Really dumb question about stock.

Just wondering if I see a big company like MS or Sony going down should I buy their stock since it will obviously go back up someday? What is the downside to this, because most like a company like MS/Sony are not going out of business anytime soon and are bound to go back up eventually.

Don't speculate on something you don't understand. Least of all stocks if you are really that elementary on the subject. That's all I'm going to say.

Don't speculate on something you don't understand. Least of all stocks if you are really that elementary on the subject. That's all I'm going to say.

jetpower3

There's no justification for buying MS shares at the moment. The dividend's pretty insignificant, and the stock is currently trading in the 25-30 dollar range, where it has spent much of the past decade. If you're looking for a buying opportunity, you should be looking for something below $20, or a clear and sustained break through $30.

Like others have said, it would be good to acquire some education in investing before trying your hand at this. And before you start trading with real money (even after acquiring some education), practice trading with fake money. It's easy to track a hypothetical trade, regardless of whether you're using real money or not.

agreed, stocks can be extremely risky. Not to mention to actually get a half decent return you need to buy a copious amount and at that price, would require a lot of funds and probably debt leveragingchaoscougar1

They're not really as risky as most people believe they are. People only get smashed because they practice poor risk management or have inadequate education. For those who spend some money and take the time to learn how to analyze a chart and apply good risk management techniques, stocks are by far the best place to put their money over the long term.

There's no justification for buying MS shares at the moment. The dividend's pretty insignificant, and the stock is currently trading in the 25-30 dollar range, where it has spent much of the past decade. If you're looking for a buying opportunity, you should be looking for something below $20, or a clear and sustained break through $30.

Like others have said, it would be good to acquire some education in investing before trying your hand at this. And before you start trading with real money (even after acquiring some education), practice trading with fake money. It's easy to track a hypothetical trade, regardless of whether you're using real money or not.

pianist

If you have money to invest, and you're young, consider placing it in a retirement fund, like an IRA.

EDIT: Actually, no matter how old you are, contribute to a retirement fund if you have the income!

There's no justification for buying MS shares at the moment. The dividend's pretty insignificant, and the stock is currently trading in the 25-30 dollar range, where it has spent much of the past decade. If you're looking for a buying opportunity, you should be looking for something below $20, or a clear and sustained break through $30.

Like others have said, it would be good to acquire some education in investing before trying your hand at this. And before you start trading with real money (even after acquiring some education), practice trading with fake money. It's easy to track a hypothetical trade, regardless of whether you're using real money or not.

pianist

The problem with fake paper trading is the very fact that it is not real money. It doesn't adequately prepare oneself for the emotional factor of putting money into the market. I suppose though that can only come with time, experience, and learning to just buy and hold over a reasonable period as opposed to micromanaging.

When you purchase stock you're going to pay more than the current value, plus a commission if the broker doesn't offer any commission-free trades.

So you would have to wait for a share's value to go up quite a bit to match the overhead you paid out. Also when you sell you're liable for capital gains tax.

There are a couple of problems with that line of thinking. First, as we have seen, no company is "too big to fail". Secondly, the purpose of investing your money is to make returns on it. If you put a lot of money into a stock that keeps dropping, you will have lost money. And furthermore, your money will be tied up in that company's stock as opposed to earning your returns in another. It's not just that the stocks value won't be zero, you won't a stock that will go up in value after you purchase it. Sure, Sony and MS may go back up, but perhaps your money would be better invested elsewhere.

[QUOTE="chaoscougar1"]agreed, stocks can be extremely risky. Not to mention to actually get a half decent return you need to buy a copious amount and at that price, would require a lot of funds and probably debt leveragingpianist

They're not really as risky as most people believe they are. People only get smashed because they practice poor risk management or have inadequate education. For those who spend some money and take the time to learn how to analyze a chart and apply good risk management techniques, stocks are by far the best place to put their money over the long term.

I would also like to add that debt leveraging is not necessary. Although it is probably one of the few ways to make money consistently within the scope of short term fluctuations (I don't recommend trying this unless you're an institutional investor with deep and diversified positions), buying for the long haul in the right places can create quite handsome returns, even for established companies and a relatively small beginning principal.

Hey guys can someone look at this quote and tell me how much it would cost to buy this stock. Would it be like $20? Is that what the 20.72 means?

http://investing.money.msn.com/investments/stock-price?symbol=us%3aerts

Sorry I can't link for some reason.

