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Thread: Stock Market Questions from a Newbie

  1. #1


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    Stock Market Questions from a Newbie

    Hello all,

    I realize this is a blackjack forum, but I have benefitted from other topics being discussed - like stock market stuff.

    However, I often find myself almost reading another language as you veteran stock market folks post your advice, etc. I know virtually nothing about mutual funds, bonds, futures, cryptocurrency, etc., but I have an extremely analytical mind. And I hear now is maybe a very, very good time to buy (certain?) stocks.

    So, more specifically, can you recommend to me maybe an online beginner's stock market primer or resource (e.g., an informational website or YouTube video created by someone you really trust)?

    Some questions (that I realize are extremely basic) I have:

    1) Can stocks be bought or sold for free?

    2) What are some good sites? Is Overstreet one? (I think they emailed me ownership in one share of Groupon or something.).

    3) Can I begin VERY small, like with $100 or so, and maybe buy a small amount of stock in 4-5 companies in obvious? (considering the virus) companies like FedEx?, UPS?, biotech?, medical supply?, Amazon?, etc?

    4) Over the long run, can someone who is a newbie realistically make 2% or so per week by investing?

    5) What is day trading? Why is it apparently so difficult?

    6) Can shares be bought at, for example, 10 am and then sold later the same day for an extremely small profit? (Maybe this is day trading?)

    7) What are some pitfalls or common mistakes newbies make, such as having unrealistic expectations?, maybe using certain poor websites?, not diversifying?, giving up too soon?, paying too much for trades?, acting out of fear?, trying to tackle high risk things? (like futures?), hiring a broker?, not hiring a broker? etc.

    8) Any final, not unkind words of wisdom/ recommendations for a very small-time newbie willing to learn and work hard and be patient to make lots of money slowly over the next 10 or so years?

    Thanks in advance!

  2. #2


    1 out of 1 members found this post helpful. Did you find this post helpful? Yes | No
    OK, I'll give it a shot. But not in-depth responses.

    "I realize this is a blackjack forum, but I have benefited from other topics being discussed - like stock market stuff.

    "However, I often find myself almost reading another language as you veteran stock market folks post your advice, etc. I know virtually nothing about mutual funds, bonds, futures, cryptocurrency, etc., but I have an extremely analytical mind. And I hear now is maybe a very, very good time to buy (certain?) stocks."

    It may be early, but major indices are down 20% for the year and 25% from their recent highs, so many consider that buying at these depressed levels offers a good opportunity. And, while that's probably true, I'm not at all sure that the pain is over.

    "So, more specifically, can you recommend to me maybe an online beginner's stock market primer or resource (e.g., an informational website or YouTube video created by someone you really trust)?"

    Investopedia is quite excellent. Go here: https://www.investopedia.com/article...invest1000.asp


    "Some questions (that I realize are extremely basic) I have:

    "1) Can stocks be bought or sold for free?"

    Virtually. Major online brokers like Vanguard, Fidelity, Charles Schwab, TDAmeritrade, and ETrade all offer transactions at little or no cost.


    "2) What are some good sites? Is Overstreet one? (I think they emailed me ownership in one share of Groupon or something.)."

    Not bad; https://www.forbes.com/sites/steveschaefer/2016/01/05/10-things-you-absolutely-need-to-know-about-stocks/#66f722563f57
    https://www.thestreet.com/topic/47701/how-to-invest-in-stocks.html


    "3) Can I begin VERY small, like with $100 or so, and maybe buy a small amount of stock in 4-5 companies in obvious? (considering the virus) companies like FedEx?, UPS?, biotech?, medical supply?, Amazon?, etc?"

    Not really reasonable. It would not be even ONE share of some stocks. Current price of Amazon: $1,925 for ONE share!! Of course, that isn't typical. Even buying the index SPY ETF (exchange-traded fund of the S&P 500) would be about $260.

    "4) Over the long run, can someone who is a newbie realistically make 2% or so per week by investing?"

    So 100% return on your money every year??!! Er, NO!!!! Average annual return of the S&P 500 is about 6%. 8% with dividends. If you try to beat it by picking individual stocks on your own, you will almost certainly do worse. Every year, about 10% of mutual funds and hedge funds outperform the S&P. The rest fail dismally. You will fail, too.

    "5) What is day trading? Why is it apparently so difficult?"

    Don't even THINK about it. I won't even answer the question. Again, forget that it exists!

    "6) Can shares be bought at, for example, 10 am and then sold later the same day for an extremely small profit? (Maybe this is day trading?)"

    Yes, it is day trading. See above.

    "7) What are some pitfalls or common mistakes newbies make, such as having unrealistic expectations?"

    Well, with what you wrote above, you can put that at the top of the list!!

    "maybe using certain poor websites?, not diversifying?, giving up too soon?, paying too much for trades?, acting out of fear?, trying to tackle high risk things? (like futures?), hiring a broker?, not hiring a broker? etc."

    All of the above.

    "8) Any final, not unkind words of wisdom/ recommendations for a very small-time newbie willing to learn and work hard and be patient to make lots of money slowly over the next 10 or so years?"

