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crocadoodledoo
Joined: 26 Nov 2008
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 Posted: Mon Dec 22, 2008 11:26 pm Post subject: Stock market for beginners |
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Hi everyone - I have already searched the discussion search thingy and there is nothing on this topic
The question is how to begin getting into stocks etc.
There are a lot of threads about good stocks to buy, but really I have no idea how to begin.
I would prefer to use my Korean Won to buy some Korean stocks so I can
a) wait out until Korean Won goes up again, and b) buy some stocks low
Thanks for your help! |
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mike in brasil
Joined: 09 Jun 2003
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| Posted: Tue Dec 23, 2008 12:39 am Post subject: |
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First do paper trading.
If you find you can make money on paper then start an account with an amount you are willing to lose.
The most important thing is money management. Never get into a trade unless you have a defined exit strategy.
Plus, if you are asking this board for investment advice, something tells me maybe you shouldn't be jumping head long into the market. |
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crocadoodledoo
Joined: 26 Nov 2008
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| Posted: Tue Dec 23, 2008 3:44 am Post subject: |
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Hi Mike 
By paper trading, do you mean switching money to different currencies?
To start an account, should I go to a Korean bank, or use an online system?
Thanks again and great picture |
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huck
Joined: 19 Jan 2003
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| Posted: Tue Dec 23, 2008 7:57 am Post subject: |
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I think he means 'mock trading'.
For the first few months, don't actually invest. Just pretend to invest, and keep track of how much you would've made/lost on paper. |
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iknownothing
Joined: 14 May 2008
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| Posted: Tue Dec 23, 2008 9:35 am Post subject: Re: Stock market for beginners |
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| crocadoodledoo wrote: |
Hi everyone - I have already searched the discussion search thingy and there is nothing on this topic
The question is how to begin getting into stocks etc.
There are a lot of threads about good stocks to buy, but really I have no idea how to begin.
I would prefer to use my Korean Won to buy some Korean stocks so I can
a) wait out until Korean Won goes up again, and b) buy some stocks low
Thanks for your help! |
croc
what are the apparent "good stocks" to buy?
are you trying to trade korean stocks? short-term or long-term?
if you are looking for long-term stock investments, find a local mirae, samsung, hyundae, tongyang, kiwoom, etc. branch and ask them if they have any english speakers.
if you are looking to day-trade, it's going to be close to impossible my friend
not because you can't open up an account
but because of language barriers when you use the korean trading program
but if you do want to go ahead and open one up anyway, the brokerages with the chepest rates are tongyang and kiwoom. mirae is also not bad because their online system is relatively simple to use. when you go into these firms, try to go with a korean or if you can't, just ask them if they have any english speakers. they might or might not.
if you can get through all the language barriers, by all means I encourage you to invest. Just make sure you do your studying and research. |
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Mochi
Joined: 20 Oct 2008
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| Posted: Tue Dec 23, 2008 5:01 pm Post subject: Stocks |
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Never take advice from anyone who hasn't made money in the stock market.
If you really want to learn, you should get Peter Lynch's "Beat the Street" for Christmas. It's the bible. The Motley Fool has good books, too. "You Have More Than You Think" is a good start. It's interesting stuff, but you must be prepared to do your own work. Otherwise stick with index funds. |
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seoulshock
Joined: 12 Jul 2005
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| Posted: Wed Dec 24, 2008 4:29 am Post subject: |
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You're on the wrong forum. Do a Google search for stock market investing, there are lots of forums available out there. I'd stick with sites that don't promote any products (like day trading systems, for example), and go for purely informational sites. Forums are a good place to go, as you can generally hear from 'real' people, though most of them are probably people who lose money. I've checked out the forum on Kiplinger's, and it seems to be good with information in all areas of finance.
Anyway, you should also get some books. First, get a book to know what the stock market is and how it works. Probably the best book for this would be a Series 7 study guide (Series 7 is the NASD/FINRA exam to become a stockbroker), though many of the details will apply to US markets only. But if you are interested in investing in foreign stocks, you can do so in America via ADR's. For example, I purchased KB (Kookmin) Bank stock in America. The price fluctuates with the prices in the Korean market as well as exchange rates. Anyway, you can learn all of this on Google, and though not necessary to get a Series 7 guide (actually Series 6 should be good enough), it'll definitely give you all the info. you need.
Then the other thing to understand is strategy. What you're trying to accomplish. Your risk tolerance. Your time frame. A Series 65 study guide should give you good info. on this (Series 65 for those wanting to be investment advisers).
