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Help with Stocks -- Tips for a beginner

Discussion in 'Off Topic [BG]' started by Sonic_Death, Dec 20, 2006.

  1. Well I have decided to try to get into stocks a little bit seeing as I have a good amount of money lying around and nothing to do with it except put it in the bank. About $1500 to be exact, I was looking to invest about $1000 of it.

    Basically, I know nothing. Of course I am not going to just do anything without any knowledge, and my brother has done pretty well at stocks when he started at my age, so I am definitely going to go to him. I was just looking for any tips, advice, do's and don'ts, etc... Thanks :smug:

  2. ric1312

    ric1312 Banned

    Apr 16, 2006
    chicago, IL.
    Try elitetrader.com Will cut right through all the BS, lots of resources their, as well as reviews on books.
  3. bongomania

    bongomania Gold Supporting Member Commercial User

    Oct 17, 2005
    PDX, OR
    owner, OVNIFX and OVNILabs
    Just remember that the stock market is like a casino- you can make money if you get lucky and then quit while you're ahead. Keep playing and you will lose it again. Statistically speaking, of course- this is true for the majority of stock market players, but there are the edges of the "bell curve" as well, if you really apply yourself fanatically and happen to be lucky repeatedly. :)
  4. Trestles


    May 24, 2006
    Los Angeles, CA
    I will second the recommendation for the Coffeehouse book. It is excellent. I bought a copy for my Mom who learned a lot.

    Another great option is the Four Pillars of Investing by William Bernstein. It covers history, theory and business angles of investing. It is a heavy duty book. If you want lighter reading the Coffeehouse is what you need. If you want deeper reading go with the Four Pillars.

    One of the big concepts taught by these books is diversifying away from the basic S&P 500 portfolio. By including bonds and foreign stocks you can reduce the risk of losing money. Here's a chart of a coffeehouse portfolio against the S&P 500 to demonstrate:


    The coffeehouse did not grow as fast as the S&P 500 during the dot com runup, but it didn't fall as fast either. It is a steadier grower.

    Icarra is a website I run when I'm not playing bass. It has several example portfolios available, tracks performance, makes charts and so on. Most portfolios are created by other people.

  5. Headroom


    Apr 5, 2002
    There's plenty good advice in this thread. I did also want to congratulate Sonic_Death on taking an interest in investing at this point in life. A very smart move. I know most folks are aware of how great the benefit is to investing when they're younger, but it's so valuable I'll mention it again.

    This is excerpted from a book called "The Random Walk Guide to Investing" by Burton Malkiel:

    William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions (at age 40), William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

    Answer: James has $218,364.
    William has $1,365,227

    I know there are a lot of demands on one's cash when you're young, but if you have the ability to save, you can see how you'll be miles ahead of the everyone else. And you won't regret the decision.

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