Does anyone here invest in stocks?

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Icyflamez96

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My dad started trying to get me into it a few months ago seemingly out of nowhere. He wanted me to watch the channel a bit and then make an etrade account when I turned 18. Seemed cool to me how everything worked, and also seemed like a cool way to make a bit of extra money.

Anyone here successful with making extra money off of investing in stocks? Any tips for me?
 
I invested in my 401K when I was working. I think about 60% is in Disney Stock and then some in the long term investments. I can change it any time, but it's done pretty well since I left the company in 2008. I had just above the bare minimum to keep it going or else I would have had to cash it out. It's quadrupled in that time.
 
Icyflamez96 said:
That sucks :( How'd you lose it specifically? If you don't mind sharing

edit: thanks for the links guys
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I can break down the exact numbers and what they're allocated into if you want, as well as what price I got in at and what price they're currently at, but I think it'd be more helpful if you went to the thread where people actually know what they're talking about.
 
Zabuza said:
Seems risky.
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Well I guess you'd know.
 
I would generally advise against investing in individual stocks, especially if you're looking for advice in a videogame forum.
In any case, first thing you need to do is figure out your goals.
 
Chichikov said:
I would generally advise against investing in individual stocks, especially if you're looking for advice in a videogame forum.
In any case, first thing you need to do is figure out your goals.
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My Dad is going to be pretty much walking me through it. I'm not being sent out there in the wild alone lol. We've been monitoring the Facebook stock trends so we're probably going to start off there with small investments.
 
Icyflamez96 said:
Well it's more than just a gamble if you know trends right? It's not like it's a completely luck based thing.
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You don't "know trends". Information about a business that is commonly known is already reflected in the price of a stock, and you can't take advantage of it. What portion of fund managers consistently beat the market average rate of return every single year for 10 or 20 years? It certainly isn't many.
 
From what I've learned from school, stock prices should supposedly be raised or lowered by market speculation due to recent events and trends. But in reality, it seems completely random and unless you manage to get the lucky stock of a company who becomes bought be Google or something it's not worth your time unless you hire somebody to purchase stocks for you.
 
Icyflamez96 said:
My Dad is going to be pretty much walking me through it. I'm not being sent out there in the wild alone lol. We've been monitoring the Facebook stock trends so we're probably going to start off there with small investments.
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While it depends on how much money you have, the time you're able to dedicate to it and your specific goals, I still thinks that for almost all small investors, buying and selling individual stocks is not the best option.
But best of luck.
 
Its a gamble, but sometimes it paid off. Like Netflix dropping last week. Got into that ASAP and have a very nice net profit already. Its gambling honestly, but at least you have information on your side to try and predict certain things.
 
RadioJoNES64 said:
From what I've learned from school, stock prices should supposedly be raised or lowered by market speculation due to recent events and trends. But in reality, it seems completely random and unless you manage to get the lucky stock of a company who becomes bought be Google or something it's not worth your time unless you hire somebody to purchase stocks for you.
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Hiring someone to purchase stocks for you is one of the dumbest things you can do with your money.
 
If you're just playing around for fun with money you can afford to lose, absolutely buy individual stocks, trade tips with the stock thread, chase trends or try to predict the markets.

If you actually want to invest for the future and make money in the long run, you'll want to buy index funds. It's already been linked, but this thread has some excellent advice: http://www.neogaf.com/forum/showthread.php?t=749978 . Don't be fooled by the fact that it's ostensibly about retirement; the advice in the thread applies equally to any kind of longer term investment.
 
Tertullian said:
You don't "know trends". Information about a business that is commonly known is already reflected in the price of a stock, and you can't take advantage of it. What portion of fund managers consistently beat the market average rate of return every single year for 10 or 20 years? It certainly isn't many.
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Hm? So we were looking at the Facebook highs and lows. If we buy Facebook shares when it's at an average low, and sell the shares when they go up, you make money. Well from what I'm understanding about this.
 
Icyflamez96 said:
Hm? So we were looking at the Facebook highs and lows. If we buy Facebook shares when it's at an average low, and sell the shares when they go up, you make money. Well from what I'm understanding about this.
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What Tertullian is telling you is that if you think you can analyze stock trends and make money off of them, you're incorrect. If there is a predictable short-term trend that can yield outsized returns, algo traders have eaten them all by the time you've spotted the trend. There ain't no such thing as a free lunch, in the stock market more than anywhere else.

If you think there's a longer-term trend, well, the market has access to all the same information you do, and has already priced in the overall expectation of that trend. The overall prediction is likely to be far more informed and accurate than yours (see also the concept of prediction markets, which come from this idea).

The only way to reliably beat the market is to be very smart, do a ton of research, and then buy and hold undervalued stocks for the long-term, being prepared to weather losses and bumps on the way. This is how people like Buffett make their money.

