The official lounge stock market & investment advice thread

[Sugar Adam Ali]

Bulls make money.
Bears make money.
PIGS GETS SLAUGHTERED!

Don't be greedy! You make some profit, sell it!

Excellent advice Jim Cramer

What this means is that

Bulls- bull market is a market/stock going up, so a bull invests thinking it goes up and if it does , they make money- hence the bulls make money

Bears- a pessimists that think the market/stock is going to go down, so they do what's called selling short, which is a way to make money off of falling prices.. So even in a bad market, bears can make money

Pigs are the greedy ones that milk a good thing to much and ultimately get burned, or should I say slaughter

The phrase is very good advice

[jaded]

If a stock is trading for $50, what ratios and figures to you use to see if it's high or low?

I will answer later

It really doesn't matter...the stock market is rigged. It's controlled by high-frequency trading. In every transaction the brokerage holds the edge and will always screw the client. It's kind of like insider trading. Real estate excluding weird derivative disasters type situations (a predictable recipe for failure) in growth markets are your best investments. If you can't afford to buy then buy into a fund. The stock market is a big scam.

BTW...Buy high/sell low...you new that was an attempt at humour...right?

[Sugar Adam Ali]

It really doesn't matter...the stock market is rigged. It's controlled by high-frequency trading. In every transaction the brokerage holds the edge and will always screw the client. It's kind of like insider trading. Real estate excluding weird derivative disasters type situations (a predictable recipe for failure) in growth markets are your best investments. If you can't afford to buy then buy into a fund. The stock market is a big scam.

BTW...Buy high/sell low...you new that was an attempt at humour...right?

I won't deny that the market can be cheated, but overall it's not rigged per se..

If you invested in Microsoft in 1992 after windows was getting big, you would have made a small fortune by now...

short-term, your at the mercy of the market and all the shenanigans but over a 20,30,45 year period, you will make a killing..

The thing to remember is your buying and owning a part of a major company, and over time, especially with inflation, ownership in major companies will rise in value...
There is no doubt in my mind that Amazon, Microsoft, Apple, Google, mcdonalds, etc will be worth more in 25 years than they are now..



And lol, no I didn't get the humor, totally didn't even catch until you said something

[Sugar Adam Ali]

It really doesn't matter...the stock market is rigged. It's controlled by high-frequency trading. In every transaction the brokerage holds the edge and will always screw the client. It's kind of like insider trading. Real estate excluding weird derivative disasters type situations (a predictable recipe for failure) in growth markets are your best investments. If you can't afford to buy then buy into a fund. The stock market is a big scam.

BTW...Buy high/sell low...you new that was an attempt at humour...right?

I don't see how my brokerage screws me... I set the price I wanna pay, they charge 8.95.
Been doing it for years, never felt screwed.. People just don't understand how it works and get scared of all the terminalogy and horror stories..

I have never once in 20 years ever felt cheated

[jaded]

I won't deny that the market can be cheated, but overall it's not rigged per se..

If you invested in Microsoft in 1992 after windows was getting big, you would have made a small fortune by now...

short-term, your at the mercy of the market and all the shenanigans but over a 20,30,45 year period, you will make a killing..

The thing to remember is your buying and owning a part of a major company, and over time, especially with inflation, ownership in major companies will rise in value...
There is no doubt in my mind that Amazon, Microsoft, Apple, Google, mcdonalds, etc will be worth more in 25 years than they are now..



And lol, no I didn't get the humor, totally didn't even catch until you said something

The thing to remember about hindsight is that's it's always 20/20. I swear if I had 1/2 % of the foresight that I have in hindsight I'd be a billionaire.

[Sugar Adam Ali]

The thing to remember about hindsight is that's it's always 20/20. I swear if I had 1/2 % of the foresight that I have in hindsight I'd be a billionaire.

It's not about hindsight.. Companies will be worth more than they were in the past, unless they go out of business or products become obsolete..

If your timeframe is longer than 20 years, you will make money, the gains will surpass anything else you can put your money in ie bonds, gold, savings account

[jaded]

I don't see how my brokerage screws me... I set the price I wanna pay, they charge 8.95.
Been doing it for years, never felt screwed.. People just don't understand how it works and get scared of all the terminalogy and horror stories..

I have never once in 20 years ever felt cheated

There are a few good exposés on the topic...look around.

http://www.cbsnews.com/news/is-the-u...market-rigged/

That won't embed for some reason.

