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Thinking of throwing in the towel
- Thread starter nursebee
- Start date
Interesting you want to learn investing when we're at the cusp of the second Great Depression.
Quote from achilles28:
Investing in a range-bound market is a great way to rack up losses. S&P was ~breakeven this past decade. I would suggest a couple things.
1) Buy and hold will work again. Research the PIIGS and American debt crisis. Central Bankers will have no choice but to print money, as they have in recent years. This is bullish for equities, especially commodities. Long equities, miners and oil stocks will do well in the next 10 years.
2) Shift from a long-term investment perspective, to a swing-trading one. Make a couple trades a week. Use Daily or 4 hour charts. Learn technical analysis (trendlines, price action, support and resistance etc). Start small, maybe with a grand or two, get the hang of it, then size up. Traders can and do make money this way, everyday, using simple methods outlined above. You've got capital on your side. Most traders blow-up not because it's impossible, but because they're undercapitalized. Within 6 months, using real basic stuff, strict risk management, you can average at least 5% a month. Sounds like a lot with nice stake, and it is.
The moral of the story is fundamental-based investing has gone to crap. In todays market, it's rarely about any rising star company (yes the googles, apples and bidus happen, but are the exception). Now, in this environment, asset prices are driven largely by monetary policy. A rising tide buoys all ships etc. Understand credit growth and destruction, it's toggle effect on risk-on/inflationary assets (equities/commodities/real estate) and risk-off/deflationary assets (bonds and cash), combine with simple trend following methods outlined above, and you're on your way.
+1
I would add: learn chart reading - technical analysis, money management, etc. There are many free videos on YouTube for this. Some are good and some are crap. Buyer beware - caveat emptor.
Quote from nursebee:
I've been doing some reflecting, hope to get some feedback from others that have been doing this for a while...
Known: I have never met anyone realtime that made their fortune investing in individual stocks.
I have lost a lot of money investing.
If I continue to invest in stocks it will not change my current lifestyle, it will only effect retirement timing and comfort level.
I started following the market in 2007, made and lost a lot of money. I maximize 401k for myself and spouse. I reflect and review my trading, it was too rapid and fast paced, principal error keeping me from the big money was not holding onto stocks in overall bull market, and not holding onto shorts in overall bear mkt. I was too leveraged. Now, I listen more to the inner small voice in my head and have held onto a couple of issues for many months with plans to hold for years. I am principally interested in just equities, with an eye on futures/commodities.
I've been reading more from a buy and hold low cost index investing area, specifically that of John Bogle ilk. I started out with this stuff 10 years ago, might well have been better had I stayed the course, certainly so in my trading accounts. My attention to the market really helped out the big money in 401K, saving me from big losses and also guiding me back into the market within a few months of the overall bottom.
So what I am trying to figure out is if this is a fools game or not?
Is the excuse of paying all this tuition money really part of the game?
Do people really turn it around and get profitable?
Have any of you consistenly made money in stocks with buy and hold?
It is tough to know what all the lies are that I tell myself.
Any thoughts?
If I was to give advice to anyone new, I'd say to maximize tax advantage accounts in low cost index funds and to not join the individual investor ranks.
You really can't go wrong with Index Investing . you might try the boglehead forum
http://www.bogleheads.org/forum/viewforum.php?f=10
lots of smart people but moderation is OVERBEARING to say the least, I suggest you just lurk.
Quote from nursebee:
I am not interested in daytrading. It is a path of ruin for me in many ways. The only thing I would consider along this line is fading the opening hour of select issues. Not in my immediate future.
I am not interested in pips, not a term I am familiar with, though I see it thrown around here. Not interested in currencies, short term holdings.
I am "Joe Retail" at home, drawing inspiration from many resources but now focused on just what I like and suits me. I focus on IPOs of the past several years, in areas I can understand and grasp, with leadership I believe in, with marketshare to be grabbed. I have a full time job and plan to keep it for many years.
If you suspect I am a lurker trying to cast doubt, take a look at my >3yr public blog at 4nursebee.blogspot.com
More doubt should be had in this arena anyway. Trading is zero sum. I know many people that have lost a lot of money, yet nobody that has made money.
Nope trading is a negative sum game whereas investing is a positive sum game.
Just buy gold
To OP - there was a recent thread about how trading paid off. Several around here sincerely posted about how well trading has paid off. Yes there are plenty of retail guys who have made it, but many more who haven't. It really is a difficult game. No one seems to know what the actual figure is of losses, but most clearly do fail.
I think you should consider how much you plan to make, how much time you have to spend, and how much of a difference it will really make. If you are just interested in buy and hold equities, put it in a equities managed account. If you have enough cash, do a hedge fund. The difference between buy and holding equities yourself and day trading anything yourself on luke warm knowledge and work will just be the amount of time it takes to blow up your account.
An in person mentor will really work. Have you cold called before?
If you do decide to put in the effort to do the equivalent of an MBA* on your own, start with focusing just on futures. Forget equities. With small retail accounts, the only chance you'll have is in leverage. You obviously won't come close to using all the leverage. 2:1 or 4:1 on equities, or the nonsense buy-and-hold retail grandpa account, won't work but waste time and some money.
Do you have any friends or former coworkers who worked in finance? Anyone in person?
* I say the equivalent of an MBA in terms of work load. Getting an MBA will not prepare you.
cheers
I think you should consider how much you plan to make, how much time you have to spend, and how much of a difference it will really make. If you are just interested in buy and hold equities, put it in a equities managed account. If you have enough cash, do a hedge fund. The difference between buy and holding equities yourself and day trading anything yourself on luke warm knowledge and work will just be the amount of time it takes to blow up your account.