But I don't want to totally rain on your parade here. Putting in some money that you can afford to lose is a fine way to get involved with stocks. Though I'd consider signing up for a site where you can buy and sell with play money first, to sort of get the idea of how things work, before you put in your real money. And of course it's entirely possible that you will beat the market, just through randomness. Also, since the general trend is upwards, even if you don't beat the market you're still likely to make money.

Sow your wild oats and then start investing in index funds. :P
 
Icyflamez96 said:
Hm? So we were looking at the Facebook highs and lows. If we buy Facebook shares when it's at an average low, and sell the shares when they go up, you make money. Well from what I'm understanding about this.
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Look: you can't predict the future. You might look at several days or several months of past Facebook stock prices, and determine what is a "high" or a "low" price during that time. But that is no guarantee of future performance. You might buy when the price is what has historically been low, only to find that the price continues dropping until it's only 70% of what it used to be. Maybe Facebook announced something stupid, or maybe there's no discernible reason for the drop at all. Either way, you just lost 30% of your money in a matter of hours.

Or maybe you get lucky, and the price really does recover. Then you do it again with Google stock, and once again you guessed right, and the low price is only temporary, and it recovers. And maybe you guess right 50 more times. But that 51st time, you might put all your money into a stock that drops 70% in a matter of hours. And suddenly, all those unrealized gains are wiped out in an instant.

Or maybe you mostly guess right for a whole month. Or a whole year. But there's no reason to think you'll keep guessing right next year.

People who are far smarter and more knowledgeable than you lose an enormous amount of money every day buying and trading individual stocks. They simply guess wrong. They buy when they think a stock isn't going to go any lower, only to discover that it does go lower. There's no reason to think you predictions about the future are better than theirs, and good reason to think they might be worse.

Add to that the fact that people in general are extra irrational with their own money. You'll get greedy when you see big gains, and keep holding when you should sell. You'll panic when you see big losses, and sell when you should hold.

So if you want to gamble, listen to your dad. But if you want to save for retirement, hunker down and buy index mutual funds with the rest of us schlubs.
 
I tried to do it holistically.

- Read analyst reports and statements, make judgement calls
- Try to apply acid ratio or DCF (impossibruu)
- Buy and hold only, aggressively cut underperformers

Nope... I suck at it hardcore. I think I'm better off in some no-load index fund.
 
Icyflamez96 said:
Well it's more than just a gamble if you know trends right? It's not like it's a completely luck based thing.
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For all intents and purposes, unless you have insider information, it is.
Major stockbrokers cannot "Beat the Market", why do you think you will?
It's pure gambling, only you don't actually have the house cut against you.
If you actually want to invest, though, buy baskets or indexes for the long-term.
 
Tertullian said:
Is this thread for real? The OP knows he's just gambling, right?
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Investment is not gambling, speculation is.

These are not the same things.

Icyflamez96 said:
Well it's more than just a gamble if you know trends right? It's not like it's a completely luck based thing.
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Investment is not about knowing trends, it is about owning a profitable asset over the long term. Over time a profitable company will be worth more money almost by default, they would basically have to burn the money they made as profit for this not to be the case.

Certain companies you can predict profitability really easy (say coca cola, it is really unlikely that people will ever stop drinking coke products). Most of these companies are really boring and slow growers, but over the long term they will make you a tremendous amount of money. More importantly you can predict with certainty that on average companies in the stock market will be profitable over the long term. This is why index funds are so great.

If you are looking to get rich quick though, don't bother with investing, buy lottery tickets instead, your odds are just as good.

Investing is about growing capital exponentially over decades via compounding returns. It starts out slow, but once that ball gets rolling, it picks up speed quickly.
 
Aureon said:
Major stockbrokers cannot "Beat the Market", why do you think you will?
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This "professionals suck why should you bother" generalization may need some context.

Professionals like fund managers have managament overhead (1-2% alone could put you behind the S&P), constant inflow-outflow of investors (so transaction costs), and volume restrictions (they have to invest big figures which excludes them from the small caps and illiquids). Also the really good ones may be in less-regulated hedge or privates.

iamblades said:
Investment is not gambling, speculation is.

These are not the same things.
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I think anything with probability is a gamble, including something mundane as me crossing a busy road.
 
lol @ investing is gambling

mutual funds are like the safest place to put your money if you want to see profit worth anything & not just sit in the bank
 
Tertullian said:
Look: you can't predict the future. You might look at several days or several months of past Facebook stock prices, and determine what is a "high" or a "low" price during that time. But that is no guarantee of future performance. You might buy when the price is what has historically been low, only to find that the price continues dropping until it's only 70% of what it used to be. Maybe Facebook announced something stupid, or maybe there's no discernible reason for the drop at all. Either way, you just lost 30% of your money in a matter of hours.

Or maybe you get lucky, and the price really does recover. Then you do it again with Google stock, and once again you guessed right, and the low price is only temporary, and it recovers. And maybe you guess right 50 more times. But that 51st time, you might put all your money into a stock that drops 70% in a matter of hours. And suddenly, all those unrealized gains are wiped out in an instant.

