Stocks, Mutual Funds, investment basics.

[Iowanian]

At this time, the dow is approaching the neighborhood of 13,000. Historical highs.

I'm trying to learn more about investments, in plain English how some of these things work and how to best use them.

I don't dabble in day trading, but have mutual funds and ownership shares in a Bio Co.

When I watch the Dow climb, it makes me happy that I'm making some money, that the college fund is growing, but it also makes me wonder.....when is it time to pull back, and put that gain into something safer to 'hold' the value. Will the market keep climbing? What will the ceiling be? Keep putting money in or hold off for a drop?

How do Index funds work....

I'm here to learn.

[beavis]

Check out morningstar.com. Lots of good info there. Other than that, I check out yahoo finance almost daily.

I get nervous whenever the indexes start hitting new highs. I'm not taking any money off the table right now, but I'm sure not putting anymore in.

[Brock]

Open an eschwab account for starters, a self-directed IRA, and just start paying attention to investment shows.

I just cut a fat hog on Jones soda.

[cookster50]

Ignore the Dow, the S&P is more useful. The Dow is only 30 stocks, S&P 500. Much better barometer on what the market is doing.

Index funds simply buy what is on the index. That is why their fees are low. Con is that you won't ever beat the market, just follow along.

As far as when will it stop climbing, if someone can answer that they will be a billionaire. Don't focus on the short term, think long term. The market generally follows a pattern of ups and downs. I am a little worried because this current upswing is lasting longer than normal. But no one really knows diddly squat.

[Iowanian]

I'm definitely not looking for "Get rich quick" sollutions, but want steady growth in the money I am able to invest.

I do have a broker that I trust for the investments I have, however I also like to have some idea as to what I think should be done. Right now, I've got some in the higher risk stuff that is doing well, I've made some money this year, but wonder if the right thing to do is to keep riding the wave, or pull back and save some of that gain. The majority of my investments are in safer mutal fund areas where I don't see the huge gains, but steady and supposedly "safer".

Brock,
With the self directed IRA, "I" am selecting the companies that make up the fund?

[Brock]

Brock,
With the self directed IRA, "I" am selecting the companies that make up the fund?

Yes, and the great thing about it: TAX FREE.

[Iowanian]

As in, No capitol gains?

That would probably be worth looking into, if a guy did his research and was comfortable in putting together a solid core group for the fund.

Since its an IRA, its long term? Can you get to that money prior to retirement age, say if I wanted to build a house, buy land?

I'm interested in some good websites that explain this stuff in a way it makes sense.

[sd4chiefs]

Look for Mutal Funds like this one

SLASX

http://quicktake.morningstar.com/FundNet/RatingsAndRisk.aspx?Country=USA&Symbol=SLASX&fdtab=starrate

High Return, Low Risk, No Load

This one has been kicking ass over the last three years but it goes up and down a lot.

FSENX

http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&Symbol=FSENX&fdtab=snapshot

It is up right now and could drop in price for no reason really fast.

[ChiefsFan4Life]

fool.com is a good website to read up on

[sd4chiefs]

Do not, I repeat, Do not get your stock tips from shows like Mad Money on CNBC. Jim Cramer is a total moron.

[Brock]

Do not, I repeat, Do not get your stock tips from shows like Mad Money on CNBC. Jim Cramer is a total moron.

I've made a lot of money off of his tips, so whatever I guess....

[Hog's Gone Fishin]

I would have to suggest you pm memyselfandI. She has lots of good tips.

[Infidel Goat]

I recommend John Bogle's Common Sense on Mutual Funds . Bogle is the founder of Vanguard and a major proponent of index funds.

I don't have the time or inclination to stay up to date on stocks. If I recall correctly, though, Index funds beat 80% of actively managed funds dealing with a similar portfolio of stocks. Index funds do that because they don't need to charge for the costs associated with heavy buying and selling. Sure, 1 in 5 actively traded funds in a certain sector will beat the Index fund. Is it luck? Or is it a good manager? Bogle, I believe, would say it is mainly luck.

