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Talking stocks, trading, and investing in general

Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.

  1. SkinnyGoomba

    SkinnyGoomba Senior member

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    My banking stocks moved that much but the overall portfolio maybe 2-3% over the coarse of the event. If you are out of the market for big macro events it's hard to make cap gains. My opinion is that if the stock market takes a good beating than I will convert bonds into stocks to take advantage of it. If it doesn't than it is another bump in the road.

    Having 38% short duration bonds in this particular portfolio has a negative effect of killing overall returns in a good year for stock markets, but it had helped me reduce risk and also outpace a bad or mediocre year like last year. A different portfolio of mind is at about 57% investment grade corp bonds and blue chip stocks that has outpaced the S&P, but it is in my experience of the more aggressive side.
     
    Last edited: Sep 18, 2012
  2. YOLO EMSHI

    YOLO EMSHI Senior member

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    So I am getting really tired of being poor and am interested in starting a safe stock portfolio. I am not looking to make big money quick or to make any major risks. My situation right now is that i'm gradually saving 50% plus of my earnings and it is basically sitting somewhere in a term deposit account gathering dust. I have no experience in stock trading or finance for that matter and am looking for advice on how to get started, and of course warnings.

    Right now I'd say I'm willing to invest $2000-$5000

    Thanks!


    Edit: Don't know if asking you guys here would be any different from going into the bank or something because what i'm scared of most is being taken advantage of for my dumbassery.
     
  3. Slopho

    Slopho Senior member

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    IBM.

    Edit: Also, avoid tech stocks that pay a dividend,
     
    Last edited: Sep 19, 2012
  4. randomhero88

    randomhero88 Well-Known Member

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    Any reason in particular behind this remark? I'm not saying it was a silly comment, but you didn't really explain yourself.
    EDIT-IBM is a tech stock that pays a dividend. Were you recommending it or using it as an example to avoid?

    Technology has been the fastest growing sector of dividends paid in the past 7 years.
    Tech stocks are expected to increase 14.3 from 2011 to 2012.
    Source: First Trust

    On a personal note, Apple is the most held company by mutual fund companies. It is held in just about every growth fund and it's held in quite a few Income Mutual Funds.

    If you're new to investing, I'd suggest you read a book called "One Up On Wallstreet" by Peter Lynch. It's essentially a book about investing in companies you know and use personally like McDonalds, Apple, or Johnson and Johnson. Not because you heard from your neighbor to buy So and So Financial or because Jim Cramer said you should do this.

    My advice if you're too lazy to read the book:
    *I'd recommend finding a place where you can start a "mock investment account." Investopedia had one last I checked. You'll learn how to make trades without actually using real money.
    *After that, open up a cheap electronic investment account through Scott Trade or similar.
    *I'd suggest you learn about equity betas. The market in general has a beta of 1. A stock more volatile than the market will have a beta of more than 1. A stock less volatile will have a beta less than 1. To put that in perspective. If the market goes up 4% and a stock has a beta of 3.0. That stock would theoretically be up 12%. If a stock had a beta of .5, it would theoretically only be up 1.5%

    Decide how agressive you want to go, what you're using this money for (playing around, save for a house or car, etc), and what you want to invest in.
     
    Last edited: Sep 19, 2012
  5. Slopho

    Slopho Senior member

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    Well, in your initial post you were looking for relatively safe stock to invest in. That's why I recommended IBM. You won't get rich and you won't go broke but you'll make a little something. Regarding dividends, especially with tech stocks, they can (and do more often than not...to me anyway) indicate that there will be slow growth on a company's PPS. I like for companies to reinvest what ever dividend they were going to pay me back into the company and keep good profitable ideas coming. There was a discussion of this earlier where some people were happy that AAPL started a dividend while others (me included) were not. MSFT pays a dividend (recently upped as a matter of fact) and you don't really at ton of innovating products coming out of that shop.

    edit: Let me expand on this a little bit. So, Coca Cola (KO), Kellog (K) and McDonald's (MCD) all pay dividends. The thing with these companies is that they really don't have to evolve or innovate anything. You get your coke, you get your corn flakes, you get your burger. None of these products will become obsolete.
     
    Last edited: Sep 19, 2012
  6. idfnl

    idfnl Senior member

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    I think he was making a joke


    For a dude like that above, individual stocks are too risky. He needs a fund, then learn slowly and make purchases when he has some confidence. Buying on a forums recommendations is a good way to lose money. That said.... AIG !!
     
  7. randomhero88

    randomhero88 Well-Known Member

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    Let me say that I do this stuff for a living so I'd like to think my opinion has a bit of value

    Quote:
    At the risk of sounding rude, your logic is close, but still a bit off base.

    You are correct that, generally speaking, companies begin paying a dividend when they've passed the growth stage. Any public corporation wants their company to look as attractive as possible. A company in its growth stage invests as much as it can to continue its growth. Eventually, re-investing money into the company will yield less and less results. McDonalds and Coke have expanded globally and they're running out of physical space to add more locations or put sodas in vending machines. So at that point their goal is to stop worrying about growth and worry more about efficiency and attractiveness to investors...that's when the dividend comes in.

    Apple has a retarded market share percentage at this point. They're still growing like crazy (They're up 98% from their 52 week low). However, eventually, the iphone 27 isn't going to wow people like the current Iphone versions have. I honestly think that their choice to pay a dividend was brilliant. It was another way for them to look attractive to investors. It's only 1.5%, but that's the perfect number if you ask me. They can keep reinvesting money into the company and they're now a "dividend payer:"

    As far as your recommendation for IBM, I can't predict the future so my word isn't gold, but in my opinion, there are much better options out there. S&P has a 12-month target price of $227(a little over 10% from where it's at now), and Morningstar thinks its fair value is $193(That means they think it's overvalued by 6%). It's 52 week low is 21% below its 52week high. That's not huge, but it's still significant.