Or maybe you mostly guess right for a whole month. Or a whole year. But there's no reason to think you'll keep guessing right next year.

People who are far smarter and more knowledgeable than you lose an enormous amount of money every day buying and trading individual stocks. They simply guess wrong. They buy when they think a stock isn't going to go any lower, only to discover that it does go lower. There's no reason to think you predictions about the future are better than theirs, and good reason to think they might be worse.

Add to that the fact that people in general are extra irrational with their own money. You'll get greedy when you see big gains, and keep holding when you should sell. You'll panic when you see big losses, and sell when you should hold.

So if you want to gamble, listen to your dad. But if you want to save for retirement, hunker down and buy index mutual funds with the rest of us schlubs.
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Oh well yeah i'm already aware of that, but gamble is a harsh word here no? You make it seem like I might as well be spending my money at Vegas.
 
Cyan said:
Though I'd consider signing up for a site where you can buy and sell with play money first, to sort of get the idea of how things work, before you put in your real money.
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Any recommendations on which sites to use?
 
iamblades said:
OP never said that was what he was doing though.
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One of his first posts discussed buying Facebook stock, and maybe using his interest in the video game industry to make a purchasing decision on Nintendo stock. He then mentioned observing Facebook's historic highs and lows, and trying to time them. That sounds like trying to make a quick buck on individual stocks to me. If the OP was talking about investing in a nice, heavily diversified portfolio, then I apologize, but that wasn't the impression I got.
 
It doesn't make sense to say that buying individual stocks is gambling, but buying an index is not. It's the same thing, just with a different risk/reward balance. It's kind of like saying that it's gambling to bet on a number in roulette, but it's not gambling to bet on a color.

Simple statistics tell us that if people invest randomly, approximately half of them should beat the index fund in a given year.

Also lost in this gambling discussion is that opting to stick your money in a savings account should be viewed as a gamble against the opportunity cost of investing. And historically it has been a bad gamble, on average.
 
Oh joyous day, the semantics of gambling. As always, best to start by defining your terms. Since generally the aspect of standard forms of gambling (cards, roulette, lotteries) that cause them to be frowned upon is their negative expected return (over time, you expect to lose money), I would not put buying stocks in the same category. The expected return on stocks is positive as a general rule, and so I would not call buying stocks gambling.

I'm not sure if the same is true for day trading given transaction costs and the psychological biases which may cause us to be more likely to buy and sell at times that lose us money on the whole.

RBH said:
Any recommendations on which sites to use?
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Man, good question. Honestly, it's been so long since I used anything like that that I don't have a particular recommendation.

You might look at Investopedia's stock simulator. While I haven't specifically used that one, the site is one that I like and trust in general. (I'd strongly suggest mostly ignoring the ranking stuff. It just encourages you to go for extremely short-term, high-variance stuff.)
 
Icyflamez96 said:
My dad started trying to get me into it a few months ago seemingly out of nowhere. He wanted me to watch the channel a bit and then make an etrade account when I turned 18. Seemed cool to me how everything worked, and also seemed like a cool way to make a bit of extra money.

Anyone here successful with making extra money off of investing in stocks? Any tips for me?
Click to expand...

If you're looking to "make a bit of extra money" than investing is not how to do it. You would be better off trying to obtain a better job if your short term goal is to have more money.

If you're serious about investing, you have to consider it a long term strategy and have a lot of patience as well as time to research businesses you invest in. I don't know what channel your dad is watching but I can almost guarantee you that any mainstream channel is not going to tell you how to beat a market. I see a lot of people talking about following trends and using them as signals when to buy and sell - THIS is speculation and often leads to average returns at best.

The only strategy to investing that I've found which consistently outperforms the average return of the stock market (NASDAQ, SP500, DOW) is called value investing. The basic premise is that you ignore all the hot stocks that everyone is buying and instead you only purchase stocks that are below their intrinsic value - which is calculated by a number of different factors. Often times that prices of stocks will fall due to short term issues that can easily be resolved yet causes a panic for investors - this is when you want to buy. Of course, you have to be careful - you shouldn't just buy a stock because it went down. If the management of the company has a poor track record and hasn't been known to look after it's shareholders than it's still might be a bad purchase.

If you're really interested in investing I'd recommend these books:

1) Warren Buffet Way

2) The Intelligent Investor

Once you know more about picking stocks I'd recommend making some portfolios in Google Finance to play around with what works before you actually invest.

On the other hand, if you don't have the stomach to do all of the research necessary to be successful at investing I would suggest investing in an index fund. Index funds are a proven vehicle for investment which leads to average returns. In actuality, index funds themselves can be seen as above average due to the fact that the majority of individual investors or brokerages do not see returns higher than that of an index fund.

Alternatively, you can use another strategy called "trending value" (explained here). You can generate a portfolio here and essentially what you do is investing an equal amount in the top 25 stocks that are found using the generator and you'll beat the market on average.
 
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