Alright, so we don't have a money / investing sub-forum and we don't really have a stock trading thread.  I figured I'd create one for people to discuss stocks or any personal finance advice.  It could be mutual funds, 401ks or anything of that sort.  We're here to help! 

Tools:

www.freestockcharts.com... - Best free stock charts you'll find on the net.  Plenty of technical indicators and trendlines for you to draw.

www.finviz.com... - Stock screeners, heatmaps, technical analysis and all the works.  Excellent resource site.

www.investopedia.com... - Excellent site to learn about the stock market.  Some of the best tutorials around with plenty of examples for however complicated you'd like to be.

Quick advice:

1.  Never buy a stock based off of someone's recommendation alone.  Also do your own independent research to verify a recommendation.

2. In order to succeed in the market, you must buy when the market is selling, and sell when the market is buying.  Somewhere around 80%+ of investors fail, so you have to go against the trend. 

3. If you are looking to "trade" (quick flips for good money), use technical analysis.  If you are looking to "invest" (hold a stock for a long period of time), use fundamental analysis.  Technical analysis is basically looking at charts to determine price trends, while fundamental analysis looks at a companies revenues / profits / sales / etc. 

4. No matter how good you are, you will lose money at some point.  The key to being successful is keeping your losses at a minimum while maximizing your profits.

5. Never enter a stock without a clear exit strategy.  If you buy it at $10, you need a pre-set plan like "I'm getting out if this drops below $9.50" to minimize losses.  Don't let your emotions control your trades.

That should be an okay first post, interested to see where this thread goes.

I'm considering getting my bank's stock at their employee discount (15%), but I'm not an investor. Still the stock seems to be so low right now, it'd be really no sweat...but are these employee options really worthwhile? It doesn't seem like a good deal to get it and then flip immediately since you've got to pay to make a trade anyway.

Well options are quite complex investing strategies, so I'm no expert there. But basically there are two components of an options value, the intrinsic value (i.e how much of a discount does it represent today) and the time value (i.e how much potential is there between today and the option expiration date).

The banking sector has been hit pretty hard, and I do expect it to rebound through 2011. I'd need to know more about the company and the option terms before giving a specific recommendation.

Good point.  There's no substitute for due diligence.  Most stock recommendations you run into are going to be from companies looking to "pump and dump" or stocks that have already run up.  Most analysts aren't worth a moment's attention.  There are exceptions, of course, but doing your own research is invaluable. 

So are we going to share any portfolio picks yet? Here's mine that has finally come to fruition. Renesola - SOL. Basically a Chinese solar stock with excellent fundamentals and long term growth potential. However, highly volatile and may swing 2-4% either way on a daily basis.

I bought in at $9.58 on November 22nd based on fundamentals. Stock tumbled, then I rebought some more shares at the $8.29 level on December 13th. Learned technical analysis over those 3 weeks, and the stars aligned for a "perfect setup". Strong support line at $8.30, SMA200 line at $8.20, oversold stochastics, etc.

Today it's at $10.78. My personal target was $15 by summer, but I've seen other analysts as optimistic as $25-$30 by year end. I don't know about all that, but I know I'm riding this one out for awhile.

I'm not recommending it as a buy right now because it has absolutely blown up since the new year. It's going to be due for a small pullback soon, and I'd recommend getting in at the $10 level if it touches that again.

Just so I'm not BSing, I actually created a blog solely for the purpose of recommending SOL back in November.

http://jonebone.wordpress.com/...

Going to the moon this year!

I think your number in (3) of the OP is off. I'm pretty sure the more widely recognized number is that something like 95% of traders lag the market in the long run.

Also, just so it's out there in the open, the VAST majority of people in general, and people on NAge are better served by following a basic long-term strategy like the Permanent Portfolio, or the stuff on Bogleheads, than attempting to trade individual stocks on their own.

With individual stocks, in order to have an adequately diversified portfolio, you really need at least $25k in the game, otherwise the friction of trading costs can wear things down pretty quickly, when you're buying in lots of less than $2k-4k.

People with less than $25k to actually risk in the market, cannot afford to be trading stocks, anyway, since they "need" that money and you shouldn't invest money you need within the next 5 years in the market to begin with.


Anyway, I'm not trying to poo-poo your thread, since there are people who will be interested, and the idea has merit.
I just want to make sure that your "buyer-beware" in the OP was fleshed out a little bit more.

