Investing for beginners

[fruitcakesa]

At least look into dividend paying stocks of mutuals.
The advantage is that even during a downturn like now, they still pay; so at least the income stream continues.

 

[MinnesotaEric]

I haven稚 seen anyone recommend index funds as an alternative to mutual funds. Index funds are generally less loaded than mutual funds as they require less management. One tax related problem with investing in securities with your retirement plan is that you lose the tax advantaged cap gain treatment when securities are sold and the cash distributed to you.

My view is that everything purchased except for one fun position should yield some sort of dividend. The fun position is to keep yourself interested. The other stuff sort of pays bills.

Myself I'm not into wealth management (the goal of which is to MAINTAIN your buying power while siphoning off something to live on), I'm still trying to leverage my money to make more money. As a result, my safe positions are preferred stocks that effectively work much like bonds in that they have an issue price and a coupon based on that issue price. I tend to purchase mREITS, which are mortgage-backed instruments. These I buy more of when we have market corrections. I raise money to do so by ensuring I have trailing percentage stop-loses in place. For example by last week Thursday, I had been stop-lossed into about 40% cash and so when things looked pretty bleak, I dipped a foot back in and repurchased part of my old positions Friday at noon. By doing so, I effectively lowered my cost average on those positions I re-established that had been stop-lossed out on. I then set new stop-losses at half the difference in profit between what I was stopped out at, and my buy-back costs thereby ensuring that even if the market continued ugly, I would still get stopped out with half of my original profit intact. This Monday morning I did the same thing on new purchases and I rechecked Fridays stop losses. I expect that I will be stopped-out again and given the news-risk I'll wind up sitting back and waiting until everything just looks over-sold again, or all of the foreseeable bad news is seemingly is priced into the market.

This kind of active management you just cannot buy unless you're participating in an actively managed fund. The problem with active management is the managers of actively-managed funds like to churn stocks when nothing is going on and this winds up as "slippage" to your profits in the form of increased fees. Getting good at your own management allows you sit back and do nothing when Mr. Market is neither hot nor cold.

Speaking of Mr. Market, Mr. Market is an enormously useful vehicle in order to understand macro moved on global markets. A long time ago I made a Primer for understanding Mr. Market. I'm sure there are better videos as this thing is 12 years old now.

Pick up the video at 1:12 for those who are interested.

 

[/pine]

Buy this little book (Sticky Stock Charts) and spend one-half hour reading it, and a whole, brave new world will open up for you. Learning basic candlesticks is fundamental to being able to understand technicals.

All the technical analysis in the world is worthless if there is "news"...news is what drives stocks not technical data or analysis...

FWIW...one of the very first "internet abbreviations" EVER...was "NNN" it was found on the earliest Interent message boards and USENET groups for investing and stocks in general (long before surfing/ wave condition reports etc)...it stands for "No New News" and was the shebang required to start any off topic message...

 

[MinnesotaEric]

All the technical analysis in the world is worthless if there is "news"...news is what drives stocks not technical data or analysis...

FWIW...one of the very first "internet abbreviations" EVER...was "NNN" it was found on the earliest Interent message boards and USENET groups for investing and stocks in general (long before surfing/ wave condition reports etc)...it stands for "No New News" and was the shebang required to start any off topic message...

70% of trades are placed by algos that adhere to technical analysis. Every trader sticks to technicals, news cycles or not. Fundamental analysis simply informs the trader at what point a company is worth buying and at what point it is not. This is especially important to funds accumulating or selling positions. Regardless, technicals weather looking at minute candles or longer-term candles informs levels of resistance, levels of support, as well as a number of patterns that because the entire industry respect them, it tends to create self-fulfilling prophecies.

Nowadays, where the off-street meatheads hang out at is at reddit: the front page of the internet

 

[Tomtint]

All the technical analysis in the world is worthless if there is "news"...news is what drives stocks not technical data or analysis...

FWIW...one of the very first "internet abbreviations" EVER...was "NNN" it was found on the earliest Interent message boards and USENET groups for investing and stocks in general (long before surfing/ wave condition reports etc)...it stands for "No New News" and was the shebang required to start any off topic message...

IMO... there is no real "investing" on Wall St. All the big money makers pump and dump, Day trade, HF trade..all in effort to make money right now. The suckers i.e. "Long term investors" give them the money to play with, and have no recourse when things fail.
..The stock market is a suckers bet. ..A very select few make a very large amount of money..the rest get peanuts. Several years ago I cashed out every single equity I had and bought real estate... best thing I ever did for my financial future.

