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market meltdown
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08-15-2007, 07:42 AM
If the Fed drops the rate later this month or early next, even a quarter, and I think they may, that will be the bottom. Meanwhile, these flat spots and mild corrections are a boon to anyone buying, and in particular anyone dollar cost averaging. Dumping shares or units in favor of cash or bonds right now would probably be a mistake. But this is what makes it fun.
08-17-2007, 02:35 AM
Hey.. I'm new to investing I would like to buy some stock now that it has lowered. Any suggestions at this time and also what is a good online company to buy stock from?
08-17-2007, 02:52 AM
Hi Dori
I would suggest you go to the library and check out "Real Money" by Jim Cramer. It is non technical and will give some valuable info on how to operate in the market. Following stock tips is a sure way to lose money. That being said, I think some of the tech sector that has no exposure to mortgages have been unfairly beat down and may represent good bargains here.
08-17-2007, 03:23 AM
Hey Dori, I don't do stock tips but tdameritrade is the online broker I use, some others I know use scottrade.
Scott
08-17-2007, 05:42 AM
Stock tips are a bad idea in part because the tipper doesn't remember to tell the tippee when his/her research indicates it's time to get out. I'm a buy and hold kinda guy, but nothing lasts forever, and at some point you're going to want to sell.
Buy what you know. If you don't know, do the research. Here's a fun and easy way to get started. I've suggested this to many people over the years and alway seem to get positive feedback: Read a few financial magazines or go online and find a highly rated and widely diversified mutual fund company. Pick one whose web page is easy to navigate, has low fees and none for tranfers within the company, allows phone and on-line transactions, and doesn't tightly restrict transaction numbers. Open an account with a deposit into some milktoast fund like a money market, then go shopping. Get onto their web page and read a little about each of the funds. There will be dozens of them. You'll be looking at more than just past performance - things like the manager's credentials, investment goals, objectives and strategies, etc. Determine what YOUR investment goals are, and compare that to theirs and to the degree of risk you're willing to take (remember, risk is your friend). Narrow it down to a few, then get into those few in depth. Decide how diversified your portfolio is going to be - that is to say how many funds are you going to own. Mutual funds are somewhat diversified by their nature but also usually diversified by category. Learn exactly what stocks make up each fund and how they've done since the inception of the fund. See if you can identify a trend and ask yourself based on everything you know if you think that trend will continue. I'm talking politics, sports, weather, national and world events and economies, everything. Past performance is one indicator, but if the fund has done well for short periods and you can't figure out why, don't invest in it. On the other hand, when you find something you like, something that really does make sense to you, pick up the phone and buy it. (Take deep breath here) Once your portfolio is established, you'll want to watch it work. It's a living thing and needs to be nurtured. Look up the fund's performance by symbol and add that page to your favorites (it'll refresh depending on how your computer is set up). That way you're never more than a click away from seeing how it's doing. I check most of mine every day. When I see one start to slip, or one outperforming the others, I find out why. If I see a trend developing I adjust my portfolio accordingly. If you see one component of your fund (a stock) doing particularly well, and you think, based on your research, that trend will continue, you can always open a stock account and invest more heavily in it. Most mutual fund companies limit the number of times per month or year you can reallocate your portfolio, particularly for international funds. In and out of the fund is called a "round trip". This is done to discourage market timers. So, research up front is all important. But, when you see things moving in a different direction, by all means fix it. Investing in things you have little or no control over isn't for everyone. I'm lucky in that it's one of my hobbies (and I really enjoy it), but also my income. It has a tendancy to open your eyes to things you otherwise would not have seen. Good luck and have fun.
08-17-2007, 07:56 AM
I would do like I did, and get out of the market quick, and put it all in CDs or similar. That will avoid the roller coaster stress and potential huge losses.
08-17-2007, 08:13 AM
Thanks Brad for your insightful thoughts....would you have any pros/cons with No-Load type companies, are their fees hidden or paid in the back end?
08-17-2007, 08:22 AM
Dori,
Consumer Reports did a survey and ratings of popular online investment services in the June 2007 issue that you can probably find in your local library. Here are links to some of them: http://www.tdameritrade.com http://www.scottrade.com http://www.schwab.com http:///www.fidelity.com http://www.etrade.com http://www.bankofamerica.com/investments I have personally been using Schwab since before the Internet (B/I) and I was having to use Compuserve and BBS's for online information. I have been very happy with them because they have been around a long time (survivor) and seem to be on a continuous improvement roll. Schwab offers banking services through their Schwab Bank subsidiary. I have also been happy with their ability to link my brokerage account to my day to day banking account. I am thinking about switching my checking sinc they offer a high interest rate. Most of the large banks also offer online trading. Some like Bank of America offer free trades if you have a qualified regular bank account. I also like Schwab for their online tools (stock/Mutual Fund/ETF screeners and analyst reports as well as data on stocks,mutual funds ( fees and tax efficiency) and ETFs. Some of the premium services like analyst reports require a minimum portfolio size. I consolidated all of my IRAs into Schwab. I like Yahoo for researching and analyzing stocks. http://www.finance.yahoo.com allows you to create and track portfolios so you can test your stock picking before you commit real money. They have a really spiffy stock screaner. I would suggest you understand the meaning of the basic criteria (like P/E, PEG, ROA, Current Ratio, etc) and know what is good/mediocre/bad before doing your own investing. Yahoo has some pre-built screens you can use to test your understanding. Stick with Highly rated mutual funds and ETF's until you do. You also need the discipline to read and understand 10K reports instead of the glossy annual reports. Try to find other people who have the same interest in investing and form a club where you can meet and explain things to each other. I have always found the best way to test you knowledge of a subject is to try to explain it to someone else. Investing intelligently is very hard work. Use the advise in various investing columns as a starting point for more research and not let someone you don't know make your investing decisions. If you are not willing to spend the time to research and learn, I would suggest gathering a handfull of chicken bones instead. Larry Larry
08-17-2007, 08:58 AM
quote: Putting your money in a CD is a sure way to lose money. You get 5% annual interest, you pay tax on it and in the meantime there is a 4% inflation. Your starting principal is worth less at maturity six months later. Aloha, John S. Rabi, ABR,CM,CRB,FHS,RB http://www.JohnRabi.com Typically Tropical Properties "The Next Level of Service!"
08-17-2007, 10:07 AM
Dumping units or shares in favor of CDs would have been damned insightful in mid-July. Not so much if in the last couple of days. The Fed dropped the rate today by half a point (didn't someone predict that?). And the basics are all in place for a sound economy. Investors will be chomping at the bit for Monday's trades.
With regard to fees and loads - I always figured they'd get theirs. The important thing is to ask enough questions that you really understand and accept the fee schedule before you buy. And there's nothing at all wrong with shopping your investments around. I've never had them try to hide anything if I asked specific questions. Mutual fund companies sell a service, they're nothing without customers. |
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