Good luck.

What is the time you have to hold onto the stock before you can flip it?

The trading cost should be $10-$30 per action, depending on what brokerage you get stuck with.  So as long as the trade cost is less than the discount by a wide enough margin to make the risk of holding the stock for the vesting period worth it, then it's a no-brainer.

The other thing people should think about is the tax-effect of trading. If you have a regular, taxable investment account (not a retirement account), then most every sale you make is a taxable transaction. The tax rate you actually have to pay on those sales depends on whether the stock is held short term or long-term (a year or more). If you hold a stock for a year and then sell at a gain, then you are taxed (under current rates) at a maximum of 15%. If you hold a stock for less than a year and then sell at a gain, the gain is taxed at your marginal tax rate, which if you have enough money to be investing is probably higher than 15%.

Your losses from sales can be used to offset your gains in any given year, but you can only deduct net losses on your tax return up to $3,000 -- so if you have a really bad loss on a stock, and lose $10,000 - you can't use that entire $10,000 loss to offset your other income --- at least not all in the current year.

Anyway, this is just a VERY brief summary of the topic, but let me know if anyone has additional questions.

I also generally agree with arch ---- I've seen too many people get into investing for fun and lose money...you need to be careful and think about what your personal goals are --- if you're doing it for retirement, then you shouldn't really watch individual stocks and play the stock market game.

The tax complications can be avoided if you do your trading in retirement accounts. Very few people accumulate more than 21,500 per year of "new outside money" for trading.

Arch, with all due respect, your comment is merely an opinion and no more factual than anything I've presented.  You don't need $25k to enter the market and many online brokers have nominal fees.  I use tradeking and it's $4.95 per transaction.  Not bad at all.

You can make excuses, the rest of us will make money.  Once you have enough emergency cash in savings, what do you do with the rest?  Let it sit and gather 1% interest?  It doesn't matter if you have an excess of $1k, $10k or $25k, there's no harm in throwing some money into the stock market and taking chances.

As a matter of fact, I would say it is horrible advice for a first time investor to enter the market with $25k.  Small 1 to 2% losses on bad trades will eat away at that capital quickly.  But a 2% ($20) loss on a $1k investment is a cheap way of learning from a mistake and using that knowledge to make you a better trader.  A 2% ($500) loss on a $25k investment serves no purpose when you could have learned the same lesson while risking less capital.

You miss the entire point of my post.

There are numerous portfolios that will do as well as the market, and some that will consistently do slightly better, in the long run.  If you save at an adequate rate, that is all that is needed to be comfortable.  It's not a "get rich quick" kind of thing.

Go read up on who Jesse Livermore is, and do some more research regarding studies on market timing versus simply meeting market performance.



ETA:  Anyway, I didn't make that other post to start an argument or say that you're wrong for trading stocks.

That is not what I'm saying.  But I think a person has not done due diligence regarding investing for the long-term, in general, if they have not read up on the things I've mentioned.

Yes, of course.  But I wanted to mention it in case anyone is thinking about a regular investment account.  If someone wants the flexibility of being able to take out money whenever they want without having to worry about paying early distribution penalties, etc., then they might use a taxable investment account.  Obviously the big downside here is paying taxes every year and not getting tax-deferred income. There are pros and cons to however you invest.  I'm mostly referring to people who do this in addition to a retirement account, as a little "play" account or whatever.  Or anyone who already has one that isn't a retirement account.

Under current tax laws, you can get around the early distribution penalties if you change jobs and roll the 401k into an IRA, and then convert that IRA to a Roth IRA (gradually, to optimize the taxes paid on the conversion)

There are other cases as well where you avoid the penalties, but I just mean to say that regardless, it seems like most people I talk to have no idea about the taxable nature of investing, so I wanted to bring it up. Not really even trying to compare retirement vs. taxable accounts.  Are you a CPA as well? 

Stocks aside for a moment. Once you have that 6 month emergency fund aside. Where is the best place to stick your next chunk of change (that you wont need for years)? I met a financial adviser that said if I don't need to touch it, he could get me 12% fixed on $1000 or more. That seems like quite a bit more than the .02% Wells Fargo Savings blesses me with every month.

Was his name Bernie Madoff?

