I was wondering if anyone here makes investments or trades stocks, for fun or as a more serious option. I thought BP was a good choice 2-3 weeks ago when it was trading at 330, I bought some, it went down to 305, it peaked at about 420, I sold at 410, and it’s hovering around 390-410 for now. It’s quite exciting, though the gains are admittedly quite small when you’re risking only a little money and subtracting tax and commission.
Does anyone trade/invest? It would be good to exchange ideas and see if we’re right.
One justification for the purchase was that its market cap had dropped by about 60bn from its pre-spill peak, while its liabilities and loss of earnings were likely to be capped at 50bn according to the most dire estimates, and far less according to more benign ones, and the fact that the company has tangible assets (oil) which can only appreciate in value.
I’d wait on investing in oil as a long term investment for awhile. Given that there isn’t any way to assign total costs of the gulf mess, government clamping down on safety requirements (worldwide), the costs of doing business has no where to go but up. Until we see what this means at the pump for the average consumer, oil investment may not be as profitable as it has been in the past. Joe Sixpack could decide to rein in energy usage as the oil companies try to boost prices to maintain their high profits. The gulf mess just might be the shot that killed the golden goose.
I stealth-shop - you barely see me anywhere near a shop, until BOOM I’m there, and then before you can say “would you be interested in a store card…?” I’ve already bought 3 pairs of combat pants and am halfway home.
A (stereo)typical male attitude to shopping, that I’m afraid I’m guilty of.
No browsing.
No trying stuff on…in a dozen different sizes and colours.
No chit-chat with, nor logistical demands of, the staff.
No purchasing a loyalty card or chic designer shopping bag.
In and out in as little time as possible.
Us!
Agreed. I think that the Gulf Oil Leak is the antithesis that the campaigners for renewable energy needed against which their campaigns can take effect. Average people don’t respond to potential advantages in the future the same way they respond to real disadvantages in the present.
You can buy stocks through your bank. If you have internet banking, you’ll probably need to set up an ‘investment account’ which lets you buys bonds/stocks and then clears the amount from your current account.
I didn’t buy BP to hold, but just to ride the optimism wave as I figured there would eventually be one. I don’t think there’s going to be huge repercussions for the oil industry, accidents do happen, and noone is going to rein in energy when big screen tv’s, electric vehicles and ipods all need electricity to run and oil prices should be on an upward trajectory in the near future once the ‘double dip’ fears are settled. That’s my view. I am holding the bank because I figure their returns should normalize within the next few years after their aggressive writedowns and massive market consolidation so their shares should similarly increase in value.
I did, but I pulled the vast majority of it out to pay down some credit cards so I could get a good rate on my home loan, and to bring up my credit score so I could get a home loan at all…lol
My best buy was Sirius satellite radio when it was at about 0.08/share and I sold it at just over a dollar per share.
No. Oil is a fine investment if you’re looking for a buy & hold scenario. If the eco-fascists have their way, it will drive the price through the roof - but as reality dictates oil is still, and will remain, by far the single most valuable resource across the planet, price (and therefore value) have only one direction to go - despite the costs of doing business. This is econ 101. The costs of doing business only serve to drive price up when the elasticity of demand is low. This means that since we have no choice but to consume massive quantities - and ever increasing quantities - of oil - governments making it more expensive will do nothing but force producers to raise prices. If government says “no no - you can’t raise prices” - they simply close their doors and shift business models - further reducing supply and jacking up the price.
Oil has only one place to go. Up. The question is which company to invest in.
That would make sense - if the “pumps” were the only variable. Remember that our increasingly “plastic” civilization is only made possible by oil. And while joe sixpack may have the pleasure of reducing consumption at the pumps - the mass industrial complex that has no choice but to continue using oil in all facets of production will continue to do - and will drive up the prices for all of its products to compensate.
And what about your AC or heater? Television? What about the industrial scale electricity demand that exists at this very moment? Supplied in North America almost exclusively by oil and natural gas? What about them? Are they going to cut back too?
Oil remains, like gold, a great investment in this increasingly uncertain economic situation. At the very least - it is a commodity - and a holder of value.
In short - unless you have a strong background in fundamental/technical analysis - most experts are advising to avoid playing the stock market. Volatility is at nearly unprecedented levels - which is toxic to amateurs like us.
Your best bet is to learn about ETFs - and find a good blend of globally diversified ETF portfolios that provide a stable “total return” across fixed income, commodities and equities. In my opinion of course.
Good to see you here! Was wondering why you didn’t get back to me on those Economist articles. Just had a quick look at the ETF thing. But I understand that buying indexes or tracker funds is generally not a good idea because although your losses may be offset by gains in another security under the fund/index, your gains are prone to the inverse of the same idea. Better to handpick a number of stocks you believe have good potential to make gains. I’d buy options but I can’t seem to by my account, I’m going in to my bank soon to find out how/if I can. I only buy things after consulting people around me, though I think I have a good track record so far, and the volatility’s good, makes for easy gains when things are undervalued (eg BP, or anything in March 2009). I’m a bit weary of “investor sites”, if a lot of people buy the same thing recommended on these sites the price will go up but it won’t be a safer or better investment, if that’s what the site you’ve linked does. Reuters itself can do a good job of giving you a decent idea of how companies are doing and it’s free. And of course, there’s Bloomberg.