    Quote:
    After reading his followup, I think he was being serious (either that or him sarcasm is more advanced than mine).

    We are definitely in agreement about not buying based on forum recommendations. If you read the post you replied to I made that same point that you should avoid buying something based on hearsay. I suggested that he do a little reading on basic investing (recommended a book I found valuable), or do a mock investment account where he can learn how everything works without losing a dime.

    To respond to your post. "A fund" is a bit to general of a statement. Buying McDonalds is going to be a much more conservative than buying a small-cap growth fund. Mutual funds can be extremely volatile too. With that said, if he wants to make money, ETFs and Mutual Funds, and UITs are the best way to build a portfolio with very little money.

    -----------------------
    These are some of the questions I ask when looking to invest in a company
    *What do I want this stock to do? Grow like crazy, pay a dividend, or have constent and steady returns.
    *Do I think this company is undervalued(is it trading at $30 when I think it's a $60 stock)?
    *Does this company have a competitive advantage over its competition?
    *Can this company sustain its price? This is for companies that pay a healthy dividend(4% or more)
    *Do I like this company? It sounds silly, but financials aren't everything. 10 years ago, people would have thought buying Apple was stupid.
    *Does this company have a product that won't be obsolete in 10 years? Blackberry is a perfect example of this one.
    *How long to I want to hold the company for?
     
  8. CYstyle

    CYstyle Senior member

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    Great points, but hard to say what's gonna be obsolete in 10 years especially in Tech. There was a time Nokia had near monopoly on cell phones, billions of dollars in cash, yet today they are practically dead. 10 years ago where was aapl $7/share?
     
  9. YOLO EMSHI

    YOLO EMSHI Senior member

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    Thanks for response guys. I think i'll start with reading that book and opening a mock investment account to see how i'll do first.
     
  10. randomhero88

    randomhero88 Well-Known Member

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    You're right, that was a bit silly to say. My point was more to say, "does this company have a product that is this months fad, or is it something that will be useful for quite sometime." When i wrote it, I was thinking along the lines of Xenga or Groupon.
     
  11. djh

    djh Senior member

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    What's Xenga? Just kidding


    I've been very successful investing/swing trading by only investing in companies I understood and believed in, and then only buying them as the markets got cheap.

    Trading gets pretty easy if you learn some basic technical analysis and buy "strong" companies when the signals appear on longer-term charts (I use month and week charts). Granted I didn't start trading until late 2009 so I haven't experienced any bear markets.

    Another rule I have is to watch a company for at least 3-6 months after I've heard about it. If I miss out, oh well. Not like I knew about the opportunity before. But three to six months is a decent amount of time to learn more about the company and the stock's behavior.
     
    Last edited: Sep 19, 2012
  12. SkinnyGoomba

    SkinnyGoomba Senior member

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    Dividend champions do actually need to evolve with the times, they usually just do so at a slower pace. I lean on oil producers, tobacco, consumer staples, finance, pharma, fast food, alcohol, telecom and energy providers. These industries all change, but at a much slower pace then tech. For that reason the big names have been the same for years, decades, some over a century.
     
  13. javyn

    javyn Senior member

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    Been on a short hiatus, back now. Looks like a PIPE for ACTC, yikes. TIMBEERRRRRR
     
  14. djblisk

    djblisk Senior member

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    MRN seems to be falling to a good price.
     
  15. javyn

    javyn Senior member

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    Yeah, gotta give retail investors a chance to sell at a loss and chase some other stock heh.
     
  16. cearl

    cearl New Member

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    CVD Technologies. Gotta get dat Graphene investment somehow, although I am pretty late to the party with that.
     
  17. idfnl

    idfnl Senior member

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    This is generally not a great approach, the main reason is that you'll behave differently with real money, even if you cant see it now, you will.
     
  18. stevent

    stevent Senior member

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    Yeah tempted, gonna read some analyst reports tmrw AM
     
  19. krn.nyc

    krn.nyc Well-Known Member

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    I want to short Apple. I think it'll go down in the intermediate/long-run.

    Having been interested in the tech hardware world for a while, I see Apple's sky-high market share as an imminent sign of its downfall. To be considered the most valuable company in history within such a volatile industry is not the best news: ask Microsoft, back when it was the most valuable at the height of the 2000 bubble. With the gap left by Jobs, the pace of innovation is slowing within Apple; I believe the iPhone 5 was the last phone in the works and you can sense much of his influence wasn't exerted on that product in his last years. It wouldn't surprise me if a leaner and more agile tech company reinvents the tech landscape and is able to topple Apple in a few years (as Apple's package of hardware and software did to Microsoft's software).

    Apple still holds the most leverage in the industry due to its high market cap and talent. It still has the potential to be the highest inflation-adjusted valued company in history if the greater global consumer markets are still untapped and it continues to release blockbusters like the iPhone and the iPad. But at the first sign of troubling news (i.e. management woes, a bad conference event, etc.) , I will short Apple due to my belief that an increasingly clunky and slower-moving organization can never remain on top in the tech industry.
     
  20. javyn

    javyn Senior member

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    So many are touting the Lumina 920 as the iPhone killer...I just don't see it. Thoughts?
     

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