How did you learn the stock market?
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As a friend of mine says, the lessons you pay the most for are the lessons you learn the best.
You learn about the stock market by losing money in the stock market. You just hope that it's not a lot of money that you lose before you learn the lessons which matter.
Experience, thoughtful discussions with friends who day trade and lots and lots of reading.
Do you plan to invest or day trade?
I learned NOT to day trade from those who day trade. My mother and father were day traders- true day traders from the '80's,'90s and stopped after 2006. Lost nearly everything not once or twice, but 3 times. but made over $1mil in 7 different years. Today, they are divorced... my mom's NW might be $120k, my dad's $100k... not including each own's modest homes.
I practiced buy and hold since I was 11. I don't hold into perpetuity... mostly just 3-5 years.
Other than that, growing a business that I invested under $20k of my own into one worth over $20 mil, managing the finances through those 7 years and trying to deal with the sale of it helped me learn finance pretty quick.
I used to average over 20% aror in the markets until 2008. I saw my portfolio shrink 40%. And I even cashed out a considerable amount at the beginning of the beijing olympiad (smart move, imo)... but what was left almost turned to complete carnage....
even though I am up 78% year to date this year, it does not nearly make up for the last 2 years of losses. Not including this year, my 15-year average has dropped to 12.7%, which in older posts here on terb I used to claim a 15 year average of 20-25%.
regression to the mean, i guess
I practiced buy and hold since I was 11. I don't hold into perpetuity... mostly just 3-5 years.
Other than that, growing a business that I invested under $20k of my own into one worth over $20 mil, managing the finances through those 7 years and trying to deal with the sale of it helped me learn finance pretty quick.
I used to average over 20% aror in the markets until 2008. I saw my portfolio shrink 40%. And I even cashed out a considerable amount at the beginning of the beijing olympiad (smart move, imo)... but what was left almost turned to complete carnage....
even though I am up 78% year to date this year, it does not nearly make up for the last 2 years of losses. Not including this year, my 15-year average has dropped to 12.7%, which in older posts here on terb I used to claim a 15 year average of 20-25%.
regression to the mean, i guess
Most finance websites (google finance, Yahoo finance, etc) allow you to setup portfolios and track stocks. This is a good way to understand the sometime violent fluctuations in stocks. My personal opinion is you should not venture into something you do not understand. I am not saying you are stupid just read up first.
I read the financial post everyday as well as watch BNN and read Canadian business. The advantage of this is if you see a company mentioned positively from multiple sources it is usually a good thing.
I once read that the stock market is 70% speculation which I beleive to be true.
I read the financial post everyday as well as watch BNN and read Canadian business. The advantage of this is if you see a company mentioned positively from multiple sources it is usually a good thing.
I once read that the stock market is 70% speculation which I beleive to be true.
For me, the bible of investment books is "The Investment Zoo". It is written by Stephen Jarislowsky, who is Canadian.
Read it again and again and again.
bruce
Read it again and again and again.
bruce
investing
My opinion is that long-term buy and hold of DIVIDEND stocks is the way to go.
If you're day-trading or buying and holding for capital gains only, I wish you luck. There are market forces and players that are just out of our control and the game is rigged for them big-time. The market crash of this past year makes that perfectly clear.
Open a brokerage account, and put your money in low-cost Exchange Traded Funds (ETFs). There are many to pick from (XDV.to XRE.to and CDZ.to are all good), that pay between 4-8% dividends. If the market takes a small downturn, it's a great time to pile in to good dividend stocks where you will also see some capital appreciation as well.
Day-trading, in my opinion, just does not work. If your time horizon is 20-25 years, compounding interest will be your FRIEND...
Do some calculations here:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
DO NOT BUY GOLD!!!!!!!!!!! When everyone and their dog is buying, it means it is time to get out, or stay away!!!!! DO NOT BUY GOLD!!!
My opinion is that long-term buy and hold of DIVIDEND stocks is the way to go.
If you're day-trading or buying and holding for capital gains only, I wish you luck. There are market forces and players that are just out of our control and the game is rigged for them big-time. The market crash of this past year makes that perfectly clear.
Open a brokerage account, and put your money in low-cost Exchange Traded Funds (ETFs). There are many to pick from (XDV.to XRE.to and CDZ.to are all good), that pay between 4-8% dividends. If the market takes a small downturn, it's a great time to pile in to good dividend stocks where you will also see some capital appreciation as well.
Day-trading, in my opinion, just does not work. If your time horizon is 20-25 years, compounding interest will be your FRIEND...
Do some calculations here:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
DO NOT BUY GOLD!!!!!!!!!!! When everyone and their dog is buying, it means it is time to get out, or stay away!!!!! DO NOT BUY GOLD!!!
