# Stock Market Basics



## cazetofamo

Does anyone have any tips for someone getting started with the stock market? Any advice you have on good thing to invest in, as well as websites to use for buying and selling stock? Anything is helpful, thanks!


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## Caribou

The stock market is playing in the big league. If you need to ask advice here you are not ready. If you really want to get started you might look into a mutual fund with a good history.


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## Geek999

I suggest you check out "No Brainer Portfolios". My favorite of the breed is the Coffeehouse Portfolio, but that's probaably because I've been aware of it longer than many of the others.


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## cazetofamo

Oh, I'm not planning on starting anytime soon, I'm just compiling information (I'm addicted to it) and maybe after a while i will consider it f i can scrap us t e money and convince my parents to let me try it. So I'm just asking for the personal preferences and things too look for from people with experience with it. Thank you!


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## Geek999

cazetofamo said:


> Oh, I'm not planning on starting anytime soon, I'm just compiling information (I'm addicted to it) and maybe after a while i will consider it f i can scrap us t e money and convince my parents to let me try it. So I'm just asking for the personal preferences and things too look for from people with experience with it. Thank you!


Since you are young, and presumably still in school go for an MBA and major in Finance.


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## *Andi

cazetofamo said:


> Oh, I'm not planning on starting anytime soon, I'm just compiling information (I'm addicted to it) and maybe after a while i will consider it f i can scrap us t e money and convince my parents to let me try it. So I'm just asking for the personal preferences and things too look for from people with experience with it. Thank you!


Think Ponzi scheme ... (sorry, just the way I see it.) In my eye the market ..."today" is little but just.

IMO


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## worldengineer

I don't have any personal experience in the stock market, but for one of my Engineering Classes I have to record twice a week the rise and fall of stock of my choosing.

I suggest to you that you pick a few yourself and learn to make an excel spreadsheet to calculate it for you. Then start with $1000 (in my case we had $5000) choose stocks you think will make money and keep up with it for a couple of months. Then base your decisions on that.

Here's an example of my "portfolio"

DOW Chemical, Stone Energy, Omnova, and Ruger are my stocks.

After tracking them closely I have been able to slowly learn how the market of other stocks along with news in the US and the world affects my "profit" and it has really helped me understand the market. Like *Andi said its basically a ponzi scheme, but even then you can still win. 

I started out with $63 shares of Ruger and by predicting gun violence and the shootings I was able to move my money and now I have $71 shares. an increase of $7 dollars a share which is amazing.

Try ETrade or something of the like brokers will lose your money, and be prepared to start out with several thousand dollars you aren't afraid to lose. Its an old adage that in order to get a small fortune on the market you must start out with a large one.


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## VoorTrekker

I invested just under $3000 back in aught five. I bought Sunoco (SUN), Coca Cola (KO), Starbucks, Intel, Apple, I forget what else. 2006 I sold it all for around $11,000.

Now I buy stock in a company which has been around awhile, (KO) not going to go out of business soon (Enron, GE, GMC, etc.) 

Food companies Kellogg, General Mills, Quaker Oats, etc.
Oil Companies Chevron, Shell, Sunoco, Amoco, etc.

Aircraft manufacturers Boeing Aircraft, Lockheed Martin, General Dynamics, etc.

Industrial companies, DuPont de Nemours, Allied Signal, etc. Olin, CSX, Union Pacific RR, etc. 

Research companies for yield, book and dividends. If they don't pay out, don't buy it. Avoid banks and insurance companies and derivative type companies (AIG). AIG consolidated my 1000 shares to 50 and the price to book ratio never changed and no dividends or annuities. Scam.

Sharebuilder will allow you to buy one share and the transaction fee is per transaction. Many brokers charge per share fees. Research Scott Trade, E Trade, Ameritrade and others. I started with ten shares of Intel at $19 a share. I bought one share of Sunoco for $119. Total cost was $29, today the fee would be $8.


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## Tweto

Rule of thump; The amateurs trade in the mornings and the pro trades just before the markets close. Watch the days trades if the market drops toward the end then you know that the insiders are getting nervous, or it is the end of the month, or quarter and they are taking profits)

Common sense; buy low sell high (where's is the market right now, record highs)

Never Liston to a broker that gives stock advice. Make you're own decisions. In 40 years I have never heard a professional tell me that now is the time to get out. In fact don't use a broker at all. Get an account at Fidelity, or one of the bigger internet trading sites and make trades for $7.95.

Pay close attention to loads (fees).

Never make an emotional trade.

Spend at least a hour a day reading about the news in the markets.

Spend time on the weekends reading about the markets.

Don't forget that entire world is the market.

Most traders are way to close to day to day market activities to see the big picture. Pat attention to demographics and the light will come on and tell you where the markets are going.


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## Tweto

Now I buy stock in a company which has been around awhile, (KO) not going to go out of business soon (Enron, GE, GMC, etc.) 

LOL


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## bigg777

If your going to be a stock "trader", you might as well take your money to a casino. Atleast you'll know why your money is disappearing!

