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One of my friends asked me how quick can I make $500 on the stock market, so I asked, how much money are you wanting to invest and how long are you willing to wait? He said, I need it soon and I have around $300 to invest and I cannot afford to lose it...
Like I said, not everyone is cut out for the stock market lol
One of my friends asked me how quick can I make $500 on the stock market, so I asked, how much money are you wanting to invest and how long are you willing to wait? He said, I need it soon and I have around $300 to invest and I cannot afford to lose it...
haha, its sad that so many people have no clue about how it works.
My friends (mid 20s) get horrified if their portfolio loses 10%. They'd much rather have their money sit in a cash account earning 1% interest.
Meanwhile, the older folks, my father's age (55+) are heavily invested in stocks when they are nearly about to retire.
People in their 20s often don't know that much about investing and lack experience with it. So, they tend to be less confident about it and are more afraid of losing money. Also, it's difficult to think about retirement at that age.
All of this changes as you get older, educate yourself and gain experience. Also, the concept of retirement feels much more real as you get older and it's a big motivator.
they probably had their money in the markets during a time when the market just went up up up. The last 10 years the market hasn't done much for a 'buy and hold' type until the last few months that is. If you removed money at key times or invested in the right individual stocks (apple, google, etc) you could have done very well, not so much with mutual funds or diverse portfolios.
Me I just use the bullishness percent index. When it gets to 95% my money leaves the market... when it's below 70% I consider putting some back in. It's not 100% effective but better than simply buying and holding. I have something called a "PCRA" where I can buy ETFs and don't have to worry about getting a notice for moving my stuff too much though.
The biggest thing to get past for a trader is knowing when to set tight stops, to sell and not let a stock keep going down, and try try again until one gets a successful formula down. Emotions tend to get in the way... use the chart.. use the fundamentals (not so much with quantitative easing) ... go for momentum plays and hot growth areas (3d printing would be the latest) ... hit stuff when it's out of favor and buy low, not high...
valuations don't really mean anything, and they didn't back during the bubble in the late 90's either.
the more experienced investors know not to pay attention to short term noise and moves . once you realize that even with the drops at the low points you would not even have that amount accumulated it if you werent invested the fear goes away.
risk tolerance is not age related at all and that is something wall street refuses to learn
a 25 year old who is told to go heavy into equities and has little risk tolerance that bails and loses money with every down turn is being hurt.
a 65 year old that takes their long term money that still won't be used for 20-30 years to eat god willing can go into equities with no problem.
when i say equities i mean mutual funds that are broad based and weed out individual company risk. after all you do not want to lose your money if a company goes bust , but market risk is fine.
it takes a few cycyles of real life experience to learn where your pucker factor is.
Last edited by mathjak107; 05-24-2013 at 03:56 PM..
My friends (mid 20s) get horrified if their portfolio loses 10%. They'd much rather have their money sit in a cash account earning 1% interest.
Meanwhile, the older folks, my father's age (55+) are heavily invested in stocks when they are nearly about to retire.
My guess is a lot of those old folks got scared during the last crash and jumped ship, selling low. They got hammered. So now they are back in the market again, because they wanted to make up what they had lost, so they're buying high. Same mistake, double whammy.
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