I know you asked how to learn about the stock market but my advice is to get a good broker and learn from his/her advice. A trade will cost you about $115 but the advice can make you money now and save you from costly mistakes. I've been with the same broker since 1982 and I've been investing steadily since then. After almost 28 years of following the markets and generally paying attention, I'm not a bad investor but she still has far more savvy than I do. The vast majority of the stock picks in my portfolio were recommended by her and the trading costs have been repaid many times over. Nobody gets it right every time but she gets it right far more often than I ever will.
Learning how to invest is not easy to do, especially if you are not having any success in picking stocks, mutual funds etc..
It has taken me a good 20 years to understand what I should be doing, and even now, I second guess myself.
A "dividend based" portfolio is probably the best strategy, by far. I recommend that you learn Options trading, as this method can reap great rewards that you can't imagine. Options trading is not for everyone, but if you trade conservatively, you can do very well.
Day trading requires discipline and this can take years to understand why..
Good luck with your investing and happy trading...
bruce
It has taken me a good 20 years to understand what I should be doing, and even now, I second guess myself.
A "dividend based" portfolio is probably the best strategy, by far. I recommend that you learn Options trading, as this method can reap great rewards that you can't imagine. Options trading is not for everyone, but if you trade conservatively, you can do very well.
Day trading requires discipline and this can take years to understand why..
Good luck with your investing and happy trading...
bruce
Read the following books should help,
1) The Intelligent Investor by Benjamin Graham
2) Common Stocks and Uncommon Profits and other Writings by Philip A. Fisher
3) The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein
4) Are you a Stock or a Bond? By Moshe A. Milevsky
5) Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment by David F. Swensen
Of course you have to live within your means, balance the budget and save the dough, including decrease the frequency for hobbying when necessary before you invest. Otherwise everything are just simply academic exercises.
BTW, you could try to write CFA exams and take Accounting courses for "fun".....
1) The Intelligent Investor by Benjamin Graham
2) Common Stocks and Uncommon Profits and other Writings by Philip A. Fisher
3) The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein
4) Are you a Stock or a Bond? By Moshe A. Milevsky
5) Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment by David F. Swensen
Of course you have to live within your means, balance the budget and save the dough, including decrease the frequency for hobbying when necessary
before you invest. Otherwise everything are just simply academic exercises.BTW, you could try to write CFA exams and take Accounting courses for "fun".....
many horrible investors and money managers have read all of the above.... so don't think it will teach you how to preserve and make capital...
you still have to develop a 'knack' for evaluating risk and opportunity... and avoiding gambling.
why is it that the truly best investors in the world average from 12%-25% lifetime average annual returns? and why are they not day traders? some important questions to consider... from my own family's experiences, I am kinda anti day-trading, though, I do quite frequently buy and sell trades each day, but it is a <1% part of my portfolio! I day trade just to keep 'in the market' and practice my 'trigger finger' so to say. I used to use 'fake' money programs to trade, but the same care and conscern doesn't apply as it does when you really do invest your own $$$.
But, I liken my trading activities to that of practice or a rehearsal... I want to keep my skills fresh...
Like a cop that does frequent target practicing may go an entire career without ever having to fire while on the beat.
you still have to develop a 'knack' for evaluating risk and opportunity... and avoiding gambling.
why is it that the truly best investors in the world average from 12%-25% lifetime average annual returns? and why are they not day traders? some important questions to consider... from my own family's experiences, I am kinda anti day-trading, though, I do quite frequently buy and sell trades each day, but it is a <1% part of my portfolio! I day trade just to keep 'in the market' and practice my 'trigger finger' so to say. I used to use 'fake' money programs to trade, but the same care and conscern doesn't apply as it does when you really do invest your own $$$.
But, I liken my trading activities to that of practice or a rehearsal... I want to keep my skills fresh...
Like a cop that does frequent target practicing may go an entire career without ever having to fire while on the beat.
My advice is, if you are going to invest, do it for the long term. Nobody can time the market. If you could time the market, everyone would be rich. Buy good quality dividend paying stocks and hold on to them. Dividend growth is seldom discussed, but if you buy companies who consistently increase dividends, you will reap the rewards forever. I know investors don't like the "buy and hold" strategy, but this is really the only way to make money. Forget about all those "stock tips" that you hear about. It's a long shot that you will actually hit a stock that will make you a "millionaire". I've been trading for over twenty years and got slaughtered buying BreX, Nortel and countless other speculative stocks that got me absolutely nothing in return. I sure some of you have similar experiences. When I do buy on speculation, it is small. I give myself a set goal in terms of return and get out as soon as I hit it. For example, when rumour of RIMs earnings would exceed expectations, I bought 300 shares at $66.50, once earnings were announced and the stock shot up by abount $8, I got out and made $2,400. Atleast this paid for my Christmas expenses. Good luck to all of you in your investing conquests.
