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I usually think in terms of a year, but it could reach the target in three months or three years. I don't worry about the price movement in between as long as nothing significant happens. For example, say one day I come across a legitimate article that states AT&T and Verizon will stop subsidizing the iPhone starting in Q2 2013. That would change everything for the worse and I'd lower my target, maybe even close my position in AAPL all together.
You need to take emotion out of investing. Don't rush to sell or buy when there are no valid reasons in regards to your specific stocks. You should also be patient and do your research. Time is your best friend, so while it's important to educate yourself before investing, you don't want to wait years before you start.
That makes a lot of sense lol.
So basically, excessive amounts of research, familiarizing myself with the stocks rise/fall trends, and keeping up with companies that I follow, is the best way to survive this game (Correct?).
I've always compared the stock market to fantasy sports lol. The better players at the moment will have a significant rise in their value.While the players who have worsened, their stock will plummet, and people will begin to drop them from their team. Also, you have those players who's value plummeted, but people still keep them on their teamm because they feel confident that that particular player will get out of the slump that he is currently in. So if the stock market is anything like fantasy sports, then I would have experience. However, I feel that fantasy sports is just a highly simplified version of what we're talking about lol
So, just to get started, are their any good books that you can recommend me so I can begin to accumulate some knowledge?
So basically, excessive amounts of research, familiarizing myself with the stocks rise/fall trends, and keeping up with companies that I follow, is the best way to survive this game (Correct?).
You should focus on investing in good companies that are likely to grow and/or pay good dividends over time, especially if you can find some that are a little undervalued at the time. In that case the short term rise and fall in the stocks isn't much of a concern, nor is speculating on what small-scale news stories will do to the stock.
If you're wanting to be a day trader that outsmarts and stays a step ahead of the rest of the market...good luck. You're going up against hedge fund managers with financial degrees, years of experience, research teams, possibly inside information, complex statistical models, etc. Even they don't beat the market much of the time. Not to mention stock-buying computer programs, and even amateur traders with far more information and experience. To have any realistic chance of success at being that kind of trader requires a huge time investment and you're still very likely to fail.
When considering a stock, definitely read multiple viewpoints on the stock both pro and con before making a decision. Don't just read one optimistic view and then buy, because a lot of people don't know what they're talking about, or are not considering everything, or are lacking information, etc. Or they might even be taking the opposite position and trying to convince others to take the other position to benefit themselves.
When considering stock picks from someone, try to go back and see what their record is. Maybe their 2013 picks sound good and their reasoning seems sound, but what did they pick in 2012, 2011, etc.? They might have picked JC Penny and Best Buy in 2012, in which case you should be suspicious of their 2013 picks. This actually happened a few days ago. I was reading some analysts' stock picks for 2013, so I looked up his 2012 picks, and his biggest long was JC Penny, a stock that lost something like 40% of its value in 2012. Always be skeptical and try to look for what could go wrong, and keep in mind that even a great investor has areas of weakness. Someone might be great with real estate and energy stocks but might know nothing about technology stocks. Another guy might be great with emerging markets but knows little about the financial industry. The older analysts generally seem to do poorly with technology bets from my experience.
You should also stay aware of changing consumer trends, habits, and preferences, and the way technology changes things. For example, look what the internet and Amazon have done to book stores. Amazon, the internet, and also Wal-mart, are doing the same thing to Best Buy and Radioshack. How many people are going to buy $70 laptop chargers from Radioshack when they can get them for $10 on Amazon? How many people are going to pay $15 for HDMI cords that cost $3 from Amazon?
Consider what the emergence of tablets has done to PC sales. Some companies are able to reposition or reinvent themselves for these changes, others go out of business or see their size and market share greatly diminished. If you've got a bunch of shares in Barnes and Noble and you see this Amazon.com thing taking off, time to get out before your shares go from $40 to $10.
Quote:
Originally Posted by Jonathanp219
So, just to get started, are their any good books that you can recommend me so I can begin to accumulate some knowledge?
Warren Buffet's collection of letters to shareholders is a good read:
This is just my opinion and many will disagree. Unless you have a large sum of money to invest and hold into reliable good time, you may as well swing trade until you get a chunk of money to buy good companies at good prices. For instance, JJ, coke, are all good companies, but they are high priced.
