What is Digg?34 Comments
- serpentor, on 10/12/2007, -1/+12That isn't really saying much..
- shiftt, on 10/12/2007, -1/+10This shouldn't really be news. I started trading when I was 18 and so have many of my friends. There's a lot of people on the net that have been trading stocks as soon as they were old enough to open an account. This is a pretty emtpy article in my opinion.
- swimshaun, on 10/12/2007, -0/+8This article is simply dangerous. There are so many things wrong with what this guy is saying. Let's start off with a few.
1. being diversified does not mean owning "three or four stocks," it means owning a set of stocks that shares the risks across both capitilization and market segements
2. fundmanetals DOES NOT equal p/e, beta, 52wk high. the only fundamental he got right was dividend payout but I doubt he understand how to properly forecast dividend growth. P/E is merely a reflection of implied growth and a shortcut for those that are lazy and stupid
3. he has written of a entire segement of the market because "he got burned", what kind of logic is that. i once had a bad apple, now i don't eat anything red, wtf?
4. let "price targets" be your guide? it sounds like this guy is merely buying something at $30 and saying "oh, i'll sell at $35". he might as well use a magic-8 ball and have the same luck. the only reason you should buy the stock is if you feel the market is undervaluing the companies growth potential. This means you should have a feel for what the growth should be and then sell when it hits the price that information implies.
5. He uses 52wk high/low as a basis for judgement. That logic is right up there with, i've flipped this coin four times and it's landed heads each time, the next one has to be tails. - antipower187, on 10/12/2007, -1/+7That comment right there shows you dont know a damn thing about investing.
- invader, on 10/12/2007, -1/+7i agree, and neither is the article.
- spadin, on 10/12/2007, -0/+5First off, a 5% return for a year is not very good. In fact, you could open up an HSBC savings account and get close to the same return with little or no risk at all. For the amount of work he's putting in 5% is extremely low.
Secondly, why is everyone so pessimistic about the stock market? Seriously, the only people I've ever met that are negative about the stock market have never invested themselves and don't have knowledge of how the stock market even works. Don't judge something you don't understand. - jayc, on 10/12/2007, -1/+5Unless you're an investing genius (I'll break it to you now, very very few people are, even though they think they are) you're better off investing in a mutual fund. The first step to being enlightened is to realize you're dumb when it comes to the market. Nobody knows where it's going.
Best thing to do is buy a index fund from a company like Vanguard. The costs are much lower than other mutual funds, and chances are you'll actually beat actively managed funds. Costs are a major component in overall return. All you need to get started is $3,000. Then you can invest in $100 increments after that.
I wouldn't suggest it, though. Go get educated first. - jayc, on 10/12/2007, -0/+3Yeah, this guy is trying to purely market time.
"'I love buying stocks that are going to move, not blue chips you can sit on until you die,' he said."
$10 says the index beats him in 5 years.
Market timing is a losers game. He'll learn his lesson eventually. - volscio, on 10/12/2007, -0/+3He daytrades with only a $7,500 portfolio?
- invader, on 10/12/2007, -0/+3IIRC, etrade requires at least $1000 initial investment, and scottrade $500.. but there are others out there that might not require it
- tonyspencer, on 10/12/2007, -0/+3Not quite: it's what the market thinks it's worth, or what people will pay. The price is often uncoupled from the fundamentals. Look at the biotech bubble, the dotcom bubble, even going back to the south sea bubble and others. And I won't even mention Enron.
His rules sound sensible, and he seems a fairly good day trader: he's certainly beating the Wilshire 5000. The company board or fund managers make no difference. If they know more than other investors, that's insider trading.
One of the problems remains that some of the big fund investors are so huge, just one of them investing in a company can make a change, and they'll probably all jump in like sheep, and that can make smaller companies listing rocket.
I worked for a finance magazine once, and one of our columnists was an ex-trader. He once wondered how good the big boys were. So he looked at the performance of the top dog of the day. Sure, he made some multi-hundred million profits, but also some losses. But overall during his career, if you'd followed every trade he did, you would have made a slight profit, but you would have made more if you'd invested it in a building society and left it there...
