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TranceAddict Investors Club @ Marketocracy (pg. 100)
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| LazFX |
Ok you money making twats.. ;) lets say I have came into a small fortune from a land sale I recently finalized.. and lets say its around 50k that I want to set aside to invest...
Point me in the right direction, should I stay American or should I invest in foreign markets?? If so, what fund should if jump on ?? What company should I look into???
I am a total noob at this and I want to secure another point of income that I can draw on when I get old. |
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| Krypton |
| quote: | Originally posted by Shakka
$2 stocks that trade an average of 250,000 shares a day are the realm of day-traders and stock manipulators. The stock has traded 4.4M shares today (on what is one of the lightest volume days in the markets in recent memory) on a float of 58M shares. Try explaining why FRE is up 20% when just about everyone and their mother believes the common stock is going to be wiped out within the next few weeks! |
I believe STSI is worth less than $1 based on the fundamentals. So, do you think in this case, fundamentals will prevail in the long run? They have negative net income, but positive overall cash flow from the sum of Operating, Investing, and Financing Cash Flow. |
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| Shakka |
| quote: | Originally posted by Krypton
I believe STSI is worth less than $1 based on the fundamentals. So, do you think in this case, fundamentals will prevail in the long run? They have negative net income, but positive overall cash flow from the sum of Operating, Investing, and Financing Cash Flow. |
I know little to nothing about this company. But given the news today (which I have barely even read), do you think the fundamentals have changed? Obviously it is trading up on a short-term event. For that reason I'd guess it could easily reverse if this news is not a sign of a meaningful change in their business. |
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| Krypton |
| quote: | Originally posted by LazFX
Ok you money making twats.. ;) lets say I have came into a small fortune from a land sale I recently finalized.. and lets say its around 50k that I want to set aside to invest...
Point me in the right direction, should I stay American or should I invest in foreign markets?? If so, what fund should if jump on ?? What company should I look into???
I am a total noob at this and I want to secure another point of income that I can draw on when I get old. |
I'll tell you what I tell every newb. Don't take my advice as the holy grail, or as professional advice. It's just what I suggest.
1. Decide what you investment objective is. There are two...
-Capital Appreciation: This objective is to increase the value of your capital by purchasing highly appreciating assets.
-Capital Preservation: This objective is preserve the value of your capital while slowly growing its value, but the purpose is not to grow your capital value.
So what do you want to do? Do you want to make money investing in stocks? Or do you want to play it safe, and stay in bonds, which make you dependable income, but the value of your capital grows very very slowly. If you want to do both, you must allocate how much of your capital is going to appreciation, and how much is going to capital preservation.
2. Once you decide on your investment objective, you must decide what to invest in.
-Appreciation: To appreciate your capital, you must invest in value appreciating assets, i.e. stocks. If you know how to read financial statements and understand underlying fundamentals of a stock, it's best to invest in specific stocks. But since you are a newb, the best thing for you is to invest in index funds, i.e. ETFs. The specific ETFs I suggest you invest in are market weighted ETFs. ETFs are something you buy, like a stock, but instead of the stock value correlated to the underlying company, ETFs are correlated to an underlying index. I suggest you buy an ETF which tracks well-established indexs, like the Dow Jones, S&P 500, or the entire stock market as a whole. Here are some names ---> VTI, SPY, IYY ---> You should know that the majority of money managers fail to beat the market, so I would not suggest you invest in a mutual fund, or manage your own money if you are a newb.
-Preservation: To preserve your capital but still receive a reliable income, you can buy a bond ETF. I suggest BSV which yields you 3.63%. You can also buy a Certificate of Deposit (CD), or put money in a high-yield money market account.
3. As time goes along, you buy n hold, through thick and thin. You would be invested in the market as a whole. It does go up and down all the time. But over time, the market has gone up 10% a year for the last 100 years or so. That's with all the bad things that happened like, WWI, Great Depression, WWII, Vietnam, Cuban Missile Crisis, 1970's stagflation, 1987 stock market crash, Iraq Wars, 9/11 terror attacks, etc. etc. Reinvest your dividends for even higher returns. |
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| Krypton |
| quote: | Originally posted by Shakka
I know little to nothing about this company. But given the news today (which I have barely even read), do you think the fundamentals have changed? Obviously it is trading up on a short-term event. For that reason I'd guess it could easily reverse if this news is not a sign of a meaningful change in their business. |
It sure as hell isn't worth over $2, let alone $1. I'm betting on a steep fall at some point. |
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| mndeg |
| I'd just like to say that on Friday I noticed extreme bullishness on VIX options and today Monday it's almost as equally bullish. This means that people are almost as bearish on tomorrow's sentiment as they were on Friday. |
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| Capitalizt |
lazfx, whatever you do, don't jump into stocks all at once. If you want to get into mutual funds, etc..you should average in over time..putting a fraction into the market every month. That way if the market drops, you buy more shares at cheaper prices. Going all in puts you at risk for a big loss. And remember, there have been several periods through history where the market went NOWHERE for decades and you would have been better off in a savings account.
Personally I think the market is going to drop over the next few years so I'm staying 100% out of it. If you want to diversify, I'd recommend you put about 10% of your $$ in physical gold and silver as an inflation hedge, 40% in broad based index funds, and 50% in a nice 4% guaranteed CD. That should give you some exposure to rising prices if the market goes up, but if the market tanks, you should still be able to sleep well at night. |
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| mndeg |
I don't think long exposure in a bear market is a good idea. Inverse ETF would be a much better idea. Markets still looking for a quick turnaround in housing. My dad transferred his entire 401k into money markets a while ago.
Remember that we're still 20% off our highs. |
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| Krypton |
| quote: | Originally posted by Capitalizt
lazfx, whatever you do, don't jump into stocks all at once. If you want to get into mutual funds, etc..you should average in over time..putting a fraction into the market every month. That way if the market drops, you buy more shares at cheaper prices. Going all in puts you at risk for a big loss. And remember, there have been several periods through history where the market went NOWHERE for decades and you would have been better off in a savings account.
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Why would you ever trust the overwhelmingly under-performing managers of mutual funds with your hard earned money? |
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| Krypton |
| quote: | Originally posted by mndeg
I don't think long exposure in a bear market is a good idea. Inverse ETF would be a much better idea. Markets still looking for a quick turnaround in housing. My dad transferred his entire 401k into money markets a while ago.
Remember that we're still 20% off our highs. |
I wouldn't recommend something like the for a newb. It's best newbs just stick basic market ETFs. |
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| Shakka |
| quote: | Originally posted by Krypton
Why would you ever trust the overwhelmingly under-performing managers of mutual funds with your hard earned money? |
Because they're not all underperformers. |
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| Krypton |
| quote: | Originally posted by Shakka
Because they're not all underperformers. |
I didn't say ALL were under performers, but the vast majority are. Then take into account the management fees, taxes, and commissions. These really eat into returns. Even if I was working for a mutual fund, which might happen in the next couple months, I still wouldn't recommend to anyone to invest in a mutual fund, unless they ABSOLUTELY POSITIVELY trust the money manager in charge of the fund. Otherwise, I think it's idiotic to give your hard earned money to some unknown manager, to take risks he would never take with his own money. |
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