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Stock Purchases

Bionic MonkeyBionic Monkey Registered User, ClubPA
edited June 2011 in Help / Advice Forum
I recently started purchasing stock through an employee purchase program at my work. I don't have much at the moment, only about $1200 worth, but aside from selling it, I'm utterly ignorant on how to make money from this.

It would be great to get some beginner resources that I could read, but I'd also appreciate any layman level advice from people that have been doing this for a while.

Bionic Monkey on
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Posts

  • Idx86Idx86 A man chooses A slave obeysRegistered User regular
    edited June 2011
    I'm not a big stock guy myself, but it is definitely a benefit that you should exploit. Most ESPP's give you a discount (15%) or so off the lowest price the stock had been either in the last quarter or through some other formula. In the interest of diversification, I would buy as much stock as you can and then sell some of it to reinvest other places. You're already coming out ahead 15% (or whatever your discount is) and safeguarding yourself.

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    2008, 2012 D&D "Rare With No Sauce" League Fantasy Football Champion!
  • DeebaserDeebaser Lead Frog Rammer Fake Board GamerRegistered User regular
    edited June 2011
    -Bookmark investopedia
    -look at the fees for trading with your ESPP broker. If they aren't completely whackadoodle, stick with them for simplicity, especially if you do your own taxes.
    -Reinvest your dividends (if any) back into stock purchases. A lot of brokers allow you to do this automatically with no trading fee.
    -Yahoo finance is your friend.

  • godmodegodmode Nooo-ooo-ooo... That ain't dancin', SallyRegistered User regular
    edited June 2011
    I recently started purchasing stock through an employee purchase program at my work. I don't have much at the moment, only about $1200 worth, but aside from selling it, I'm utterly ignorant on how to make money from this.

    It would be great to get some beginner resources that I could read, but I'd also appreciate any layman level advice from people that have been doing this for a while.

    Oh man, stocks! So fun, and really an easy way to make money if you have some to spare, and you're careful about your choices. If you get an account with TD Ameritrade (It's free!), you can make what are called "watch lists" - you pick stocks you want to see and add them to a list so you can watch their trends on the market. When I was choosing stocks, I would always go back at least a year or more to see how they do throughout a given period. Use some logic when choosing your stocks. For instance, during the summer, construction work becomes common. When I used to do stocks, I bought a steel company's stocks at the beginning of summer, and sold before the summer ended. Also, I happened to latch onto some Citigroup stocks right after they bottomed out in '09, managed to do the ol' buy low, sell high thing. Altogether, I made 1,000 bucks in the space of a few months. If Sony stock weren't so expensive per share, I would recommend buying theirs since they're having issues now that drives their price down, but it's Sony so they'll rebound and the people that bought in will make profit. Look for things like that.

  • LaPuzzaLaPuzza Registered User regular
    edited June 2011
    I recently started purchasing stock through an employee purchase program at my work. I don't have much at the moment, only about $1200 worth, but aside from selling it, I'm utterly ignorant on how to make money from this.

    It would be great to get some beginner resources that I could read, but I'd also appreciate any layman level advice from people that have been doing this for a while.

    Are your buying stock in your company or investing in the market at large? I don't understand from your OP.

    If I didn't know LaPuzza wasn't a spambot I would think that was a spambot post.
  • Bionic MonkeyBionic Monkey Registered User, ClubPA
    edited June 2011
    I'm buying stock in my company, Best Buy. They take a chunk from each of my paychecks, and at the end of a six-month period, buy stock with the funds at a nice discount. Even with as poorly as they're doing right now, I've made about $400 off the deal.

    How exactly do dividends work? How frequently do companies usually pay them out? Obviously it varies by the amount of profit, but how much do they usually pay per stock?

    sig_megas_armed.jpg
  • DeebaserDeebaser Lead Frog Rammer Fake Board GamerRegistered User regular
    edited June 2011
    Not all stocks pay dividends.
    Best Buy does.

    The ones that do pay dividends usually pay them out quarterly. In Best Buy's case. They paid out 59 cents per share in the previous 12 month period.

    http://www.dailyfinance.com/financials/best-buy-incorporated/bby/nys/key-ratios

  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2011
    godmode wrote: »
    I recently started purchasing stock through an employee purchase program at my work. I don't have much at the moment, only about $1200 worth, but aside from selling it, I'm utterly ignorant on how to make money from this.

    It would be great to get some beginner resources that I could read, but I'd also appreciate any layman level advice from people that have been doing this for a while.