 

[/pine]

70% of trades are placed by algos that adhere to technical analysis. Every trader sticks to technicals, news cycles or not. Fundamental analysis simply informs the trader at what point a company is worth buying and at what point it is not. This is especially important to funds accumulating or selling positions. Regardless, technicals weather looking at minute candles or longer-term candles informs levels of resistance, levels of support, as well as a number of patterns that because the entire industry respect them, it tends to create self-fulfilling prophecies.

Nowadays, where the off-street meatheads hang out at is at reddit: the front page of the internet

And those levels of support and resistance are out the door depending on the news...
....The brightest minds coming out of college and being hired by the top financial firms are not being hired to run algorithms or even analyze the data from them...they are hired to do non technical DD...

Technical analysis is basically the tail wagging the dog...

 

[MinnesotaEric]

IMO... there is no real "investing" on Wall St. All the big money makers pump and dump, Day trade, HF trade..all in effort to make money right now. The suckers i.e. "Long term investors" give them the money to play with, and have no recourse when things fail.
..The stock market is a suckers bet. ..A very select few make a very large amount of money..the rest get peanuts. Several years ago I cashed out every single equity I had and bought real estate... best thing I ever did for my financial future.

Real Estate, rental real estate is likely the best way to build out a portfolio. One of the reasons I became a real estate broker LOL. That said, most mom and pop long-term investors have doubled or tripled their money over the last decade holding equities and bonds.

 

[MinnesotaEric]

And those levels of support and resistance are out the door depending on the news...
....The brightest minds coming out of college and being hired by the top financial firms are not being hired to run algorithms or even analyze the data from them...they are hired to do non technical DD...

Technical analysis is basically the tail wagging the dog...

Your argument is like saying both/and is better than either/or, except one must use either/or to claim both/and are better. When news cycles hit, based on the DD, the fundamental value of a company we make the determination that in the overhang of the news a company is either under or over-valued. We then look at the technicals even if people are mindlessly bolting for the doors. When you place a trade, any trade, you need to know a value to buy or sell at and that value is best based on technicals.

At best what we can say is that every market is in a constant action of discovery and as a result, likes news. As news is clearer and clearer the more accurate pricing may become. For example, I think it obvious that the markets will take another leg down and today's current relief rally will fizzle and fade and I'll get stopped out again at a profit as news of the coronavirus spreads.

 

[/pine]

Your argument is like saying both/and is better than either/or, except one must use either/or to claim both/and are better. When news cycles hit, based on the DD, the fundamental value of a company we make the determination that in the overhang of the news a company is either under or over-valued. We then look at the technicals even if people are mindlessly bolting for the doors. When you place a trade, any trade, you need to know a value to buy or sell at and that value is best based on technicals.

At best what we can say is that every market is in a constant action of discovery and as a result, likes news. As news is clearer and clearer the more accurate pricing may become. For example, I think it obvious that the markets will take another leg down and today's current relief rally will fizzle and fade and I'll get stopped out again at a profit as news of the coronavirus spreads.

It's not an argument it's an observation... New news is what makes individual stocks go up or down...not the past...

IMO if you want to own a stock buy it...waiting on insignificant numbers to fall into place is ludicrous...if you don't care about time...set up GTC limit orders with your low ball price...sometimes you get lucky...make for a nice surprise...likewise with sell orders (only high ball $) if you're reducing a position anyway...

On a little different subject...what do you think about the SEC possibly changing the reporting rules and eliminating 10-Q's ?...

 

[MinnesotaEric]

It's not an argument it's an observation... New news is what makes individual stocks go up or down...not the past...

IMO if you want to own a stock buy it...waiting on insignificant numbers to fall into place is ludicrous...if you don't care about time...set up GTC limit orders with your low ball price...sometimes you get lucky...make for a nice surprise...likewise with sell orders (only high ball $) if you're reducing a position anyway...

On a little different subject...what do you think about the SEC possibly changing the reporting rules and eliminating 10-Q's ?...

At this time I don't really know what to make of it. The SEC announced back in November that they were going to update due to tech, the reporting. Then they said, well wholly-owned subs of companies will report "different." Wut? I dunno what that means either. Today they make more announcements on reporting different and I am not following the stream of thinking. All to say, I dunno either.