Posted on Jun 24, 2018
Anyone have advice on investing or “gambling” with stocks?
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I have been told that putting some money into stocks could be rewarding if the proper research is done on that company. I know I wouldn’t not be making a ton but I’m looking to build up something extra. I recently have been using the app Robinhood and I love the layout. But I need to learn and gain experience before I really start. All I have ever heard from people is buy cheap, wait, and sell them for more. Looking for a little more info than that. So, what should I be looking to learn and focus on?
Money
Investing
Stock Market
Posted >1 y ago
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Go buy the book One Up on Wall street. My advice is don't invest in individual stocks unless you can afford to lose your money. You can make a lot of money or lose a lot of money in the stock market. Their is a principle in investing called the risk reward relationship. The higher the risk, the higher the reward or loss. High risk companies are those who are losing money, downsizing, and startups. Startups are very risky as many will go belly up. However, some start ups will become the new Apple or Google. One tool to use is the PE ratio or Price to Earnings ratio. Let's say company A has a stock price of $100 and its annual earnings are $10 for the last 4 quarters. The PE ratio is $100/$10 = 10. In theory it will take you 10 years at current earnings to recoup your investment of $100. The higher the PE ratio for a company equals higher risk of the stock as investors have bid up the price of a stock, as investors are counting on the growth of earnings.
High flying companies with high PE ratios and growth expectations over the previous year are high risk. If they report less earnings over the same quarter last year, the stock will crash.
There are blue chip stocks like Coke Cola which has slow growth and expectation so there will be little volatility in the stock. These are the biggest corporations in America.
There is also a market risk. The market will go up and down which will drag stocks with it.
If I was you, I would start with a mutual fund first which will diversify your risk. It will mirror the stock market to a degree with its ups and downs, but the longterm trend is up. The longterm growth of the stock market is like 11%. At this rate you can double your investment in like 6.5 years.
High flying companies with high PE ratios and growth expectations over the previous year are high risk. If they report less earnings over the same quarter last year, the stock will crash.
There are blue chip stocks like Coke Cola which has slow growth and expectation so there will be little volatility in the stock. These are the biggest corporations in America.
There is also a market risk. The market will go up and down which will drag stocks with it.
If I was you, I would start with a mutual fund first which will diversify your risk. It will mirror the stock market to a degree with its ups and downs, but the longterm trend is up. The longterm growth of the stock market is like 11%. At this rate you can double your investment in like 6.5 years.
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SPC Steve Bright
MAJ Ken Landgren - After graduating from undergrad I was able to break into Wall Street and worked there for about 15 years. I took a break at one point and joined the Army (very late). Seems like yesterday but most of my contacts have now retired! My first real job on the street was managing $1.5 billion which is a fair amount still but in my last job (prior to the one now) we were 10 people, 5 of which were back office, and we managed $160 billion. I have read a lot of books since then, even being mentioned here and there in the paper and in (one) book, but Peter Lynch's book allowed me to get my career going.
Ironically my first trade was due to him -- I bought shares of Gymboree the day it IPO'd, sold a bit later for like a 30% profit. My professor at the time and I did not get along because he believed in market efficiency and I argued against it. He had two PhDs, but no experience. Ironically I now work with a lot of PhDs and still think they lack experience. My current job is monitoring the markets for systemic risk (my area is municipals, leverage loans, and commodities), advising senior officials in Treasury/Fed/WH etc. Retiring soon and heading to the beach.
You? Are you still active?
Ironically my first trade was due to him -- I bought shares of Gymboree the day it IPO'd, sold a bit later for like a 30% profit. My professor at the time and I did not get along because he believed in market efficiency and I argued against it. He had two PhDs, but no experience. Ironically I now work with a lot of PhDs and still think they lack experience. My current job is monitoring the markets for systemic risk (my area is municipals, leverage loans, and commodities), advising senior officials in Treasury/Fed/WH etc. Retiring soon and heading to the beach.
You? Are you still active?
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MAJ Ken Landgren
SPC Steve Bright - I rode in helicopters, tanks, did finance/budget, and National Disaster Planning in the army. I have gratitude for experiencing a varied career. I retired from the army in 2013 with severe PTSD which is a double-edged sword. I do not have to work but I had a very rough going for several years.
I have three major projects. My primary goal is I supporting my wife the best I can because her heart is broken. We lost a 28-year-old daughter a year and a half ago. Irony is I have helped hundreds of people who have PTSD, but I cannot fill the void in my wife's heart nor fix her.