An in person mentor will really work. Have you cold called before?
If you do decide to put in the effort to do the equivalent of an MBA* on your own, start with focusing just on futures. Forget equities. With small retail accounts, the only chance you'll have is in leverage. You obviously won't come close to using all the leverage. 2:1 or 4:1 on equities, or the nonsense buy-and-hold retail grandpa account, won't work but waste time and some money.
Do you have any friends or former coworkers who worked in finance? Anyone in person?
* I say the equivalent of an MBA in terms of work load. Getting an MBA will not prepare you.
cheers
get out of here loserQuote from blowingup2012:
Just buy gold
First you need to learn how to not loose money and preserve your capital, and only then talk about making money.
Here's what I'm doing for my daughter's college fund:
1. Get a list of stable stocks that pay a nice dividend , and you believe that will never go to ZERO. I have 8 of them.
2. Separate each one into legs,
Example:
XYZ trading at 30
30, 25,20,15,10,5
Steps:
1. Buy XYZ at 30, have a sell target to sell for 50% profit.
2. XYZ drops to 25, buy a number of shares equal to the capital of your first purchase. Preferably rounded up to 100ds
3. Sell calls at 1 to 2 strikes higher. If XYZ stays at 25 ish, keep selling the covered calls and collect the premium.
4. XYZ drops to 20, buy the same number of shares and sell the covered calls again, only on the portion of the last leg.
So that's basically is the concept, your time horizon should be at least 5 years.
Throughout all that time you will be able to collect the dividend, collect the premium of the options and get in and out of the legs.
This might seem complicated for someone not knowing much about options, but in my opinion, this is the only way to invest in a long term portfolio. I do get upset if I buy a stock and it doesn't drop.
Good Luck....the main thing to do here, after understanding the initial concept, is to not get worried and stick to the monitor during the market hours and stick to the plan, if you start messing around with it, thinking to buy sooner or sell sooner, and different quantities, it might work the first time, then hurt you in a long run....
Make sure the dividend is at least 3%.. and if it's a cash dividend, reinvest it..
Here's what I'm doing for my daughter's college fund:
1. Get a list of stable stocks that pay a nice dividend , and you believe that will never go to ZERO. I have 8 of them.
2. Separate each one into legs,
Example:
XYZ trading at 30
30, 25,20,15,10,5
Steps:
1. Buy XYZ at 30, have a sell target to sell for 50% profit.
2. XYZ drops to 25, buy a number of shares equal to the capital of your first purchase. Preferably rounded up to 100ds
3. Sell calls at 1 to 2 strikes higher. If XYZ stays at 25 ish, keep selling the covered calls and collect the premium.
4. XYZ drops to 20, buy the same number of shares and sell the covered calls again, only on the portion of the last leg.
So that's basically is the concept, your time horizon should be at least 5 years.
Throughout all that time you will be able to collect the dividend, collect the premium of the options and get in and out of the legs.
This might seem complicated for someone not knowing much about options, but in my opinion, this is the only way to invest in a long term portfolio. I do get upset if I buy a stock and it doesn't drop.
Good Luck....the main thing to do here, after understanding the initial concept, is to not get worried and stick to the monitor during the market hours and stick to the plan, if you start messing around with it, thinking to buy sooner or sell sooner, and different quantities, it might work the first time, then hurt you in a long run....
Make sure the dividend is at least 3%.. and if it's a cash dividend, reinvest it..
Trading is a lousy profession, after more than a decade as a full time trader, I would have rather become a professional in some other field, a lawyer perhaps, a dentist, who knows.
Very few make it, and make it or not you will get wherever you get with plenty of scars.
Scars from losses, stress, bag in your eyes, and probably back pain and a bigger belly. In some cases, divorce, quarrels with your significant other, and what not.
Now, assuming you are wise enough not to pursue trading any longer.
Don't give up on investing.
I'll give you a few tips....
#1 Only buy reputable indices
ie SPY, it will never go bankrupt, don't try to think you are smarter than Standard and Poor, it has built in diversification, let them work out the members for you, you are not any smarter than them as a group.
#2 Only start to buy in bear markets
ie Yes, that's how you do it, it's a psychological game
#3 Dollar cost average it
ie Add to your losing position and only in lower lows to get maximum displacement. As you wait for the market cycle turn you will be accumulating and getting paid a dividend.
#4 Never overleverage
Don't disobey this rule, ever
#5 Distribute in bull markets
Distribute on higher highs when there is complacency
#6 Rinse and repeat
It's that simple
Very few make it, and make it or not you will get wherever you get with plenty of scars.
Scars from losses, stress, bag in your eyes, and probably back pain and a bigger belly. In some cases, divorce, quarrels with your significant other, and what not.
Now, assuming you are wise enough not to pursue trading any longer.
Don't give up on investing.
I'll give you a few tips....
#1 Only buy reputable indices
ie SPY, it will never go bankrupt, don't try to think you are smarter than Standard and Poor, it has built in diversification, let them work out the members for you, you are not any smarter than them as a group.
#2 Only start to buy in bear markets
ie Yes, that's how you do it, it's a psychological game
#3 Dollar cost average it
ie Add to your losing position and only in lower lows to get maximum displacement. As you wait for the market cycle turn you will be accumulating and getting paid a dividend.
#4 Never overleverage
Don't disobey this rule, ever
#5 Distribute in bull markets
Distribute on higher highs when there is complacency
#6 Rinse and repeat
It's that simple