Stock market questions

no, not Delphi. The problem is that right now, there are a ton of "penny" stocks that should not be penny stocks. Sirius Radio, is one. Ford was almost a penny stock - down to $1.

Also, $875 is a big gamble. I like to stay in the $100 or less range. get one to go from $.05 to $.10 and i have double my cash.

This really isn't for everyone. I have my solid investments, as I have stated. My 401K is stock heavy, but has 20% in bonds. I am able to have that risk level due to being 31.

oh, and the auto company is Hayes Lemmers International Inc. They make wheels and 80% of their customer base is outside of the US auto market.

 

I think I'd stay away from Penny Stocks unless you know the company well. You can make a nice profit if you pick the right one. The problem is knowing which one that is. For every winner, there are a thousand losers. If you're going to do penny stocks, you'd probably want to consider that the equivalent of Vegas money.
http://www.fraudbureau.com/investor/101/article6.html

For your initial jump into the market, I'd recommend an index fund (e.g. a fund that tracks the S&P 500 or the Dow Jones Industrial Average). Most stock pickers can't beat the average return on the market in general. Once you've built up a nice portforlio, then set aside some money for playing in the penny stocks.

 

Don't know if I agree about Sirius. I'd not be surprised if they go the way of 8 track tapes. Ford, well maybe. They seem to be the only US company that has done a few things right and seeing what they are coming up with next, like the new Taurus which for once doesn't look like ass and is actually an attractive car, perhaps they'll be a company to do well when the economy turns around.

 

Sirius is a huge gamble for a really long play. it should be in the $1 - $2 range, but not much more. it was trading at $.05 and is now up to $.55. i missed that entry point.

I am a semi long holder. i don't hold for years and years. i hold till i make a decent profit - 20% - 30% or so - and then sell. profit is profit.

 

Invest in a quality fund managed by Vanguard or Fidelity.

 

If you are going to invest in the market, now is a great time. For all those that have and lost, "NO PAIN, NO GAIN". Do NOT sell your stocks now, that is the most stupid thing you could do.

 

I disagree with this. If you have the time and pay attention, you can play the swings of the market really well. I sold Citi at a huge profit. I will buy back with my original investment money when it hits a low again. If it never hits that low again, I have made a nice profit and will move on to the next. You never lose money when you sell for profit.

 

I think what Pster was referring to was not selling stocks at their lows. A lot of people who had invested say- the last several years- have sold recently which means they basically lost a crapload money. You lose nothing if you don't sell. Its just that the value of those stocks are less. But you still own the same number of shares. He also mentioned what I did, which was to use a fund manager like Fidelity or Vanguard. Again- not sexy, but consistent and you don't have to fool with it.

 

Precisely. By the way, my degree and profession is Finance....if you think you can beat the market by timing, you are kidding yourself. Read A Random Walk on Wallstreet.......impossible - and it's been proven statistically - to beat the market average over time......otherwise you are simply "lucky".

 

pster - how is entering at a low point and holding for a 20 - 30% gain timing the market? you may drop below your entry point and things may go much, much higher than your sell point, but you still make money.

 

Anyone that's interested in investing should read about Warren Buffet. Here is a little bio from the Wikipedia article:

Also of note: he does not own a cell phone, doesn't have a computer at his desk, and drives a Cadillac DTS.

 

Ya my uncle invested early and for the long term. Made some smart moves an a fortune. Got to retire very early to SoCal and spends much of his time traveling the world

 

I am not suggesting that you should not do this when you find stocks you think are undervalued, but over time, net/net, you will NOT do better than the market. If you did this enough times, you will not beat the market. It is just statistically impossible.

 

"The Millionaire Next Door" talks about many people similar to Buffet. 80% of them never owned a watch over $200. Never owned a suit over $250. Bought cars for $30k or less and always drove them till the doors fell off. Paid cash for as many things as possible., etc. Great book.

 

Yep! If you spend your money on toys and silly expensive cars, you will not become wealthy. I would rather save and drive and Tacoma than drive a Mercedes and pretend I'm wealthy. Look into how many Mercedes are actually purchased versus leased........VERY high lease rate because it is a lifestyle/vanity object.

 

Thanks everyone to contributing to a very informative and most importantly CIVIL discussion!

 

There aught to be a whole thread dedicated to this topic alone. I'm not saying that my Wife and I are perfect , but we save more than 50% of our incomes by living pretty frugally. A few things on the list includes:

1: We keep our vehicles a very long time. Both are Toyotas, both with over 200,000 miles each. Whatever, they still run fine. I know people who buy new cars every 4-5 years. In 20 years that's more than $100,000 just in cars. Also- learn how to repair your vehicles yourself. It isn't rocket science and you save a crapload of money

2: We rent, which makes sense where we live. We pay $1,200 a month. Buying a house of the same size in this location even now would be $550k or so, or approximately $3,200 a month on a 30 yr fixed. HUGE difference. Perhaps in other markets it makes sense to buy. Not here. Secondly, we share the house with another person, which cuts down the rent even more.

3: We eat in. If you figure an avg meal for two people today is around $30, that's $150 a week just if you eat dinner out every night. If you threw in lunch and coffee, add another $100-150. That's a lot of dough just for food.

4: Buy clothes at Goodwill. Most clothes I have are from Goodwill and half of them still had the tags from the store attached: they had never been worn.

5: Buy generic groceries. We go to grocery outlets and get no-name food.

6: Carpool. It makes sense for us: We work in the same area. We save $20 a week not having to pay the bridge toll plus we use half the gas.

7: Get movies and books from the library. We're lucky. There's a big library near us that gets new movies all the time. Cost to us: Zilch.

8: Get furniture and household goods from the street. We have nice stuff in our house, but almost all of it was thrown away on the street. That doesn't happen as much today, but a few years ago when people were throwing out their stuff in preparation to sell their house, I picked up practically new mowers, a few TV sets, a stereo, a Brazillian hardwood Coffee table, a couple of rugs, a Kitchen Aide mixer, and a whole crapload of other perectly good items.

9: Buy middle of the road or refurbished car parts. My truck has a lot of aftermarket remanufactured parts in it like the altenerator and starter motor. They work fine, cost a lot less and look the same anyway. 217,000 miles and still going.

10: Keep cell phones until your contract is up. In fact, my cell phone is 6 years old. The "replacement" free versions I got afterwards were crap and blew up after a few months each. So I'm keeping this one till' she blows... which hasn't happened yet.

11: Buy CD's from Amazon. Since nobody wants CDs anymore, you can get a new CD of any artist for $3-$4 each. Then you'll have a hard copy and upload the tracks to Itunes or something.

I could go on and on. But if you just make a conscious effort to save on everything you do, the nickel and dime stuff ads up.

 

DITTO. It's a state of mind that has greater power than one's "wants".

 

Also, if you forgo the "wants" now, you can afford much cooler "wants" later in life. I will have an exotic sports car one day. It will be used, but it will still be sweet. Only 30 years to go.