My second objective is writing a cookbook called Flavors from the World. I get bored with food thus I like different cuisines from various regions of the world. I am trying to encapsulate my culinary experiences in the cookbook. It is tedious and fun to work on this project.
My third major objective is ongoing. As a private citizen I look for and find people with PTSD that need healing. All the planets aligned for me. I healed myself. Then I wrote a lengthy PTSD Healing Paper I give to people, and most people will heal significantly. Some in a few days, weeks, or months. When I am done with the cookbook, I will write a book on PTSD. I think I will title it A Journey of Healing with PTSD. I have a good understanding of your feelings pertaining to the PhDs. Many people with PTSD can't be helped by the psychologists because they don't understand it. It's like if you had to find a fishing partner for a fishing tournament do you pick a partner who studied fishing or one who has experience?
Wow you had a lot of responsibility in the financial markets and you were successful! Can you give me clarity. Did my book recommendation jump start your career, or are you concurring that it was a good book to read?
I have three major projects. My primary goal is I supporting my wife the best I can because her heart is broken. We lost a 28-year-old daughter a year and a half ago. Irony is I have helped hundreds of people who have PTSD, but I cannot fill the void in my wife's heart nor fix her.
My second objective is writing a cookbook called Flavors from the World. I get bored with food thus I like different cuisines from various regions of the world. I am trying to encapsulate my culinary experiences in the cookbook. It is tedious and fun to work on this project.
My third major objective is ongoing. As a private citizen I look for and find people with PTSD that need healing. All the planets aligned for me. I healed myself. Then I wrote a lengthy PTSD Healing Paper I give to people, and most people will heal significantly. Some in a few days, weeks, or months. When I am done with the cookbook, I will write a book on PTSD. I think I will title it A Journey of Healing with PTSD. I have a good understanding of your feelings pertaining to the PhDs. Many people with PTSD can't be helped by the psychologists because they don't understand it. It's like if you had to find a fishing partner for a fishing tournament do you pick a partner who studied fishing or one who has experience?
Wow you had a lot of responsibility in the financial markets and you were successful! Can you give me clarity. Did my book recommendation jump start your career, or are you concurring that it was a good book to read?
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SPC (Join to see)
Before you go to a financial advisor, you need to read some basic knowledge.
I happen to use USAA, Fidelity and WealthFront but manage most of my own money, I have built a large savings due to long-term dollar cost averaging into the markets monthly and buy and hold strategy over the last 30 years.
If you want to understand these terms you will need to check out some websites that can help explain them.
A great place to understand your options is the USAA Educational Foundation, it is free.
https://usaaef.org
Before you go to a financial advisor, you need to read some basic knowledge.
I happen to use USAA, Fidelity and WealthFront but manage most of my own money, I have built a large savings due to long-term dollar cost averaging into the markets monthly and buy and hold strategy over the last 30 years.
If you want to understand these terms you will need to check out some websites that can help explain them.
A great place to understand your options is the USAA Educational Foundation, it is free.
https://usaaef.org
Personal Finance Education | The USAA Educational Foundation
The USAA Educational Foundation offers the military and local community tools, tips, and tactics to develop good financial habits for a personal finance plan.
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First, be wary of investment advice from the RP investment house.
But, you need to establish what your investment goals are. What your risk levels are. How much are you willing to lose. How much market volatility are you willing to endure. Etc.
A good rule of thumb is that the stock market always wins. Over extended periods, despite major trends up or down, the overall trend points up. If your goal is wealth growth, don’t buy stocks unless you’re willing to hold on to them for 10, 15, 20 years.
If your goal is hitting a short term home run...well start doing some homework and looking for the next bitcoin or google to get into early.
Those are general, excellent advice basics. Read warren buffet. Far better than anything you’ll get on RP. Talk to a legitimate financial planner. But in the words of the immortal Young Jeezy, “scared money don’t make money”. You can’t win if you don’t play.
Best of luck to you.
But, you need to establish what your investment goals are. What your risk levels are. How much are you willing to lose. How much market volatility are you willing to endure. Etc.
A good rule of thumb is that the stock market always wins. Over extended periods, despite major trends up or down, the overall trend points up. If your goal is wealth growth, don’t buy stocks unless you’re willing to hold on to them for 10, 15, 20 years.
If your goal is hitting a short term home run...well start doing some homework and looking for the next bitcoin or google to get into early.
Those are general, excellent advice basics. Read warren buffet. Far better than anything you’ll get on RP. Talk to a legitimate financial planner. But in the words of the immortal Young Jeezy, “scared money don’t make money”. You can’t win if you don’t play.
Best of luck to you.
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