[QUOTE="pianist"]

[QUOTE="chaoscougar1"]agreed, stocks can be extremely risky. Not to mention to actually get a half decent return you need to buy a copious amount and at that price, would require a lot of funds and probably debt leveragingjetpower3

They're not really as risky as most people believe they are. People only get smashed because they practice poor risk management or have inadequate education. For those who spend some money and take the time to learn how to analyze a chart and apply good risk management techniques, stocks are by far the best place to put their money over the long term.

I would also like to add that debt leveraging is not necessary. Although it is probably one of the few ways to make money consistently within the scope of short term fluctuations (I don't recommend trying this unless you're an institutional investor with deep and diversified positions), buying for the long haul in the right places can create quite handsome returns, even for established companies and a relatively small beginning principal.

@pianist

Tell that to the people who lost millions in the GFC, dot com bubble, Enron and various other stockmarket crashes and company failings. Risk management in shares usually requires a diversified portfolio and thus still requires a decent amount of money. To the average investor performing technical and fundamental analysis is just not on the cards, simply because they wont understand it, hence the risk. Yes, obviously people who know what they are doing; hedge fund managers, stockbrokers, professional investors the risk is lessened, but it is never removed entirely and there are not many people who can forsee a crash. However you cannot ask people with other jobs, family, social life etc to spend the required time studying the stock market

@jetpower3

I never said debt leveraging was necessary, but it is widely used. Those handsome returns will only be achieved if you actually invest enough, and the small beginning principal depends on who you are investing in. Thus if you dont not have the current liquidity but are asset wealthy, debt leveraging can be used

Hey guys can someone look at this quote and tell me how much it would cost to buy this stock. Would it be like $20? Is that what the 20.72 means?

http://investing.money.msn.com/investments/stock-price?symbol=us%3aerts

Sorry I can't link for some reason.

Ugalde-

[QUOTE="Ugalde-"]

Hey guys can someone look at this quote and tell me how much it would cost to buy this stock. Would it be like $20? Is that what the 20.72 means?

http://investing.money.msn.com/investments/stock-price?symbol=us%3aerts

Sorry I can't link for some reason.

chaoscougar1

[QUOTE="chaoscougar1"][QUOTE="Ugalde-"]

Hey guys can someone look at this quote and tell me how much it would cost to buy this stock. Would it be like $20? Is that what the 20.72 means?

http://investing.money.msn.com/investments/stock-price?symbol=us%3aerts

Sorry I can't link for some reason.

Ugalde-

I would also like to add that debt leveraging is not necessary. Although it is probably one of the few ways to make money consistently within the scope of short term fluctuations (I don't recommend trying this unless you're an institutional investor with deep and diversified positions), buying for the long haul in the right places can create quite handsome returns, even for established companies and a relatively small beginning principal.

jetpower3

It's not necessary, but it served me well over the course of the recovery. You don't need to be an institution to use margin. You just need to make intelligent trading decisions and be sure to limit your losses when the market's telling you that you were wrong.

The problem with fake paper trading is the very fact that it is not real money. It doesn't adequately prepare oneself for the emotional factor of putting money into the market. I suppose though that can only come with time, experience, and learning to just buy and hold over a reasonable period as opposed to micromanaging.

jetpower3

No, it can't do that - what it can do, though, is help train you to execute decisions, and if you don't trust your ability to exit a losing a trade at the right time (or a winner for that matter), you can use an automated stop loss. It also helps to build confidence in what you're doing, as it's easier to be unemotional if you know you're using a strategy which is likely to make you money in the long run. And finally, it's the only way to test a new strategy without risking money.

Essentially, it will help you develop your rules and learn where to stick your stop losses and entry points. Then it's up to you to execute those rules.

