Buying and selling shares 101

theSquid

Hi I'm a guy who's getting started in the world and I'm realising that if I want to afford a decent place in the city before the age of 107 I'm going to have to do a lot better than stash $1K a month in my savings account.

That being said I'm wondering if having a few shares might up the overall balance a bit. Firstly, is it relatively easy to make money? Something along the lines of buying shares the day before an Apple keynote then selling once everyones frothing at the mouth about whatever Steve Jobs has announced. Do I have any idea what the fuck I'm talking about? Am I in over my head? You decide!

The second question is simply: what's the easiest way to go about doing this?

Shogun

No, you have no clue what you're talking about. Day trading is a wonderful way to lose your ass. It is not an easy way to make money and more than likely you will lose everything you put into it. Day trading also requires a significant amount of capital to make it worth your time and the trading/broker fees you will pay.

Investing for your future is a great idea but you're already saying you can't afford a place in the city. Day trading will not get you any closer. We have a thread on this it seems at least once every two weeks. Browse through some pages in H/A and you'll find them I'm sure.

Six

theSquid wrote: »

Firstly, is it relatively easy to make money?

Nope.

Do I have any idea what the fuck I'm talking about?

Nope.

Am I in over my head?

Yup.

what's the easiest way to go about doing this?

Don't.

theSquid

Alright cool. That's a pretty loud and clear answer. Thanks anyway!

Deebaser

theSquid wrote: »

Hi I'm a guy who's getting started in the world and I'm realising that if I want to afford a decent place in the city before the age of 107 I'm going to have to do a lot better than stash $1K a month in my savings account.

That's terrific, but ummm.... $1000 a month and you'll have a solid downpayment in under 5 years.

That being said I'm wondering if having a few shares might up the overall balance a bit.

It would.

Firstly, is it relatively easy to make money? Something along the lines of buying shares the day before an Apple keynote then selling once everyones frothing at the mouth about whatever Steve Jobs has announced.

No. This is very silly. Apple doesn't make these announcements in a vacuum. Investors know that Apple is making an announcement and the speculation of how awesome/revolutionary the larger/smaller ipod is going to be is built into the ask price the day before.

Do I have any idea what the fuck I'm talking about? Am I in over my head? You decide!

The second question is simply: what's the easiest way to go about doing this?

1. Not really
2. No
3. In parts

-Go to Yahoo Finance and start reading. Similarly, bookmark investopedia.
-Find a company or two that you like and would like to invest in. Alternately check out a few index funds.
- open an investment account with etrade, schwab, fidelity, whatever.
- Look in a mirror and repeat loudly and confidently "I am not going to make $TEXAS overnight. I am looking to learn, have fun and net a better rate of return than my savings account."
- Or, just open a sharebuilder account and allocate some of your savings moneys into monthly direct deposit contributions to an infinite amount of stocks.

Zombiemambo

I am also a person who has no idea about how the fuck this all works ("Buy low, sell high!"), but a person I know raves about buying stocks in silver. Now, don't go into this all blind like, but maybe once you get your bearings on the whole subject look into the silver market and see what you think. You won't be making bank, but it's pretty cheap to buy and the value seems to increase fairly steadily.

adytum

Zombiemambo wrote: »

it's pretty cheap to buy and the value seems to increase fairly steadily.

God, where have I heard that before?

edit- don't invest in anything where people tell you the price can only go up.

VeritasVR

There is a way for normal people like us to use the stock market. It's an IRA.

Unfortunately, the caveat is that you can't get your reward until you retire. But that's actually a good thing; it means that your long time in the market will lessen the risk.

Your current savings of $1k a month is really impressive actually.

Djeet

If it were easy then people would generally be more financially secure. The easiest way to get market returns (which hopefully beats inflation and whatever crappy APR you're getting in checking/savings) would be to plow all that money into low cost broad market index funds and just forget about it until you need to retire or buy a house. Granted, a couple of years before house purchase or retirement you'll want to do an analysis to determine if the market is inflated or overcorrected and how that plays into how you want to allocate funds. There's no easy way to beat market returns.


Avoid hot tips, such as exposure to a particular stock or commodity.

Avoid thinking about it as "making money" and think about it more as "saving for retirement/homeownership" or somesuch. Most of the people making money on stock transactions are making it on the transaction itself (not on long/short positions).

If you're already in the habit of saving you've done the hard part. Now you just need to figure out what store of value you want to park that money in (be it cash, CDs, mutual funds, index funds, etc.).

Talk to a certified financial planner if you want more of an education about how to invest. You shouldn't have to pay anything for an initial consultation. Good planners/analysts won't push you towards a particular fund family (which may indicate they are pushing you towards funds that offer them good commissions for sales).

Also, an IRA is not an investment, and they may not have them in Australia (though there is likely some analogous tax-deferred type of account you can fund). It's just an account. Once funded you'll still have to invest the funds in something (stocks, bonds, funds, CDs).

Zombiemambo

adytum wrote: »

Zombiemambo wrote: »

it's pretty cheap to buy and the value seems to increase fairly steadily.

God, where have I heard that before?

edit- don't invest in anything where people tell you the price can only go up.

oh no no no no, don't get me wrong, I'm not trying to sell him on anything

but it might be a market to look into?

Sygnon

http://www.amazon.com/Fooled-Randomness-Hidden-Chance-Markets/dp/1400067936/ref=sr_1_1?ie=UTF8&qid=1288804127&sr=8-1

read this book

if you really want to invest, you need to spend a great deal of time understanding how this shit works.

also, buying stock is for large capital holders only. if you want to gamble , buy options far away from the money.

soxbox

If you're wanting to use stocks as an investment mechanism, buy an indexed fund. This will typically out-perform a saving account over the long term as long as you don't need fast access to any of the money invested.

If any of the italicized bits scare you, run away. If not, get an indexed fund and an indexed fund ONLY (not a managed fund, don't buy individual stocks).

Everything other than an indexed fund will be a higher risk, with potential higher reward, but you will be unlikely to make enough more out of it to balance the increased fees and/or increased time you will need to invest in market watching.

Erios

OP, you've described what probably 80% of long/short hedge funds do (of them, a significant number are pretenders to value investing). Their time horizon longer, their margin calls less likely and their platforms superior. You will not win a day in advance on momentum trading without extraordinary skill. As a retail investor, you are better off going with a fund, an ETF or getting ready to do some serious grunt work value investing. Of course, you could always take a chance and trade on faith, but do realize you might get killed.

The silver trade set sail in late September. I guess you could do it now, but you're exposing yourself to risk. The basic draw is heavier industrial use and "arbitrage" with gold. As long as gold keeps exploding, SLV and related funds will be doing fine. Plus the whole thing with the debasing of the dollar.

Honestly though? I hate commodities. Hate them. I view them as alternative money at best and pure speculation at worst. They're a really easy way to lose your shirt since their value is not derived by a discounted series of cash flows. Even worse, in commodities ETFs you can lose your shirt to traders gaming you on contango.

Also, Taleb's great but his stuff is inherently epistemological, so don't go looking to him for answers on how to make a fast buck. I think he's much more spot on in regards to his views on rare events, probability and statistics. Despite what some say, returns are random to a point, but then you have stuff like David Einhorn's epic takedown of St. Joe (NYSE: JOE) before the Value Investing Congress.

EDIT: You want a free piece of advice since I'm feeling bitter? Reverse Iron Condor HITT over a longish time horizon and buy it below 46 if it gets back down there.