Any money I don't need for at least five years currently goes into a Total Market stock index. FWIW, though, you can get Index funds in target areas like International stocks.

If someone really enjoys learning about specific stocks and thinks they can be the 1 in 5 to beat Indexing, more power to him. I'm not that guy--and I'm comfortable with that. Besides, it leaves me with more free time.

Any money that I would need in less than five years, I would likely be more conservative with--right now, for instance, some CDs are paying a little over 5%.

I'm young, my kids are young, so it's time to be relatively aggressive.

[Iowanian]

Maybe my best bet is to put the money into Bail Bonds, and buy a $15 wooden collections-stick.

There is alot to learn and keep up with, and I don't claim to really understand alot of this stuff. I do have some short term CDs I was able to get in for over 5.5% last fall, which is a far cry better than the pathetic Savings account rate I was drawing at my local bank. I do also put a good percentage into the work retirement fund which is more than matched, however I am trying to make some moves now that I may not be able to in the future.(no car payments at this time, more kids, build house etc...) My mutual funds are managed by a broker, who is a member of the extended family who I trust. He answers questions when I have them, but I'm always interested in other perspectives I can approach him about.

I'm also fairly young (34) and have a young family, and have an agressive nature that fueds with my very fiscally conservative nature(broke as a kid, always waiting for the hammer to drop).

I'd describe myself as.....restrained-agressive. I'll take risks with a %, but don't want to go "all in". I got my ass slain in the late 90s with everything I had in high risk-high reward accounts......dumb kid.

Anyone do Ag commodities?

[sd4chiefs]

I've made a lot of money off of his tips, so whatever I guess....


http://www.cramerwatch.org/

[Brock]

http://www.cramerwatch.org/

I don't know what to tell you. I'm up 13 percent this year, and I've bought stocks that I never heard of before Cramer mentioned them. Understood that you have to wade through a lot of bullshit.

[Zebedee DuBois]

I had been into owning individual stocks, but really wasn't keeping up.

I have changed my strategy to owning several types of mutual funds. Growth, Value, Foreign growth, and about 30% in bond funds. All no-load, 4 or (preferably) 5 star rating from moringstar.

So far this year, my investments are making about twice what I am making at my job.


But....I am no expert.

[Braincase]

If you believe in global warming, invest in Air Conditioning manufacturers.

If you think the war situation is going to get worse, invest in liquor and cigarettes.

If you think libs are going to take over, invest in gold.

If you think I'm an asshole, invest in antifreeze futures.

[Zebedee DuBois]

For the record,

Dow is the largest producer of ethylene glycol, followed by Shell and BASF.

Sorry, Braincase, I had to look it up.

[Saleenman607]

fool.com is a good website to read up on

Absolutely......The Motley Fool has the best investor website hands down. If you are a neophite, or well versed in investments...fool.com cannot be beat......

[Iowanian]

Whats the symbol for Prestone, BC?

[rageeumr]

I just started an IRA at Vanguard. Put 100% of the money into their Vanguard 500 fund. S&P 500 index. Long term I just don't think I have the time to do the research required to consistenly beat the market with a broadly diversified portfolio. I've put some money into some stocks in a non-retirement account, I think I have the time to manage them right now. I'm not looking for a home run, but just trying to get more than the 5% I get out of my Emigrant account.

I'm doing my MBA at KU right now, and my Investments professor has the "post of the day" on the Motley Fool today. Really intriguing if you're looking for a company to invest in.

http://www.fool.com/community/pod/current.htm

[ChiefsfaninPA]

The best advice I can give is don't worry about what the market is doing now. If you are investing long term (at least 5 years) it will have its ups and downs. Don't try to time the market. You will lose. It has been shown historically that putting money in and keeping it in the market is better than timing the market. They did a study that even if you knew the dates the market hit its peak and the dates it also hit its lows, and made your investments accordingly, you still wouldn't have made as much money as leaving your money alone through good and bad times. Personally, whenever the market is down I put in more money. It is like buying stuff on clearance only better. I manage the retirement accounts for state employees so I do know a little. I never tell people not to invest in individual stocks but as a rule I wouldn't advise it. You have to really do your homework and keep doing it as long as you own the stock. For some people they enjoy it and are good at it, but most people are not.

