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I want to open an account to try some stock. Could someone give me any suggestion about stock broker? I would not be a active trader and probably do by myself.
Suggestion about a stock broker? Um... don't get one.
Look...though more and more firms won't hire you without a degree these days, the fact remains that broker's don't even need their bachelors, and their jobs can be acquired through a liscensing examination. My theory is that just because somebody passed their drivers liscence test doesn't mean I would want them to drive my car. To be blunt, I don't like brokers. I mean, they're good people outside of work, but from 8:30-4:00, they're complete jackasses. I work through the night creating a plan for the next day, using a proven quantitative analysis program, and by 11:00am, these guys have forgotten everything I put in the morning report. If they like General Electric, they'll put you on GE, even if I told them GE was moving down and my department would short sell it first. And mind you this is at one of the top investment banks in the world.
I guess my point is that if you are at all knowledgeble of the stock market, try to do it yourself first. You'll probably do just as good as most average brokers, and you won't have to pay as much for commissions, or feel like you're getting screwed everyday. To make a long story short, they work based on fees and commissions and will not hesitate to put their financial interests (ie money in their pocket) before yours.
Thank WallStreetWarrior for your response. I think you are right. But if I do it myself. What do I need to do first? I mean if I should go to bank to have an account. ...I am totally a green hand on it..
I want to open an account to try some stock. Could someone give me any suggestion about stock broker? I would not be a active trader and probably do by myself.
Any response is appraciated.
Open an account at Vanguard. they have the lowest expense ration. Start putting money into a good index fund, like the vanguard 500. Put in a little at a time and leave it there.
Open an account at Vanguard. they have the lowest expense ration. Start putting money into a good index fund, like the vanguard 500. Put in a little at a time and leave it there.
This would actually be a pretty great idea. Here's what I'd do:
1.) Get fired from work for taking advantage of this awsome GS bandwidth and posting on City Data forums multiple times a day.
2.) Open an account with Vanguard, using the money for either the index, or other mutual fund. The index fund might be your best bet because I want you to learn from this fund how the market works. The Vanguard 5 is practically free in terms of relative cost to other mutuals. If you weren't aware, the Vanguard 500 is a reliable mutual fund that tracks the performance of the S&P 500, has relatively all of it's assets in stocks, and weights the amount in each company in the same ratio the S&P 500 does.
3) This is the learning part. Many investors buy into mutual funds so that they don't need to actually pick and choose their own personal stocks. Often this is a good idea, seeing as how the average fund manager is much more skillful than the general population of investors. I think Beuk might still be running the Vanguard 5, which is a great example. First of all, us CFAs are by my standards the only people in finance who should be managing other people's money, which also explains why I can't stand brokers. Secondly, these are great people to learn from because they are the best.
4.) Even though it's a mutual fund, follow as much activity as you can. Granted it's impossible to track the progress of each holding the company has, and to do so would be simply taking things too far. But let's say you look at the top 20 holdings very regularly. These 20 have the most weight in the fund and thus will prove to be the "shakers and movers". Treat the entire fund as if it were your personal portfolio, and watch what happens to the fund as the individual prices of the stocks change. From here, you'll be able to understand the basics of portfolio diversification, a very important aspect of a portfolio.
5.) After you feel comfortable with understanding the importance of diversification, break those top 20 holdings down even more. In fact, of them choose 1 from each industry and save it's profile in your favorites. Now instead of checking the mutual fund daily, check these individual stocks. Read the news headlines for them daily and begin to understand what sort of "news" affects the stock prices. That being said, there no equation that can tell you where a stock is going to go, so understanding the forces that move a stock is very important.
6.) At this point, you should either get a book on the stock market, or find a reputable web site so that you can understand some of the more technical terms and factors that move stocks. You'll want to be educated on the way an earnings base for a company works, and how to read their cash flow, balance, and earnings reports. You'll want to understand the key fundamental factors that give stocks advantages in it's industry such as the EPS (which is part of the earnings base), as well as P/E and PEG ratios which are valuation multiples designed to give investors an idea of how a stock will perform in the future, based on a statistical inquiry of past prices. You'll eventually want to discover how the advanced technical factors move stock prices, such as inflation, or investor liquidity and interest.
7.) Now, I know this is one beast of a post and I don't blame you if you just skimmed through it. This probably sounds like mastering kung-fu and therefore will take years, however, with the right attidude, and a urge to become fluent, you should be on your way to individually making modest gains in no more than 8 months.
Hope I could help, and once again, I apoligize for the flood of information.
Matthew...CFA hahaha
Last edited by WallStreetWarrior; 08-21-2007 at 11:52 AM..
Reason: wanted to add CFA at the end
Thanks a lot, Roma, GreenMachine, WallStreetWarrior. I think I am going to open an account at Vanguard next week. WallStreetWarrior, I already read your post several times and it helps me a lot.
there is web site that scott burns the columnist who retired from the dallas morning news several months ago writes even though he is living in Santa Fe ...he has been around long time--is all in favor of people managing their own accounts and doing index funds to keep your expense ratio down...his web site is very informative and you can find it by just googling his name...if I post it--will get deleated...I get lot of good info from it--unfortunately my husband feels that he needs someone to "manage" our investments...
the downturn in the market cost us ...we had just turned almost all investments into cash because we were moving from one financial advisor to another...we moved to get someone we trusted to be more ethical in what he recommended--the new advisor is partner in financial investment arm of the CPA firm that has done our taxes for almost 20 years. He said he was going to keep funds liquid/T Bill type account until a downturn in the market which we all agreed was coming--we just did not know when....until I opened one of the statement in August I thought we were still liquid but apparently he started to invest the funds in March and just finished before July 17 peak--now we are down over 10% in most vehicles...
my husband is not that concerned because we are still looking long term but I am VERY upset--I feel that this guy was not paying attention to what we discussed---we could have MADE a quick 10 or more percent if he had just waited until the slide....now we have lost probably all chance of making any profit this year and maybe next if the market is going bear-ish...
I feel like I don't know if I can trust this guy any more than the other one we used--we made money in a couple of vehicles but most of investments did not even match the index returns of past 3 years...so were basically mediocre...we thought we were moving to someone who would be on top of things and invest our money like it was his--well, there is no one who does that I am coming to believe....DH knows how upset I am about this--I started to look at the funds we are in and many of them have the same 3 year history of trailing the index---that is just not smart investing...
Last edited by loves2read; 08-22-2007 at 12:28 PM..
I loved your post earlier, I think I have read it at least five times now and I even printed it. I decided last night to take a peek at one of the Vanguard Index Funds, just visiting the Vanguard site is a challenge for a novice such as myself. I did manage to make my way around a bit and it has caught my interest.
I have a couple of questions regarding your suggestion to follow some stocks to familiarize myself with the activity of the market. I imagine any daily newspaper would do the trick to start? And also, does creating some type of graph or chart make sense for the daily activity? As far as "news" regarding specific stocks, who would be considered a reliable source for that information? The WSJ? A major newspaper? Wouldn't weeding through the "news" on each stock require a lot of interpretation? I can't imagine a newspaper coming right out and saying " stock x,y,z is set up for a prime year" or "stock a,b,c is heading for disaster". I guess I'm asking if I will get a feel for what affects a stock over time or is it easier to pick up than I'm thinking it will be?
I really appreciate all of you comments, and thanks so much for your time.
Shelley
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Hi WSW ( Matthew )
