Investing

Starting in Stocks

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  • Jul 10th, 2012 10:44 am
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Nov 26, 2005
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heroviper wrote:
Jun 22nd, 2012 7:21 pm
With $1,000 I will say you better take a mid to long term position.
In my experience, day trade with small fund will end up with nothing left in your pocket. (commission, emotion, gamble behaviour...etc, will just destroy you completely)
unless op lose all 1000 in 1 shot (options) I dont see it as a waste even he lose most of it in say 6 months. it is important to get the feeling of trading. there is no place to learn how to control emotion elsewhere. it is an expensive learning process; for $1000 it is cheap. it is better than learning how to trade with 1million on hand lol.
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Nov 26, 2005
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angelok wrote:
Jun 23rd, 2012 11:47 am
Forget about trading. it's a zero sum game.

Buy companies that pay and grow their dividends, add to your portfolio on a regular basis and always re-invest your dividends. Think long term.
the odds actually favor retails, considering most mutual funds, pension plan, etc lose money...
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Aug 28, 2010
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ccyk wrote:
Jun 29th, 2012 4:06 am
too many lazy or less intelligent people who fail to do so say impossible. at least give yourself a try.
Too many people who have read all of the studies that say your chances of doing it successfully in the long term is extremely small. The studies are all exceptionally clear. Just because you don't want to believe the science, doesn't make the science any less true.

A better approach is to study ETF and kick out those obvious losers and buy the rest stocks to beat etf.
The studies are clear that doesn't work.

ccyk wrote:
Jun 29th, 2012 4:12 am
the odds actually favor retails, considering most mutual funds, pension plan, etc lose money...
The studies are extremely clear that in the long term nearly all traders underperform the market. So no, the odds don't favour retail investors.


ccyk wrote:
Jun 29th, 2012 4:11 am
it is important to get the feeling of trading.
Why? It's clear for the vast majority of people this is a horrible way to invest in the long term. So why bother learning how to do it?
[OP]
Newbie
Jun 20, 2012
29 posts
4 upvotes
Its good to see no one agrees on anything! Always learn the most from that sort of conversation.

I have a couple questions if someone wouldnt mind answering them.
1) Who does the after hours trading? Or does the price change on stocks from non-trading related things overnight. Just looking at the TSX right now and I see a huge jump from closing yesterday. I knew this happened, but could someone tell me the cause?

2) Kind of a continuation from #1. What exactly changes the stock price. And I don't mean "what makes a stock go up and down" in the long term sense. Throughout the day the thousands of tiny adjustments, what is actually casuing them? Does each stock bought and sold raise and lower the price by some amount? Or is there two guys out there somewhere baratering over a price, representing me and every other person at my broker who just hit the sell or buy button?

3) I think I already know the answer to this one, but the large index's I could not even buy into with my $1000, correct? TSX example again, one slice would cost me 11k?

Thanks again guys.
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Jan 4, 2009
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For me, investing in stocks is like playing golf.

You'll get an innumerable number of different opinions and sugestions from people on how to play. Some will take expensive lessons, spend all day at it and show nothing for their efforts. Others just have a natural ability. The professionals will flaunt their latest techniques, trying to convince the masses to follow their lead. Then you get the people who brag about their latest birdie, while conveniently forgeting about all the triple bogies they had last week. Most end up doing average at best.

In the end, there's a hundred different ways to play the game and still get a good score...or a bad score. But you need to find your own swing, and keep playing because you enjoy it.
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Sauerkraut wrote:
Jun 29th, 2012 12:17 pm
But you need to find your own swing, and keep playing because you enjoy it.
I see no reason to enjoy investing. I see it as the same thing as paying my bills or vacuuming the carpet. It's just something I need to do.

I invest to hopefully ensure I have a comfortable retirement. Not for entertainment value.


I passively invest because all of the studies are quite clear this is the best way to invest. And passive investing is boring. But it's also doesn't take much time. Which leaves me a lot of time to do things I actually enjoy.
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FunSave22 wrote:
Jun 29th, 2012 1:08 pm
I passively invest because all of the studies are quite clear this is the best way to invest
Well I'm glad you cleared that up for me. Didn't know it was the "golden rule"
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Sauerkraut wrote:
Jun 29th, 2012 1:24 pm
Well I'm glad you cleared that up for me. Didn't know it was the "golden rule"
If you know of a study that says otherwise, please post it. I expect many of us would be interested.

As far as I know, all of the academic studies are exceptionally clear.
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Sep 12, 2004
516 posts
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North York, Toronto
Sauerkraut wrote:
Jun 29th, 2012 12:17 pm
For me, investing in stocks is like playing golf.

You'll get an innumerable number of different opinions and sugestions from people on how to play. Some will take expensive lessons, spend all day at it and show nothing for their efforts. Others just have a natural ability. The professionals will flaunt their latest techniques, trying to convince the masses to follow their lead. Then you get the people who brag about their latest birdie, while conveniently forgeting about all the triple bogies they had last week. Most end up doing average at best.

