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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 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?
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.
You said the same thing 18 min ago.
People aren't listening.
You will get fucked if you follow stock market advice on a message board.
especially because you can have dividends (if you own stocks that pay them) reinvested in more shares of that company, which builds wealth and lowers your overall cost basis if you hold long term. I agree with the above advice: invest in what you know. Do research. Don't let the single day/week swings impact your investment mood. Here is a list of suggested stocks to do research on. They combine some conservative dividend payers with more speculative small caps. I don't recommend any of them for anyone, but I find them interesting and own them myself.
Apple.
Artificial Life (AILF)
McDonald's
Joe's Jeans (JOEZ)
City Telecom (CTEL)
Bank of America
Ebix Inc. (EBIX)
Conexant (CNXT)
Permian Basin Trust (PBT)
Astra Zenica (AZN)
If you don't have the time to do your own research, stick to mutual funds and indexes. Good luck.
Lol, I worked in a group that covered PBT for the past two years...
pays a great dividend, and has appreciated nicely too.
It wasn't under my direct coverage, so I'll refrain from providing any uninformed e-pinion. PBT was under a group that focused on E&P MLPs and Royalty Trusts, my coverage was midstream energy MLPs.
I just thought it's a funny coincidence that someone on MGo is invested in a fairly niche sector that I worked alongside of. Small world.
The space between your mattress and box spring or bedframe- great for stashing several thousand dollars in $20 bills. Use it.
I sold short on emo's MGoPoints and made a fortune.
financial advice from sports boards...
My advice:
-history always repeats itself
-oil
-this market tanks Jul/Aug
Here is what I am in right now:
BPT
PBT
DSX
SFL
GS
GG
DOW
History does NOT ALWAYS repeat itself
What about oil?
Why do you think this will happen?
Stock advice is like assholes everyone has one.
Go figure, bouje has an opinion too!
So when I see something say something fucking stupid sorry but I'm going to call them out on it so that people don't lose their ass and then blame it on my profession.
What do you mean? You are here defending your profession? I thought the OP was talking about buying/selling his own stocks online (presumably day trading considering his self-proclaimed OCD). What does that have to do with your profession?
If you want to call someone out for being stupid... have at it. Just don't pretend like the reputation of your pofession is at issue.
or when the market tanks people blame it on the professionals for "rigging the system and taking it on poor ole mom and pop". With all of the regulations that the government is trying to put on my profession yeah it kind of pisses me off when people take stupid advice. When you put on a trade it's your job it's your idea it's your position if you make or lose money it was your decision to put it on and you only have yourself to blame.
Your profession could obviously use more regulations. The financial markets are critical to the nation (like electricity), but the lack of rules/regulations means its players can destroy the stability of the future in the hopes of a short-term quick buck.
I think we would all be better off if the trading of derivatives (that have a huge effect on the economy) was regulated and if there were serious conflict of interest rules between banks and rating agencies. The CMBS "scandal" proves that, unchecked, the market will suffer from the lack of rules (that attempt to enforce seemingly intuitive principals, like not investing much in subprime loans, that get lost in the shuflle of bonus season.
If more regulations push the "wild west" winner take all aspects of the financial markets overseas....so be it.... then they can ruin those countries instead.
homes and only made like 60k a year. Why is no one pushing for the days when you had to have 20% down to buy a home, a certain credit score, so much debt/income and so much money in the bank.
You can say that it was all the financial industries fault for these crazy derivatives but really it was a host of problems within the government, society and in these companies and while a regulation of just the derivatives would probably not be a terrible idea it's not THE ONLY solution that needs to be done so that this doesn't happen again.
...just a necessary part of the solution. The most necessary.
People shouldn't have bought those homes either, but, from my point of view, I think the financial realities of home loans should be understood and appreciated a little more by the people trained in such matters and who enter into numerous loans. The borrowers obviously bear some blame and many lost their houses (which is a little worse than losing a job and/or bonus in a company). But, its clear the bankers definitely should have known better.
More blame falls on them, becuase they had more responsibility (as the backbone of the economy) and institutional knowledge.
(BTW - They use the discrepancy in "financial knowledge" to their advantage in the credit card arena by charing huge raes to stupid people....so they know there is not a level playing-field when it comes to financial intelligence.)
It was the governments job to say "ya you shouldn't be able to give this loan to these people". The whole "everyone in America should be able to afford their own home" was the undoing of the financial markets and the housing crisis in general.
As someone who was also one of these douchebags who sold loans to people (that's why I quit was because it was unethical) they don't care. It's like trying to tell a used car salesman not to be an asshole or a realtor. They are all slimey pieces of shit who only care about making money. Therefore since they are not looking out for the best interests of their clients in most cases it is the governments job to protect them and when they laxed the requirements for purchasing a home and threw shit out the window is when the housing market failed.
If the market tanks again, oil is a horrible short term investment. Volatility with the peaking of oil production is going to be the norm. Long term investments on the upstream side might have some payoff, but to minimize risks you need to minimize oil investments that have a large downstream refining, marketing, and trading sectors. Exploration and deepwater production stocks should be a decent 10 year bet, but beyond that, once global production is down 10-15% and the middle east has gone to shit because they have cannibalized their export market and disrupted their domestic subsidies, well ...
don't take advice from internet message boards.