You can be a day-trader (which I don't recommend unless you have at least 20K or so as well as access to real time quotes, nerves of steel, and a good strategy that you've implemented on paper beforehand)...
...or you can be a swing-trader, which is what I do. I hold my stocks for anywhere from a few days to even as long as six weeks. My strategy is to buy at a price I believe is relatively low, then continuing to add to my position if the price goes lower. For example, with KB, I bought 100 shares the first time, but it went lower, and so I bought 200 more, and it went even lower, so I bought 400 more. My average cost went down to about $22.40, and I sold for about $23.80. That was about a 6.25% gain which is nothing special, but this was in a period of about 32 days. Also during this same time I purchased Prudential stock at an average of $23 and sold at $27.43... this time, a 19.26% gain, and this was in a period of 25 calendar days.
I think swing-trading is the best for short term trading (anything under a year), but only if you have the bankroll to keep purchasing add'l shares as it heads lower. Of course, any stock you choose could theoretically go to zero, so you'll always take that risk. So I wouldn't recommend this for penny stocks, but only companies that are in at least decent financial shape with little chance of any signs of going under within the next year. Also, you need to decide how low you're willing to fund it to. For example, I picked the bottom for KB @ $15. I thought it was conservative, but I was wrong, as it actually ended up going as low as $14.70. Anyway, it eventually came back up and I'm out of it now.
Now, if you're a long-term trader, and you want this as your retirement nest-egg, then all I can say is, just give money to Vanguard or Fidelity and have them put it in a low-cost index fund. You don't need to 'trade' stocks...
But you probably just want to 'get rich quick', and that probably won't happen with stocks unless you get lucky in trading stock options. It seems to me and my friends that I do make quick money in the markets, but I've been trading for over 10 years now, and the first few years I made so many mistakes because I didn't have the proper education, strategy, philosophy, and management ideas that I do now. It took almost $70,000 in losses before I finally 'got it'... still, best money ever 'spent' for the knowledge I have today.
If you look for it, you'll find it, but don't get distracted by scam artists trying to sell you some magical system that'll make you $1,000 a day or whatever. If those systems were so great, they obviously wouldn't be sharing it with you as it would affect their trades as well... so obviously whatever they're selling you their system for is more profitable than their actual 'trading'. They are just like the shovel sellers during the gold rush in California.
In my not so humble opinion, the advice I've given you is valuable, and as a financial planner, I normally charge for it. So I hope you take the advice I've given you and avoid the mistakes I've made, as well as 90%+ of other traders who eventually quit the markets after they lose their money... only to be replaced by other new traders who will also lose their money... over, and over again.
Why am I giving out this free info? I'll be honest: I just snorted some coke and was feeling nice enough to share.  |
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itaewonguy
Joined: 25 Mar 2003
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| Posted: Wed Dec 24, 2008 9:51 am Post subject: |
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| seoulshock wrote: |
I think swing-trading is the best for short term trading (anything under a year), but only if you have the bankroll to keep purchasing add'l shares as it heads lower. Of course, any stock you choose could theoretically go to zero, so you'll always take that risk.
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thanks for your info really appreciate it..
I see that you trade stocks pretty quick, usually selling at 1 dollar more than you paid for the stock or sometimes more.. 10-20% ..
but with all the commissions and low share numbers..
do you actually make much money from it?
why not wait for yearly dividends to pay out and reinvest it into the company? what is your goal here? |
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seoulshock
Joined: 12 Jul 2005
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| Posted: Wed Dec 24, 2008 2:06 pm Post subject: |
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| itaewonguy wrote: |
| seoulshock wrote: |
I think swing-trading is the best for short term trading (anything under a year), but only if you have the bankroll to keep purchasing add'l shares as it heads lower. Of course, any stock you choose could theoretically go to zero, so you'll always take that risk.
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thanks for your info really appreciate it..
I see that you trade stocks pretty quick, usually selling at 1 dollar more than you paid for the stock or sometimes more.. 10-20% ..
but with all the commissions and low share numbers..
do you actually make much money from it?
why not wait for yearly dividends to pay out and reinvest it into the company? what is your goal here? |
The most commission I pay is a flat $7 when I buy. Though my average is more around $4 each time I buy. And on average, I buy a stock in 3~4 phases, so that adds no more than $21~28 to my purchase price. Of course, when I sell, usually I'll sell them all at once, so add another $7 (max) there. And even if I only sell half, and then half later, then that's a total of $14 to sell (max). Add the $14 to the $28, and it's $42 maximum in total fees I pay (based on buying in 4 phases).
