Stock Investing

[pwny]

23 minutes ago, theJ said:

So in all seriousness, these people messed up by endangering their entire net worth on "small" investments (well, except for that guy that lost 3.7M, wtf lol).  I can understand the urge to trade some stocks.  It's not my hobby of choice, but i can see the thrill.  And it's necessarily dumb, although the overwhelming majority make less than the S&P average.

What's dumb is betting enough on margin trading or shorting to jeopardize more than 5-10% of your net worth.  I think some of it is people not understanding the danger.  But i'm sure some think they'll just never get caught.  They're "too smart".  None of this stuff is remotely predictable enough to gamble things like the money you need for food, your mortgage, or even your retirement.  

You really have to view this the way “smart” gamblers do. You budget this in as a hobby, understanding that once the money is in, it’s gone. You get whatever thrills you enjoy out of the trades and watching, but know that you should never count on that money to be there next week or even an hour from now.

If you’re in it with the intent to win, you’re going to lose 95% of the time. And they can be disastrous losses.

If you want to earn money with stocks, play it safe and take the 6-8% growth every year. You’ll double your money every 7 years. 

[Shockwave]

1 hour ago, iPwn said:

You really have to view this the way “smart” gamblers do. You budget this in as a hobby, understanding that once the money is in, it’s gone. You get whatever thrills you enjoy out of the trades and watching, but know that you should never count on that money to be there next week or even an hour from now.

If you’re in it with the intent to win, you’re going to lose 95% of the time. And they can be disastrous losses.

If you want to earn money with stocks, play it safe and take the 6-8% growth every year. You’ll double your money every 7 years. 

If you put the time in to learn proper risk management and you go into it with a trading plan you can be quite profitable in short term swing trading. I started seriously trading in July and by the end of the year my account was up 15%. Nothing spectacular. And yea I would have been more profitable  just buying the SPY but I learned some crucial lessons that will last me a lifetime. I never expose more then 1/8 of my capital to one position. I scale into and out of positions. I rarely ever take a loss because I always leave enough capital in cash to average down until a position goes green for me. Then it's just a matter of letting them run. I mostly stick to large cap high volume stocks, avoid earnings weeks and ex-dividend dates. Once you figure out one or two dependable signals it's actually not that hard to make some side money in the market.

[ramssuperbowl99]

18 hours ago, iPwn said:

You really have to view this the way “smart” gamblers do. You budget this in as a hobby, understanding that once the money is in, it’s gone. You get whatever thrills you enjoy out of the trades and watching, but know that you should never count on that money to be there next week or even an hour from now.

If you’re in it with the intent to win, you’re going to lose 95% of the time. And they can be disastrous losses.

If you want to earn money with stocks, play it safe and take the 6-8% growth every year. You’ll double your money every 7 years. 

Exactly this.

In general, people are far too focused on the return of their investments. That's only 1 component of actually building wealth, along with developing their skills so they can earn more money, and managing their lifestyle so they can save more of money the money they make. And of those 3 components, market returns are far and away the one that is most difficult to control.

The person who saves 50% of his/her income is going to be financially independent in 15 years with a 7% return (assuming the same expenses). The person who works hard and gets promoted or takes new jobs enough to double his/her salary over that time period and increases the savings rate to 66% would cut that time down to somewhere around 10-11 years. The person who saves 15% like a standard retirement with a 10%, ridiculous return that would make any hedge fund manager flashback to glorious montages of Wolf of Wall Street level debauchery is going to need to wait nearly 30 years to be financially independent.

 

If you want to gamble on individual securities since it makes you happy or it helps you learn about something you didn't know before or whatever and you have the rest of your financial life set, it's not any worse than going to Vegas with your buddies. But if you're dependent on those higher returns, you're probably neglecting some other areas of your financial life. If you think you can consistently beat the S&P 500, you're either a high level trader with years of experience in a major financial firm (in which case you aren't reading a stock thread on a freaking football website) or you're an amateur who is completely unaware of how little resources, quantitative ability, and experience you're bringing to the table.

 

EDIT: There's one exception to beating an S&P 500 index fund. If you have enough money where you can buy the different stocks that make up most/all of the S&P 500, you can sell any that lose money and use the losses to help reduce taxes on the dividends you might be paid out. You'll end up paying them down the line, but you can defer them more than you can with an index fund. But that's including realistically a few thousand dollars in transaction fees from making all of the individual trades, so you'll need a ton of starting capital to get that going. And if you have that, you should be spending your time on a beach somewhere.

Edited February 8, 2018 by ramssuperbowl99

[mission27]

#missionwasright

Buckle up gentleman.  This is the big one.

[TheVillain112]

14 minutes ago, mission27 said:

#missionwasright

Buckle up gentleman.  This is the big one.

Right about what?

[mission27]

1 hour ago, TheVillain112 said:

Right about what?

Massive stock market crash incoming.

[theJ]

8 minutes ago, mission27 said:

Massive stock market crash incoming.

So you shorted the market then right?