[yeti]

first of all stocks that pay dividends are your friend. get in for the long term and if you want to do individual stocks make sure that your portfolio contains at LEAST 8 to 15 stocks to virtually eliminate your diversifiable risk and there is a lot of value and simplicity to just performing basic fundamental analysis. If you invest in solid companies that are not overpriced (although pretty much everything is right now but just look at the Price to Book value ratio) things should be all right over the long term. just a few thoughts.

[Logical]

I'm definitely not looking for "Get rich quick" sollutions, but want steady growth in the money I am able to invest.

I do have a broker that I trust for the investments I have, however I also like to have some idea as to what I think should be done. Right now, I've got some in the higher risk stuff that is doing well, I've made some money this year, but wonder if the right thing to do is to keep riding the wave, or pull back and save some of that gain. The majority of my investments are in safer mutal fund areas where I don't see the huge gains, but steady and supposedly "safer".

Brock,
With the self directed IRA, "I" am selecting the companies that make up the fund?

Personal advice is now is not likely a good time to jump in, if you are looking at an alternative you might want to consider commodities, you really need to know what you are doing to make money in bonds.

[Taco John]

http://www.cramerwatch.org/



That site is so deceiving...

Jim Kramer does not trade the way they are trading. They are looking for get rich quick solutions. Kramer is get rich steady. That site measures ROI over 30 days... It takes Kramer 30 days just to move INTO a position, and 30 days for him to move OUT of a position.

Kramer isn't perfect, and he gets some wrong, but he gets plenty right.

[2112]

Invest your money in property..it's the best investment.

Who knows..maybe in 20 years Iowania will be developed like the East coast is right now.

[sd4chiefs]

That site is so deceiving...

Jim Kramer does not trade the way they are trading. They are looking for get rich quick solutions. Kramer is get rich steady. That site measures ROI over 30 days... It takes Kramer 30 days just to move INTO a position, and 30 days for him to move OUT of a position.

Kramer isn't perfect, and he gets some wrong, but he gets plenty right.

His name is spelled with a 'C'

What about this one.

http://dealbook.blogs.nytimes.com/2006/03/24/sad-money-cramers-stock-picking-prowess-in-question/

After sifting through 246 stock recommendations over a period of about 11 weeks, three researchers from the Kellogg School of Management claim to have found that buying Mr. Cramer’s televised picks is a losing proposition.



Cramer is getting rich selling his books that he plugs on his show.

[recxjake]

Fidelity Roth IRA... Fidelity Freedom Fund 2040... that is what I do... 100 bucks a month... when I'm 59 1/2 I will be a millionaire! (I'm in college now, when I get a real job I will fully invest)

[rocks]

Do yourself a favor and find a good Financial Consultant or CFP. Nothing in life worth having is free. IMO

[Amnorix]

Maybe my best bet is to put the money into Bail Bonds, and buy a $15 wooden collections-stick.

There is alot to learn and keep up with, and I don't claim to really understand alot of this stuff. I do have some short term CDs I was able to get in for over 5.5% last fall, which is a far cry better than the pathetic Savings account rate I was drawing at my local bank. I do also put a good percentage into the work retirement fund which is more than matched, however I am trying to make some moves now that I may not be able to in the future.(no car payments at this time, more kids, build house etc...) My mutual funds are managed by a broker, who is a member of the extended family who I trust. He answers questions when I have them, but I'm always interested in other perspectives I can approach him about.

I'm also fairly young (34) and have a young family, and have an agressive nature that fueds with my very fiscally conservative nature(broke as a kid, always waiting for the hammer to drop).