As for micromanaging... one tax season is usually enough to convince a sane person to avoid excessive trading. :lol:

@pianist

Tell that to the people who lost millions in the GFC, dot com bubble, Enron and various other stockmarket crashes and company failings. Risk management in shares usually requires a diversified portfolio and thus still requires a decent amount of money. To the average investor performing technical and fundamental analysis is just not on the cards, simply because they wont understand it, hence the risk. Yes, obviously people who know what they are doing; hedge fund managers, stockbrokers, professional investors the risk is lessened, but it is never removed entirely and there are not many people who can forsee a crash. However you cannot ask people with other jobs, family, social life etc to spend the required time studying the stock market

chaoscougar1

If you lose millions, it's because you are NOT practicing good risk management (unless, of course, you are comfortable with losing millions, which certain extremely wealthy traders are). Risk management is partly about diversification, yes, but the other key aspect that people ignore is setting an intelligent stop loss point and sticking to it. Losing money in the market is not a problem, provided that your gains outstrip your losses, and for an intelligent investor who takes the time to develop or learn a good strategy and then sticks to his rules, this will almost certainly happen. Basically, you have to decide how much money you are willing to risk on a trade. If you're only comfortable losing $100, you choose the size of your position and the your stop loss point on that basis. Very simple, and you'll never end up losing your shirt on a trade if you stick to it.

Are you going to lose some of your trades? Absolutely. Are you going to lose your shirt? Only if you're a fool. That's the point I'm making here. Stocks outperform any other investment over the long term, even if you only do "average." And they're capable of simply blowing other investments out of the water if you get a little education and do much better than average. I can say that from personal experience.

As for time required, I learned to invest while I had my current job and other commitments. Reading a chart really isn't as difficult as people make it out to be. Or perhaps I just happened upon a particularly user-friendly system. Either way, it did not require a huge investment of time, and I have done fine with technical trading since I started up five years ago.

[QUOTE="jetpower3"]

I would also like to add that debt leveraging is not necessary. Although it is probably one of the few ways to make money consistently within the scope of short term fluctuations (I don't recommend trying this unless you're an institutional investor with deep and diversified positions), buying for the long haul in the right places can create quite handsome returns, even for established companies and a relatively small beginning principal.

pianist

It's not necessary, but it served me well over the course of the recovery. You don't need to be an institution to use margin. You just need to make intelligent trading decisions and be sure to limit your losses when the market's telling you that you were wrong.

I never meant to imply that debt leveraging is only for institutions. I just don't recommend it to try to profit off of short term fluctuations like a lot of financial institutions try to do (in things like Forex).

@ pianist What would you think of investing in EA. Just wondering since they seem like a great investment to me. Now obviously I know there are things I don't know that could make this a bad company to buy into. They just did well on Tiger Woods 12. They also have Mass Effect 3, Battlefield 3, and Madden 12 coming out this year. Looks like they're trying to go big with Battlefield 3 but Madden could take a hit due to the NFL lockout. They just seem like they have some big things coming and their stock is only at $20. Seems like they will probably go up soon. What would you think of them?

Heres there info from MSN. http://investing.money.msn.com/investments/stock-price?symbol=US%3aERTS

I never meant to imply that debt leveraging is only for institutions. I just don't recommend it to try to profit off of short term fluctuations like a lot of financial institutions try to do (in things like Forex).

jetpower3

Ah, I see. I agree with that - although I don't mind swing trading in principle, provided you have the time to devote to learning how to do it effectively. I've had some success with it in the past, but when my job became busier, I no longer had the time to keep up with it.

First, as we have seen, no company is "too big to fail". sonicare

@ pianist What would you think of investing in EA. Just wondering since they seem like a great investment to me. Now obviously I know there are things I don't know that could make this a bad company to buy into. They just did well on Tiger Woods 12. They also have Mass Effect 3, Battlefield 3, and Madden 12 coming out this year. Looks like they're trying to go big with Battlefield 3 but Madden could take a hit due to the NFL lockout. They just seem like they have some big things coming and their stock is only at $20. Seems like they will probably go up soon. What would you think of them?

Heres there info from MSN. http://investing.money.msn.com/investments/stock-price?symbol=US%3aERTS

Ugalde-

Haha... I'm not a financial advisor. So I'm not going to tell you to buy or sell anything. As you don't own the stock, though, I will tell you that it is currently right at resistance ( around $20), and so you don't know whether it will break through or bounce back down. Personally, I wouldn't be interested in this one, as it has been range-bound for about 2.5 years, and it's on the higher end of its swing at the moment. If this is one I DID want to own for some reason, I'd be looking for about $15, and I'd be looking for that support level to hold before I entered. I'd also be intrigued if it climbed to $25 and formed a support level there.