But again, to me this is just a bit of practice, excitement, and first hand experience in what moves idle money around everyday. There’s a whole lot of ‘magic’ around working in finance here. Even though I’m not in finance by training, I understand a lot of mech eng graduates go into it so it’s something I’d like to look into. Being a trader or broker seem to be the two top options for minimum work and maximum payoff/minimum risk compared to just about every job in any sector. You have both money and a life.
I know, I know. I disappeared back to Canada for a month to study and write some exams - and came back to a hectic work schedule. Am just finding time again to peruse and participate. I’d still like to continue the earlier discussion - so I’ll see how I get on.
There are countless studies, and real life, current examples to the contrary. The mechanism that you’re trivialising as “generally not a good idea” is diversification. When you purchase a handful of stocks that you “believe” may generate returns - you’re making what amounts to an uncovered bet on that stock. You may win - you may not - and statistically speaking, you’re far more likely to lose than you are to gain. The way around this - is by spreading out your investment into a “portfolio” – hence the theory of portfolio management. Your objective is to generate consistent “absolute” or “total” returns - regardless of what certain classes of stocks may be doing in the short run.
Active and passive portfolio managers - or “wealth” managers - seek to generate these overall returns for a given investment value by evaluating both the individual investors risk appetite and the prevailing market indicators - across many industries and governments - to find a well diversified portfolio of securities (stocks, commodities, cash, fixed income) - that are resistent to any single loss event (ie: shift in fed interest rates) - but also exposed to potential short and long term gains - thereby generating consistently positive, strong returns.
ETF’s are capable of achieving all of this - with much less initial cash - with minimal overhead costs - and great flexibility.
Generally speaking, stock selection as an investment strategy - unless you know something - is unwise. In today’s economic climate - even the expert managers are avoiding the stock markets. Volatility is crushing everyone. Everyone but the ETF people…
What’s your 12 month total return? Ie: capital growth and income generation? What makes you think BP is undervalued? Options are a great tool if you know how and when to use them - but they’re there’s no such thing as a free lunch - so be careful.
Why don’t you go there and read a little. It is not a securities pump & dump site. They make no recommendations - other than things such as: a) look to reduce modified duration on your US agency fixed income, or b) look at the possibility of shifting to a greater percentage of commodities as part of your overall portfolio. But generally - they prefer to simply discuss/comment on any number of emerging market trends, long term movements, theories, expectations, etc.
What’s your formal education in? I’m going to go out on a limb and wager it’s not in finance or economics. What kind of research do you do before investing in a stock?
Financial sense is free also. But isn’t MSM. Your call.
Exactly.
No magic. Just randomness - most of the time. Statistically speaking - even the best managers are only the best because they got lucky a few times. Sad truth - but just the nature of human beings engaged in trade.
It’s a lot harder to break into that industry than you think. It’s one of my goals one day too. Good luck to you!
Ok thanks now I know what diversification is! And knowing is half the battle. What I was referring to was the performance of key indices (FTSE 100, S&P 500, Dow Jones). If you’d invested in any of them in 2000, or even after the dot com bubble, you’d be making modest gains or even a loss depending on the purchase/sell dates. Again, I don’t know about these ETF’s but indices like those above don’t have a good history of performing. Maybe ETF’s are different but I’ll need to look into them more. The “don’t invest in indices” is from a book written by a hedge fund manager (David Einhorn - Alliance Capital) and the said performance. Picking 10 companies you know well or know the management of as part of that same diversification strategy is a different matter, I never implied that it was a matter of belief or a random bet. I don’t think my choice of Lloyds and BP were random bets. The volatility is exactly why you find undervalued companies on a regular basis, lest we go back to 2005-2007 and everything’s at a consistent stable and probably overvalued price.
My return has so far been about +20% but again it’s a small amount and the gains are minimal in absolute terms. The price shifts a lot as well if you look up Lloyds. It’s more fun and the idea of free money than risking huge amounts. A friend of mine had an Excel based “model” to determine volatility etc and choose between options/stock so I’ve learned a little and my own reading of the reference books (e.g. John Hull). BP was clearly undervalued because I made a gain! But really, a 60bn drop in market cap and withholding dividends when your company deals in tangible assets that are bound to appreciate is an obvious buy, certainly for the short term. I consulted some people and some said it was risky, others agreed it was undervalued, I figured it’d go up, and I was right. 330 to 410 nearly 25% over a week is definitely decent.
I’m a mechanical engineer but I live in London, the uni’s got one of Europe’s top business schools so we get a lot of banks advertising around, and a number of friends work or intern at banks so there’s a lot of exposure to that environment. The research is basically going out reading about the company’s market share, the market size, projected market growth, future liabilities, simple assessment of business model risk, the competition, as well as seeing if the directors are purchasing or selling. I consult with 1 or 2 of my professors who’ve made the right calls, see what they advise me, and then if I like the overall picture and get a good “feel” about it, maybe I’ll buy it.
I meant there’s a lot of magic around the profession, even though a lot of people got laid off and there was the whole crisis, it’s still seen as an elite club. Certainly by those in it.
But I’m in London so there’s more people working in and more jobs available. As I’ve been told, “It’s not what you know but who you know”. Let’s see how it goes
I’d still like to continue the earlier discussion - so I’ll see how I get on.