Also read this...

http://www.cbc.ca/news/business/cana...tion-1.2594639

Katsuyama noticed that when he would send a large stock order to the market, it would only be partially filled, and then he would have to pay a higher price for the rest of the order.

When he investigated, he found that his orders travelled along fibre-optic lines and hit the closest exchange first, where high frequency traders would use their speed advantage to buy the shares he wanted and then sell them to him at a slightly higher price ***8211; all in milliseconds.

This is a not a quick discussion topic...but basically ...you bought at $1. and it's now trading at $2. and you want to sell. Your order won't get processed until all the trades have been processed that favour the brokerage's position (they may own the stock as well or simply have more important clients where big commissions are made). By then the price has dropped because all the big action trades have passed. That's just one of many ways you get screwed...this has nothing to do with high frequency trading BTW.

The stock market is not a place for the small player.

[jaded]

It's not about hindsight.. Companies will be worth more than they were in the past, unless they go out of business or products become obsolete..

Tell that to the former Enron stock owners and the many Enron-esq companies that went bust. Remember when Obama used a Blackberry and how cool it was to own one? Although literally in recent days the stock is making a comeback...many people took a bath on it...who'd have figured? And gee if only I knew about Microsoft...Homedepot...Facebook..etc 20 years ago...damm right it's hindsight. How many billions do you have anyways?

If your timeframe is longer than 20 years, you will make money, the gains will surpass anything else you can put your money in ie bonds, gold, savings account

Just so you know...in July of 2001 gold was $343. an ounce... in Sept. of 2011 about 10 years later it hit $1614.

20 years ago I could have bought a house here in Vancouver for $250,00. It's seemed a bit over priced to me then considering what that got you in say Montreal where I was originally from. Today that house goes for $850,000. and there is no capital gains tax on a house here. So much for your argument..and BTW...that house would have provided me with a place to live in...try to live in a piece of paper AKA a monthly statement. There are people who bought Enron 20 years ago who are homeless today.

20 years ago money had literally 1/2 the value it does today. Your cash does not buy what it could have then.

[Sugar Adam Ali]

Tell that to the former Enron stock owners and the many Enron-esq companies that went bust. Remember when Obama used a Blackberry and how cool it was to own one? Although literally in recent days the stock is making a comeback...many people took a bath on it...who'd have figured? And gee if only I knew about Microsoft...Homedepot...Facebook..etc 20 years ago...damm right it's hindsight. How many billions do you have anyways?



Just so you know...in July of 2001 gold was $343. an ounce... in Sept. of 2011 about 10 years later it hit $1614.

20 years ago I could have bought a house here in Vancouver for $250,00. It's seemed a bit over priced to me then considering what that got you in say Montreal where I was originally from. Today that house goes for $850,000. and there is no capital gains tax on a house here. So much for your argument..and BTW...that house would have provided me with a place to live in...try to live in a piece of paper AKA a monthly statement. There are people who bought Enron 20 years ago who are homeless today.

20 years ago money had literally 1/2 the value it does today. Your cash does not buy what it could have then.

1.. Quite using the hindsight thing.. By 1992 Microsoft was already a huge company based on ms-dos, and once windows arrived it only got bigger.. Microsoft and Disney were the first stocks I ever bought and I have made thousands and thousands on them thru capital gains and dividends... It didn't take a rocket scientist to figure out that these companies will be around for ever..
The people that bought the blackberry/palm stock and got destroyed were the people that don't pay attention or know what p/e, peg ratio, quick ratio, etc.. All you had to do with blackberry is look at the price to earnings curve and you could see the price going way up and the earnings not following.. The same can be said for Amazon right now.. You would be an idiot to invest in amazon right now unless your willing to wait 25-30 years. It is way overpriced..

As for for you example, yes real estate is a great investment, and your lucky in canada not to pay capital gains taxes on it,, in America you are not so lucky.. But yes I totally agree that real estate is just as good of an investment if not better than stocks. Trouble is for most people,stocks are much cheaper than buying real estate.. How many people can pay 250k at one time.. Stocks you can invest by just a few hundred bucks.. Plus stocks pay dividends, while at least in the US you have property taxes each year, plus maintenance. How much taxes have you paid and how much maintence have you paid since the 80s.. Stock costs me nothing after purchase and actually gives money back in form of dividend. If I out 250k into an index fund in the mid 80s it would be worth a few million plus i would be getting a nice dividend the entire time.. You went from 250k to 850k plus paying property taxes (I assume) and maintence.. And your house never earned you a dime.. Unless your renting, which being a landlord and renting can be very lucrative and have great returns..