If you want to see how this trade would have worked out for you, then keep an eye on this stock for the rest of the year and see what happens to it. It's good that you're interested and starting to look into stocks. The next step is to acquire some education on the matter. You may yet be too young to purchase that education, but I assure you that if you're seriously interested in handling your own trading, it is necessary to get some form of education before you start. Otherwise, it's just gambling, pure and simple.

@ pianist What would you think of investing in EA. Just wondering since they seem like a great investment to me. Now obviously I know there are things I don't know that could make this a bad company to buy into. They just did well on Tiger Woods 12. They also have Mass Effect 3, Battlefield 3, and Madden 12 coming out this year. Looks like they're trying to go big with Battlefield 3 but Madden could take a hit due to the NFL lockout. They just seem like they have some big things coming and their stock is only at $20. Seems like they will probably go up soon. What would you think of them?

Heres there info from MSN. http://investing.money.msn.com/investments/stock-price?symbol=US%3aERTSUgalde-

1. The most important factor in the value of a stock is expected future earnings. That $20 price point for EA stock is already taking into account Mass Effect 3, Battlefield 3, and every other game that EA has in the works. The stock will only swing if some of those games do much worse than expected, or much better than expected. You won't ever have any insider knowledge that the actual brokers don't, but you can still make well informed decisions about where you place your money. You do know EA fairly well, so they're worth a look if you think the company is in a good position to build on previous success.
2. Consider the volume of the stock, not just its price. Some companies might have a million shares trading at $5,000 each, while other companies might have a billion trading at $10. Owning 1,000 shares of the latter gives you the same % ownership of the company as one share of the former. On the other hand, looking at the price graph of a stock over 1 and 5 year spans can give you a better idea of the direction and history of the company.

When you say education do you mean college? Because the way you said purchase makes me think you mean something else.Ugalde-

No, I mean investing education. You CAN get that at college if you take the right classes, I'm sure, but I received mine through a website that was created by a successful local trader who created a stock search engine and training program on the basis of his decades of trading experience.;.. and I continue to receive education with every trade I make. The market is an excellent (albeit merciless) instructor. :P

It'll likely cost several thousand dollars like my program did, but what it teaches you provides you with the means to earn many hundreds of thousands. Again, I can say that from personal experience.

I can't reveal the name of that website here, as it would be in violation of Gamespot's advertising policies, so please don't ask. All I can tell you is that I do technical trading, and that the program I followed taught technical analysis in a way that makes chart-reading extremely simple. For a monthly fee, the same website provides a powerful search engine that helps you locate potential trading opportunities. But no site is going to offer you a magic bullet for making money in the market. It's still going to come down to your wits and work ethic in the end.

Wow Archon thank you for opening my eyes. You confused me big time when you said "That $20 price point for EA stock is already taking into account Mass Effect 3, Battlefield 3, and every other game that EA has in the works.". I just googled a few thing and now I see something totally different about stocks. So it's not just about if a company might go big it's do people think that their going to go big. If nobody things their going to be big and you invest and they do then boom. Man I got a lot to learn before I even try to invest.

I thought stock prices went up and down based on how much money a company made. Obviously that effect it but thats not the end all be all.

[QUOTE="Ugalde-"]When you say education do you mean college? Because the way you said purchase makes me think you mean something else.pianist

No, I mean investing education. You CAN get that at college if you take the right classes, I'm sure, but I received mine through a website that was created by a successful local trader who created a stock search engine and training program on the basis of his decades of trading experience.;.. and I continue to receive education with every trade I make. The market is an excellent (albeit merciless) instructor. :P

It'll likely cost several thousand dollars like my program did, but what it teaches you provides you with the means to earn many hundreds of thousands. Again, I can say that from personal experience.

I can't reveal the name of that website here, as it would be in violation of Gamespot's advertising policies, so please don't ask. All I can tell you is that I do technical trading, and that the program I followed taught technical analysis in a way that makes chart-reading extremely simple. For a monthly fee, the same website provides a powerful search engine that helps you locate potential trading opportunities. But no site is going to offer you a magic bullet for making money in the market. It's still going to come down to your wits and work ethic in the end.

I'll probably start by reading a few books. Not sure where I'll go from there.Ugalde-

Best of luck! That's as good a place as any to start. Keep poking around on the internet, too, as there is a lot of information out there which is offered for free. If you keep researching, your "next step" will become clear in due time.