Stocks 101

[Teak]

Originally Posted by MPrime

Simply understanding the basis of business obviously explains Motley's trend to advertise themselves. I find nothing terrible in that and if they have something of value to offer, why not? Its simple, its business gentlemen, what else is there to it? People making a living, just like us.

Okay, point made.

There are a lot of investment advisers out there trying to get us to subscribe to their newsletters so in that respect Motley Fool is no different. What makes Motley Fool different is:

1. The founders (the Gardners) rarely post the articles. It seems rather that their flunkies are doing the posting and then suggesting that if we REALLY want to make money, then we should subscribe to the founders' newsletters. I suppose they think that the recommendation is more, ah, honest....free of conflict-of-interest....etc., by using the flunkies, but I am not fooled for a minute (pun intended).

2. The flunkies almost always indicate that they do NOT own shares in what they are touting. In other words, they make it very obvious that they have NO financial interest in what they are touting. On the surface, this sounds good: a fully-disclosing advisor. But, hey, I put real money into my stock selections so I want to hear from those that do the same. I don't want people with play-play portfolios giving me advice.

3. Look at the bottom of many of their "articles". Many contain a phrase that goes something like this: Previously published on xx/xx/200x. So basically, a recycled COME-ON. I want new analysis, not rehashed marketing come-ons.

4. Motley Fool specialises in the come-on hype using IF: "If you had invested $10 in Microsoft in 1972, you would have $34.5 million today!! These are the kinds of stocks that the Motley Fool founders -Tom and Gary- will find for you if you just subscribe to their newsletter: Fools Pay Us Money! Subscribe today." This article also appeared 3 July 2001, 14 October 2006, and 24 April 2008. We call this type of hype: hindsight bias. I read one of their books and think that they accidentally made it big with America Online, and thus their investment careers started. Do you know where America Online is today?

So, yeah, Seeking Alpha, Steve Suggerud's Daily Wealth, Jeremy Siegel, and all of the others are trying to catch subscribers just like Motley Fool, but they just don't seem smarmy about it.

[John23]

Originally Posted by MPrime

Hey there ladies and gents.
Was rambling the site and seems that I didn't find one thread that would cover it all about stocks and good funds and sites that would be a goody to check out. So, if nobody minds, I want this thread to be dedicated to exactly that, but without all the bumph and useless rubbish.

I'm currently in the search of a good site that would expand my knowledge on the subject of stocks. Have seen most of whatever is out there, but for some reason believe there are still some hidden jewels I might not know of yet.
So, off we go on this journey of investing. It would be quite nice to hear any stories or experiences you might have had with the stock market, I'll throw in a couple as we go along.

I got into stocks, investing 10 years ago. I actually followed Wade Cook (he was a popular stock guru in the 90's) for while. And I use to subscribe to thestreet.com and charting services, etc.

Eventually I wised up, and started focusing on those "hidden jewels", I gave up on all the newsletters, motley fool, columnists, the jeremy seigels.

Some good books that have saved me money

-"Money Game" by Adam Smith. This is the sort of hidden jewel you won't find on CNBC. They say, "there's nothing new, except that which has been forgotten". Well, very true with "Money Game", a book written about the market of the 60's, but could easily be applied to the market of the 90's or 00's. That was an eye opener, and part of the reason why I havent invested in stocks in the 00's (long term). Didn't lose a dime in this latest crash.

-Also, Jim Rogers philosophies (two good books of his, Investment Biker, Adventure Capitalist). Good overview of world economics, world markets, in simple language.

-Beware of fad promoters. Anyone remember the Beardstown Ladies? They were hot in the 90's. Some promoters (hypers) make it big with one stock, or one idea, but then flame out. Wade Cook, he was big with stock splits. This was when aol, dell, msft were splitting every 6 months and going up. "Well, just buy after the split!"

You have to use your own judgment and make your own decisions.

[Teak]

Originally Posted by John23

-Beware of fad promoters. Anyone remember the Beardstown Ladies? They were hot in the 90's. Some promoters (hypers) make it big with one stock, or one idea, but then flame out. Wade Cook, he was big with stock splits. This was when aol, dell, msft were splitting every 6 months and going up. "Well, just buy after the split!"