Not a fan of gold,,nothing against it but I view it more as an insurance policy rather than an investment...

As to say how could I know at Home Depot, Facebook etc...
Well you have too look and do your homework, that's why I suggest to posters that you use an index fund rather than try and pick individual stocks..

Let's take Facebook for instance, everyone knew what Facebook was before it went public.. It went public 2 years ago, and if you knew anything about the sector you knew Facebook was severely overpriced.. It opened at about 36 initially and at that price their p/e was near 100.. At the same time google and Apple, much more proven and diverse companies, had p/e at under 20, which shows that Facebook was greatly overpriced for a company that had no earnings. So based on that you knew Facebook would drop, and they did.. It went up to 38 and all the guys that have connections bought the initial stock at 36 sold at 38 and all the regular dopes who bought it there or anywhere in the 20s,30s got burned and the stock dropped into the teens and the p/e became a lot closer to reality.. I set a limit order to buy once it hit 20 and I was lucky enough for it to hit there and I bought, and now that it shows earnings the stock has risen into the 50s..
It takes a lot of homework and weekly, daily research to pick individual stocks, that's why I suggested for beginners and novice investors to just put their money in index funds which takes away the risk associated in picking a single stock..

As for Enron.. Enron wasn't even a public company 20 years ago, and the people that got burned had blinders on..
The employees got screwed but you shouldn't put all you eggs in one basket, hence why index funds are better long term than individual stocks..
Plus, only invest in things you understand,, everyone kinda has a good understanding how coke, Pepsi, Nike, Microsoft, Apple, etc make their money, but Enron and other companies are too complex, and I never invest in anything I can't understand, and I didn't really understand Enron.. Same goes for Cisco, and some others.. If you can't easily understand what the company then it's probably not a good invest to make.. It a good rule that I always try and abide by..

And no one is homeless that worked at Enron, these were people working at a Fortune 500 company, they have have lost the huge house with the huge mortgage, but they aren't homeless

[Sugar Adam Ali]

There are a few good exposés on the topic...look around.

http://www.cbsnews.com/news/is-the-u...market-rigged/

That won't embed for some reason.

Also read this...

http://www.cbc.ca/news/business/cana...tion-1.2594639

Katsuyama noticed that when he would send a large stock order to the market, it would only be partially filled, and then he would have to pay a higher price for the rest of the order.

When he investigated, he found that his orders travelled along fibre-optic lines and hit the closest exchange first, where high frequency traders would use their speed advantage to buy the shares he wanted and then sell them to him at a slightly higher price ***8211; all in milliseconds.

This is a not a quick discussion topic...but basically ...you bought at $1. and it's now trading at $2. and you want to sell. Your order won't get processed until all the trades have been processed that favour the brokerage's position (they may own the stock as well or simply have more important clients where big commissions are made). By then the price has dropped because all the big action trades have passed. That's just one of many ways you get screwed...this has nothing to do with high frequency trading BTW.

The stock market is not a place for the small player.

Your talking about being a trader- jumping in and out of stocks trying to gain profit quickly..
I'm talking about being an investor- long term buying and holding stocks or funds.. Over the long haul.

Yes your totally right about the stock market being not the place for the small player- if your trying to be a day trader, instead of a long term investors..

You bought it a $1 and 10 years later it is at $2 bucks for a 100% gain or 10% annually then yeah it's easy to sell to get your gains.. Set a limit order at 2 bucks and once it hits, you got your money..
Now if your trying to trade it the same day you bought it which is known as day-trading, then yeah the small guy gets crushed.. But if your not day trading, then the playing field is pretty level.. All you have to do is set limit orders at the prices you wanna buy and sell, instead of doing a market order and being hung out to dry..

My first few trades I used market orders and I never got the price I wanted except once when I sold and never when I was buying.. But after 6 or 7 trades, I used limit orders and always got the price I set, it might take awhile, my are good for 60 days so if it does hit the price during that 60 days, my order cancels and I gotta reorder..
The small guy needs to buy and hold stock for a long time period to truely build wealth.. They can't think they can make tons of trades and rapidly buy and sell and not get burned, it's basically gambling and the house always wins in the long run..

Index funds are the way to go for novice investors over the long term