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Do you know how to invest in stocks?
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48 / M / Reston, Virginia
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Posted 8/22/14
Yes, I know how to invest in stocks.

And yes, I tried investing in individual stocks right before the 2000 Internet implosion and lost half of the money I had invested, which wasn't that much. I pretty much stick to mutual funds now, which is essentially letting a fund manager pick the stocks and/or bonds that you are investing in. My retirement savings are all in mutual funds.

There are a couple of people at work who actively invest and trade stock. My mom also buys $100 worth of Disney stock a month as well.
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36 / M
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Posted 8/22/14 , edited 8/22/14
I have never invested before and I am still afraid of doing so. Its not that investing is bad but now a days there are so many frauds happening in the market that its wise to think twice before investing. I am not saying this just like that but I can prove this comment.

A few days back when I was planing to invest, I did some research work and I came across this article where few people namely Jawad Rathore, Maloney and Petrozza made a smart move to reach on the peak by giving them wrong leads of investments, they persuade customers to buy shares of a particular company for which they got banned from trading and had to pay a penalty of $3M.

So I would say do invest but be smart while making investments.
chiplg 
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43 / M / Texas!
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Posted 8/22/14 , edited 9/13/14
If you are interested in investing and don't know where to get started, here is some advice. If someone had taught me this in high school, I'd have been very grateful.

The BEST investment paper is the Investor's Business Daily. The book that tells you how to use this paper is called How To Make Money In Stocks by William J O'Neil. Buy the book and read it. It is easy to read and will explain how to use the paper to invest.

Now, the single most important thing you need to learn about investing is when to sell. Buying is the easy part. The book will help. Experience will help more. You cannot let emotion or feelings effect you in your decision. Every time I let emotion rule me, I regretted it. I never regret following my sell rules. It is better to say, "I'm down 6%, it's time to sell" than hold on and hope it recovers. You need sell rules for taking profits, and sell rules for cutting losses. Make them and follow them. The rest is painfully easy, especially with the IBD paper. I'm serious. With IBD any idiot can pick a winning stock. The key is following your sell rules to get out when it wasn't a winner after all, or taking your profits while you still have them. My winners way outnumber my losers, and even if it was 50/50, my gains crush my losses.

Don't start with more than you can lose, don't simulate it either (invest with fake money on paper). You want real money in real stocks to really learn how it works. Ultimately, you want enough money to buy 5 positions. That's 5 different stocks. Your winners will keep you motivated while you dump your losers and replace them. It's OK if you can't do that right off the bat.

Here's how much you should put on a position. Think of your trade cost. That is, the cost to buy and the cost to sell. I use Scottrade. It costs me $7 to buy and $7 to sell. That means, I have to make $14 to break even. $14 on a $100 position is 14% gain. No No No. That's not enough money. $14 on a $1000 position is 1.4%. That is much more doable with the expectation of making more beyond that. If you don't have $1000, $500 is ok too. Now you have to make a 2.8% gain to break even. With a good growth stock, you are looking at well more than that. It also makes getting out easier. Your 6% loss on $500 is $35. Add the $14 to get in and out, and you're at a $49 loss for being wrong, or almost 10%. That's not good, but you are learning. Add $50 to your account and try again. If you have more to invest that is better. My positions are much larger than this. I'm using small amounts as my examples because most people on this forum are young and broke like I was 20 years ago. If you have $5000 to start with, then by all means start off with 5 $1000 positions (not on day 1, keep reading). I started investing with $500 and one position in my 20's. My gains and losses were small, and I started adding a few dollars each month. Eventually, I had enough to buy two positions. As you add money, let it sit there until you have enough to invest. You have a position with $500 invested and you are adding a little at a time. Don't add to the position you have. let the money pile up for position 2. You might even sell position 1 and buy another. Let the money for position 2 wait until you have another $500 to put down. You'll get there. be patient.

Don't buy more than 5. The more positions you add, the more difficult it is to make money. You might as well buy a mutual fund and let someone else do the work. Mutual funds are OK, but not if you really want your money to work for you. 5 positions mean one bad stock only hurts 20% of your portfolio. It also means 1 awesome stock only increases 20% of your portfolio. One more thing on positions. Don't buy them all at once. Buy them in stages. If you buy all 5 on Monday and the market as a whole tanks on Wednesday, you don't have any gains in your positions to lessen the impact. Buy in stages. It also helps keep the positions straight.