The deck is stacked against small retail investors like us. There are computer programs employed by the big investment houses that trade using algorithms that trade huge amounts of money in split second intervals. Being a "day trader" is a sucker's bet, years ago I spoke with a certified financial planner (CFP) that told me that statistics show that 98% of all day traders lost money over time.

If you are young, begin a regular schedule of small investments in either ETFs or mutual funds, based on indexes such as the S&P 500, Nasdaq 100, total bond market, etc. Make regular nearly equal purchases over time. The trajectory of the indexes is upward over long periods of time.

Stay away from individual stocks, atleast until you are very well versed in investing and the markets. For retail investors, individual stocks are speculative and very risky.

Before you begin investing, start saving! Any CFP worth his or her salt will tell you that you need to have an emergency fund of 6 months worth of actual expenses before beginning to invest!

Finally, I would recommend engineering over finance for your education.

Oh BTW, I'm not a financial expert don't take my musings as gospel, but I did sleep in a Holiday Inn Express last night!


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## brightstar

I'll throw my 2 cents in since my mom has been a broker and ops manager for brokerage firms for over 30 years. If you ask around you can find good brokers, ones that will tell you the way it is and when to buy or get out. The trick is asking people you trust with money whom they trust with theirs. Don't look for the quick buck, the market works best for those who are patient and don't panic at every little dip. It will go up and down, learn to ride the tide. I recommend a portfolio of moderate growth. It will take you longer to make the money, but it is a much safer bet in the long run than the aggressive ones. Conservative takes too long unless you are looking really long term such as retirement. Mid Cap is another good way to go.


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## VoorTrekker

Also, reinvest your yields (dividends) instead of spending it. Re-investing it adds more shares.


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## Geek999

*Andi said:


> Think Ponzi scheme ... (sorry, just the way I see it.) In my eye the market ..."today" is little but just.
> 
> IMO


If you don't know the difference between a Ponzi scheme and the stock market, you clearly should not participate in the stock market.


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## Geek999

bigg777 said:


> If your going to be a stock "trader", you might as well take your money to a casino. Atleast you'll know why your money is disappearing!
> 
> The deck is stacked against small retail investors like us. There are computer programs employed by the big investment houses that trade using algorithms that trade huge amounts of money in split second intervals. Being a "day trader" is a sucker's bet, years ago I spoke with a certified financial planner (CFP) that told me that statistics show that 98% of all day traders lost money over time.
> 
> If you are young, begin a regular schedule of small investments in either ETFs or mutual funds, based on indexes such as the S&P 500, Nasdaq 100, total bond market, etc. Make regular nearly equal purchases over time. The trajectory of the indexes is upward over long periods of time.
> 
> Stay away from individual stocks, atleast until you are very well versed in investing and the markets. For retail investors, individual stocks are speculative and very risky.
> 
> Before you begin investing, start saving! Any CFP worth his or her salt will tell you that you need to have an emergency fund of 6 months worth of actual expenses before beginning to invest!
> 
> Finally, I would recommend engineering over finance for your education.
> 
> Oh BTW, I'm not a financial expert don't take my musings as gospel, but I did sleep in a Holiday Inn Express last night!


If you believe the "deck is stacked against you" then stay out of the stock market.

Almost every rule change for the past 40 years has been for the purpose of getting the individual investor the "best" price in a moving market. The result is the volatility we see today.

The stock market does reward smarter, more informed, more disciplined investors. If you aren't one of those, you should only invest through funds, or not at all.


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## Immolatus

Geek999 said:


> I suggest you check out "No Brainer Portfolios". My favorite of the breed is the Coffeehouse Portfolio, but that's probaably because I've been aware of it longer than many of the others.


I have to ask why you would like this portfolio? In 10 years it hasnt beaten the S&P because 40% of it is in bonds. I also hate these kinds of things because it is solely made up of Vanguard funds, which means you are paying fees on each one.



*Andi said:


> Think Ponzi scheme ... (sorry, just the way I see it.) In my eye the market ..."today" is little but just.
> 
> IMO


That is the way you see it because that is the way it is.
60-70% of all trades are made by HFT's. Kinda corresponds to 60-70% of bonds are bought by the F3D.

I hate giving out any kind of investment advice, so I will just suggest you read and learn as much as you can before you go out risking any money. That said, might as well just start with the S&P SPDR ETF, symbol :SPY

Only risk what you can afford to lose.
Past performance is no indication of future performance.


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## Geek999

Immolatus said:


> I have to ask why you would like this portfolio? In 10 years it hasnt beaten the S&P because 40% of it is in bonds. I also hate these kinds of things because it is solely made up of Vanguard funds, which means you are paying fees on each one.
> 
> That is the way you see it because that is the way it is.
> 60-70% of all trades are made by HFT's. Kinda corresponds to 60-70% of bonds are bought by the F3D.
> 
> I hate giving out any kind of investment advice, so I will just suggest you read and learn as much as you can before you go out risking any money. That said, might as well just start with the S&P SPDR ETF, symbol :SPY
> 
> Only risk what you can afford to lose.
> Past performance is no indication of future performance.


