Talking stocks, trading, and investing in general

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

  1. jbarwick

    jbarwick Senior member

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    I wouldn't count on 2 beats as a reason to get into the stock. If anything you buy after the 2nd earnings beat after some profit taking then grab a couple %. It is not a stock I would want to hold long term.

    As for reasons to get into a stock, does anyone look at the Bollinger Bands of a stock as a signal to get in? If you believe in this method, it would signal TWTR is a little overbought and will correct soon.
     


  2. guyver00

    guyver00 Senior member

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    If we all look at the same stock the same way, there wouldn't be any efficient pricing system; it's the opposing views that make the market.

    Having said that, TWTR's fundamental is crap, it's bleeding money. The only saving grace is its growth in users, and I believe more and more companies will use social media (FB and TWTR) to engage their users and consumers, particularly entrepreneurs and startups. TWTR isn't a value play, it's a speculative growth play. That's why I only have <2% of my portfolio in TWTR, and I'm happy since I bought it when it was $34. :slayer: I'm trying to avoid the disposition effect of selling my winners too soon, so I'm going to let it ride.
     
    Last edited: Aug 27, 2014


  3. idfnl

    idfnl Senior member

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    Your hesitation means that you don't believe in the stock. You've shown this same hesitation with good moments for FB and most recently EPZM. A good growth story doesn't need earnings beats to convince you to get in.



    I use them, but only in combination with other technicals such as moving averages. I'd never use it on it's own as an indicator.



    I think you have another $3 or $4 to gain, but that's about all.
     


  4. djblisk

    djblisk Senior member

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    Since I am new to stocks, I wanted advice on an ongoing issue in my head.

    What is ones strategy when investing with a limited amount of money?

    Lets say I have 10K to spend. Why the hell would I want to put it into an expensive stock like GILD if an $1 uptick only nets me about $80? It doesn't seem like a logical way to make a good return on speculation.

    Or am I thinking about this all wrong?
     


  5. otc

    otc Senior member

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    Yes.

    Price doesn't matter, percentages matter.
    Right now, Google is down $3, but that is only 0.5%. BAC is down $0.10, but that is actually 0.6% so it is worse than google even though google is down 30X as much per share.

    Look at it as a total purchase.
    100 shares of a $10 stock or 10 shares of a $100 stock. Either way, you have $1000 invested in the company and are impacted the same by a 5% change.
     
    Last edited: Aug 27, 2014


  6. lawyerdad

    lawyerdad Senior member

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    Yes, you're thinking about it wrong.
    First, let me be patronizing and say you probably shouldn't be buying individual stocks at all.
    With that out of the way, here's the flaw in your example:
    If you assume the potential price increase in GILD over whatever time period you are looking at (stop using stupid trader terms like "uptick" - you should only care about "upticks" if you're day-trading, which you should not be doing) will be only $1, then you probably shouldn't invest. That's -- what, a 1.something% increase? (I suck at math.)
    But those absolute values don't really matter. People (again, leaving aside day-traders and the like) don't buy GILD because they expect it to go up by $1. They buy GILD because they expect it to go up by $8, or $40, or whatever. Put differently: what's better, investing in TSLA and seeing it go up $26, or investing in GILD and seeing it go up $8? The correct answer (only slightly oversimplified) is that there's no difference. That's about a 10% gain for each of them. If you invested $1,000 in either, your investment would have increased in value by 10% (ignoring transaction fees, blah blah) to $1,100. You'd own fewer shares of TSLA if you went that way than you would of GILD if you'd gone that way, but the financial result is the same.

    Stocks aren't "expensive" or "cheap" because of their absolute share prices. That's an arbitrary number based on the number of shares outstanding. They're "expensive" or "cheap" based on the share price relative to the underlying value of the company, or relative to the expected price change (on a percentage basis) and dividend yield over whatever time horizon you're looking at, depending on what your fundamental benchmark is.
     
    Last edited: Aug 27, 2014


  7. UnFacconable

    UnFacconable Senior member

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    This is true for almost everyone. If you view the stock market as a hobby and like to talk about growth stories and earnings beats, etc. (as opposed to performing fundamental analysis, etc.) then by all means invest in individual stocks but understand that you're gambling. If you just want to ride the wave, invest in Vanguard Total Stock Market and root for the market generally.
     


  8. djblisk

    djblisk Senior member

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    That makes sense.
     


  9. GreenFrog

    GreenFrog Senior member

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    Yes, you're exactly right. My hesitation with TWTR is grounded in the fact that I think it's a shitty platform in an industry that FB is absolutely dominating.

    EPZM is a biotech stock. I don't view these types of stocks with the same lens. If anything, it was a pure swing trading opportunity. Not an investment opportunity.

    FB is an example where I learned that I should get in sooner rather than later. I'm still up with them despite the fact that I got in early this year.
     


  10. lawyerdad

    lawyerdad Senior member

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    But, but . . . we're all smarter than average, which means we can all beat the market if we do a bit of research, exchange hot tips with our buddies on the internet, and apply the "science" of technical analysis while sacrificing a goat, no?

    But yeah, of course you're right. A threshold point I skipped over.
     


  11. GreenFrog

    GreenFrog Senior member

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    Technical analysis is a joke. It's only "valid" to the extent that masses of people believe in it and perpetuate expected moves, which is to say, lots do.

    Anyway, there's no "right" way to invest. Everyone approaches stocks in his / her own manner. No one way is right over the other.

    My belief is that for the average retail investor, investing in individual stocks is still close to a 50/50 gamble as to whether you'll be up or down in a given time period. Sure, you can take some precautionary measures to maybe skew the odds in your favor with some sound due diligence, but at the end I the day, no one can ever consistently and reliably predict how a stock will behave.

    At $177 I was lamenting how ridiculously overvalued TSLA was. Look at where it's trading now.

    If there's one tried and true method of investing, it's to buy an major index fund or etf and holding onto it for years and years and years, if not decades.
     
    Last edited: Aug 27, 2014


  12. lawyerdad

    lawyerdad Senior member

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    FTFY.
     


  13. guyver00

    guyver00 Senior member

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    VTI is all you need, maybe mix in some VXUS in a 70/30 mix. Buy and forget, dollar cost average every month with fresh money. Hold for 20 years and reap the reward of compounding.
     


  14. djblisk

    djblisk Senior member

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    I have that in my Roth.

    Half VTI and Half GASFX
     


  15. jbarwick

    jbarwick Senior member

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    People I work with yack on about how a competitor's stock price is higher than ours when "only a few years ago we were trading higher than them". I try to mention more shares outstanding and our market cap is higher but they still complain.

    I only have 2 trading incidents I wish I could have back but in reality I was young and it didn't cost me my whole portfolio: 1. A speculative China play that lost 60% of it's value...probably a phantom company with two guys sitting in a barn playing checkers or whatever board game they play and 2. Not broadly basing my portfolio sooner and doing some single stock picks. I am still <30 years old so I learned early instead of being 40 or 50+ and figuring these things out. Total stupidity cost? ~$8K
     


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