very few newsletters have beaten the market, and the exceptions beat it by such small margins that there's no way to tell whether luck or skill was involved.

Not CNBC.

Not any book about How To Make Money In Stocks written by someone who twice failed at running mutual funds.
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Quote from larrymoencurly View Post :
The Intelligent Investor, by Benjamin Graham, one of the few authors who actually outperformed the market.

One Up On Wall Street, by Peter Lynch, one of the few authors who actually outperformed the market.

Value Line or Morningstar for summaries of companies and their stocks. There are free versions, but many libraries offer access to the pay versions for their patrons, either online or inside the library building.

The Mark Hulbert columns at MoneyWatch.com, New York Times, and Forbes (must go way back with Forbes - 1980s and 1990s) because he evaluates the performance of investment newsletters. Basically he's discovered that very, very few newsletters have beaten the market, and the exceptions beat it by such small margins that there's no way to tell whether luck or skill was involved.

Not CNBC.

Not any book about How To Make Money In Stocks written by someone who twice failed at running mutual funds.
As ridiculous as CNBC is at times, there are some gems on there if you look closely. Some of the guests provide some great insight.

One time the CEO of a major background checking company prior to the release of the job reports said he saw a rise in it background checks, which correlates to businesses hiring more. The job reports came out, validating the comments made.

Another instance is Stephanie Link (righthand woman to Jim Cramer) explained how the cost of coffee went down about a year ago, but says it doesn't necessary mean its a good time to buy Starbucks because they're usually hedge for about a year. They'll repeat the benefits of this 9 months later. When the Starbucks earnings came in for the past 2 quarters, they have been rocking. I made some money off of this analysis.

Yes there are a lot of people who are just making crap up, but there are some people who really know what they're talking about. Like picking a stock, you have to figure who they are.
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Quote from PaulPats View Post :
Wu Tang Financial.
You gotta diversify your bonds, ninja.
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Quote from larrymoencurly View Post :
The Intelligent Investor, by Benjamin Graham, one of the few authors who actually outperformed the market.
Ironic, don't you think? Why would an "intelligent investor" try to beat the market in the first place? Sounds like a fools game from the onslaught.

No investor has ever beat the market because the market cannot be "beaten." When you go buy a house, do you settle on the price you want to pay because you "beat the market?" Ridiculous. How about a car? A hot dog? The market only signals one thing: price. The rest is clutter, most of which is generated on purpose to get you to buy and sell at the wrong time.

A guy I know that knows another guy once told me that once you start playing poker, you never stop. It's an endless, lifelong hand. You must count every win, every loss - through time - to truly appreciate that value of playing in the first place. Seems to me that those that approach gambling to only win are ultimately the biggest losers.

I think if you can take a realistic approach to trading and accept that the game will never be won or lost, it's just a game, you will have an edge over 90% of those "intelligent" investors. Losing money sucks, it will happen and you have to know how to handle it.

Don't like gambling? Ok, well then maybe trading is not for you. How about golf? Ok, I have a good one for you if you want to try both: it's not how good your good shots are, it's how good your bad shots are. Same thing with the markets. Anyone can make money, not everyone can keep it or stop themselves from losing it.
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Last edited by Bania August 8, 2013 at 08:02 PM
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#13
Quote from SP33DFR34K View Post :
As ridiculous as CNBC is at times, there are some gems on there if you look closely. Some of the guests provide some great insight.

One time the CEO of a major background checking company prior to the release of the job reports said he saw a rise in it background checks, which correlates to businesses hiring more. The job reports came out, validating the comments made.

Another instance is Stephanie Link (righthand woman to Jim Cramer) explained how the cost of coffee went down about a year ago, but says it doesn't necessary mean its a good time to buy Starbucks because they're usually hedged for about a year. They'll repeat the benefits of this 9 months later. When the Starbucks earnings came in for the past 2 quarters, they have been rocking. I made some money off of this analysis.

Yes there are a lot of people who are just making crap up, but there are some people who really know what they're talking about. Like picking a stock, you have to figure who they are.
But how does a newbie tell the difference when 100% of those CNBC commentators are at least superficially very smart, well informed, and completely certain of their opinions?

Much better is http://www.WealthTrack.com
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#14
Buy low and sell high. Works every time!!!
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Quote from Bania View Post :
Ironic, don't you think? Why would an "intelligent investor" try to beat the market in the first place? Sounds like a fools game from the onslaught.

No investor has ever beat the market because the market cannot be "beaten." When you go buy a house, do you settle on the price you want to pay because you "beat the market?" Ridiculous. How about a car? A hot dog? The market only signals one thing: price. The rest is clutter, most of which is generated on purpose to get you to buy and sell at the wrong time.

A guy I know that knows another guy once told me that once you start playing poker, you never stop. It's an endless, lifelong hand. You must count every win, every loss - through time - to truly appreciate that value of playing in the first place. Seems to me that those that approach gambling to only win are ultimately the biggest losers.

I think if you can take a realistic approach to trading and accept that the game will never be won or lost, it's just a game, you will have an edge over 90% of those "intelligent" investors. Losing money sucks, it will happen and you have to know how to handle it.

Don't like gambling? Ok, well then maybe trading is not for you. How about golf? Ok, I have a good one for you if you want to try both: it's not how good your good shots are, it's how good your bad shots are. Same thing with the markets. Anyone can make money, not everyone can keep it or stop themselves from losing it.
The market is usually defined as the S&P 500 (in the most general sense), because its the average of a bunch of stocks. You're "beating the market", if you're performing a lot better than the S&P 500. You can beat the market if you pick less losers / less worse losers and more winners / better winners. Beating the market is really just doing "above average".

Regarding the car example, beating the market as most people who define it as paying less than the average person. Lucky for us TrueCar [truecar.com] gives us an idea of how much the average person is paying.

Even on this site you can think of it this way, the average person probably paid $1000 (arbitrary value) for their TV, while a Slickdeals user paid $800 and got a better TV than the average person.

Quote from larrymoencurly View Post :
But how does a newbie tell the difference when 100% of those CNBC commentators are at least superficially very smart, well informed, and completely certain of their opinions?

Much better is http://www.WealthTrack.com
Stick to the facts, things that have actual numbers like how exchange rate affect the profitability of a company (Honda, Mazda), commodity costs (Starbucks, Southwest), and actual sales figure (Apple, Samsung). This isn't easy and takes a lot of work.
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