Also, by reading the book and following the paper, you not only know what to buy, but when to buy it.

Don't follow advice from anything you see in an ad. Don't follow advice from the idiots on TV. Don't follow advice from the news. Read the book. Get the paper, follow the rules it lays out. Don't bog yourself down in the CANSLIM method when you first start. Read it, so you understand why you are following the advice. Think about it when you are looking at stocks in the IBD. Don't try to apply each and every aspect to what you are looking at. That comes after you get comfortable investing. Start slow and learn as you go. You will read the book more than once. I started on the 2nd edition of the book, and read it once. I read the 3th edition twice. I read the 4th edition when it came out. Don't freak out by the thickness of the book either. It's filled with pictures! Haha, not joking. This system uses charting to spot winners in addition to other elements. Pretty pretty pictures.

Other tips to follow.

Don't use margin. (borrowed money) I do, and I have many years of investing experience. It increases both gain and risk. Get on margin when you have invested enough to have a black eye from losses and learned to ignore your emotions.

You WILL screw up. The sooner you screw up, the better. That black eye will help teach you, but probably not the first time. You will feel like you know better than the rules. You will be hurt and living on hope. You will ignore what you read and go on some other advice. You WILL screw up. That is a good thing, and it will help teach you why those rules exist. Even with them you'll have losses. They will just be more manageable.

If you don't know why you're holding something, it is time to sell it. You have to have an exit strategy. Also, do not get a dollar sign boner and hold that big gain because it's going to go up more. If you made your money, sell it. I held on too long and got a black eye in the beginning. I had just sold my first position that was up over 100%. I had more than doubled my money, and I was feeling like I was brilliant. I am brilliant by the way, just not a brilliant investor. It's important to know that even after years of experience. So, anyway, I had another position that was up 70%. I was so smart, I knew what to do. Wait for the next quarterly report and sell it on the pop. Company reports. The stock pops. I win even bigger. Well, guess what? It was a bad report. My 70% gain became a break even position in ONE WHOLE DAY! Well, I was brilliant though remember? So I figured it was overreaction. After I finally bailed at a 40% loss, I realized I had a lot to learn. That stock kept going even further down after that. It was finished, and I could have gotten out at the top, but no. This story is not meant to scare you away, but to prepare you. Emotion will rule you in the beginning. Read the book. Use the paper. Learn to control your emotions. Get your experience and when it finally clicks one day it will be so very worth it. I am not a brilliant investor. I am an investor that makes money and follows the rules laid out before me. When I feel emotion in a stock, it's time to bail. It's better to lose an opportunity than to make a mistake. Don't go into this to get rich. Go into it to make your money work for you. Read the book. Read the book. Read it again. It's not magical. It's not 100%. It is surprisingly easier than I thought now that I have experience.

Ok, I'm going to go watch some anime!
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30 / M / Central KY.
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Posted 8/22/14
I sure do. If I wasn't Schooling so damned often, I'd probably be in there trying My luck. My Father has gotten QUITE lucky before.
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24 / M
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Posted 8/23/14
i said no but i have been thought and kinda know my way around
3731 cr points
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16 / F / イブキド
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Posted 8/25/14
Yup, my parents taught me how to.
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30 / F / New Orleans, LA USA
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Posted 9/2/14
Nope. I have someone to do it for me.
Posted 9/2/14 , edited 9/2/14
No.

I want nothing to do with money...
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F / The Far Shore
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Posted 9/2/14
no
<-- i'm like 5 years old
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49 / M / Bottom of Montere...
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Posted 9/4/14


I'll give the book a read. Thanks for the information.
It's amazing what you will learn sometimes on CR.
Posted 10/16/14
No. Please teach me.
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31 / M / Minnesota, USA
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Posted 10/23/14
I know how to but don't do it. I don't like to gamble with my money.
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27 / F / Australia
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Posted 10/24/14
No, I'm pretty clueless when it comes to that sort of stuff. I'd rather stick to my straight-forward budget and not potentially lose anything!
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23 / F / AUSTRALIA
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Posted 10/25/14
Nope. They don't teach that at school. I even study economics and nothing has been said about it.
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Posted 12/24/15
"Year-end cleanup. Closing threads with no activity since 2014."
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