You are assuming the goal is beating the S&P 500. That is a difficult target and I don't think it is an appropriate goal for a balanced portfolio. The goal of this portfolio is to keep risk under control, not "beat the market".

Vanguard has some of the lowest fees in the industry and there is very little turnover with any of the No Brainer portfolios. Fees are an appropriate concern, but you aren't going to do much better than with Vanguard.


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## RevWC

bigg777 said:


> If your going to be a stock "trader", you might as well take your money to a casino. Atleast you'll know why your money is disappearing!
> 
> Finally, I would recommend engineering over finance for your education.
> 
> Oh BTW, I'm not a financial expert don't take my musings as gospel, but I did sleep in a Holiday Inn Express last night!


Agricultural degree is your best bet..


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## *Andi

Geek999 said:


> If you don't know the difference between a Ponzi scheme and the stock market, you clearly should not participate in the stock market.


I do not participate with the market because of my views of it. :wave:


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## Geek999

*Andi said:


> I do not participate with the market because of my views of it. :wave:


Ponzi schemes are illegal.  The stock market isn't. Maybe your views need some adjustment.  However, I agree it would be a mistake for you to participate in the stock market.


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## cowboyhermit

Geek999 said:


> Ponzi schemes are illegal.  The stock market isn't. Maybe your views need some adjustment.  However, I agree it would be a mistake for you to participate in the stock market.


Or perhaps the legal status of the stock market needs some adjustment.


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## *Andi

cowboyhermit said:


> Or perhaps the legal status of the stock market needs some adjustment.


Thanks for the smile...

Me and the stock market just don't mix for a number of reason... If one reads about the long reach of the gobberment arm and "the market" and they are alright with that... go for it. 

It is up to each and ever person to look at and say ... WOW ... This is for me or Whoa ... I don't think so...

I'm in the, I don't think so group. Just the way it is... (I hope you are alright with that. )

As for Ponzi schemes are illegal ... :lolsmash: (Is the g-ment above the law?)

Yea ... we both know how that works. :beercheer:

Best wishes to you and your! :2thumb:


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## RevWC

*Andi said:


> (Is the g-ment above the law?)


ask obama, reid, mccain, pelosi, boehner, mcconnel, lindsey....the answer is yes...


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## BillS

Stay out of the market. The market is being juiced by all the fiat money coming out of the Fed. It could crash at any time.


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## Immolatus

Geek999 said:


> You are assuming the goal is beating the S&P 500. That is a difficult target and I don't think it is an appropriate goal for a balanced portfolio. The goal of this portfolio is to keep risk under control, not "beat the market".


Point taken. I have always been of the mindset that you should always do better than the "average" and to me that means beating the S&P. OTH, that also means you are taking all the risk that this entails, which is ok by me. I also have a real problem loaning the gubt money, so I will never buy US bonds even though I'm a big fan of corp bonds.



Geek999 said:


> Ponzi schemes are illegal.  The stock market isn't.


I think Andi is for the most part correct. Without new money coming in, the whole thing is a zero sum game and it would just be money shuffling from one hand to another with brokers skimming a cut, no?



cowboyhermit said:


> Or perhaps the legal status of the stock market needs some adjustment.


As loathe as I am to call for more taxes, something needs to be done about HFT. I've seen the proposals for a small transaction tax, and I might be up for that.


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## invision

Ok, I will throw my 2 cents in here. This is just my opinions not actual advice from a professional.

Investing in the market can make you money IF you do proper research. The first question are you in for long term investing or short term investing. Second question, are you going to be actively monitoring your stocks or just checking once or twice a week. If you answer short term and not monitoring all the time, then you will have a greater chance for loss. My final question, are you playing with your rent money or are you playing with disposable income. Never bet the house in the market.

If your looking for long term - then you want stable global 500 companies that pay dividends. 

If your looking for short term - then you want to equally watch the news for "incidents". A prime example 10-15 yrs ago, Ford was using Bridgestone tires and they had a massive tire issue. Think 2002? Ford stock crashed down over 100% in value like $20 down to $7... If you would would have bough at the down cycle, and waited for 8 months, you would have seen almost a 100% return on you investment. I think I bought around $8 and sold for $15... 

Right now, for me it is to complicated to play in the markets having clients that can dictate whether I can buy or sell... I missed out on a 1,000 google IPO shares because 1 of 3 firms told me no. So, I have sold everything and invest only in PMs.

Although, right now the best advice I can give would be to play the short term markets, if you really watch reactions right now - good news the markets falter and go down, bad news the markets react opposite and go up. Which is completely opposite of the way it should be. Here is why, the equities market is inflated due to the $85B a month pouring in from the quantitative easing program from the Fed Reserve. In addition, the FR has also manipulated interest rates. 10 years ago you could walk into a bank and get a jumbo 5yr cd with anywhere from 6-8% interest. now your extremely lucky if you find 2%. So people like my father who every month stocked money into these investment vehicles has no where to really earn money except for the market. 