You just say oil? Do you want to own oil or short oil?
Why do you think it tanks in July/August? (I personally think that it will tank when they raise interest rates)
And to that list of ticker symbols what the hell does "in" mean? Long, short, options?
Anyone can say Oil is the thing to be in! But if they don't say which way then they are always right.
I have to say that most of the advice here was pretty terrible.
1. If you think that you know something for sure you are wrong. Trading is like any other game of probability and there are no sure things there are always fatty tails (just ask the LTCM guys)
2. I agree with everyone that said DO NOT take advice from message boards and honestly why should you listen to anyone on here?
3. You need to come up with a system that you believe will minimize your losses, maximize your gains, while preserving capital, which gives you an edge on the market (whether that edge be 55/45 or 70/30).
4. If you have never traded before you should start out with play money and just bs around and see how you do on a simulator and develop a strategy and risk controls.
5. No matter how sure of a thing that something seems always have stops and an idea of when to get out. Capital preservation is the most important thing.
6. Finally know your time frame. If you're a professional who works during the day, day-trading is probably not for you as it requires 100% attention to the market. So then besides day trading there is swing trading and longer term investing.
7. Finally again, you need to determine do you want to base your decisions on: fundamentals, technicals, price action (again it all comes back to having a system)
8. Remember the time old adage that says (with my corrections):
Bulls make money (most of the time)
Bears make money (once a few years but they make shit tons)
Pigs get slaughtered
If you'd like to know what books or what not to read to get you started on this stuff just feel free to ask away.
Actually I'd like to hear some good options books since that is your area. I've looked into them before and have confidence in what I learned, but more education never hurts.
But the best options book from what I've heard is:
Option Volatility & Pricing: Advanced Trading Strategies and Techniques
and the "bible" for all of the varying strategies is:
Options as a Strategic Investment
You won't need any other books besides those 2.
for anyone with spare cash but no sense. Here is all you need to know:
- Get diversified funds with low fees.
- Do not hire any professionals to manage your money; the fees will kill you (no offense to any in the industry)
- If you MUST buy individual stocks rather than ETFs or mutual funds (not recommended), you have to buy at least 50 different stocks across all industries/sectors to achieve any sort of diversity to lower your risk. The fees associated with doing this are high, especially in the middle (end? beginning? who knows) of a recession.
- Learn to HOLD your investments. Constantly buying and selling is for people that know what they are doing and of course bring higher transaction costs with them. Investing should be a long term strategy.
- Assuming the investments are made with actual disposable income (i.e., not the college fund), remember that the older you are the less risk you can afford. Older = less stocks, more bonds and other instruments with less risky (and just less) rates of return.
- If it sounds too good to be true, it is. Do not take any advice from anyone WRT any particular investment.
EDIT
- almost forgot, if you aren't maxing out your Roth/401(k) you shouldn't even be thinking about other investments. The tax deferral benefits are incredible. Again, seek funds with low fees and good diversity.
Max out only to the point of the match.
401K is captive and you are limited in choices and fee structures.
Roll over any 401K to an IRA immediately for control and costs purposes when you leave a company.
If you don't get a match don't do a 401K.......RothIRA is much preferred.
But for people with decent jobs or otherwise in high tax brackets, 401(k) >>>>> Roth. Most people are in a lower tax bracket when they start receiving distributions at retirement age, thus you want to be taxed then, not now. 401(k) is subject to the risk of tax rates increasing overall in the future, but will they end up higher than the brackets you are in now? Roths are subject to the risk that something will happen and investments will lose their tax free distribution status, though political pressures would likely prevent something like this from happening.
Tax bracket: If you are pulling from 401K funds, +SS plus non qualified accounts, you are going to be in a much higher tax bracket. For the uber wealthy there are different options.
You now have no tax deductions: kids, less income = less giving, mtg interest is gone in most cases.
You are now going to also be paying taxes on SS income (85%). With Roth's you will not be jumping up tax brackets on money pulled from the account and may be able to pay less taxes on SS income as well.
No one has ever told me they thought taxes were going to be lower 20 years from now.
Roths have the same risk as a 401K but if you control the Roth you have more control over the investment and the fees.
Every client is different but you have to address these issues.
In the end, it is what you keep not what you make.
I've never heard anyone tell me they expect to be in the same or higher tax bracket at retirement.
The bottom line is that--like I said--it is different for everybody. While I am normally precluded from rolling over to a Roth, I'm able to this year thanks to a tax law change. I will not make this election.
Invest heavily in BARWIS stock. Their investments in chocolate milk and wolf food will pay off handsomely.
If you want to satisfy your OCD/Stock market itch, use play money. I used to do updown.com a lot. You can do everything you can in real life, without the risk (and of course, the return). Experiment there, and be smarter with your real money.
Or don't listen to me. I'm just a sophomore at Ross. I haven't even taken finance yet.
If you are planning to trade a lot and have a decent-sized bank roll of "Vegas money" (money you are willing to risk), then you might look into Trade Station. The cost to trade is dirt cheap. It's like being a professional trader. You can program algorithms to signal trading opportunities or screen for stocks. You can even automate your trades by letting the computer execute your trading program (you may not want to do this unless your very confident that your strategy works).
