Playing the stock market

[Dani]

Stupid lil me wanted to get involved in the stock market so I bought a few shares of RedHat and a few shares of Sun Microsystems. (they are each at ~$5)

It's been less than a week and already I'm losing money ... Think there's any hope for me? (Note to self: pretty sure Sun at least will come back up there!)

[Tekmaven]

Your supposed to consult someone that watches CNBC 24/7 (me!!!) before you buy stock!

[Dani]

So what do ya think, CNBC expert? lol

[aeinstein]

pity those who shelled $45-$50+ when RedHat ipo'd!!! LOL!!! ur young, i'd hold onto it llllloooooonnnnnnnggggggg term. odds are that if u shelled low$$$ on it 2 begin w/ u'll make it back & then some - bwtik! ;D

[Dani]

Stupid lil me ...

OK OK I take that back. ;D Not so stupid after all! ;)

[Young Teck 06]

I have a few shares at 16 years old, I have some of Level3, couple Microsoft and Nike, just put in my Nike shares the other day and made $15.00 more, so I went and got Sony, since they just put out the PSP, hopefully sales will dedicate to my much larger sum.

[Libertate]

What are your methods of selecting stocks?

I love technical analysis.

[Young Teck 06]

'Eh I am more for the same field, technical type things, I also try and purchase other types of things, most of the NYSE myself I would say if technically constructed of stocks.

[Dani]

I'm not much into stocks. But when I see a company I'm familiar with (a tech company, of course) introducing a new product, buying out smaller companies, etc. then I'll investigate and possibly buy.

[Young Teck 06]

I just do it to get some extra funds in my pocket and some extra funding in for my store, never works though, just cashed out everything earlier yesterday. I'll probably buy some more Nike later on in a month or so or wait until this summer when businesses start booming.

[Libertate]

I was refering to technical analysis of stocks verses fundamental analysis.

Technical analysis uses mathematical equation(s) using historical numerical data (almost always only price & volume), and attempts to predict the stocks direction, or future price. Technical analysts believe that anything and everything there is to be publicly & legally known (and some hidden knowledge too) about a stock is already in the price and volume, therefore theoretically this should work.

Fundamentalists believe that reviewal of financial documents, price to earnings, customer relations, market, sector, industry, unions, government regulations, etc. need to be reviewed and taken into consideration, and a subjective decision is made.

Majority of Wall Street purports to be fundamental analysts. Truth is, most major sell side brokers have computers that pull triggers for buy and sell actions, humans never see... I know... I wrote some of them :mrgreen:

As for picking tech industry stocks, I shy away from pegging myself to tech despite my background in tech. I am afraid to get enamoured by something just because I think it is cool and exciting...

I use some basic fundamental analysis to narrow down the number of stocks, then run it through my trusty little "black box". Spits out buy and sell signals, and then I go from there. Very methodical, and I stick to it.

[Young Teck 06]

Oh, alright, sorry, never caught onto what your real question was and HEY, I just learned something. I would have to say since the fundamental sounds more the safe way to play it, I'd have to be a fundamentalist, with all the reviews of past financial stocking and such, so okay.

[ramprage]

Adobe has just bought Macromedia for 3.4 billion, you might want to consider Adobe :)

[Young Teck 06]

Already am about to, just need to contact Ameritrade and see how things are coming along with the finding of the missing tape, believe it or not, they informed me my customer information was on that via my backup email.

I told them I'd create a new one, they said they couldn't do that so IDK.

[Libertate]

Wait a minute! :evil: you just said you perfer fundamental to technical! You can't sit on the fence buddy! :lol: If you play fundamental, you hold on, and do long term - no quick (a la ADBE) buck pal! You need to hold on to your stocks for 10 years, and make sure you get all those little dividents reinvested...

I personally would not touch ADBE and MACR with a 10' pole any more...

The smart money is already done, the only person making anything there is going to be the brokers.

If you take a look at both of the charts, you will see they started moving on the 5th of April...ADBE down, and MACR going up. That is when the people in the know started "playing" - but the volume would not have given it away...

On the 15th, they both go really crazy, when the street gets a wind of it. (tell me if that is not inside trading, eh?!) On the 18th it is announced.

The chance that either will continue on their direction after 15 days, is very very unlikely...

So, technical analysis. A fundamental analyst would have NEVER have noticed this on time. Hell, they won't know about it till end of the quarter when the 10Ks and 10Qs are filed! :mrgreen:

In technical analysis, a simple scan with MA would gone nuts on the night of 15th, and (if I still had money) I would have dumped everything into MACR. A more complex tool would have set bells off (and it did for all the street brokers), paged you, called your mother to reach you, sent you a fax, and filled your car just so you can make the trade...