I'd describe myself as.....restrained-agressive. I'll take risks with a %, but don't want to go "all in". I got my ass slain in the late 90s with everything I had in high risk-high reward accounts......dumb kid.

Anyone do Ag commodities?



Rule No 1. Know what you know, and know what you don't know, or don't have time for. It's real money, and if you have no clue, or just want to fool around, then you'll get burned.

Maybe I could be the next Michael Milken (without the break the law part) but I don't have the time or interest, so here's what I do:

1. I saved up enough and keep enough in regular boring savings accounts, CDs and bonds to cover several months of expenses. Hell, probably a year or two, with how cheap we are. This is mainly to appease my very conservative wife. :)

2. I max out my 401(k)/SARSEP. Investing through a 401(k) is the first and best place to sock away money for retirement. You can't beat the pre-tax investment that grows tax free for many years. If there's matcching from your employer, even better.

3. If money left after #2, and you still want to focus on RETIREMENT savings, then you want to go with an IRA, whether traditional or Roth. There's benefits and drawbacks to both, but you'll want to do one or the other, and max that out.

4. If there's still more to invest, or if you don't want to plow everything away until you're on Geritol, then you can either use others, or do a do-it-yourself way. The latter takes time, effort, focus, intelligence and resolve. If you're going to sell cuz the market has a bad month, then you need to let someone else do the work for you.

Someone else in this case means, most likely, mutual fund managers. An index funds is typically best because they have lowr fees. The differnece between a 1% fee and 0.5 doesn't sound like much, but over 30 years it can make a big difference.

You can also rely on brokers. My only advice here is to make sure that hte money is held by ANOTHER institution, and that you get or can access reports on how the account is doing from someone other than the broker. A secondary bit of advice is that you generally want the broker to take a percentage of the total amount invested, rather than make his money on a per trade basis. In the former situation, he wins if he makes your account bigger. In the latter, he makes money by churning stock -- that ain't so hot.

Obviously, there's books galore on this. Others can do better with recommendations in that area than me. I have a systematic plan that works well for me and my family, but I don't read that much on it, and don't work too hard at it. I let people who are experts at what they do help me with it, while I do what I do best to make more money to invest.

Good luck!

[Amnorix]

Invest your money in property..it's the best investment.

Who knows..maybe in 20 years Iowania will be developed like the East coast is right now.

But it also takes work, and can be a hassle dealing with tenants, etc.

[2112]

But it also takes work, and can be a hassle dealing with tenants, etc.
True that

[beavis]

3. If money left after #2, and you still want to focus on RETIREMENT savings, then you want to go with an IRA, whether traditional or Roth. There's benefits and drawbacks to both, but you'll want to do one or the other, and max that out.

About the IRA option, if you are already contributing to a 401k at work, I'd suggest the Roth, if for nothing else than tax diversification purposes.

Watch out for fees too, given the choice between two similar funds, take the one with the lowest expense ratio, because as as Amnoix mentions, a single point or two will add up over time.

I don't like the idea of forking over 5% (or whatever the fee may be) to a investment guy, and immediatly starting off in the hole. With a very minimal amount of research, you can do just as well on your own as they would do for you.

Always remember, even the best fund managers have a very hard time beating the market on a regular basis. Keep it simple.

[bigdreams1]

Id buy FRPT Force Protection, Nasdaq...They are about to start making some serious cash. They are in the business of MRAP vehicles as in the ones the US military is planning on paying out over a billion dollars for. I bought in at 3.60. It is now at 20.00 and on its way to 50 before the end of the year. All in my opinion of course but this is the gold standard for the new war on terror. They are also getting foreign contracts..(Iraqi Army, South Africa)

[Iowanian]

Capitol Gains Taxes for Dummies.

Lets say a guy invests in something. Lets say a year later, the guy can double his money and has reason to do so( buying house, starting business or whatever).