So how much money do you have to invest in stocks, thats the first question? If its less than $5k, I would say, IMO, to save your money and wait for a market crash to get better returns.
Another idea, is to trade the futures (ES emini, Forex, sugar contracts, etc.) The margin is only $500 per contract for day trading. Which means you only need to depoist future trading account. I use Apex. The commisision is low, the capital gains is low, and the returns of profit is faster than buy and holding stocks. But this requires discipline and strategy to future contracts. But the risk vs rewards is worth it if you just have extra cash to invest. This allows me to hedge my stocks picks.
My stock picking strategy:
I been investing for 4 years. I loss some and made some money as well. I made more than I loss.
Here is my receipe:
1. Find about 50 stocks/companies with good fundamentals. Find more if you like.
2. Open a google finance portfolio and put each stock in the portfilio.
3. Every day you watch these stocks. Pull up a chart and define the support and resistance of the stocks. Draw the lines. Including the 52 week high and lows.
4. Whenever price comes to the support or 52 week high or low, you simple buy a certain amount of shares.
5. Closely monitor why the price drop to support and if price is turning back up from this support. Determine how much you will lose incase this support breaks down and price continue to fall. I stick to $300 per trade, depending on market context. Define a resistance point to sell when price reverse. Sell and take your profit. Once you up by $200 to $300 set stop loss to break even. Move on to the next stock on your list.
6. Keep up-to-dates with market news (ie, fiscall cliff, qe3, recession news. etc)
7. Sign up for Zacks daily commentary for free as a edge to keep you in the know whats going on.
8. Find a stock picking services for one year to see how professionals trust with good track records.
All in all, there millions of good companies out there to buy. What matter most if buying them at good prices. JJ can be the best stock in the world, but if you buy at the wrong price, you are starring at a loss. So timing plays a roll as well. You have to be cheap. This is why I say to find about 20-50 stocks you like and wait for price to fall and then buy. Simple as that. Wait for price to drop, determine why the price drop and make decision. There is no rush. Also, find you a service like below that provides market context and direction based on statistics so you have an edge in this game.
I don't understand why they stayed out! That's when I jumped in! I jumped in blindly of course, buying just good cheap companies. I am blessed and not bragging, but stock picking is not for the individual person unless rich. But for anyone interesting in stock investing, I advise do the follow first and foremost before stock picking your after-tax money:
1. Build emergency fund, 6-12 months
2. Get rid of debt (student loan, credit loans, high interest car loan, etc.). Pay extra or whatever you have to do.
3. Get house refinance under 4% and start trying to pay it off in 15 years.
4. Fully max out your 401K to the government limit year
5. Fully max out your Roth IRA to the government limit every year.
6. Max out IRA account every year
7. Allocate your 401K and Roth and IRA with cheap index funds in each account according to age.
9. Get 529 plan for the kids if you like.
10. Save money for nice vacation, every year
11. Fix up the house, add on if you like. Buy a hobby car.
Now, if and only if you still have extra cash you want to risk in investing in stock, you can now take the risk. Cause the odd of you winning stock picking with no skill and experience is probably less than 15% with years of experience and learning. I myself, do not even have 80% of the above steps complete. but now I know what to do. And although I won at stock picking for the most part, i lost some as well. And its tuff work. If I could do it again, I would. march 2009 was good buying time so was early this year and during the fiscal cliff debate. However, I am done with stock investing for the most part. Cashing out and paying off some debt. However, I may dibble and dab in future commodity trading as I want. hahahahahah
got a question for you guys, they say if you need the money much later, like 20,30 years later. Then invest it in high risk high yield stocks/funds etc. They say since you don't need it until much later, just leave it in and it will make money. but my question is since it's high risk high yield, you can also lose it all in a couple years right? or you can lose a lot of it and only got 10% left...then 20,30 years later how is that 10% going to make a come back? also if you did make money out of the first 18, 28 years...but the last couple years you can also lose 30,40% since it's high risk high yeild no? or do they mean if you are still young just invest it in high risk/yeild...even if you lose it all you can still make money coz you are still young? can someone tell me the logic behind "if you need the money until much later like 30 years later...then just put it in high risk/yield investment" thanks
High Risk / High Reward means you are increasing your chances on losing a lot or all of your money or making a lot.
Younger people can invest more in high risk because they have time to re-make lost money.
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