You need to stay away from people like that.  There is absolutely no way to guarantee that kind of return with interest rates as low as they are.

Personally, I would recommend transitioning $5k/year (per person) into Roth IRA's, since long-term the growth is tax free (not just tax deferred), and you can pull principal back out in a true emergency.

If you have 6 months of liquid emergency money, AND you're filling your Roth IRA's every year, AND you don't have access to an employer sponsored 401k, then I'd recommend doing some legwork and picking your favorite brokerage, depending on what you're trying to accomplish.

If you want to take the Bogleheads approach, then Vanguard is what you want.  For the Permanent Portfolio I'd recommend Fidelity or Schwab.  Otherwise, I'd go with whoever has the combination of the cheapest trades, the lowest minimums, and the best trading platform.

arch, are you a CFP, or CPA, or something? I ask because I've yet to find another CPA / gaming enthusiast combo such as myself, and I'm hoping you can prove that I'm not the only weirdo. Most of my peers and work acquaintances are very rigid and would think video games are childish and immature from a "professional" such as myself. Which is stupid, I know.  Not that I really talk about it at work or with clients / acquaintances, heh, but just saying.

And back on topic, I also call BS on that "financial advisor."

No, I do not work in the financial industry, I just stay well-informed since I want to take good care of that money I spend all my time earning.

Ok, that's great. It's rare that I see an individual not in the industry that knows so much on the topic. I wish everyone were as well-informed as you. Most of our clients don't really have an interest in knowing this kind of information. I think it's important to know, and people just don't want to take the time / effort to learn.

My brother spends his times doing the markets. His website is theaimboy.info. An amusing read... He does the AIM market (obviously) which is super risky but can be fun if you have some cash to throw around. I used to have quite a few shares but dumped them to pay for a massive holiday I had last year (safari plus following England round for the WC in SA!). I have a share account just need to stop spending all my money on holidays and NES stuff!

He's a long time friend of a long time friend.  I'm very interested if you think he's some kind of scam artist.  

The reason I am skeptical of this person, is that NOTHING is paying close to 12% fixed. Unless you are investing in extremely unstable and high-risk investments, I simply don't see how he could guarantee 12% fixed return on $1,000 (and that's certainly no guarantee even). Interest rates are extremely low right now, and I haven't seen CDs, bonds, or anything else pay 12% fixed.

It simply sounds too good to be true - in which case I think it probably is. Also, there are a million other financial advisers with access to similar information, and if there was a magical investment paying 12% I'm pretty sure more people would know about it.

I believe Arch said to stay away from these people because generally speaking, these kind of too-good-to-be-true promises turn out to be just that, or a scam.

I don't know this person, and I can't speak to their character or truthfulness, or where they get their information, but the disparity between what he offered and what is out there in the market is REALLY high.  It'd be one thing if he even said 6% even, but 12% is ridiculous.  I would be extremely cautious if someone told me about that.

If there really is something that he can do with your money to get 12%, it likely isn't a traditional investment and is something else high-risk.  Generally speaking, you can't get the return without the risk.

You should get a prospectus from him for us to look at.

I suspect that, best case scenario, he's misrepresenting what he's talking about, and that it's just regular investing in high dividend high risk bonds, or high dividend high risk closed-end funds.

PSEC was a closed end fund that Seth and Erik have championed for a couple of years running, and it's maintained a 10-20% dividend through that time, but there are significant risks to your principal, in all of these cases.

There is just no way to guarantee returns that high without putting the principal at risk, unless we revert to the late 70's/early 80's and you can buy Treasuries that pay 15%+

Yeah, I'd be skeptical of an analyst that can "guarantee" that rate of return.

As for myself, my profit target on SOL was 20% within 6 months. I'm actually already up 20% in under two months, but I would have never told my friends or family "Hey, give me some money and I guarantee I'll give you back 120% of it!"

It's one thing to risk your own money and quite another thing to risk another's. There's no such thing as a guaranteed high yield return in this market, but if you do your research you can find stocks with high probabilities of being successful.

Since you are a card guy Robin, let me put it to you like this.

You could find the best stock in the world and feel "guaranteed" it is going to make you 12%. But similarly, if I gave you a poker hand of 4 kings, you'd probably almost feel "guaranteed" to win. But if that person across from you is holding 4 aces... you're outta luck.