    Invest what you feel comfortable with in the S&P 500 index. Do NOT pick individual stocks. Don't even try. Use one of the sites for which there are NO fees at all (currently Fidelity, Vanguard, and Schwab, for sure. There may be others). Then forget all about it and come back in ten years to see how you've done. :-)

    Good luck!

    Don

  3. #3


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    Excellent post, Don. I was particularly interested in how you would res[ond to #4.

  4. #4


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    Quote Originally Posted by Overkill View Post
    1) Can stocks be bought or sold for free?
    Many accounts qualify for free trades of various types of equity vehicles. Some have minimum account balances. I think with Vanguard they allow free trading of their own ETF products. Others may be similar, but I'm most familiar with Vanguard.
    Quote Originally Posted by Overkill View Post
    2) What are some good sites? Is Overstreet one? (I think they emailed me ownership in one share of Groupon or something.).
    I'd second the recommendation of Investopedia
    Quote Originally Posted by Overkill View Post
    3) Can I begin VERY small, like with $100 or so, and maybe buy a small amount of stock in 4-5 companies in obvious? (considering the virus) companies like FedEx?, UPS?, biotech?, medical supply?, Amazon?, etc?
    I would not recommend it. Can you? Yes. But I would urge you to NOT buy individual stocks with such a small amount as you'd have have no way to get adequate diversification. But if you're interested in specific sectors as seems implicit in your question, I'd recommend looking into an ETF. Some can be quite specific in sector they cover and you'll be getting a basket of stocks so getting diversification. And some do fall into the price range you're looking for, though you may need to look around.

    Quote Originally Posted by Overkill View Post
    4) Over the long run, can someone who is a newbie realistically make 2% or so per week by investing?
    No. Simple. No.

    Quote Originally Posted by Overkill View Post
    5) What is day trading? Why is it apparently so difficult?
    6) Can shares be bought at, for example, 10 am and then sold later the same day for an extremely small profit? (Maybe this is day trading?)
    At one time it might have been possible to "day trade" as you describe (buying and selling in the same day for a small profit), but with the huge companies now employing algorithms scouring every market for discrepancies to exploit in milliseconds, it is no longer feasible.

    Quote Originally Posted by Overkill View Post
    7) What are some pitfalls or common mistakes newbies make, such as having unrealistic expectations?, maybe using certain poor websites?, not diversifying?, giving up too soon?, paying too much for trades?, acting out of fear?, trying to tackle high risk things? (like futures?), hiring a broker?, not hiring a broker? etc.
    Yes.

    Quote Originally Posted by Overkill View Post
    8) Any final, not unkind words of wisdom/ recommendations for a very small-time newbie willing to learn and work hard and be patient to make lots of money slowly over the next 10 or so years?
    You mentioned cryptocurrencies -- a basic word of advice is not to get caught up in any particular fad. As you're starting small, be realistic and have patience. I'm not sure how old you are, but if you're young then you have the advantage of compounding ahead of you -- the past few weeks notwithstanding, over great enough periods of time markets have traditionally rewarded those who take prudent risks. Take advantage of every tax advantaged account you have access to (if you're with an employer who offers a 401K, max that out to the extent feasible, otherwise, look into Individual accounts -- for example, I keep detailed records of my bj activities that meet IRS requirements so that I can plow much of my earnings into a SoloK). This won't help with current income, but compounds the effects of compounding since taxes are not eating into it until you qualify for taking it out.
    Hope that helps.

  5. #5


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    Fractional shares are now a thing, so you should be able to start investing with just $100.

  6. #6


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    Quote Originally Posted by Meistro123 View Post
    Fractional shares are now a thing, so you should be able to start investing with just $100.
    But what would be the point??? To have $110 by the end of the year??

    Don

  7. #7


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    Quote Originally Posted by DSchles View Post
    But what would be the point??? To have $110 by the end of the year??
    Better than putting it in a savings account and having $100.50 by the end of the year.

  8. #8


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    Wow - I am grateful to receive such respected advice from investing experts! And to receive it pro bono too! Thanks so much to all who took the time to reply, especially Don and UNCBear 4SJ.

    I am 50 years old. And as I mentioned, I am extremely analytical, as are many on this forum. However, If I am reading the responses to my original post correctly, there is no really prudent way for me, someone with virtually no money and who knows little to nothing about investing, to apply my keen eye for detail and obsessive work habits to the stock market?

    I was hoping with time and lots of research I could 'go the extra mile' and be thusly rewarded according to my efforts. But it sounds like for me I probably wont reap what I sow (in other words, more effort probably won't equal more success), correct?

  9. #9


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    Quote Originally Posted by 21forme View Post
    Better than putting it in a savings account and having $100.50 by the end of the year.
    Maybe. Because, in a year like this one, the $100 in the market could be $60 at the end of the year!

    Don

  10. #10


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    Quote Originally Posted by DSchles View Post
    Maybe. Because, in a year like this one, the $100 in the market could be $60 at the end of the year!
    True, but I think you've been reading too many of MWP's posts, thinking short term.

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