Stock Market

[Redskin]

Ok i know one or two people on here have to know something about playing the stock marketand i am in need for some broker help or a good website in which you manage your stocks from.

Advice would be nice to

[saden1]

Originally Posted by Redskin

Ok i know one or two people on here have to know something about playing the stock marketand i am in need for some broker help or a good website in which you manage your stocks from.

Advice would be nice to

It isn't a game unless you're playing with someone else's money. First thing you have to do is educate yourself. Once that's out of the way you can "play" with your own money. And remember not to get too greedy.

[hooskins]

Dude you are 18 and you are thinkin about investing?? Did you rob a bank or did you inherit a fortune?

[GhettoDogAllStars]

Here's a good stock to start with:
BERKSHIRE HATHAWAY INC.

[724Skinsfan]

I don't play the stock market but I do manage my 401-k pretty stringently. I've always liked the Motley Fool guys and go to their website more times than others.

[Schneed10]

I'm not a broker, but I studied investments on my way to grabbing my MBA. I'm of the academic approach: it's virtually impossible to beat the market.

The S&P 500 (the biggest 500 companies in the US) historically returns around 10% per year. You can put your money in Vanguard or Fidelity's S&P 500 fund, and if you keep your money there for 10 years or more, you've got a great shot at earning 10% per year. You can certainly put together a stock portfolio that can beat 10% over the course of a year, or maybe even three years. But if you're investing for the long haul, like an 18-year old should be, it becomes very difficult to top 10% per year for 10 years or more.

The reason is simple. There are some very talented stock pickers out there, guys who can beat the market. Some are brokers, some are mutual fund managers. Brokers typically charge you 3% or so for their services. Think about that. In order for them to give you more than the S&P 500 can, they have to gain more than 13% per year. One year they might gain 25%, the next year maybe 15%, but then the next year they'll lose 20%. Net of their fees, it's incredibly hard.

My advice: steer clear of brokers at all costs. You pay a much lower expense rate by investing in a Vanguard or Fidelity mutual fund. These two fund companies have the lowest expense ratios in the business. Fidelity has a few stud fund managers, specifically William Danoff who runs the Fidelity Contrafund. He is one of only 7 or 8 managers in the world to beat the S&P 500 for 10 years in a row, even after factoring in his fees. However, the Contrafund this year is going to end it's streak, Danoff is not going to beat the S&P 500 this year, proving that even the best can't do it year in and year out. Same with Bill Miller of Legg Mason Value Trust fund, he is widely considered one of the best stock pickers out there, he has beaten the S&P 500 for many years in a row, but this year he won't.

If you want to make the most out of your investments, make an S&P 500 index fund the core of your portfolio. Expense ratios at Fidelity and Vanguard are below 0.2%. That's pretty favorable compared to a broker who will charge 3%. Then if you wish, mix in some more aggressive stock funds, like the Fidelity Contrafund or the Fidelity International Discovery fund, which invests in developing markets and is on fire right now.

Just realize that the more aggressive your investments, the more prone you are to seeing your money go on a rollercoaster ride. Don't invest aggressively unless you can sock away your money for at least 10 years. If you need it before that, you should be in bonds and money market accounts.

[Schneed10]

Unless you're uber rich and can afford to own shares of tons of companies on your own, investing directly in stocks is a fool's errand in my opinion. Experts tell you that you should never have any more than 5% of your money invested in any single company. The exposure to risk is too great - all it takes is for that one stock to tank and you're effin screwed.

Mutual funds allow you to buy shares in a "portfolio of companies." You can put $3000 in a S&P 500 mutual fund, and you will effectively own a small piece of all those companies.

If you wanted to try to buy stock in each of those 500 companies, you'd need millions (not really, but you get the idea). You can't just put say $100 in a single stock, there are investment minimums - usually in the $1000 - $3000 range per stock.

[SmootSmack]

Originally Posted by 724Skinsfan

I don't play the stock market but I do manage my 401-k pretty stringently. I've always liked the Motley Fool guys and go to their website more times than others.

Did you know the founder of the Motley Fool is the same who came up with the concept of Pardon the Interruption on ESPN?

Anyhow, Redskin at your age mutual funds are strong way to go. But you may arguably be too young for that as well

[Schneed10]

Originally Posted by GhettoDogAllStars

Here's a good stock to start with:
BERKSHIRE HATHAWAY INC.

Actually yeah. If I was going to buy one stock, that would be the one I'd pick. Simply because Warren Buffet basically invests in tons of different companies and fixes them, turns them around, flips them, or simply lets them earn him some money. There's a lot of diversification built into this one stock, just like there is in a mutual fund.

Only trouble is the minimum investment is $100,000.

[SmootSmack]

Speaking of stocks. Does anyone else watch Mad Money w/ Jim Cramer on CNBC? I'm hooked on that show

[itvnetop]

Originally Posted by TAFKAS

Speaking of stocks. Does anyone else watch Mad Money w/ Jim Cramer on CNBC? I'm hooked on that show

Is that the guy who sounds like he's hopped up on too much java? He looks like he's going to have an aneurysm at any moment hehehe...

[jsarno]

At your age, I'd say go with an IRA, if you look up the interest rates over the past 50 years, you'll notice that you won't lose money very much, but overall you will yeild 10-13%.

If you're addicted to gambling, enjoy the stock market. I would recommend you get the advice of a professional. Ever hear the saying "if you defend yourself, you have a fool for a client"? Well, by that some token, if you play stock market without a lot of knowledge, you're an idiot.
Is that good advice?

[Daseal]

Speaking of stocks. Does anyone else watch Mad Money w/ Jim Cramer on CNBC? I'm hooked on that show

I was going to mention him. This guy is great, gives some solid advice, and doesn't sound like Ben Stein.

Personally, I agree with Jsarno. I don't have a lot of cash standing around, but when I have some I toss it in an IRA. I believe you can put about 3K a year in there, and the compound interest is ridiculous.

Personally I'd go regular IRA because I know I'd take a loan from my IRA for a home or a college education for children. So, I dont even want the option!

[Schneed10]

Well to clarify on an IRA, that's just an investment vehicle that allows you to put money into it on a pretax basis, or in the case of a Roth IRA, put money in on an after-tax basis but withdraw the earnings tax free once you reach retirement.

If you're 18, then you likely don't make enough money in a year for the federal government to tax anything, so a traditional IRA is pointless. Like if you're going to college, and then just have a summer job, your annual earnings likely don't exceed the taxable threshold. The whole point of using a traditional IRA is so that you can get a bigger tax refund. But if your earnings don't exceed the taxable threshold, you don't pay any federal taxes anyway, so the traditional IRA does you no good.

In general, unless you are in a high tax bracket (making close to six figures), you want the Roth IRA. You don't get a bigger tax refund, but when you're 60 you can withdraw the money tax free.

[Schneed10]

But see, an IRA is just an account that holds your money. Once you open an IRA, you can put the money in stocks, bonds, mutual funds, whatever. So as far as what to invest in once you have an IRA, my advice in posts #6 and #7 still stands.