If I have $10,000 invested into a stock, as I had at one point had (in an earlier example) 700 shares of KB stock (purchased in 3 phases), and the PRU stock I mentioned above, I didn't mention I had 1,000 shares of it (purchased in 4 phases). The average cost per shares I listed above, *included* the fees I paid.
So adding an add'l $42 to KB over 700 shares added an additional 6 cents per share (but that was already figured in, well except for the $7 exit trade)... of course, it *wasn't* $42 as I only traded in 3 phases so my maximum fee there would have been $28. 3 purchase trades * $7 = $21... and 1 sell trade * $7 = $7... Total $28. So it really only added 4 cents per share to my cost NET... and I made over $900 on that trade, so I missed out on $28... which is not much compared to the overall profit.
And for PRU stock, total fees (buying and selling) was $35, so my total share cost only went up 3.5 cents. I liquidated my position for $27,430 ($27,423 after commission), from a total cost of $23,000 (this includes purchase commission). My net gain therefore, was $4,423 (before taxes, of course)... Had I paid no commission, yes, I would have made an add'l 3.5 cents per share, which would have been an additional... $35 in profit... which is really nothing compared to the $4,423.
...and this is why I stated in the earlier post that this is only for thsoe who have the bankroll to keep purchasing add'l shares... though I should have clarified and stated not to buy in phases of $100 (as then a $7 commission would be eating 7% of your investment right off the bat). I think the minimum for a "phase 1" would be $1,000, though I usually start off with $2,000 minimum, and I have enough to a point where I can put $30,000 into one stock if I have to. Usually it doesn't get to that point (though with PRU, it did get close). So a lot of times, a lot of my money just sits there, collecting what little interest the brokerage house offers, and it never sees any action.
Anyway, point is, is that commission is a very minimal fee for me. Though for someone who has a $2,000 account for example, the fees could be killer... even if it is only $5. That is why smaller traders should stay away from day-trading, or swing-trading, and adapt to a more buy-and-hold long-term strategy. The money they'll save in fees and short-term capital gains taxes will outweigh the benefits of whatever tiny profits they manage to squeeze out of a trade even if they get a big double digit gain (like 15%), due to commission cost % relative to their account size.
And I didn't mention this before, but I also do have long-term accounts in both qualified and non-qualified plans. I have a 401(k), which I put up to the company match (free money, essentially), and I use it to purchase index funds and our company stock. Then I also have a IRA which I contribute the maximum to. So that handles my qualified plans. In my IRA I do go for stocks that pay dividends, and enroll in the DRIP (dividend reinvestment program). Some good long-term stocks I'm holding (consistent growing earnings as well as dividends) are... well, I'm not going to be a stock guru and tell you which ones to buy. Just giving you the concept.
One stock I used to hold until earlier this year was CMA (Comerica Bank). This was the #1 leader in America of all publicly traded companies that managed to raise their dividends every single year for the past 60 or so years. No other company has come close. Unfortunately for them, they cut their dividends by about half I think, at which point, I got rid of the stock... so for my long-term trading, I have very, very, very strict rules on what I buy. I have a list of criteria I need to buy the stock, and I use stock analysis software to get a list of these stocks. I then analyze them myself, and make my own judgment on which ones I *think* will be the best for long-term holding.
And most financial planners can't even do this, because most of them are just people who got interested in the industry one day and got in with the hopes of making good money and working with securities. Most of them don't know much more about investing than the average stock trader, and most of them (at least from what I've seen) don't seem to invest themselves except for a 401(k) contribution. They make me sick, actually. Last year they were pushing all their clients into energy funds, because they'd been going so high for the past few years without even taking into consideration that the funds were due to crash hard. Of course, they didn't listen to me. And yeah, what they want is the best for their clients, but they're too stupid to know what's best for their clients. Anyway, that's my rant on the financial services industry.
BTW, the the OP, I recommend you just stick to buy-and-hold, and if you're a US guy, then open up a IRA. You can't touch it until you're 59 1/2, otherwise you incur a 10% penalty on top of capital gains tax, but the money will go tax deferred and contributions are tax deductible (unless of course you opt for ROTH-IRA, which isn't always necessarily better when you do the math). On top of that, you shouldn't even be investing unless you're debt free (except maybe a mortgage). Your interest rates on your credit cards, assuming say 15%... chances are you won't be able to beat that, because you'd have to do better than that, AND in a qualified account in order to make it worth it. So get rid of your debt first, and *then* invest.