And taking your money to a casino CAN make you money, IF you know how to play - my wife and I are semi-pro poker players, every year since I started playing in 2005, I have had a positive ROI - 2006 I made enough to buy a corvette in untaxed cash. My wife has been playing since 2007, she also has had nothing but a positive ROI playing cards with 4 WSOP cashes, 2 WPT cashes and a 2nd place in the WPO. Last year my wife had 42 1099s from casinos valued at $36,000 from slot machines. Caesar's Entertainment has a table game called WSOP Texas Holdem where you play against the dealer - if you know the basic fundamentals of the real poker game, you will win against the house, I play that table game every time I am in Nola, and have always doubled my buyin if not tripled it. The slots there is a little skill there, however if you know the systems - you can make money - here is one - Caesar Entertainment casinos, have the slots set to trigger a bonus payout 1 spin out of 20 or 25 spins, you odds during that 1 spin increase from 1-100 to 1-20 for hitting a bonus based on your play at the time of the spin... so if you bet max spin, you have a 1-20 chance, where as of you are betting min spin you have a 1-100 chance. I have been told this statement by 2 slot technicians and 3 of our executive hosts at different casinos. My wife plays max or next to max and hits religiously compared to watching players around her playing min or next to min spins. As for poker, that is a game of skill, you have to understand the statistics of the game pre-flop to river for Holdem. You also must be a people person, observing the players and playing against the players not the cards a lot of time. If I can recognize the grinder on the table - playing for a living OR the ones playing with their lunch money - I typically eat their lunch as I am not afraid to gamble and once I do catch an impossible card statistically speaking, I have them on tilt, once I have them gunning for me, I control the game play. True story, I decided to play in a $300 buy-in tourney in Bioxli, MS one Saturday - I announced to the table before the game that I would not look at my hole cards pre-flop until I make it heads up. That I would play based on playing the players. I either folded, called or raised completely blind, and then after the flop would look at my hole cards and react to who I was against. End result - I won the tournament.


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## Geek999

cowboyhermit said:


> Or perhaps the legal status of the stock market needs some adjustment.


To what? Are you suggesting that companies should not be allowed to raise capital? Are you suggesting that if I own stock I should not be allowed to sell it?

Are you a communist?


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## Geek999

*Andi said:


> As for Ponzi schemes are illegal ... :lolsmash: (Is the g-ment above the law?)


As a matter of fact, the government is not subject to the securities laws or regulations.

However, the thread is about the stock market, not the government securities market.


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## Geek999

BillS said:


> Stay out of the market. The market is being juiced by all the fiat money coming out of the Fed. It could crash at any time.


It can crash at any time for this or other reasons. That is a risk one should consider before investing in the stock market.


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## Geek999

Immolatus said:


> Point taken. I have always been of the mindset that you should always do better than the "average" and to me that means beating the S&P. OTH, that also means you are taking all the risk that this entails, which is ok by me. I also have a real problem loaning the gubt money, so I will never buy US bonds even though I'm a big fan of corp bonds.
> 
> I think Andi is for the most part correct. Without new money coming in, the whole thing is a zero sum game and it would just be money shuffling from one hand to another with brokers skimming a cut, no?
> 
> As loathe as I am to call for more taxes, something needs to be done about HFT. I've seen the proposals for a small transaction tax, and I might be up for that.


Doing better than average is difficult and even determining an appropriate average can be a hard thing to do. A "No Brainer" portfolio gives you good diversification, which lowers risk, but is not in any way structured to beat the S&P, which has much greater risk. The S&P 500 is by its nature concentrated in large capitalization US stocks, no bonds, no global diversification and no smaller companies. As a result the S&P 500 is risky in comparison to a No Brainer portfolio.

The stock market is not a zero sum game. A zero sum game would NOT have new money coming in. A zero sum game by definition is closed.

Since the markets are pretty much global, any tax would simply cause trading, and hence liquidity to move off shore. That would have pretty serious negative consequences.


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## VoorTrekker

The Stock Market did crash in 1929 and the next day there were still companies trading and a Stock Market!

So what if the market did crash tomorrow? I would cash out some available money and buy large quantities of shares in companies which were still stable. 

Also, there is Common Stock and Preferred Stock. Say common stock is $20 a share and pays $0.75 dividend quarterly; preferred stock would be $2000 a share and pay $20 a share quarterly. If the company did fold, preferred stock holders would be paid along with assets and bond holders and common stock would be paid last if at all.

I don't try to "play the market," I just try to get a grasp of the opportunities to grow my potential for invested returns. What is an HFT? 

I would advise to look into mutual and annuities, they pay. The stock market and investments markets goes back to colonial days. I see investing as a patriotic activity. 

As for Ponzi schemes--Social Security.


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## cowboyhermit

Geek999 said:


> To what? Are you suggesting that companies should not be allowed to raise capital? Are you suggesting that if I own stock I should not be allowed to sell it?
> 
> Are you a communist?


