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I was wondering if people had any advice about online trading. I've got a 401k and 529 set up, so I'm not trying to establish a retirement fund. I just started an account on sharebuilder.com and I guess I'm looking for a way to make some money while also satisfying my OCD needs of checking something 100 times per day. Figured playing the market may be a good way to accomplish both.
Any advice would be much appreciated.
Look at JP Morgan, BOA, Citi etc. Do not put in anything you need to have access to within the next 2 (maybe even 3 years).
Energy stocks (like Exxon) are a good buy with the impending recovery.
Cosigned. Bank stocks are very undervalued right now.
As far as online trading, I use ScotTrade. Fees are pretty reasonable.
i.e 3-5 years AIG is a must have (It is a 2* recruit with HUGE upside :0 )
Make sure you have a diversified portfolio.
Uh, really?
AIG was 1.50 two years ago. Now it is at 40 dollars per share. For you to make the same return that you evidently missed, AIG would need to jump to over 1065 dollars per share.
The time to buy into the market, if you were looking for battered stocks, was a year ago, not now.
AIG actually did a 20-1 reverse split in June '09, so 2 years ago it was trading at like 1400ish a share.
That said, AIG is a piece of crap owned by the gov't. And your last point is spot on. Very few things are cheap anymore (at least for rational reasons)
Thanks for the clarification on the reverse split. I wasn't aware of that.
Yeah, they did it to increase liquidity since it was trading so low.
What's funny is that most stock charts show a 1 year history when you click on it initially. Do it for AIG, doesn't look outrageous... Then make it a 3 year chart. Death!
I agree on AIG being a cheap piece of shit.
Considering that they accepted more TARP money in May 2009, the company is currently waiting for markets to rebound enough for a massive asset selloff. Anyone buying and selling AIG stock is employing the same faulty logic that got us into this mess in the first place.
Because high inflation is likely on the horizon, IMO the best novice investment currently is income producing real estate. Prices are still relatively low, and people can buy at today's prices and pay it off over time with devalued dollars. Almost too good of an opportunity to pass up, especially if you purchase in a lower tax area with a robust rental market.
Yes, I realize that. However, I was referring to the logic behind such investments. Housing prices seem to have bottomed, and my theory is to buy and hold for a long period of time while receiving a steady revenue stream.
With AIG, the company has taken on so much debt that it will have to sell assets in order to repay. AIG shares could make money in the long run, but at this point that bet would be based on other investors driving up share prices and not actually based on the overall value of the company.
I bought AIG jr. subordinated debentures due 2067 at $3/per (face value $25), now trading at $18.32 to yield 8.8%. They're sitting in front of the US treasury's investment in the capital structure, so there's a nice taxpayer backstop behind them. I figure they're good for another $5-7 of appreciation, plus the 6.45% coupon.
I've also bought a number of bank preferred stocks below liquidation preference. They got caught in the downdraft but are generally money good with solid yields.
PNC Bank has some 9 7/8% pref, and US Bank has 7 7/8% pref, both healthy banks. Now trading above liq pref, but still some juicy yields.
Would you mind helping me understand some of the subtleties of preferred shares? I understand most of the concepts from financial classes I've taken, but I have a hard time taking a prospectus and translating it into terms I can understand.
Preferred shares offer (typically) a superior position in the capital structure vs common shares, coupled with a (typically) mandatory dividend payment of X% and a specific liquidation preference (basically a face value).
In short, if the company goes into the toilet, you're ahead of common shareholders in the recovery waterfall - you get paid your full liquidation preference before they get a single penny of value. Plus, you get current income - a defined, usually mandatory dividend stream which (usually) must be paid in full before common shareholders can get a penny of dividends.
Pref stock usually comes in retail and institutional denominations - face/liquidation preference of $25-100 per share for retail, and $1,000-1,000,000 for institutional investors.
Pref has some of the attributes of fixed income (higher up in the cap structure, defined dividend/cash flow stream), but also some elements of common equity - e.g. either explicit or contingent board representation (usually contingent on failure to pay required dividends in full).
Basically, it gets you current income/cash flow while also offering some equity upside.
Pref is a great investment when you think a company is getting unfairly pounded in the market. Usually the pref falls with the common (especially if it's retail pref), even though it's senior in the cap structure and its dividends may not be under threat.
In the case of financial institutions, equity capitalization rules (fractional reserve requirements, etc.) force them to carry a larger equity cushion than in many other industries, so you end up with multiple tranches of hybrid capital that get full or partial equity credit for capital adequacy calculations. These tranches usually pay pretty good dividend rates (e.g. PNC's 9.875% preferred).
If you can buy them below liquidation preference, the cash flow is the same, but the effective yield is higher (you're buying the same cash flow stream at a discount, thus enhancing the yield), plus you get the prospect of absolute return on the trading price of the pref itself. For example: I bought PNC 9.875% pref at $12, it's now trading at $28 or so - thus I got absolute return of $16 per share, plus I still get the 9.875% dividend on the $25 face (just under $2.50 per year per share - for an effective yield of 20%+ - $2.50 on $12 cost basis).
If you play it right, it's a great investment.
penny stocks, they are fools gold. at least that is what my econ teacher said.
Very very few beat the market with any consistency. Build a market-diversified portfolio, along with bonds, foreign currencies, and commodities. Don't make the mistake of thinking you are smarter than the market.
Euro's due for a rally
You really should listen to NEPrep (whose advice is similar to that of Warren Buffett's, fwiw). Professionals spend their lives trying to pick stocks to beat the S&P index and very few do it consistently. Buy an index fund. Trust me - if you don't heed this advice, there is a very good chance (much better than 50%) that you will not only do worse than the S&P 500 index over time, but you will waste a lot of time and aggravation doing it.