ALL the information -including insider trading, the street brokers getting wind of the action, etc. ALL of it was in the price and volume of the stocks.

THAT is why I LOVE technical analysis. :cheesy:

[Young Teck 06]

Well really, I realize that I am fundamental and the technical analysis you made provides to me that maybe it isn't such the good idea I was thinking about.

I was thinking of maybe getting ADBE because of its acquisition, but over the last few days I haven't seen much improvement (as you also provided that ADBE down, MACR is up right now.)

But anyway, Ameritrade got back to me and end up finding my information on one of the three of the four missing tapes that were recovered, so basically I am back and ready to go. To be honest, yes, I am going to try and take maybe a risk at Adobe if it at all goes up, but things aren't looking up right now.

I want to try Forex at the same time so that I can get acquainted with foreign currency exchanging and such.

[zeroth]

Although I don´t play the market anymore (too much time involved to do it right) I can tell you a method that will help you in decisions. You need to have more than one process so that they complement each other.

Go to an analysis group web page that provides stock charts, which you can customize as to length of graph, etc., and follow the stock that you interested in with three other similar stocks overlaid. An old example of this was back when IBM PC came out and was using PC-DOS. If you overlaid these two graphs (with at least two others that were related) you could see the trends. It´s actually possible to predict with this method when the tops and bottoms will come. It´s a dangerous game to pick tops and bottoms but it´s REAL profitable if you can do it.

Disclaimer: You can always get burned in the stock market, that´s why I recommend more than one indicator process for any decision. But this one does work most of the time. Two requirements are that you know the industry that you are dealing with and know the relationships between the companies that you are comparing.

Good luck to all...

[Young Teck 06]

That sounds like a great piece of useful information, I never though of anything like that. So you mean like to apply 2 things that are like, work together. Not sure, but maybe something like YHOO to GOOG (which you probably already know is Yahoo! and Google.) I am understanding what your saying, just cannot match anything up right.

I will check the analysis sites and apply this form of method the next time I trade and see what results are generated. Thanks again.

[zeroth]

So you mean like to apply 2 things that are like, work together. Not sure, but maybe something like YHOO to GOOG (which you probably already know is Yahoo! and Google.) I am understanding what your saying, just cannot match anything up right.

Yes, you´ve got the general idea. I would not do less than four. I can´t think of the site I used to do this but it was one of the analysis sites with graphs, or chart analysis and it was free.

In any case, you can google up a site that works. What you are looking for is one that lets you overlay the graphs of the companies that you are interested in on the same graph. You can change the chart periods and other features to see the TRENDS, which is what you are looking for. I remember doing one with Microsoft, IBM, Cisco and one other, to do trades on the tops and bottoms of Microsoft. MS doesn´t work the same anymore because the market conditions have changed but back then it was a pretty steady climber that would repeat the ups and downs to the extent I was able to read the overlaid graphs, with my own interpretation of the market, and do some pretty accurate predictions on when to trade.

It really wasn´t all that hard, although I repeat the warning (and I´m certain you are already aware of it) that this type of trade is seriously risky. If you guess wrong, you loss big time. (Just trying to protect those that night read this that are less knowledgable about stocks - it´s just legal bookmaking, after all (I´m not kidding, it works exactly the same way.)

[Libertate]

I would say this is good if I am investing in a sector fund, but not on an individual stock.

The scenarios, with different results. Let's take Google & Yahoo.

Google is selected as the Federal Government's official Search Engine.
What happens to Google's price?
What happens to Yahoo's price?

A new Gartner research document comes out and indicates that Google & Yahoo are the best and only places to invest for online marketing.
What happens to Google's price?
What happens to Yahoo's price?

So the prices are not tied together per se. I can look at the sector, or industry, but individuals compared would create a havoc, at least in my mind.

I would have to keep track of all activities in the public to make sure the divergence is not from a negative impact on my stock, but from a positive impact on the "baseline" stocks.

I venture to say that you got lucky with Microsoft, IBM, Cisco combo. Microsoft and IBM slightly overlap, but Cisco is clearly a separate industry.

Maybe overlaping with the industry or sector itself would be a tool. It would show how well the stock is doing amongst it's peers.

On the road I use bigcharts dot com.

[Young Teck 06]

Thanks for the link to the bigcharts.com and I am checking them out right now at this moment to see how well tehey are of factor. Does anybody know which would be the overall best, Forex or NYSE? I really need some help because I want to and would like to invest in something that could get easy profits back but with a small risk challenge, gotta love challenges.

[Libertate]

Thanks for the link to the bigcharts.com and I am checking them out right now at this moment to see how well tehey are of factor. Does anybody know which would be the overall best, Forex or NYSE? I really need some help because I want to and would like to invest in something that could get easy profits back but with a small risk challenge, gotta love challenges.