[Building Societies are UK institutions where people save for houses, and pay about 1.5% interest ie less than inflation] - jfujita, on 10/12/2007, -0/+2Sounds like a complete amateur. This guy still has a lot to learn.
- Harry, on 10/12/2007, -0/+2The Efficient Market Hypothesis is a load of crap, ask any of the great investors, such as Buffet or Lynch. The market overreacts on the upside and the downside incredibly often.
What the kid in the article is doing is fine for entertainment purposes, but it is not intelligent if he wants to make a high return over the next 10+ years. - pythonkiss, on 10/12/2007, -2/+4I disagree with his strategy. We are young, and so time is on our side. Keeping stocks for longer periods has more advantages than selling them quick. Remember, time dilutes risk - jawad.shuzak.com
- covertbadger, on 10/12/2007, -0/+2@marysuze
I dunno, about 50 bucks would be enough to start, I reckon. You can easily invest in an index tracker for that. - ScottMitchell, on 10/12/2007, -0/+2I don't think you need tons of MONEY to be a good stock picker, but you do need marketspace knowledge and tons of TIME. The average Joe stock picker is just gambling based on some 'hot tip' a friend gave him or based on an article or two he's read.
Most everyone who has more income than is needed to feed and shelter them and their family, IMO, should have some exposure to the stock market, albeit through mutual funds or index-based funds rather than picking stocks themselves. - AlbinoRaven, on 07/06/2008, -0/+1I have a small pile I do the same thing with. It isn't related to my main investments of mutual funds, which unfortunately being in Canada, have preformed worse than a savings account or a GIC. However it's not a bad thing to be conservative when investing for retirement. If you're planning on screwing around, then shorting everything might be a decent hobby.
I started with 3k in a trade freedom account for ***** and giggles (cheapest in Canada at 9 a trade) about two years ago. I'm up to 12k now. I only Invest in small cap and learn about the various industries around them. Although I did get a lucky break, I ended up flushing all the ATAR (Atari) stock before it did it's reverse split (bought at .47 cents, sold at .52 before it stopped at .65 cents. I had capital after the sale and ended up buying Vmware on it's launch at 42 and sold at 60. VMware kept going to 72 and I was already long gone. As the kid in the article mentioned, don't be greedy and you wont get burned. And of course dont put all your eggs in one basket.
The 52 wk high/low thing strikes me as a little weird, but I'm sure that with his pile of cash he's having a good time and making things up as he goes along. Most investors, even the conservative ones, are fairly dogmatic and prone to ritual of some kind. He's just finding his investment quirks to make him feel comfortable on the market. No matter what the market offers, there is always risk (Enron is a sure thing!! lol poor buggers). - malfureon, on 10/12/2007, -0/+1hello efficient markets hypothesis!
stock prices implicitly reflect the value of the stock RIGHT now, give all possible available information. Of course, there are boundary cases in which this is not true, but the likelihood that Joe Investor at home is going to uncover a diamond in the rough today is very unlikely. the very internet that allows investors to find these diamonds also makes sure that their existence is noted as immediately as possible.
this guy is daytrading on a slightly expanded time horizon. He doesn't have as much information as (a) the company board, and (b) fund managers - there's no way he can generate returns on a consistent basis.
read this: http://tinyurl.com/esyqg for more information. - fitzfan, on 10/12/2007, -0/+1So i guess hes made 300-400 this year, for hours of work a day.
Should be trading options to make some fast money. - Mysidia, on 10/12/2007, -1/+2It's not really true that keeping a single stock for longer periods dilutes the risk, such a strategy may concentrate risk -- even w./long term plays normally thought relatively safe (big stable companies) they will eventually have major adjustments to make and can go bankrupt over the long term -- whereas if you held for a shorter number of years, and sold when earnings over a few quarters started sagging, you might have booked profit.
Growth can reasonably be expected to slow over time as a company gets larger,
has fully exploited its market, competition can begin to take a bigger bite -- price
wars between competitors (where previously a competitor did not exist) can
parasitcally reduce profit margins by a phenomenal amount, and these kinds of things
can have impact over a short period of time.
There is a tradeoff due to commissions -- buying or selling your whole position over a short range of time can be bad, because much of the return winds up going to the agent buying/selling for you; however, barring a massive positive price movement, an investment that should be bought is not likely to transform into one which should be sold, shortly after your purchase.