Citibank and let it ride up to $10....
Don't get obsessed with your holdings. They'll go up, they'll go down. If the reasons you bought the stock are still true, ignore the occasional 3% dip.
Don't fall for stupid stuff... like thinking stock splits make you rich, or the actual dollar value of a stock means something.
Do your research. Stick to it.
Do find good values. Do find good "stories".
Do invest in what you know.
Don't listen to analysts.
Trade exchange-traded funds.
Very liquid and industry or market based.
You can long or short.
Example: go long financial short real estate
Trading on one individual company is very risky. One piece of bad news can shave 30% or more or they could halt trading on the company and you lose everything.
I agree with ETFs 100% for inexperienced investors. If you have OCD then you should not invest as transaction fees and taxes will eat away any short term profits that you may realize on certain trades.
Set up monthly withdrawals from your checking account and buy an ETF and just forget about it. Picking individual stocks is not an easy thing to do and while you are seeing many whopping returns this last year - that ship has sailed. VCI is a local example, look at a 2 year chart and see what could have been.
(I work in Asset Management for a reputable firm)
Wooo! Fellow NYC UM fan working in financial services!
Seeing your posts below I figured you were in the industry. The only advice I really think the OP should listen to would be ETFs, proper diversification and DO NOT THINK that you can time the market. All of those people that bought Citi at $20?!?!? a couple of years ago thought they had a for sure thing, learn from their mistakes.
Dollar cost averaging is where it is at and just start sacking funds away in low cost ETFs and stay diversified.
Where are you at? I was with Citi for two years, and heading over to SIG now.
Fortunately I think I work for the best on the street as far as stability is concerned. I worked in an office in Detroit 2 years ago and then moved to NYC during the market meltdown to keep my job. From what I read we came out of this the least affected, but many changes have been made over the past 2 years.
I was able to attend a seminar during college where Jamie presented, he was phenomenal. Best speech by far, better than Mack and O'Neil and Fink and everyone else. I love JPM, my buddy just joined the metals & mining team there. Another buddy from college went straight into JPM Asset Management. She loves it.
In all seriousness, selling Domino's might be a good idea.
I was just thinking about how we need a thread on $$$. Literally.
Anyways, what makes people think bank stocks are undervalued? To me, it seems like there's still uncertainty and mistrust as to their holdings, so a bit of a discount might be justified. Also, we'll probably be seeing rate hikes in the coming months.
But I love discussing this stuff.
Anyone here good with preferred shares?
I would avoid preferred shares until seeing what Congress does with the Capital Gains rate for dividends.
Be very careful. Many professional money managers, those folks who handle multi-million dollar portfolios, believe, as I do, that the market is much higher than it should be - oversold. Technical indicators show many stocks as being very highly priced. Furthermore, there is often a substantial correction which occurs in markets of the type we have just experienced, and the correction has not yet occurred.
With the housing market still in crisis and staying there for at least another year and with effective unemployment pushing 17%, I'd be cautious and invest conservatively. As NEPrep noted, diversity is very important.
The market is overbought - not oversold if you think its too high...
You are absolutely right - brain fart.
Buy low, sell high.
(I'm a genius)
and many individual stocks are pushing highs, I would wait for another crumble, maybe buy some specific funds that deal with banks or latin am. imax is really hot now b/c of the whole 3D craze, apple is hot, baidu is pretty hot not sure if it will go down, some bank stocks are good and visa and mc will always be good b/c we spend what we don't have.
Sorry, I can't condone on-line gambling... or gambling of any kind really. The institutional players/house always win and the little guy just drinks beer and looks stupid while they slowly take his money and fool him into thinking that losing money is "fun."
Day trading (as opposed to long-term investing) is just that.... gambling. Plus, you probably know less about the companies you gamble on than the sports teams you would bet on. If anything, you are just providing revenue for the truly informed and/or "microsecond trading" professionals.
You really think you have any shot at "making money" on the outside looking in?
If you are going to throw your money away, look at spending it on club level seats for Michigan football or maybe on a trip to our bowl game this year.
The truly informed are fewer than you think. Making your money as a financial analyst has more to do with being able to sell your services than it does with knowing the market.
How is premium Michigan seating or seeing our bowl game throwing money away?
I meant it as an alternative to throwing your money away.
I have repeatedly made the argument to my wife that such expenses are an excellent investmant option.
You will get fucked if you follow stock market advice on a message board.
That's the best stock market advice you'll ever get. Professional advice (either books or paid consultants) and index funds are all amateurs should get involved with.
Outside of those sources of information you'll probably do better and have more fun in Vegas.
Edit: CG beat me, but I'll leave this since I included a bit more but he's correct.
I agree with books, but financial consultants can be very successful and know squat about the market. If you get one be on top of them, do your homework, question their advice.
Who needs the stock market, i won $70 playing Black Jack. Woohoo!
you do anything else, buy this book and read it -
http://www.amazon.com/Random-Street-Completely-Revised-Updated/dp/039305...
Frozen Concentrated Orange Juice
if you can get the loan
investing in canada is something to consider - especially if you think commodities are going to gain value. i would talk to someone about the currency situation first though, to protect your investment vs. higher CDN dollar.
as far as message boards, i agree with the comments above, but do think with some research and education it is definitely more beneficial than pure gambling IMO.
"to protect your investment vs. higher CDN dollar."
I think it is 1.005 to 1 last time I checked so it isn't much higher anymore...
#2 - you are correct, but some analysts are saying that it could hit 1.05-1.10 by mid-summer
You will get fucked if you follow stock market advice on a message board.
