Stock Market Players

• se-alum

  

  I'm gonna have a little cash to mess around with, and I've thought setting up an account with one of the online trading sites. Anyone else do this? If so, how hard is it for a stock market novice to do?
• LJ

  

  Places like TD Ameritrade are pretty easy to use. Just be careful with roundtrips in 24 hours (buy-sell) because the SEC will get on your ass and classify you as a daytrader, and if you don't have $25k in your account, they will lock it for 24 hours.
• Belly35

  

  Buy and sell Gold Not stocks I let the Chase do that investing for me..
• I Wear Pants

  My fake stock portfolio on Updown is doing really well.
  
  Hope this helps.
• Abe Vigoda

  

  Silver is better than gold.
• queencitybuckeye

  Abe Vigoda;1100601 wrote:Silver is better than gold.

  In the long term, ownership of quality companies (aka common stock) is better than both.
• se-alum

  

  This is just something I want to play around with to learn about the stock market. I have a friend that is a Financial Advisor, and will probably invest some larger sums with him.
• gut

  Buying specific stocks is really a fool's game. Most people have no idea the amount of research and analysis that professionals put into this, and most of them can't consistently outperform the market. Now, you can do some research and your opinion isn't necessarily any less valid than the pros, but most people have no idea of the difference between their opinion and that of the market, which is ultimately what you are betting on. More and more pros are short-term investors, even most mutual funds won't often hold picks a full year while hedge funds and traders can typically be less than 3 months. This means if you really do your homework and find a GOOD company (at a good price!) for the long-term, you can do well.
  
  I'm a big advocate of asset allocation. Learn about asset classes, market exposures, growth/value/basis risk...and go to town. Research has shown time and again that 80%+ of returns are generated by asset/market allocation. Set-up a diversified portfolio to reduce risk and volatility, and then overweight the areas you see better opportunity (and conversely underweight areas you expect to underperform).
  
  You'd also be wise to learn about dollar cost averaging. Too-frequent trading and poor timing/chasing wipes out gains for a lot of novices. Also, learn to cut your losses. Big thing that kills novices is they pull gains too quickly because they want to make a buck, and then they ride losses lower and lower because they can't write it off nor will they revise expectations.
• McFly1955

  

  I'm a dollar-cost averaging man myself.
  
  I took and passed the series 7 exam a few years ago for my last job, was a finance major in college, and I still don't feel like I have the time or knowledge to invest in individual stocks at this time. Someday.
  
  For now, it's max out a roth putting in equal amounts every month into an index fund.
  
  
  Depending on how small of an amount your talking about to play around with, it may not be worth it if you consider account maintenance and trading fees (depending on the site I guess).
  
  It also might be a good idea to mess around on a 'mock' trading site for a few months to get the feel for what you would be doing with real money....
• Timber

  I have had a scottrade account for a couple of years. Went with them because of $ 7.00 trades and they had a local office relatively close to my dwelling. That way, if needed, I could go in and talk to a real person about any issues I may run into.
  
  I have not had any problems. I do not make many trades though either. I have only sold one stock. I only hold six stocks in my account. I do not do any etf, mutual fund, or option trading.
  
  Single stock dividends can not be re-invested in the stock with scottrade, it just goes into a savings account that I let build up to a point and buy somethin with the dividends.
  
  I only put in limit buy orders and sell orders.
  
  Do not fall in love with a stock! Have a certain percentage loss that you are willing to take in any stock. Dump it and move on.
  
  Diversify!
• I Wear Pants

  gut;1100754 wrote:Buying specific stocks is really a fool's game. Most people have no idea the amount of research and analysis that professionals put into this, and most of them can't consistently outperform the market. Now, you can do some research and your opinion isn't necessarily any less valid than the pros, but most people have no idea of the difference between their opinion and that of the market, which is ultimately what you are betting on. More and more pros are short-term investors, even most mutual funds won't often hold picks a full year while hedge funds and traders can typically be less than 3 months. This means if you really do your homework and find a GOOD company (at a good price!) for the long-term, you can do well.
  
  I'm a big advocate of asset allocation. Learn about asset classes, market exposures, growth/value/basis risk...and go to town. Research has shown time and again that 80%+ of returns are generated by asset/market allocation. Set-up a diversified portfolio to reduce risk and volatility, and then overweight the areas you see better opportunity (and conversely underweight areas you expect to underperform).
  
  You'd also be wise to learn about dollar cost averaging. Too-frequent trading and poor timing/chasing wipes out gains for a lot of novices. Also, learn to cut your losses. Big thing that kills novices is they pull gains too quickly because they want to make a buck, and then they ride losses lower and lower because they can't write it off nor will they revise expectations.

  Depends on what you're trying to do. If you're just trying to beat the markets then yes you're right. But say you don't really care about being a world beater and simply want a better place to put some money than a savings account you could do worse things than buying some stocks known for good dividends like Smuckers or JNJ.
• LJ

  

  I Wear Pants;1100848 wrote:Depends on what you're trying to do. If you're just trying to beat the markets then yes you're right. But say you don't really care about being a world beater and simply want a better place to put some money than a savings account you could do worse things than buying some stocks known for good dividends like Smuckers or JNJ.

  My favorite thing to do with stocks like those is buy 50-100 shares and run a DRIP and then forget about it. Hopefully none of my DRIP stocks go out of business, but I am hoping to have some nice eggs in 20-25 years.
• gut

  I Wear Pants;1100848 wrote:Depends on what you're trying to do. If you're just trying to beat the markets then yes you're right. But say you don't really care about being a world beater and simply want a better place to put some money than a savings account you could do worse things than buying some stocks known for good dividends like Smuckers or JNJ.

  That's the point....stick with mutual funds and, my preference, ETF's (mainly due to lower fees and don't worry about strategy drift/mismanagement). I don't think there's any reason for a non-sophisticated investor to buy individual stocks - you probably won't beat the index and you'll have more risk/volatility. There's no value in that.
  
  Buying dividend yield can be a good play, at times, not so good at others. If you want/need the income, favorable tax treatment (for now) vs. potential ordinary gains generated by selling makes sense, but there are plenty of strategies to generate income and manage tax liabilities.
  
  Asset allocation is the way to go. The really large mutual funds are basically tweaking individual names/sectors trying to eke out a few bps over the index return. But after you subtract fees most of them underperform.
  
  My advice to anyone is if you were going to make just one trade, buy SPY (that's the S&P 500 ETF).