Okay, I charge $300/hour... from this point on. |
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itaewonguy
Joined: 25 Mar 2003
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| Posted: Thu Dec 25, 2008 3:57 am Post subject: |
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| seoulshock wrote: |
Okay, I charge $300/hour... from this point on. |
ahhahahah , thanks for the advice...
yes I hear you about the stock brokers not knowing shit! last time I took one of their advice I lost 5 grand in 2 months! and lucky I got out of that fund because It kept crashing, he was telling me to hang onto it, don't get emotionl etc.. I think he watched wallstreet one to many times and thought he was gordon gecko or something.. I got out and the stock crashed.. saved myself 25grand.. and cut my ties with that company..
now I realise its best to do your own homework, put your money to work for yourself, ask a lot of questions and read up as much as you can..
sure I cant predict the future of a stock.. but hey either can the broker!
its all gambling at the end of the day..
with most stocks trading 60% or more down in their value.
you think its a good time to buy stock and hold onto it for the long term for when they reach back at their peak? seems like we can make a killing when it corrects itself..
stocks at 10dollars which usually trade around 80 or 100 dollars..
or 4 dollar stocks which usually trade at 40 or 60 dollars..
a lot of these bargains out there.. |
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nolan
Joined: 13 Oct 2008
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| Posted: Thu Dec 25, 2008 5:19 pm Post subject: |
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Its NOT all gambling. It can be, but it shouldn't be! Grab a book on passive investing. Like mentioned before, do one of those silly online tests to figure out your loss tolerance and intended period of investment. Find a cheap trading site, safe bet is probably a self-directed account from your bank at home. Online discount brokerages are an option too. Use the quiz to figure out your proper asset allocation and chuck your money in low cost index funds.
Its actually dead simple and you cut out middlemen like the poster above who charges $300/hour and probably (not necessarily true in his case) won't beat the market over 10 years. |
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seoulshock
Joined: 12 Jul 2005
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| Posted: Tue Jul 21, 2009 3:56 am Post subject: |
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| nolan wrote: |
| chuck your money in low cost index funds. |
...which is what I stated earlier: "Now, if you're a long-term trader, and want this are your retirement nest-egg, then all I can say is, just give money to Vanguard or Fidelity and have them put it in a low-cost index fund. You don't need to 'trade' stocks..."
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| Its actually dead simple and you cut out middlemen like the poster above who charges $300/hour and probably (not necessarily true in his case) won't beat the market over 10 years. |
$300 hour not for stock investing, but financial planning. If a client can save a few thousand or a few million through proper planning, then $300 is nothing.
BTW, most mutual funds themselves won't beat the market over 10 years. Most financial advisers just choose mutual funds for their clients, so naturally they won't beat the market either. Unless of course, they choose the small % that have a proven long-term track record (I look for at least 10 years, low fees, low turnover, above average gains w/ lower risk).
Of course, you can just basically 'match' the market by getting the low cost index fund, but most people will never learn to do it on their own and will just have someone else take care of it for them, like an adviser. Of course, an adviser isn't necessarily going to put you in a low cost index fund because they need to earn a living as well. |
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rgv
Joined: 10 Oct 2008
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| Posted: Tue Jul 21, 2009 4:17 am Post subject: |
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http://www.fool.com/investing/basics/index.aspx - Lots of information on stocks, what they are, and even tips on how to read a balance sheet/etc.
http://vse.marketwatch.com/ - Virtual stock exchange. Don't just throw money at it. Make a few games w/ play money and invest in a few stocks/indexes to get your feet wet first. |
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crossmr
Joined: 22 Nov 2008
Location: Hwayangdong, Seoul
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| Posted: Tue Jul 21, 2009 5:14 am Post subject: |
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| Last time this was talked about someone linked to a site where you could do mock trades..it wasn't VSE though.. anyone remember what it was? I meant to bookmark iti...but apparently I forgot to. |
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Otherside
Joined: 06 Sep 2007
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| Posted: Tue Jul 21, 2009 7:58 am Post subject: |
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Only saw this thread now, great advice there SeoulShock.
I've been trading very successfully myself this year, also swing trading. Your technique of doubling your position whenever the price drops is interesting, but seems to create a huge amount of risk. I generally buy 100 shares, if it drops buy a 100 more, and maybe 100 more if it drops again.
The biggest lesson I've learnt so far is to minimise your losses, and with the doubling method, 1 bad call can kill you...if say you happened to be in General Motors.
But overall, your post was easily one of the most informative I've read on the topic (unfortunatly, I'm not American, so alot doesn't apply to me). I hope you'll be posting more. |
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