Geek999, when someone uses a sticky out tongue emoticon it might be a hind that their comment should not be taken too seriously

But since you brought it up. The communist part is funny on so many levels, I am in fact about as far as one can get from a communist, likely farther than anyone on this site (I essentially believe in no government interference.) Not that that makes a difference. What is hilarious though is that this is what people always say when someone criticizes the current financial system despite the fact that this system is about as far from the free market as you can get.

Governments and corporations have propagated the idea that the stock market = free market, anything else is communism despite all evidence to the contrary.

Take for instance a corporation, these exist only by the government saying that they do with legislation or some sort of registration or royal decree, they have not arisen from a free market. Businesses have always existed, they do not require a stock market to raise capital. The government created and regulated world of corporations and stock "markets" is MUCH closer to Communism or Facism, or Corporatism than many are willing to see.

Not that I am saying that they need to go, just that they are typically misrepresented.



Geek999 said:


> The stock market is not a zero sum game. A zero sum game would NOT have new money coming in. A zero sum game by definition is closed.


That is not correct 
http://en.wikipedia.org/wiki/Zero-sum_game


> In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which a participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.


There is nothing to preclude new money coming in within a zero-sum game, it is not the input but the SUM that is ZERO.


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## Geek999

cowboyhermit said:


> Geek999, when someone uses a sticky out tongue emoticon it might be a hind that their comment should not be taken too seriously
> 
> But since you brought it up. The communist part is funny on so many levels, I am in fact about as far as one can get from a communist, likely farther than anyone on this site (I essentially believe in no government interference.) Not that that makes a difference. What is hilarious though is that this is what people always say when someone criticizes the current financial system despite the fact that this system is about as far from the free market as you can get.
> 
> Governments and corporations have propagated the idea that the stock market = free market, anything else is communism despite all evidence to the contrary.
> 
> Take for instance a corporation, these exist only by the government saying that they do with legislation or some sort of registration or royal decree, they have not arisen from a free market. Businesses have always existed, they do not require a stock market to raise capital. The government created and regulated world of corporations and stock "markets" is MUCH closer to Communism or Facism, or Corporatism than many are willing to see.
> 
> Not that I am saying that they need to go, just that they are typically misrepresented.
> 
> That is not correct
> http://en.wikipedia.org/wiki/Zero-sum_game
> 
> There is nothing to preclude new money coming in within a zero-sum game, it is not the input but the SUM that is ZERO.


Your definition of a zero sum game still does not fit the stock market. It is not a zero sum game. New money can come in. Money can come and go. Gains do not equal losses, etc.

I'm glad to hear you are not a communist. The only country I know of that outlawed its own stock market was the USSR. That did not work well.


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## cowboyhermit

Geek999 said:


> Your definition of a zero sum game still does not fit the stock market. It is not a zero sum game. New money can come in. Money can come and go. Gains do not equal losses, etc.
> 
> I'm glad to hear you are not a communist. The only country I know ofoutlawed its own sto that ck market was the USSR. That did not work well.


It isn't my definition of a zero-sum game, and I never said that the stock market was one. It seems like you are still missing what it means though.

I hope you don't think that what happened in the USSR was due to it not having a stockmarket, that was probably the least significant concern. People, businesses, and society functioned and thrived without the stock "market" and many still do today.


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## Geek999

cowboyhermit said:


> It isn't my definition of a zero-sum game, and I never said that the stock market was one. It seems like you are still missing what it means though.
> 
> I hope you don't think that what happened in the USSR was due to it not having a stockmarket, that was probably the least significant concern. People, businesses, and society functioned and thrived without the stock "market" and many still do today.


Places that don't have a stock market because they haven't gotten around to it are different from places like the USSR, which had a stock market and a banking system and outlawed both. The automatic result of losing their financial markets and institutions was to place themselves at a disadvantage economically and when that finally became apparent in the Reagan administration, they fell apart.

Was the lack of a stock market the worst problem? No. Was the lack of a financial system, of which a stock market is typically a part responsible for their downfall? Yes.


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## cowboyhermit

It was not their financial system that was their problem, it was their entire economic system, there is a big difference.


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## BillS

Geek999 said:


> It can crash at any time for this or other reasons. That is a risk one should consider before investing in the stock market.


That's not really true. The stock market today has nothing to do with economic fundamentals and the ability of the companies to make money. The pattern of the S & P 500 resembles the pattern for 1929.


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## BillS

VoorTrekker said:


> The Stock Market did crash in 1929 and the next day there were still companies trading and a Stock Market!
> 
> So what if the market did crash tomorrow? I would cash out some available money and buy large quantities of shares in companies which were still stable.
> 
> Also, there is Common Stock and Preferred Stock. Say common stock is $20 a share and pays $0.75 dividend quarterly; preferred stock would be $2000 a share and pay $20 a share quarterly. If the company did fold, preferred stock holders would be paid along with assets and bond holders and common stock would be paid last if at all.
> 
> I don't try to "play the market," I just try to get a grasp of the opportunities to grow my potential for invested returns. What is an HFT?
> 
> I would advise to look into mutual and annuities, they pay. The stock market and investments markets goes back to colonial days. I see investing as a patriotic activity.
> 
> As for Ponzi schemes--Social Security.