How much of a clip will Capitol Gains take? Is there any legit way around it, for example like rolling that money into an IRA or something?

[ChiefsfaninPA]

Capitol Gains Taxes for Dummies.

Lets say a guy invests in something. Lets say a year later, the guy can double his money and has reason to do so( buying house, starting business or whatever).

How much of a clip will Capitol Gains take? Is there any legit way around it, for example like rolling that money into an IRA or something?

You need to talk to a tax accountant. There are too many variables to properly calculate what the cap. gains would be. But short term rates(held less than a year) are your tax rate. Long term rates are 15% and can depend on the investment. Spending the time and money with a tax accountant would be well worth the money depending on how much will be involved and your current tax rate. In some instances, taking a gain will also be counted as income(once again it depends on the investment) and can raise your tax rate.

[ChiefsfaninPA]

Re-reading through this thread a lot of guys have good ideas and intentions with their investments. A lot of your theories go along with you personal risk tolerance. I see some pro Cramer and anti Cramer posts which is the norm when talking with people who believe in one investment theory over the other. I only caution people to look at who they take investment advice from. Brokers(commissioned based, not fee-based), insurance agents and even bankers need to be watched carefully. You have to weigh their motive to steer you into a particular investment.

Some good advice would be to read "A random walk down Wall Street" by Burton G. Malkiel. You will begin to understand the the pros really no nothing. The market acts and reacts in a way that can not be charted. I am strongly in the camp of simple investing. I only own three index funds that cover all of my bases to be diversified. My expenses are low and there is no need to constantly monitor my investment or worry about the ups and downs of the market.

[Iowanian]

In this case, we're talking an investment thats a little over a year and hasn't been movable until now. Our Concensus is that if we can't double our money, we'll keep it and ride the wave. I know there are some tax incentives for the next 2-3 years by keeping it.

I'm leaving my job, relocating and am looking to leverage the money I have to start a new business, buy a home, and or live until I get positive cashflow.


You need to talk to a tax accountant. There are too many variables to properly calculate what the cap. gains would be. But short term rates(held less than a year) are your tax rate. Long term rates are 15% and can depend on the investment. Spending the time and money with a tax accountant would be well worth the money depending on how much will be involved and your current tax rate. In some instances, taking a gain will also be counted as income(once again it depends on the investment) and can raise your tax rate.

[ChiefsfaninPA]

In this case, we're talking an investment thats a little over a year and hasn't been movable until now. Our Concensus is that if we can't double our money, we'll keep it and ride the wave. I know there are some tax incentives for the next 2-3 years by keeping it.

I'm leaving my job, relocating and am looking to leverage the money I have to start a new business, buy a home, and or live until I get positive cashflow.

I am not aware of any investment that can "guarantee" to double. What is the money currently invested in and why was it not movable before now(taxes?). The only tax incentive for the next few years (until 2010) are 15% capital gains taxes on qualified investments(held long term). In 2010 there will be a 0% capital gain tax rate and no death tax. At this point all the tax breaks W signed into law expire unless renewed(highly unlikely). If you have a good business idea I always tell people that is the best place for your money. I just caution them to make sure they do their homework, understand the industry and realize that running a business is the hardest job they will hold. But if you are getting your ready to start a business the best thing to do is horde money, cut your expenses and be realistic about how hard it is going to be until you get started and successful. I would also advise you to find a good lawyer and accountant. Their guidance and information will more than pay for itself, especially when just starting out in business.

[alnorth]

Some good advice would be to read "A random walk down Wall Street" by Burton G. Malkiel. You will begin to understand the the pros really no nothing.

Agreed. How can anyone predict the oil crunch in the 70's, the cold war, the rise and fall of the tech fad, 9/11, or the housing bubble? You cant, and it is foolish to try.

I go about it a bit differently from your simple approach, I pretty much try to have a little bit in everything, but your way is great too if your 3 indexes cover it all. With broad diversification, I always have some funds that take off, some that stink, and overall its a net positive. I do both index funds and money managers, because there are some years where the money managers beat the indexes even with their fees.