    Oh man, stocks! So fun, and really an easy way to make money if you have some to spare, and you're careful about your choices. If you get an account with TD Ameritrade (It's free!), you can make what are called "watch lists" - you pick stocks you want to see and add them to a list so you can watch their trends on the market. When I was choosing stocks, I would always go back at least a year or more to see how they do throughout a given period. Use some logic when choosing your stocks. For instance, during the summer, construction work becomes common. When I used to do stocks, I bought a steel company's stocks at the beginning of summer, and sold before the summer ended. Also, I happened to latch onto some Citigroup stocks right after they bottomed out in '09, managed to do the ol' buy low, sell high thing. Altogether, I made 1,000 bucks in the space of a few months. If Sony stock weren't so expensive per share, I would recommend buying theirs since they're having issues now that drives their price down, but it's Sony so they'll rebound and the people that bought in will make profit. Look for things like that.

    I lost more than you made going short in Feb of 09.

  • DjeetDjeet Registered User regular
    edited June 2011
    How much does Best Buy stock represent as a portion of your entire investment funds? Personally I wouldn't put more than 5% in any one company, unless I'm Director-level or higher at said company, in which case there are other considerations. If it's a significant portion of your investment funds I'd probably start cashing some out as shares exceed their holding period and take the proceeds and save or invest elsewhere. This is not a statement against Best Buy stock performance, but an argument that's pro diversification. However, since we're talking about $1200 I might take the risk of holding onto all acquired stock until I had enough that the sale of shares would garner enough proceeds to fund another investment, typically $1K-3K. A lot of mutual funds have such an amount as the minimum investment, and to reduce transactional expense I prefer to deal with at least that much stock in any given transaction.


    As for how to make money picking stocks in general, I rarely buy stock in individual companies, but when I do it's because I've a belief that it's considerably undervalued (I'd consider a good discount also compelling) and at time of purchase I'll have decided an exit point, be it time, valuation, or stop-loss.


    Re: dividends -

    Paid quarterly, semi-annually or annually to whichever brokerage your plan uses, and then the brokerage transfers that to your account (or these may be automatically re-invested into shares if that's what you elected to do). If selling/buying around the time the dividend is to be paid you may want to know about the ex-dividend date, though that date has never been a significant determinant for me in whether or not to buy/sell. A company may also elect to disburse a special dividend independent of their normal dividends.

  • CauldCauld Registered User regular
    edited June 2011
    godmode wrote: »
    I recently started purchasing stock through an employee purchase program at my work. I don't have much at the moment, only about $1200 worth, but aside from selling it, I'm utterly ignorant on how to make money from this.

    It would be great to get some beginner resources that I could read, but I'd also appreciate any layman level advice from people that have been doing this for a while.

    Oh man, stocks! So fun, and really an easy way to make money if you have some to spare, and you're careful about your choices. If you get an account with TD Ameritrade (It's free!), you can make what are called "watch lists" - you pick stocks you want to see and add them to a list so you can watch their trends on the market. When I was choosing stocks, I would always go back at least a year or more to see how they do throughout a given period. Use some logic when choosing your stocks. For instance, during the summer, construction work becomes common. When I used to do stocks, I bought a steel company's stocks at the beginning of summer, and sold before the summer ended. Also, I happened to latch onto some Citigroup stocks right after they bottomed out in '09, managed to do the ol' buy low, sell high thing. Altogether, I made 1,000 bucks in the space of a few months. If Sony stock weren't so expensive per share, I would recommend buying theirs since they're having issues now that drives their price down, but it's Sony so they'll rebound and the people that bought in will make profit. Look for things like that.

    You're not smarter than the market at large. I'm not trying to be mean. Everything you've stated is immediately factored into the price of a stock. Imagine if steel companies always had stock prices increase during the summer, then everyone would buy them in the spring. If everyone bought them in the spring, the price would always go up in the spring, etc.

  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2011
    Theres also the confusion of Alpha with easy.

  • KakodaimonosKakodaimonos Registered User regular
    edited June 2011
    Employee stock purchases are almost always a great plan to participate in. Couple of things to keep in mind.

    You get taxed on both:

    Capital gains (appreciation of the stock price from when you purchased it and when you sell it). Generally a good idea to hold the shares long enough so you'll be in the long term capital gains tax when you sell and not short term (> 1 year). Find out if your plan administrator keeps track of when you purchased your shares and also executes any sales orders on the oldest shares first.

    Compensation income (the difference in the share price in the market and the discounted price you were able to purchase the shares at). I've seen plan administrators screw this up occasionally. Keep notes on when you purchased the shares, the price you purchased them at and the market price.

    Finally, it's usually not a good idea to try trading the same shares in the same account that you purchase your employee discounted shares in.

    Hold the shares for at least a year, sell them and if you still want to trade other shares, open another brokerage account and move the profit into that account.

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