Yeah, I forgot about the Beardstown Ladies' Stock-Picking Club. They went downhill after someone correctly calculated their returns and found them to be quite ordinary. The Ladies apparently were mis-calculating returns and getting unrealistic results, which is what made them famous.

I wouldn't diss Jeremy Siegel too quickly. His work is based upon thorough stock research using his students at the University of Pennsylvania to assist in the collection, reduction and analysis of the data. This is academic research, so they have to follow the methodical rules of data collection, statistical analysis and correct interpretation. In other words, he gives a summary of what the data shows, not some hot idea or quirky technical analysis method.

Gist of ~100 years of data? Buy cigarette company stocks, pharmaceuticals, and consumer staples (Coke, P&G, Colgate, etc.). These are the highest returning (and dividend-paying) stocks of the past 100 years. That's what the data shows. In reality, one only really needs toilet paper, medicine, food and vices (cigarettes, beer, Coca-Cola) to survive. The rest is fluff.

[Jonotastic]

Stocks are like a business. You can go to 100 business seminars, get a major in every field of business and still be a horrible businessman.

Best advice, watch the market yourself, make your own assumptions, use the tools available but don't rely on "experts" advice, they make their profit off of people like you, not the market.

[MPrime]

Originally Posted by Traderx

You say your looking to expand your knowledge on the subject of stocks.
Well, when you expand it enough to understand that the stock market is just the best casino on earth and nothing else you'll be getting somewhere.

Thank you for that piece of advice. Though I might disappoint you with what I have to say: the stock market will be whatever one makes of it. And that is true in every area of life. For example, I can be the biggest believer in some crazy theory, yet all of us have our own take on things, where both our personal experiences and knowledge on the subject count. It's a very logical principle that I believe most people agree with. Its the way you approach it and the thoughts you think of if that make it what it is for you. I personally restrain from labeling things (judging on that matter too), be that anything, even as one might think, something as straightforward as the stock market being the worlds largest casino.

[Black Jack22]

Here is an EXCELLENT book to get started in stocks, you CANNOT go wrong with it, take my word for it:

"The Neatest Little Guide to Stock Market Investing"-It is easy to understand and actually encourages you to learn the habits of some of the best stock investors such as Buffet. Investing in the Maximum Mid-Cap is a good way to go and the book goes indepth on this. After you read this, then I would read some of the other books on stock investing.

Also practice on a simulator such as Welcome to Investopedia.com

[pghquest]

Originally Posted by Traderx

Shush...

If someone wants to help feed my kids let them, okay!

[pghquest]

Originally Posted by Teak

Yeah, I forgot about the Beardstown Ladies' Stock-Picking Club. They went downhill after someone correctly calculated their returns and found them to be quite ordinary. The Ladies apparently were mis-calculating returns and getting unrealistic results, which is what made them famous.

Ladies forgot to add the brokers commission costs into their equation..

[j_k_k]

Originally Posted by Black Jack22

Here is an EXCELLENT book to get started in stocks, you CANNOT go wrong with it, take my word for it:

"The Neatest Little Guide to Stock Market Investing"-It is easy to understand and actually encourages you to learn the habits of some of the best stock investors such as Buffet. Investing in the Maximum Mid-Cap is a good way to go and the book goes indepth on this. After you read this, then I would read some of the other books on stock investing.

I wouldn't go so far as to say you cannot go wrong with it. I tried one of the strategies Kelly proposed and went very wrong with it. I don't blame Kelly; how were any of us to know some assumptions were going completely upside down right about that time? But one can go wrong. One can go wrong with any investing advice. I don't think telling people they can't is a good idea.

However, that said and overall, I agree Kelly's book is excellent for new investors and would also be one of the primary ones I'd recommend. You can tell a liberal arts major authored it rather than a pure numbers wizard: clear, concise, understandable for the layman, and often witty. If you were to absorb everything he's telling you and put it to work, you would very likely win more often than you'd lose. In investing, that's big.

[bongofury]

Buying stock is not for most. Low-cost mutual funds are appropriate for most.
Everyone needs a plan. To have a plan you need some basic information. I'd start here: The Little Book of Common Sense Investing, by John C. Bogle