New to the Market

[huscroft6]

Just thought Id post a question. And ys I know, at 32 with my parents owning our business since I was 13 I should know. But, other than the McDys stock my parents got for me when I was 15, I have never been involved in the market. BUT, I am anxious to get involved, granted the market is rough right now, but at least at a minimal basis. So I am just curious to the best way to get involved, as far as internet market sites to buy and sell, the best way to go as a beginner, how to get involved, etc etc etc. Any help would be great as by now I should start learning and getting involved even at a minimal basis at the start.....

[Goods]

Hey Huscroft6,
Best way to start learning is pick up a couple of books and start reading.
I recommend Trading for a Living by Alexander Elder to start with.
From there, Technical Analysis of the Financial Markets by John J Murphy.

You can also check out Investopedia.com

IMO, it's best to read a lot and figure out what style of trading or investing you like. And paper trade which means not using real money. It's too easy to lose money fast. Just like you wouldn't read an accounting book and expect to be a CPA, trading takes time to get it right.

You can always post questions here and me or some of the other guys will help where we can. Good luck

[huscroft6]

Thanks a lot Goods, that was one think I thought of too, finding a good book. Ill check a few out at the book store and go from there. Appreciate the response man.

[Goods]

NP huscroft6. Just go slow, there's ALWAYS a trade and always will be.

[huscroft6]

Originally Posted by Goods

NP huscroft6. Just go slow, there's ALWAYS a trade and always will be.

Trust me it will be, its more just something to get into very slowly and very carefully until I get more knowledge and 'feel'. May not even get into it for a year down the road being pretty busy with work and all (betting) . But I hear ya. Tks again Goods

[Dagger]

I am also new this trading and want to give it a try. I don't have a big bankroll so I'd like to start with a small investment. Can I start with 10K or it has tobe more than that? Thanks in advance.

[Goods]

You can start with very little. The issue with smaller bankrolls is you can't buy a lot of shares and commisions eat away small gainers so go with a discount broker like Scottrade. The daytrade rule comes in for accounts under $25,000 which says you can't daytrade more than 3 times in a 5 trading day period.

But you can do just fine with 10k or less as long as you learn what you're doing before jumping in. Right now is a great time to get in on longer term plays. Everything's so beat down, the great stocks will thrive when we finally bottom.

btw, I prefer short term momentum trades, which are only a few days usually so I wouldn't recommend following my trades for investing longer term.

Post any questions as always. And don't listen to Jim Cramer

[jrobie79]

hey goods, when do you anticipate this bottom to come around?

[Goods]

No telling jrobie. Earnings all around are expected to be ugly and companies aren't getting crushed as bad as they used to when they miss. But guidance isn't great either and that's what traders are looking for.

I'd expect one more big flush out to test low levels and if support holds, that could be the bottom. Just gotta trade what the market gives ya.

[Kramer]

DOLLAR COST AVERAGING ...
BY JIM JUBAK
Start investing now? You've got to be kidding, right?
This is a great time to be starting out as an investor
There's sound logic behind that advice.
Buying on fear works. Here are three reasons why:
1. If you had bought SOME STOCKS on Oct. 20, 1987, the day after the Standard & Poor's 500 Index crashed by 20.5%,
you would have been up 11% in one year and up 52% in two years.
2. If you had bought stocks on Oct. 9, 2002, the day that marked the bottom after the dot-com bubble broke in March 2000,
you would have made 33% in a year and 44% in two years.
3. If you'd bought stocks on Aug. 10, 1982, just as the U.S. economy started to recover from the strong medicine
that the Federal Reserve had administered to cure the inflation of the 1970s, you would have been up 57% in a year and 61% in two years.


And what if you had missed calling the exact bottom?
After all, not even the experts can tell exactly when stocks will stop going down.
Well, if you had bought three months too early in 2002, for example, your return in a year from investing
in the S&P 500 index would have been just 3% instead of 33%.
But something rather encouraging would've happened the longer you held on to your stocks.
In two years, the gain from calling it right in 2002 would have been 44%,
but the gain for the investor being too early would've crept up to 14%.
That too-early investment in the S&P 500 would've gained 23% in three years, 30% in four years and 56% in five years.
That wouldn't have caught up to the five-year gain of 92% for the person who had invested in the S&P 500
at exactly the right moment. But the gap between 56% and 92% sure would've looked a lot better
than the 3%-to-33% chasm after year No. 1.
This, of course, is why financial planners tell beginning investors to stay in the market for the long run.
Time is the great leveller. It has a way of minimizing the effect of mistakes in timing.

A little at a time


You can minimize the effect of mistakes even more by using a tactic called dollar-cost averaging to build your portfolio.
It works like this: Each month or quarter, you put the same dollar amount into whatever stocks you're using
as the foundation of your long-term portfolio. By putting in the same dollar amount,
you buy a greater number of shares (since each share costs less) when prices are low
and fewer when prices are high (since each share then costs more).

So let's say that you missed catching the absolute bottom for stocks in October 2002
not by a mere three months but by a whole year and three months.
If you'd invested all your money in the S&P 500 on July 8, 2001 --
a full 15 months before the stock market hit bottom -- you would have a return of just 6% in five years.
To put it in dollar terms, $20,000 invested in the S&P 500 on July 8, 2001, would have grown to only $21,132 by July 7, 2006.
Why so little? Because being early cost you big.


The $20,000 you invested on July 8, 2001, had dropped in value to just $12,960
by the time the market bottomed in October 2002. That gave you a whole lot less in your portfolio when the market began to rally.
What if you been just as early but had bought $1,000 of S&P 500 stocks using dollar-cost averaging
every three months starting on July 8, 2001?

Well, your gain would have zoomed to 16%, more than two-and-a-half times better.
The total value of the $20,000 you'd invested would have grown to $23,285 in five years.
And, importantly for many beginning investors, you would have been able to put together this portfolio
by saving and investing $1,000 a quarter rather than having to come up with $20,000 in one initial lump sum.
And you would have earned that 16% return even though you started investing during one of the worst
bear market declines in stock market history. That's not an especially scary outcome, is it?

Thought this article might be helpful ...

Don't invest all at once ,
but a little at a time is best advice ...

a good portfolio IMO
is to keep aside at least 30-40% cash aside...

you want a mix of preferred shares ,
dividend shares ,
depending how your age is risky growth stocks 10-15%,
etc
JMO