Investing in stocks

[Tmv]

Trying to get your opinions on it. Any success stories? Any failure storys?
Anybody know any good reading material on this subject?

[wrenchhands]

It's awesome if you are into that kind of thing, but you can build your own.





HAHAHA!

Seriously though, this past year and around 10 years ago, lots of people lost tons of cash throwing their money around the stock market. It would be ignorant to call it gambling, but that's what it is unless you put careful consideration into what you are buying, and how long you are holding onto it.

[atypical1]

The Wall Street Journal has some really good books on investing that are worth a read.

james

[shree]

If you are in US, just visit your local library and you will find tons of good book right from "Dummies" series to highly technical analysis book.

One idea someone suggested me when I started was to do a "Virtual" trade. You maintain a Diary and write all your Buy & Sell. After a period of six month or year check your profit. If you are comfortable with your results then start doing it with ACTUAL money. This way you will not end up in a situation like the picture posted by "wrenchhands"

Good Luck with your journey

[tenkev]

Only invest in companies that you know firsthand and that you have reason to believe are undervalued or are well-run or are serving a niche that you know alot about.

If you don't have inside knowledge, its best to just invest in mutual funds and index funds. There is only one Warren Buffett.

[mjh]

have a read of iwillteachyoutoberich.com

Great advice for saving and investing. He advocates index funds and investing in yourself over trying to play the stockmarket.

[nburge]

It's fine as long as you do it with money you can afford to lose. Unless you dedicate your life to it you will come up against people that spend all their time meeting companies and investigating what they're up to, researching what governments will be doing with interest rates etc etc and you will struggle.

Historically the yield from the stock market has been greater than the yield from bonds or other investments to it is a good place to put money - as others have suggested it is a good idea to use a fund to benefit from the better return that stocks typically give without over-burdening you with the hassle of valuing companies/countries/industries on a daily basis.

If you really want to get into it a good starting resource (that's free) is www.investopedia.com - there are 101 courses for a variety of instruments (stocks, bonds, options, etc) on there that should bring you up to speed and give you more to think about. There is also a glossary/dictionary of terms that will help you understand if you're a complete beginner. If you're serious about doing it I'd suggest investing in a professional qualification (that you can do in your spare time) like the CFA - this will give you a complete grounding in the financial services rather than a focus on stocks. There are so many variables OUTSIDE of what the company chooses to do and how it is run to think about that you can't view stocks in isolation. They are inextricably linked to the rest of the financial world.

As an aside I was a money broker for 5 years during which time I learned a lot about how the markets work, and I don't invest my own money in stocks at the present time. This is because I don't have the time to dedicate to doing it properly (it's your money - give it due consideration) and I don't have the money to lose (as I said to set out - only bet what you can afford to lose).

Many people have become very rich and successful from the markets, most of them have had some formal training and experience though. Be cautious and try to keep a level head (don't let early success get you carried away) - you will also learn more from your losses than you ever learn from your gains. Good luck!

[Tmv]

Thanks for all the help so far, I'll check out the sites.
I was planning to set aside a certain amount of money just for investing so I don't end up like that guy in that picture

[nburge]

Nice one - in which case I'd do as shree suggests above and start playing with some ideas doing virtual trades (most of the online operators should let you set up a "play money" account) whilst you learn the ropes, then when you're happy with what you are transacting, go get involved. Good luck!

[Dragar]

Most of the advice above is good. Unless you really know what you're doing and are willing to put in a lot of time and energy I'd go with indexed funds, or build a portfolio which approximates it.

I'm currently studying the CFA programme (looking to transition from a technical to commerical career). It is very good, be aware though that it is a LOT of work.

Whatever you do don't get caught up in stories people tell you about how they made a heap of money, how this stock is absolutely going to double in value, or how some foolproof trading method they bought onlien or at a seminar for $999 is guaranteed to make you lots of money. There are a lot of very serious investors in the market with a lot of knowledge who do a lot of research, and the volumes they trade in dwarf the retai investors. You aren't going to outperform them with a gimmick. If you are going to invest directly in stocks I'd defintiely do it virtually for now - just make sure to accoutn for transaction costs, and for the current bid-ask spread and volumes. You can't automatically trade at the most recent traded price, you can only buy/sell what people are currently offering at the volumes they are willing to buy or sell at

[BigLifter]

I agree with Dragar, for most of us it's best to buy n hold low-cost index funds. You can combine many index funds to obtain the asset allocation you are looking for. One really good resource for learning about the benefits of this simple form of investing is the bogleheads forum or their wiki page. I am only 23 so I don't have a lot of experience, but I have read a lot of books! Anytime I go to the bookstore I browse three sections mainly: Personal Finance / Investing, Chess, Fitness.

Be wary of many financial websites because they make their money off of your business! If you would like to know of any good books I've read let me know!

BL