Domestically, I hit all 4 style corners with a lot of money in international funds. Since I am still young, I have it invested pretty aggressively without being stupid about it, in about 10 mutual funds.

My current allocation:
High Yield Junk Bonds: 10%
Managed Large Value: 7.5%
Managed Large Growth: 7.5%
Index Large Core: 15%
Managed Mid/Small Value: 7.5%
Managed Mid/Small Growth: 7.5%
Index Mid/Small Core: 15%
Managed International Equities: 10%
Managed International Emerging Markets: 10%
Index International: 10%

Nothing in there is safe, no bonds (junk bonds arent safe), no CD's, etc because with a 30+ year time horizon, I have absolutely no need for safety now. If the market tanks, thats a buying opportunity for me. No one can predict what's going to do well in a given year, this year the international funds kicked ass, but next year it might be the small caps, or value stocks, or whatever, so I want a little bit of everything.

I wish my 401k had a REIT option or an international bond, I may buy a little of that in an IRA.

To the OP: one guy I listen to regularly is Ray Lucia, who has the most popular money-oriented talk show in the country, probably because he's also not incredibly boring to listen to. If you cant catch his radio show, download his podcasts and listen to it for a couple weeks, he's also got a couple good books.

[ChiefsfaninPA]

Alnorth,

Glad you are into investing and looking out for your financial future. You seem to know what you want out of your investments and that is the biggest battle. I tend to only use the three funds I do because after doing a lot of research over a 20-60 year time period(which is the timeframe I am investing for. I am 26 and won't need this money until I retire which I hope is around 55-60)no actively managed fund has EVER beaten the S& P 500 index fund. That is not to say actively managed funds are junk. Far from it. They just don't meet my needs or comfort level for what I am trying to achieve. I am on track to accumulate around 6 million by the time I reach 69 1/2. This is only through investing in index funds. I don't own real estate(besides my house which I don't consider an investment) or individual stocks. As I get older I will reallocate some of my holdings but not many. It is investing on autopilot. I have good years and bad years, but overall I am doing well.

[Iowanian]

CPA....

You've got a pm, explaining my situation a little better. This is not a publicly held traded investment, and I can offer my stocks with a floor on what I'll take, which is how am fairly confident I can double my investment...or keep it.

In short, I've got 3 pools of money to make my move/business with.....this investment, savings and CDs, or money invested in mutual funds.

I don't claim to know as much about investments and invidual funds as many of you, however there are several things about this market, and the level of the market now that make me nervous....short term.

[ROYC75]

I would have to suggest you pm memyselfandI. She has lots of good tips.



ROFL ROFL ROFL ROFL ROFL ROFL ROFL ROFL

[alnorth]

however there are several things about this market, and the level of the market now that make me nervous....short term.

If you need to spend all of the money short-term, say within 5 years, then the market should make you nervous. If youve got at least 15 years to leave all or a portion of it alone, I believe there has never been a 15 year period where the S&P 500 lost money, and never a 20 year period where the S&P 500 hasnt at least beaten inflation.

For short-term, its hard to beat CD's and money market mutual funds, absolute safety at about 4-5% right now.

The risk of the market is nearly eliminated by broad diversification, and by time. As people get close to retirement, they need to pull maybe 15 years worth of money into safety, and let the rest stay in the market to grow to make sure their retirement income can get a bump every few years to stay ahead of inflation.

[PastorMikH]

Sell all your investments, lease up all the best hunting land in your part of Iowa then advertise guided hunts in the big city newspapers. You could even buy some bull elks and make big $ on guided/controlled elk hunts with shotgun slugs.



:):thumb:

[CoMoChief]

Make sure you put all of your eggs into one basket. God, I'm a genious.

[Iowanian]

I'm putting in all into Enron.

This guy I know says if I cut him a cashiers check, he can get me 4 to 1 on the stocks through a loophole.