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[JoshuaFH]

I've always wanted to learn more about stocks and such, but I only have a rudimentary idea of how it works.

So, in other words, I'm in the same boat as Nilocy, and it might benefit me to learn more.

[atomicwinter]

I've always wanted to learn more about stocks and such, but I only have a rudimentary idea of how it works.

So, in other words, I'm in the same boat as Nilocy, and it might benefit me to learn more.

Before you buy a stock look at the charts and the past history of it, and consider what the company produces and how that sector is doing in the current economy. Just some basic common sense and you might make some money.

[redacted123]

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[LASD]

I got interested in stocks few months ago too and a friend pointed out an interesting site to me:

http://www.investopedia.com/

It's a huge resource for investing information and they've got a great and entirely accurate (except for dividends) simulator too to try investing without risks. It starts at 100 000 dollars which is a bit unrealistic, but makes it easy to try out different things.

At start I made easily few thousand dollars, but then made a catastrophic investment that brought my bottom line all the way to 93 000. On the other hand this friend who pointed the site for me rode Google (GOOG) from 500 dollars to the 600+ where it sits now, bringing his balance to some 116 000$ only in a few months.

I recommend trying out simulator for anyone interested in stocks, it was quite fun at the start when things were going well and I'm sure I learnt a number of things. Like evaluating hot tips a bit more before buying.

[Nilocy]

Good link that. Just reading through the basics now, thanking you LASD.

[Blacken]

If you aren't willing to spend a disgusting amount of your life reading prospectuses and trying to optimize your purchases, I'd just go with mutual funds--professionally managed collective investments in which you buy shares. With extraordinarily rare exceptions, they do not lose money, and their returns tend to be decent.

[BuriBuriZaemon]

If you aren't willing to spend a disgusting amount of your life reading prospectuses and trying to optimize your purchases, I'd just go with mutual funds--professionally managed collective investments in which you buy shares. With extraordinarily rare exceptions, they do not lose money, and their returns tend to be decent.

I am in the same situation with Nilocy's and I agree with Blacken's post. I'm at the point where I have to decide which career I should begin with. Equipped with accounting qualification, that's probably the one I would go for, but if I had the chance and capacity to move to finance, I would and this would involve me getting full understanding of how the stock markets work.

So ask yourself this question, how do you see yourself in 10 years time? Are you planning to go to an industry that is interrelated to stock markets? If yes, then learn about it as early as possible. If not, then simply go to investment managers and let them do the works for you.

There is a catch for letting investment managers manage your portfolio, they often to move in line with the market. Don't expect them to outperform the market. On the other hand, at least you know you're getting steady returns when the market is favourable.

One lesson to learn about investing in stock markets: Whatever the direction of the market, you can always make profits. (Note: Short-selling, I'll let others to explain it).

[Muz]

My dad deals with stocks, even goes all the way to help the companies do well. Doesn't mean that what I know is true XD

Anyway, basics of what I figured out...
Earnings is in growth. The faster the company grows, the faster you get your money. Growth tends to boom early and slow after a few years. Sometimes a company regrows again after some good decisions (e.g. Apple), but often it doesn't.

The rest of the money is in buying what others are selling, then selling when more people are buying. Try not to buy at the same time as everyone else. Wait for a stock to fall, then buy it at its lowest (assuming it doesn't go bankrupt). If your lucky, the plunge in stock price is because everyone is selling. Then when the company does well, you sell. You want to be selling when the growth rate is minimum.

P/E ratio: A good indicator of whether a company's stock is overrated. If the price is way higher than earnings for the sector, it better be in the seed or growth phase. A lot of people love investing in stocks of companies they hear of, like Google and telecom companies, take a careful look at the P/E ratio if you do. A "N/A" P/E suggests that either the company's going to get some heavy investments or is doing badly.

Be patient. Especially when other people aren't. If you buy stock A, and stock B goes up, people are going to be selling stock A and buying stock B. If you do the same, stock B's price goes down because a lot of people are buying and A goes up because people are selling.

High tech companies are the highest growth. Heavy industry tends to not grow so much. But other people know this too. Low growth is good because you make a profit when people start bailing. High growth good very early on.

Finally, you should get to know the company. If anything, I find that knowing the leaders is the most helpful. Do some background checks on the people running a company.. some are incompetent fools, some are new and will learn from their mistakes, some are business geniuses. No matter how bad the economy is, under a good captain, earnings should weather the storm while people are abandoning ship.