We're looking at a complete economic collapse with most Americans dying, probably 90%. America will become a much poorer country without the ability to borrow money.

So we're not only looking at a stock market crash like 1929 but eventually we're looking at a complete shutdown of the financial markets in the US. Probably indefinitely.

That's why you don't buy stock after the coming market crash.


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## Geek999

cowboyhermit said:


> It was not their financial system that was their problem, it was their entire economic system, there is a big difference.


Ever try to build an economic system without a financial system?


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## Geek999

BillS said:


> That's not really true. The stock market today has nothing to do with economic fundamentals and the ability of the companies to make money. The pattern of the S & P 500 resembles the pattern for 1929.


I don't see where you are disagreeing with my statement.

The correlation between the stock market and the broader economy is loose. However, the S&P 500 has been recovering as their earnings have recovered from the crash since hitting bottom in 2009.

If you think the market is acting like 1929, then you should not merely get out. You should short it.

Personally, I think it could go either way.


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## cowboyhermit

Geek999 said:


> Ever try to build an economic system without a financial system?


Typically when I am building an economic system I start off without one and incorporate a barebones version once things get complicated

For most of human history finance did not exist, there was no financial system. An economy of some sort has existed as long as we have, possibly longer depending on your definition of the term and your views on proto-humans.


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## Geek999

cowboyhermit said:


> Typically when I am building an economic system I start off without one and incorporate a barebones version once things get complicated
> 
> For most of human history finance did not exist, there was no financial system. An economy of some sort has existed as long as we have, possibly longer depending on your definition of the term and your views on proto-humans.


A financial system has existed since money was invented. Our modern financial system could be said to date from Adam Smith, which is about when the economy started to grow into what we see today.


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## cowboyhermit

Geek999 said:


> A financial system has existed since money was invented.
> 
> Well that would depend on how you define "financial system". It might fit some definitions but most would agree that money has existed without finance, and at the very least without a financial "system".
> 
> Our modern financial system could be said to date from Adam Smith, which is about when the economy started to grow into what we see today.


What most of us see is a mess 
I blame the government.


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## *Andi

cowboyhermit said:


> What most of us see is a mess
> I blame the government.


And I second ...


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## Marcus

If you're just getting started, try a low cost index fund for the S&P 500. Vanguard, Fidelity and others offer these funds with an expense ration of 6-20 basis points (1 basis point is 1/100 of 1 percent.)
The Coffeehouse portfolio and others are the idea of Scott Burns, a columnist for the Dallas Morning News.


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## Geek999

cowboyhermit said:


> What most of us see is a mess
> I blame the government.


At least you are blaming the appropriate party.


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## BillS

Geek999 said:


> I don't see where you are disagreeing with my statement.
> 
> However, the S&P 500 has been recovering as their earnings have recovered from the crash since hitting bottom in 2009.


No, earnings aren't recovering. The economy is slowing. Companies are having trouble reaching sales targets.

Maybe earnings per share are recovering but they're being manipulated by companies buying back their own stock to juice earnings per share.


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## Geek999

BillS said:


> No, earnings aren't recovering. The economy is slowing. Companies are having trouble reaching sales targets.
> 
> Maybe earnings per share are recovering but they're being manipulated by companies buying back their own stock to juice earnings per share.


Earnings have been going up. I consider that recovering, but you are free to call it something else.

Manipulation is a legal term and companies that buy back their own stock must follow strict rules that prevent manipulation. As for the reason being to "juice" earnings per share, there are two ways to return capital to shareholders, dividends and stock buybacks. Companies also buyback shares for reasons such as obtaining stock for employee stock purchase plans, etc.

The impact of stock buybacks on share prices is widely covered by analysts, the buybacks are public information, and there is nothing sinister about the process.

There is even one ETF that invests primarily in companies with strong records of buying back their own shares.

As for the economy, it has been going up at a disappointing pace for several years. I'm not saying it is good, but I don't think you can really say it is slowing yet either. It may slow, but at the moment it seems to be limping along as it has since the official recession ended.

Regarding companies hitting sales targets, it is fair to say that many companies are achieving their profit targets through cost cutting rather than improving sales, but you really need to look at that company by company.


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## VoorTrekker

BillS said:


> ...We're looking at a complete economic collapse... America will become a much poorer country without the ability to borrow money.
> 
> So we're not only looking at a stock market crash like 1929 but eventually we're looking at a complete shutdown of the financial markets in the US. Probably indefinitely.
> 
> *That's why you don't buy stock after the coming market crash*...


You got that right! 90% of the people? I don't get it, but that may be a new thread for you to start. As for a complete economic/financial meltdown...we've all seen this coming. That's why we prepare in various ways.


