Newbie questions on stock market.

Discussion in 'Stock Market' started by DustyInfinity, Jul 20, 2018.

  1. william the wie
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    william the wie Gold Member

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    Benjamin Graham's "The Intelligent Investor" has the best track record of any guide to the market and it is relatively cheap from any source.
     
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  2. candycorn
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    candycorn Alis volat propriis

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    If I might suggest...

    There is this thing called Mutual Funds. One of the ones I own is from a company called Vanguard. Just a 30 second synopsis of what a mutual fund is....

    They combine different investments from different sectors. For a very simple example, the fund can hold 100 shares each of Exxon, Wal*Mart, General Motors, Del Monte, Apple, AMC Theaters, and Microsoft. You can buy shares in the fund instead of individual stocks. This spreads out the risk over several sectors. The returns aren't so great if you're a small investor but the risks are almost non-existent. You make more than you would at a bank in exchange for the lack of liquidity.

    Good luck in your investing future.
     
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  3. Marion Morrison
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    Marion Morrison Platinum Member

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    401K's are kind of like a Mutual Fund approach. Sort of like uh..you get an expert's opinion that invests in 14 different stocks, so it usually always gains.
     
  4. DustyInfinity
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    DustyInfinity VIP Member

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    When my son is able, I want him to get a Roth IRA. My goal is for him to graduate college with no debt, and to put money in the IRA. I watch a little Suzie Orman.
     
  5. MarathonMike
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    MarathonMike Platinum Member

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    I get it that the stock market has a feel of a casino filled with car salesmen. But there is a wise old saying "If you want to be rich, do what the rich do".
    There is a method to the madness and ways to limit your risk. But it is not for everybody, for sure.
     
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  6. candycorn
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    candycorn Alis volat propriis

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    In the casino...
    If there are 1000 people in the room and everybody bets on black; the number that comes up can still be red or black

    In the stock market...
    If there are 1000 people in the room and everybody buys shares of XYZ corp, the number of shares outstanding diminishes; the law of supply and demand takes hold and the stock price rises.

    In the casino...
    The next time the roulette wheel is spun, the same 1000 people bet on red. The number that comes up can still be red or black

    In the stock market...
    If there are 1000 people in the room who sell their shares in XYZ corp, the number of shares outstanding increases; the law of supply and demand takes hold and the stock price falls.

    It may seem like a casino but there is a science behind the stock price that is usually--not always--based on financial numbers. Now, are the numbers accurate? Maybe/maybe not. Who triggered the buying/selling? Was it an analyst who spent years studying the company and the sector or was it a guy on TV? What is the buying/selling based on? A blip of good/bad news or is it a good/bad trend?
     
  7. MarathonMike
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    MarathonMike Platinum Member

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    That's a good analogy for quiet orderly trading of stock XYZ. But things that cause rapid price increases and declines are what scare new investors. Things like short squeezes, Bad conference calls, big earnings misses, Merger news, Class action law suits, etc. that cause 10% or larger swings in a stock in one day. That is what makes a lot of people say "heck with that, I'll just buy a CD".
     
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  8. DustyInfinity
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    DustyInfinity VIP Member

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    My dad had a financial advisor who was fairly aggressive. This person wanted to put most of his portfolio in the market. He always had to put the breaks on this person to do a lower percentage of risky investments. He wasn't as bad as just put money into CDs, but he did go for the greater percentage of lower risk options. He probably felt pretty good during the .com meltdown.
     
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  9. MarathonMike
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    MarathonMike Platinum Member

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    Sounds like he was a wise man. A lot of us including me took a pounding when the dot.com went poof. The worst story I ever heard was a guy I worked with who had retired with well over a million. He took it in a lump sum, invested all of it in tech stocks and lost all but $100K and had to go back to work!
     
  10. Toddsterpatriot
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    Toddsterpatriot Diamond Member

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    In the stock market...
    If there are 1000 people in the room and everybody buys shares of XYZ corp, the number of shares outstanding diminishes;


    Shareholders can't do a thing to increase or decrease the number of shares outstanding.
     

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