Some of the worst indicators are a cocky/corrupt leader. Arrogant leaders tend to try to hide things from stockholders. Corrupt ones will chip bits and pieces from the company from the inside into their pockets and their friends' bank account, until the whole thing comes crashing down.


Anyway, I'm not going to claim to be an expert, but that's what I learned in class and from other people with experience. Feel free to correct me where I'm wrong, just saying this because some guidelines are better than nothing

[Ampersand]

My only advice when it comes to buying stocks or investing in mutual funds, or anything of the sort; never buy anything expensive based on the supposed annual yield of your investments. Only buy if you have cash on hand to pay for things, even if it means selling off a portion of your stocks temporarily in order to afford it. You do not want to be in the position of the Madoff victims, who are in debt only because they never purchased things with real money, but on the supposed future value of their investments. Voodoo economics as they say.

Yes, I know the world economy is based on this sort of thinking, I know the federal government basically operates on this principle, and yes, I know without it the world would collapse. But still, don't do it.

[Dr. Johbson]

I remember this old sub teacher I had, only had him once, but he spent the whole day teaching us stock marketing instead of actually teaching us what we were supposed to learn. I think he was crazy, too, because we were all 11.

I don't have anything helpful to say, I just wanted to say that. 

[eerr]

My stepfather managed to lose a lot of money on the sharemarket. I wouldn't recommend it. Unless you know what you're doing, it's essentially gambling, and it takes a long time to know what you're doing.

It takes a long time to learn in-depth what you are doing.

But lacking basic prinicples, Panicking and overconfidence can kill very quickly.
Even with the principles, when people buy and sell based on emotion, they are usually wrong.
(according to Jim Cramer from the TV show Mad Money)


Pop quiz-
Lets say you have a stock valued at 100 dollars.
It drops to 80 dollars. What do you do?

[andrea]

Pop quiz-
Lets say you have a stock valued at 100 dollars.
It drops to 80 dollars. What do you do?

You give not enough information. Why did it drop? general crisis? losing money? panic? corrupted CEO discovered? is the company still "healthy"?

not knowing anything and being FORCED to decide quickly, probably I would risk staying in if that money isn't that important, but if I need it, or it is necessary to keep working in the stockmarket then I would sell.

I really would like more informations about that however.
Some years ago, in my country, a manager ( CEO, owner, don't know. Important person) of a company was discovered stealing money from the company or something like that. Stocks dropped really low, but the company kept producing and selling like before, employees were paid and all that. Eventually, company recovered and whoever bought at lowest price probably got lots of money ( I hate beign too young at the wrong time! ).

Price doesn't mean much, since it could just be meaningless panic. Demand & offer works for stocks too, as far as I know, which means that if people panic and sell, then price drops. which makes more people panic and sell. Like a tantrum spiral.

Whatever I choose to do, however( sell or buy), I would look for further information about the company then keep track of the title if I think it has hope of recovery. At the lowest price buy, then wait till it goes back. Of course, many things can go wrong then.

Actually, if it has a good chance to raise again after dropping, it may be even better to sell now, then use money you get to buy more stocks later, when price is much lower.

At the end, not being a person who plays with stocks, I think that it may be better to sell , whatever your opinion is : if you think it will go bankrupt, you need to get out as soon as possible. If you think it is going to raise again after  a period of dropping, then it may be better to get most money now, to buy more stocks at the peak of panic.
Of course, selling stocks increase panic, while buying decreases it, which makes things much more complicated.

I think I would sell and keep track of prices ( companies who drop are more interesting than ones who are stable or rise slowly I think).
But to be able to give a good answer I would need to know how other people usually act in these situations. It is a complex system.

Of course, in the time it took me to write this, it may already be too late to do anything.

A last point: if 80 is, in my opinion, the lowest point it will reach, then I buy instead of selling.

[eerr]

Well, ah, I was looking more for the short answer:
Not enough information, or Time for research,

or something that depends on information I didn't give, but not in so much detail.

But yea, I think you covered all of your bases there...


The point being, you don't just buy low and sell high. You also shouldn't panic and take money out if the stock has a decent chance of recovering, and investing just when a stock is heading up may or may not also be a bad idea.

[deadlycairn]

I'm WAY too risk averse for the stockmarket. In your hypothetical stock scenario, I would have sold my stocks long before $80 and a  20% loss - a 5% loss is allowable, but certainly not 20%

[eerr]

I'm WAY too risk averse for the stockmarket. In your hypothetical stock scenario, I would have sold my stocks long before $80 and a  20% loss - a 5% loss is allowable, but certainly not 20%

You suck at playing pretend.