What, you tell him to buy dividend paying stocks then say you made good money on RIM a no div stock?? lol... I woundn't be to focused on dividends as they are a sign of a mature company and rapid growth is behind them in most cases. I have no need for BCE or any company that soon will not have much room for growth.
b d
b d
Do not listen to anyone who tells you to avoid these types of securities and only buy these other ones. Each and every asset class has its place in the market place. You must learn the nuances of each one, know how they work, how to value them and most importantly how and when to use them. You may in fact never buy certain securities, but your reasoning should be justified based on your strategy.
The stock market is built upon information asymmetry. Theoretically speaking, trading should not exist. With the assumption of rational thinking, if you are selling me something that means you don't want it, and if you don't want it, then why should *I* be buying it? Clearly, someone must be making a *mistake* here. Of course, nobody believes they are the one making the mistake. Always keep this in mind before you hit the submit button on your online order.
There are many many schools of thought when it comes to investing, which is used to explain the "trading shouldn't exist" theory. Naturally, everybody thinks their method is right.
IMO, nothing tops experience. But with experience comes ego, the biggest danger in investing.
In the end, objectivity in your analysis is the best investment advice I have to offer.
The stock market is built upon information asymmetry. Theoretically speaking, trading should not exist. With the assumption of rational thinking, if you are selling me something that means you don't want it, and if you don't want it, then why should *I* be buying it? Clearly, someone must be making a *mistake* here. Of course, nobody believes they are the one making the mistake. Always keep this in mind before you hit the submit button on your online order.
There are many many schools of thought when it comes to investing, which is used to explain the "trading shouldn't exist" theory. Naturally, everybody thinks their method is right.
IMO, nothing tops experience. But with experience comes ego, the biggest danger in investing.
In the end, objectivity in your analysis is the best investment advice I have to offer.
The first decade of the 21st century has not been kind to U.S. equities. Heard on the radio that this is the worst 10 year return (half a per cent) in over 200 years.
Slow but sure, money can be made in the stock market (same as real estate). Helen White, with her husband, owned a small hardware store in a small Nova Scotian town. Helen recently passed at 96 and she willed her stock portfolio worth $6million to her local church.
Anyone currently involved with leveraged ETFs such as horizon beta gas/oil
HNU - HND / HOU - HOD ?
They seem to be a balance of risk/volatility/reliability between long term stocks & penny stocks.
HNU - HND / HOU - HOD ?
They seem to be a balance of risk/volatility/reliability between long term stocks & penny stocks.
Learn technical analysis and Fibonacci retracements. Combine that with a mastery of the strength indicators, trading volume and price momentum and you may have a shot.
Just follow a stock, do technical analysis and analyze its price fluctuations, after a while you'll know where to find your $5/share and turn trades profitable.
I talked to a millionaire in Toronto who owned many businesses throughout his life, he's 45 now, what he told me is that you can't make as much $$$ in any business as you can in the stock market. He made 30k last month trading and 3 millions this year.
Just follow a stock, do technical analysis and analyze its price fluctuations, after a while you'll know where to find your $5/share and turn trades profitable.
I talked to a millionaire in Toronto who owned many businesses throughout his life, he's 45 now, what he told me is that you can't make as much $$$ in any business as you can in the stock market. He made 30k last month trading and 3 millions this year.
... just trade GLD on New York Stock Exchange using technical analysis and you'll be better off.
SLV is better pick IMHO
Or DBA if you're bullish on agricultural commodities like the real Dr. Doom Marc Faber claims for the best investment idea in 2010.
Right now I am "less pessimistic" on USD as there could be massive short covering on USD carry trade.....
Some of this stuff is getting way too complicated. Just buy the "Big 6" Canadian banks, collect the dividends, watch your portfolio grow, get married and raise fat children.
Sure, just invest the following ETFs,
For Canada only,
RRSP & TFSA-XBB, XSB, XCB & XRB
Non-registered accounts-XDV, XRE, CPD & GLD/SLV
For Canada, US and the rest of the world
RRSP-TIP, BND, BSV, WIP, BWX & MUB
TFSA-XBB, XSB, XCB & XRB
Non-registered accounts-XDV, XRE, CPD, GLD/SLV, VT, VEU & VWO
Of course, you need to live below your means, keep an eye on budgeting, have the cash to max out RRSP & TFSA annually before you could even think of implementing the strategies above.
Make sure you use discount broker like TD Waterhouse or Scotia iTrade, not full service brokers where the well-dressed salesperson try to sell you expensive wrapped financial products like hotcakes.
And don't forget maxing out RESP contribution room and government "free money" for your fat children tuition fees. You don't want to have them coming back to your house, saddle with huge student loans looking for jobs after graduations