[Shockwave]

Ehh no biggie. I made a killing on TVIX today. But I'm certain it's just a correction. The FED increasing rates plus the looming shutdown have people frenzy selling and the VIX jumping.

[mission27]

1 hour ago, theJ said:

So you shorted the market then right?

More or less, yes.  

[theJ]

On 2/8/2018 at 10:40 AM, ramssuperbowl99 said:

The person who saves 50% of his/her income is going to be financially independent in 15 years with a 7% return (assuming the same expenses). The person who works hard and gets promoted or takes new jobs enough to double his/her salary over that time period and increases the savings rate to 66% would cut that time down to somewhere around 10-11 years. The person who saves 15% like a standard retirement with a 10%, ridiculous return that would make any hedge fund manager flashback to glorious montages of Wolf of Wall Street level debauchery is going to need to wait nearly 30 years to be financially independent.

This is a good post, and says in a different way what i try to explain to people sometimes.  Yes, rate of return is important.  You don't want to put your money in CD's and get 1.5% the rest of your life.  But the far more important rate is the rate at which you invest.  If you spend all your free time doing market research, playing games with individual stocks and make 14% to my 10%, but only put 5% of your income into it, i'm going to kill you on returns because i'm putting in 30%.

[ramssuperbowl99]

1 hour ago, theJ said:

This is a good post, and says in a different way what i try to explain to people sometimes.  Yes, rate of return is important.  You don't want to put your money in CD's and get 1.5% the rest of your life.  But the far more important rate is the rate at which you invest.  If you spend all your free time doing market research, playing games with individual stocks and make 14% to my 10%, but only put 5% of your income into it, i'm going to kill you on returns because i'm putting in 30%.

Not an easy thing to explain, because the people who most need to hear that message are the people who will think it's physically impossible to save 20, 30, or 50% of your income.

[cddolphin]

should change the title to "Investing" tbh

[Dome]

So I'm at a point that I want to start investing, figure better late than never and with my 27th birthday coming up it seems like a good opportunity to kick things off.

 

Just a little background... Wife and I (no kids) have 9-months combined salary for an emergency fund. In the next 2 or so years I aim to be self employed and would like to see that grow to about 12-months worth of combined salary, but with no kids and none on the horizon I'm not SUPER worried about that right now. Wife and I do a good job saving each month as well, and if this investing endeavor is at least enjoyable some of that may make it's way into the stock market instead of the savings account.

My IRA at work matches up to 3%, I'm putting in 5% of my own but might bump that up a bit. IDK a lot about this stuff, the guy managing it suggested we be a little more aggressive because I'm young and nows the time to try to do that. Sounded good to me so that's what I went with. I'm admittedly a bit out of the loop on what he's doing but I trust him, he's been managing 3-4 of my coworkers accounts for 10+ years and they all love him.

Aside from that, I have $1,000 that I'd like to begin to grow outside my IRA. I've been wanting to for a while, but have been hesitant.  Somone school me. Best sites or books to read in your opinion? Any good youtubers or podcasts for a total beginner? I've been doing some reading on other websites and will continue to do so, but I want opinions from the fine folks at FF as well.

Thanks in advance!

[MWil23]

50 minutes ago, domepatrol91 said:

So I'm at a point that I want to start investing, figure better late than never and with my 27th birthday coming up it seems like a good opportunity to kick things off.

 

Just a little background... Wife and I (no kids) have 9-months combined salary for an emergency fund. In the next 2 or so years I aim to be self employed and would like to see that grow to about 12-months worth of combined salary, but with no kids and none on the horizon I'm not SUPER worried about that right now. Wife and I do a good job saving each month as well, and if this investing endeavor is at least enjoyable some of that may make it's way into the stock market instead of the savings account.

My IRA at work matches up to 3%, I'm putting in 5% of my own but might bump that up a bit. IDK a lot about this stuff, the guy managing it suggested we be a little more aggressive because I'm young and nows the time to try to do that. Sounded good to me so that's what I went with. I'm admittedly a bit out of the loop on what he's doing but I trust him, he's been managing 3-4 of my coworkers accounts for 10+ years and they all love him.

Aside from that, I have $1,000 that I'd like to begin to grow outside my IRA. I've been wanting to for a while, but have been hesitant.  Somone school me. Best sites or books to read in your opinion? Any good youtubers or podcasts for a total beginner? I've been doing some reading on other websites and will continue to do so, but I want opinions from the fine folks at FF as well.

Thanks in advance!

I'm more old school than most, but I'd aggressively pay off most/if not all debt before you invest, especially student loans. Then I'd refinance to a 15 year mortgage. If you've done those, you're off to a great start.

[Dome]

39 minutes ago, MWil23 said:

I'm more old school than most, but I'd aggressively pay off most/if not all debt before you invest, especially student loans. Then I'd refinance to a 15 year mortgage. If you've done those, you're off to a great start.

No CC debt, studen or auto loans. Just our mortgage.

We just bought our house last year but will be looking to refinance at the end of this year, or maybe next depending what options we have.