In the end, there's a hundred different ways to play the game and still get a good score...or a bad score. But you need to find your own swing, and keep playing because you enjoy it.
Well put, find your own swing. The movie The Legend of Bagger Vance succinctly describes the process. Here is a scene from the movie. To add to that, " You can jump into Ayrton Senna’s car (deceased legendary Formula 1 racer) and use his exact seat adjustment, mirror positions, helmet and everything else. The results will not be the same even if Ayrton talked you through it all. You have to make it your own. You have to come with the right attitude."

I can offer this to new traders:
1. Take your time and read as much as possible on the subject
2. Find a mentor, see if their style jives with yours
3. You need a reliable, independent and objective methodology that works in multiple time frames. Structure, simplicity, objectivity, measurable, expectancy, validation through back-testing.
4. Detach yourself to money, develop your psychology edge

Stephen Covey has a 90-10 principle. He mentions that 10% of your life is determined by what happens to you. 90% of life is decided by how you react.

Events happen to us. What differentiates how we react.

"Any fact facing us is not as important as our attitude toward it, for that determines our success or failure."
- Norman Vincent Peale

Remember, this is a process. Any step in the right direction moves you closer to your goal.

"Continuous improvement is better than delayed perfection."
- Mark Twain
Personal Investment Blog - Goal is 10% return on capital (ROC) per month
Deal Addict
Nov 26, 2005
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FunSave22 wrote:
Jun 29th, 2012 6:26 am
Too many people who have read all of the studies that say your chances of doing it successfully in the long term is extremely small. The studies are all exceptionally clear. Just because you don't want to believe the science, doesn't make the science any less true.

yea majority of people are lazy and average at best. so dont be them. spend time to do due diligence! I spend avg 2.5 hours /day researching stocks.
The studies are clear that doesn't work.


for that small amount of people, it works wonder.
The studies are extremely clear that in the long term nearly all traders under perform the market. So no, the odds don't favour retail investors.
I don't know. but for myself, trading since 06, I made 400%+ gain already.
etf is just market perform which by itself even has a hard time beating inflation the same period...
Why? It's clear for the vast majority of people this is a horrible way to invest in the long term. So why bother learning how to do it?
it is clear you are amusing OP is the average majority...maybe yes, maybe no.
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ccyk wrote:
Jun 29th, 2012 2:43 pm
yea majority of people are lazy and average at best. so dont be them. spend time to do due diligence! I spend avg 2.5 hours /day researching stocks.
There's no evidence I'm aware of that working hard helps you become a better trader. There are a huge number of traders who put in a lot of work and most of them underperform in the long term.

but for myself, trading since 06, I made 400%+ gain already.
Six years isn't the long term. It's much too early to tell whether you are among the tiny group of people who can outperform over the long term or whether you have just been lucky.
[OP]
Newbie
Jun 20, 2012
29 posts
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FunSave22 wrote:
Jun 29th, 2012 3:04 pm
There's no evidence I'm aware of that working hard helps you become a better trader. There are a huge number of traders who put in a lot of work and most of them underperform in the long term.



Six years isn't the long term. It's much too early to tell whether you are among the tiny group of people who can outperform over the long term or whether you have just been lucky.
As I said before, I apreciate the arguement, its insightful, but lets keep it that way. Give the man some credit for a job well done so far at least. :) Also no one has yet answered my last set of questions :D
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Nov 26, 2005
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NakorOranges wrote:
Jun 29th, 2012 3:28 pm
As I said before, I apreciate the arguement, its insightful, but lets keep it that way. Give the man some credit for a job well done so far at least. :) Also no one has yet answered my last set of questions :D
last set of question? regarding learning? do you know how to read and understand financial statements? and various stock price models? if not, that is the area to look at for a good start.
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Jan 4, 2009
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FunSave22 wrote:
Jun 29th, 2012 1:49 pm
If you know of a study that says otherwise, please post it. I expect many of us would be interested.

As far as I know, all of the academic studies are exceptionally clear.


That's the problem with most investors, they want to seek out some study that justifies their plan and then they can feel all warm and fuzzy. Or they want to study charts and trends and god knows what else. I've been investing for almost 40 years and I've learned one thing...there are no rules. The future can't be predicted by some trite historical pattern like "sell in May and go away" or "Santa Claus rally". If Couch potato investing works for someone, great but that doesn't mean it's the best or only way.

I personally chose to try and follow Warren Buffett's style. Is it the right way...who knows, but it's worked out for me so far! I'm sure when my kids inherit my money, they won't give a crap if I used active or passive investing.
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Aug 28, 2010
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Sauerkraut wrote:
Jun 30th, 2012 2:15 pm
That's the problem with most investors, they want to seek out some study that justifies their plan and then they can feel all warm and fuzzy.
Wanting to see evidence and using said evidence is a bad thing?


I've learned one thing...there are no rules.

Sharpe's The Arithmetic of Active Management is most certainly a rule.

It's a mathematical proof. Similar to how the circumference of a circle must be 2*pi*r, Sharpe's proof must be also be true.

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