You want to make a ton of money, with small risk and in a very short time. Hmmm... Win the lottery? :lol:

I suggest you do not get involved with Forex, unless you truly understand the mechanics of it.

To get some money invest in long term, "blue chip" stocks with dividends. Reinvest the dividend payments into stocks.

"Unfortunatelly", for this you will have to use fundamental analysis. And it will take you about 7 years to double your money. But the risks are percieved to be lower then with a NASDAQ stocks. Of course, in your case I would still use NASDAQ because NASDAQ is a virtual floor. i.e. everything is computerized, and automated.

There is a method, that seem to have worked very very well over the years, and involves investing in blue chips. It is called the "Dogs of the Dow". Search for it. It is an excellent "secure" way to invest, yet get better returns then most direct blue chip investment.

[zeroth]

I would say this is good if I am investing in a sector fund, but not on an individual stock.

The scenarios, with different results. Let's take Google & Yahoo.

Google is selected as the Federal Government's official Search Engine.
What happens to Google's price?
What happens to Yahoo's price?

A new Gartner research document comes out and indicates that Google & Yahoo are the best and only places to invest for online marketing.
What happens to Google's price?
What happens to Yahoo's price?

So the prices are not tied together per se. I can look at the sector, or industry, but individuals compared would create a havoc, at least in my mind.

I would have to keep track of all activities in the public to make sure the divergence is not from a negative impact on my stock, but from a positive impact on the "baseline" stocks.

I venture to say that you got lucky with Microsoft, IBM, Cisco combo. Microsoft and IBM slightly overlap, but Cisco is clearly a separate industry.

You´re right to a certain point and I do see you point.

However, as I said when I explained the technique, you can´t just use this one factor to make your decision. It´s very important to know how the industry is moving around your stock to make the pick.

Re-consider the Cisco factor in my example. Microsoft stock (at least at that time) responded directly to sales of Windows. Cisco sales were an indicator of number of PCs sold, therefore an indicator of how many copies of Windows were sold. As I said, it wouldn´t be applicable now, only at that point.

You can´t use this in isolation but only as a part of an overall strategy to give you an indication if you are thinking right. But it is valuable as a piece of the puzzle...

[Young Teck 06]

Alright, I am really interested in fundamental analysis like Liberate said, but bad as it really is, I am really scared of the "7 year wait" :P So yeah.

I am really thinking about the blue chip idea and maybe doing a little analysis of my own and creating a table and a review summary from trading 3 months of Forex and then 3 months of NYSE to see where my real choice would be best at in.

The really bad part is that I am not trying to lose the money and all for the fact of the matter is that losing money reduces me on getting more money for further testing of the Forex market and NYSE market.

Excuse me, but yes I am not the "smart genie" for stock market and forex, as I am still learning the mechanics of Forex. I never heard of the "Dogs of the Dow" and I will research on it more.

To be really complimentive, I am thinking about taking the "layers method" if you could explain that a little more.

Also, what are some good sites for beginners because even though I sound like I know my stock market, I am still somewhat lost. I try to learn from the Investorpedia.com simulator and at the same time, what are the best stock brokers online? I like ETrade and Ameritrade mostly, but what are some other good ones and can you please explain the top notch of them.

[rouzbie]

i registered just to post on this thread. this is funny!

[Young Teck 06]

Makes a lot of sense rouzbie, and why did you do something like that for?

[zeroth]

We´re glad to have such a knowledgable advisor to this thread but I don´t understand what you find funny in it. Can you please share, rouzbie, what you find amusing?

[Young Teck 06]

I'd personally like to know what he finds so amusing too, I mean, what is so hilarious about talking about the stock market.

[zeroth]

There are those that believe themselves to be so knowledgable about stocks that they find anyone else´s opinions and methods amusing. And so, they amuse themselves by believing their own BS.

Stock brokers are the worst in this regard. I´ll repeat with details my statement about the stock market being legal bookmaking:

Bookies take illegal bets (except in Vegas, where it´s legal) on both sides of a football game (for example). They then lay off the excess bets on the larger side to other bookies so that they have equal betting on both sides and make the money on the loser´s fees to them. Stock brokers do exactly the same thing, except they take fees from both sides when they make trades.

The only guys laughing about this business are the ones that don´t play, use their industry knowledge intelligently or get lucky. That´s why the majority of stock brokers don´t purchase stock (bet) even though they have no problem with telling their clients (suckers) what to purchase. The old joke: if they really knew that the stuff they were telling clients was accurate, they wouldn´t be giving advice, they would be rich...

[Young Teck 06]

Very well put, enjoyed that post and the reading was real, thanks Z