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## partdeux

Geek999 said:


> Earnings have been going up. I consider that recovering, but you are free to call it something else.


Earnings are NOT going up. EPS is going up. Completely different animal


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## partdeux

cazetofamo said:


> Does anyone have any tips for someone getting started with the stock market? Any advice you have on good thing to invest in, as well as websites to use for buying and selling stock? Anything is helpful, thanks!


Buy anything I'm selling 

right now the market is being highly manipulated and the high frequency trading computers are often driving the market all by themselves.

I've made good money in the market and I've lot a lot of money in the market.

Personally, right now, my IRA and 401k are in "safer" investments. Blue chip mutual funds, highly rated bond funds, and a high amount of "cash". Everything is screaming major crash... however, almost all the experts are claiming we have a long ways to go on the upside.

Something that has worked well for me in the past, what do you see people buying? What stores have a lot of traffic? Good example, go into a JC Penny's and tell me what you see. Low traffic, dated product, lack of sales support staff.


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## Marcus

partdeux said:


> Buy anything I'm selling
> 
> Personally, right now, my IRA and 401k are in "safer" investments. Blue chip mutual funds, highly rated bond funds, and a high amount of "cash". Everything is screaming major crash... however, almost all the experts are claiming we have a long ways to go on the upside.


Then you are sadly mistaken if you think you are 'protected' from a crash.

*J.P. Morgan: "Gold is Money. Everything Else is Credit."*

Your bond funds are very sensitive to capital risk if interest rates spike.
Your blue chip mutual funds are sensitive to a crash.

One of the things that concerns me is whether you'll be able to get out of your mutual funds quickly enough since mutual funds only trade at the end of the day. You'd be better off with ETFs mirroring your current mutual fund holdings. If you think I'm being overly cautious, look at the '87 crash.


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## Geek999

partdeux said:


> right now the market is being highly manipulated and the high frequency trading computers are often driving the market all by themselves.


Manipulation is illegal. I think it is fair to say the market is possibly being affected by high frequency trading, but to say the market is being "manipulated" is incorrect.


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## LincTex

Get some old monopoly money, or print some yourself. Use this money to run your stock purchase/sell experiments.

If you find you are making money, then maybe you understand the market well enough to use it. 

if you find you are losing money - - - then all you lost was some little pieces of colored paper. Put it back in the game you borrowed it out of, and forget about your "abilities" in the stock market.


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## Tweto

I have 9 different portfolio's in Google finance. Each one has different instruments and methods of investments. There is no real money involved. I would start a new portfolio when I thought I had a way to make money and then I would watch it as a sanity check. Some of the portfolios have been running for more then a year, some as little as 3 months.

Even though the markets are up for the year some of the portfolios have lost money, some have made money. But the ones that made money have not made the percentages that the overall market has. Averages of all portfolios have increase 2-3% over that time.

Not to good.

I see the markets as topped or close to it. The up side possibilities seem minimal but the downside risk seam huge. Markets can crash much faster then they can climb. I'm out and will stay out.

I see the financial planners, brokers, TV pundits, wall street traders as salesmen for investing. Their sole purpose in life is to keep you in the markets. Their income depends on it. When the Dow hit 15,000 they said that it will go to 16,000, when and if it gets to 16,000 they will say 17,000 is possible. Just last week I heard a TV pundit say that the markets may never stop climbing.

I have heard this all before several time, only the numbers were smaller. and every time we had a crash that took several more years for the value to get back the the previous high.

My 2 cents worth.


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## Geek999

Tweto said:


> I have 9 different portfolio's in Google finance. Each one has different instruments and methods of investments. There is no real money involved. I would start a new portfolio when I thought I had a way to make money and then I would watch it as a sanity check. Some of the portfolios have been running for more then a year, some as little as 3 months.
> 
> Even though the markets are up for the year some of the portfolios have lost money, some have made money. But the ones that made money have not made the percentages that the overall market has. Averages of all portfolios have increase 2-3% over that time.
> 
> Not to good.
> 
> I see the markets as topped or close to it. The up side possibilities seem minimal but the downside risk seam huge. Markets can crash much faster then they can climb. I'm out and will stay out.
> 
> I see the financial planners, brokers, TV pundits, wall street traders as salesmen for investing. Their sole purpose in life is to keep you in the markets. Their income depends on it. When the Dow hit 15,000 they said that it will go to 16,000, when and if it gets to 16,000 they will say 17,000 is possible. Just last week I heard a TV pundit say that the markets may never stop climbing.
> 
> I have heard this all before several time, only the numbers were smaller. and every time we had a crash that took several more years for the value to get back the the previous high.
> 
> My 2 cents worth.


What you are seeing is the challenge in either beating the market aaverages, or timing the market correctly. It isn't easy.