However, as an owner of something purchased as an investment, you should always be on the lookout out for a good deal, which means a person or a market willing to buy some of it from you for more than you think it's worth -- the more unreasonably high
the price you can sell for, the greater the percentage should be sold.
The earlier you sell and book a profit, the more opportunity you get to reinvest the
capital in undervalued instruments. - fitzfan, on 10/12/2007, -0/+1Hes gotten 5% in just over half a year, so hes on pace fro just under 10% for the full year, double your HSBC account. And 2ndly 5% is nothing too special, but the way the markets been this year its not bad at all.
- Mysidia, on 10/12/2007, -0/+1Efficient market hypothesis is why an investor shouldn't just go out and buy any company they feel will do well; people can and should wait for a good deal, buy when the rumor mill is predicting that the sky is falling on very little basis, when it is doubtful, when the prediction is highly irrational, and the price is reflecting the irrational belief, nevertheless, because though things may be bad, the sky does not fall often.
There is bound to be a psychological element effecting markets, which introduces
an inefficiency, because unjustified fears are hard to quantify, hard to assign
reasonable value, depend on the person, and have little to do with the true value
of the thing.
A market often reflects irrational elements beyond the rational value of something --- bad news will sometimes leave an unjustified cloud over the issue, I.E. price will fall more than justified, an opportunity to buy and have a profit later.
Similarly, a flurry of good news will sometimes lead to excessive hype, causing an unjustified increase in price, an opportunity to sell for a profit, so long as you got a better deal when you bought, or, otherwise, you might take the risky move of choosing to sell first [short] (and buy back when the hype winds down, and buyers become less euphoric). - NextGenXbox, on 10/12/2007, -1/+1I'm just like this guy. Wake up early. Trade stocks. Make money. :)
- asdfasdf, on 10/12/2007, -1/+1Anyone have any stock-market 101 sites where I can learn about this stuff? I've had some good luck predicting the fate of some products/companies.
- jfujita, on 10/12/2007, -1/+1http://www.investopedia.com/
- inactive, on 10/12/2007, -12/+12Ah yes... the stock market: America's only legal national gambling franchise.
- mp3chest, on 10/12/2007, -0/+0How much have u actually made and in what time-frame?
- hondoinvesting, on 10/12/2007, -1/+1I'm the kid from the article. I'm an active investor and not a trader. I don't move the kind of money that actual traders do. I understand the points about being able to time the market. I can't do that and I don't say that I can. Seriously, I'm a pretty average kid who has this for a hobby. I know many of you can do this better than me, however, I like doing it and happened to share it with the right person. I have a ton more to learn about the market, but I know that. If I come across the right stock at the right price I will sell out of all my positions and deal with it over the long-run. Sure like someone commented above, I could just let it sit in cash at 5% at HSBC, but I'd rather chance it. If anyone has any other comments for me I'd sure like to hear them.
- antipower187, on 10/12/2007, -4/+1Sounds exactly like me, except I made money on Lucent.
- Computer_Kid, on 10/12/2007, -8/+5 OH YEAH! It's 9:45 and google has raised .0002 points! OH YEAH!
- inactive, on 10/12/2007, -9/+0After reading all of this, what I have to say is:
My hobby would be stock picking too if I had tons of money to invest
Small investors get eaten up in the stock market, everyone knows that. Only the ones with big money actually get something from it in a long term.
Nice try though. Almost fell for it. - invader, on 10/12/2007, -12/+1haha beyotch.. i gotcha beat.. i don't check my stocks every morning (they're all intended to be mid-long term), and i don't really consider it a hobby or sport (um.. i always thought it was an investment).... but i'm a year younger than him..
- inactive, on 10/12/2007, -17/+1O really? Hey Mr. Smarts-who-likes-to-digg-down-the-dumber-than-him, so how much do I need to set aside to start investing in stocks?
Do something productive instead of digging down, and actually share your wisdom. - inactive, on 10/12/2007, -18/+1My hobby would be stock picking too if I had tons of money to invest! HAH
Small investors get eaten up in the stock market, everyone knows that. Only the ones with big money actually get something from it in a long term.
Nice try though. Almost fell for it.
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