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## partdeux

Geek999 said:


> Manipulation is illegal. I think it is fair to say the market is possibly being affected by high frequency trading, but to say the market is being "manipulated" is incorrect.


you need to closely watch the markets, time of day, and day of the week movements. How many months was Tuesday always up? When there is some serious downward pressure, there's almost always a spike up, usually on very thin volumes. Don't get me started on Gold. JPM and GS are fighting a battle that is pushing the market up and down, with a third party getting involved, usually early morning.


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## Tweto

It has been reported that the US government is selling gold in naked shorts to bring down gold prices and to increase world desire for the dollar. I'm lost on some of this but if I understand it correctly the US are selling gold to third parties only to have it sold back to the US.

There are other governments doing the same, selling it out one door and receiving back through another door.

Gold manipulation at the highest level.


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## Geek999

Tweto said:


> It has been reported that the US government is selling gold in naked shorts to bring down gold prices and to increase world desire for the dollar. I'm lost on some of this but if I understand it correctly the US are selling gold to third parties only to have it sold back to the US.
> 
> There are other governments doing the same, selling it out one door and receiving back through another door.
> 
> Gold manipulation at the highest level.


The gold market is distinct from the stock market. The advertising for gold also sends off all sort of rumors. For instance, and advertisement that has been running for a year says gold is going up when it has been falling for the past 6 months, etc.

Gold should really get a different thread from a discussion of the stock market.


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## invision

Right now, with Ben B on the way out, and the new chick in and being very Pro QE, money will continue to flow into the markets from the QE investments. The only place for it to go is up IMO... Until.


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## Geek999

invision said:


> Right now, with Ben B on the way out, and the new chick in and being very Pro QE, money will continue to flow into the markets from the QE investments. The only place for it to go is up IMO... Until.


Are you referring to the stock market or the gold market?

Since I have seen the new Fed chairman's picture, I have difficulty calling her "the new chick".


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## invision

Geek999 said:


> Are you referring to the stock market or the gold market? Since I have seen the new Fed chairman's picture, I have difficulty calling her "the new chick".


The money from QE is going into the equities market, with new records being set constantly with the DJIA, S&P, etc... Gold prices as well as silver are of course being driven down.

Now one good thing about that, I can buy more physical silver and gold each month with the priced deflated, and when the market starts to swing down, which will eventually happen, if it doesn't crash crash, my PMs will only go up and up.


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## LincTex

invision said:


> Right now, with Ben B on the way out, and the new chick in and being very Pro QE, money will continue to flow into the markets from the QE investments. The only place for it to go is up IMO... Until.


Uh oh...... I am not very optimistic:

http://en.wikipedia.org/wiki/Janet_Yellen
Janet Louise Yellen ..... is the Vice Chair of the Board of Governors of the Federal Reserve System. Previously, she was President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, Chair of the White House Council of Economic Advisers under President Bill Clinton, and Professor Emerita at the University of California, Berkeley's Haas School of Business. On October 9, 2013, President Barack Obama nominated Yellen to be Chair of the Federal Reserve...[1][2]


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## Meerkat

Seems like a good time to get in quick and out quicker.


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## invision

LincTex said:


> Uh oh...... I am not very optimistic: http://en.wikipedia.org/wiki/Janet_Yellen Janet Louise Yellen ..... is the Vice Chair of the Board of Governors of the Federal Reserve System. Previously, she was President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, Chair of the White House Council of Economic Advisers under President Bill Clinton, and Professor Emerita at the University of California, Berkeley's Haas School of Business. On October 9, 2013, President Barack Obama nominated Yellen to be Chair of the Federal Reserve...[1][2]


Only thing to be optimistic about is the following:

You want to make a hedge on PMs - buy hoping they go up... Like him or hate him - I think Ican has it right - http://www.zerohedge.com/news/2013-...stocks-says-market-could-easily-have-big-drop.

He was also quoted saying... "The market tells you that you are doing well, but I don't think a lot of companies are doing that well. They are taking advantage of very low interest rates. So, obviously, you don't have to be a financial genius to understand if I can borrow at 3% or 4% and buy assets maybe my own stock that is yielding 9%, 10% or 11%, I am going to make a lot of money. In one sense or another that is what is going on&#8230;.I do think at 17x that you have to be pretty well hedged."

Same article quotes "These comments come a little more than a week after Stanley Druckenmiller opined that, "But if you tell me QE is going to be removed over nine or 12 months, that's a big deal because when it's my belief that QE has subsidized all asset prices. And you remove that subsidization, the market will go down."

Read more: http://www.businessinsider.com/druc...fett-on-the-stock-market-2013-9#ixzz2lITvYnTI

'Nough said? So, yeah, you could risk money in equities, hoping to get in and out, but even Buffet (in that last article) said that he is having trouble finding value in equities to buy low and sell high, or buy and keep for long haul.,. So, I am not one to buy high, thus equities would not be an interesting value buy for me, but PMs with Gold under $1250 and Silver sitting in $19s doesn't look to bad, considering the last down cycle, silver shot into the $30s and Gold to $1700's (from $800ish) - thus gold could hit $2500?!?! If we see a big down cycle like these guys are hinting at...

These are my thoughts not advice.


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