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Stock Investing - Teach me EVERYTHING about the basics please!! Watch

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    (Original post by professortobe)
    The stock market is a very high risk way of investing money and i dont know where you read this over optimistic view of the situation but my guess is it was probably in an advertisement for a stockbroking company. It is a well known fact that investing in stocks is a legal form of gambling. The reason for this is that while business returns can be estimated, they are dependant on so many different factors that predictions are nearly always wrong. Even if you do happen across a flourishing business to invest in and your shares do rise in price, every business reaches its peak at some point and if you dont identify that and sell at the right time you end up with less than you started out with.

    Basically OP if you have spare money and have no important plans on what you want it for then you may be able to afford to take the risk but its by no means a method of investment with any kind of guaranteed return and its not the kind of thing you can put your money in, forget about it and get back double a few years later. It takes constant thought and monitoring in order to decide when to sell etc. If you do decide to go ahead with it make sure you get a reliable broker who knows what he's doing otherwise its really just a gamble and there are quicker ways of doing that.

    Best of luck
    Posts like this are rather annoying as it's populist half-truths from someone who has clearly little/no experience of equity investments. If you invest in an Index of equities (FTSE, S&P, DAX etc.) and hold the portfolio without necessity to liquidate the position at any sub-optimal moment you have little chance of losing money in the stock market. This is loosely how long term institutional investors, such as pension funds, can guarantee low but steady returns. A lot of responses in this thread indicate something more akin to day trading which is an unrealistic proposition for most individual investors.

    This said if you really think this is the place for advice on equity investments then you're probably best off investing your savings in a Nigerian ponzi scheme.
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    Currently, I'm personally quite tempted to invest everything I own into Bulgarian commercial real estate funds.... :bl:
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    I've been trading since the 11th of august 2009, and not really made much, however I've just got to grips with a strategy which is comfortably making me money on a reliable basis. Very few private traders make money in their first year. I know 65% of trades on IG index (spread betting) lose money.

    If it wasn't for one company, gulf keystone petroleum, which I bought on said date, I would be seriously in the red right now. Its not that stock investing is risky, but it is if you plan to make ****loads out of it fast.
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    Op - the best way to get into it is to try with smaller amounts of money. Shares are not necessarily high risk if you invest in large well-known FTSE100 companies, though there is always the risk that prices may go down. You can hedge against this by investing in different companies from different market sectors, so drops are likely to be off-set by rises elsewhere. http://www.share.com is a great website and an easy way to get into this.

    Broadly, you can invest in shares for income (where companies pay their shareholders a dividend, typically lower risk) or growth (where you hope to make a profit because you think the share price will be higher in future, typically higher risk).

    If you don't want to invest in shares directly, invest in a fund (see share.com) and a fund manager will invest for you.

    (Original post by TravelGuru)
    Well clearly you have no right to be dishing out information about something you don't understand.
    Given that you've just blankly asserted that an ISA is safer than dealing in shares (including an ISA invested in central African equities, presumably?) and got the currency completely wrong on an investment carrying exchange risk, I'm not sure you are in a postion to be talking down to people.
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    1) buy blue-chip stocks if you're a beginner (by this I mean companies with dominant or very large market cap
    2) open a brokerage account with a retail bank (my preference is HSBC)
    3) never spend more than 10% of your portfolio on one trade
    4) Cut your losses early, don't cling on to a stock if it is falling
    5) learn financial accounting, that is, learn how to read an interpret income statements, cash flow statements, and balance sheets
    6) Read The Economist, Financial Times, Businessweek, and listen to Bloomberg radio
    7) Talk to everyone you know remotely related to investment baning/trading
    8) avoid derivatives avoid futures and avoid IPOs
    9) For 2011 I personally recommend investing in commodities and financials. So basically, invest in LARGE mining companies (avoid exploration companies they are very risky and without insider information you're simply gambling); and invest in investment banks with diversified services, such as Bank of America, JP Morgan, FBR Capital Markets etc
    10) be wary of European stocks, or UK stocks heavily dependent on Europeans (Spain+Greece+Portugal debt crisis)
    11) short gold long silver

    Anyway, hope this helps. PM me if you need more info.
    Also, I highly recommend buying 'Trading for Dummies'. It really helped me
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    (Original post by jacketpotato)
    Op - the best way to get into it is to try with smaller amounts of money. Shares are not necessarily high risk if you invest in large well-known FTSE100 companies, though there is always the risk that prices may go down. You can hedge against this by investing in different companies from different market sectors, so drops are likely to be off-set by rises elsewhere. http://www.share.com is a great website and an easy way to get into this.

    Broadly, you can invest in shares for income (where companies pay their shareholders a dividend, typically lower risk) or growth (where you hope to make a profit because you think the share price will be higher in future, typically higher risk).

    If you don't want to invest in shares directly, invest in a fund (see share.com) and a fund manager will invest for you.



    Given that you've just blankly asserted that an ISA is safer than dealing in shares (including an ISA invested in central African equities, presumably?) and got the currency completely wrong on an investment carrying exchange risk, I'm not sure you are in a postion to be talking down to people.

    Of course an ISA is safer than dealing in shares. Please explain to me what credentials you have and why to argue otherwise, all I've heard is a bunch of nonsense so far.

    I didn't get the currency wrong at all. I explained how much he invested in today's currency. I won't apologise if you can't grasp that. Why would I possibly bring up a non-existent currency such as German mark which has no exchange rate.
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    (Original post by jacketpotato)
    Op - the best way to get into it is to try with smaller amounts of money. Shares are not necessarily high risk if you invest in large well-known FTSE100 companies, though there is always the risk that prices may go down. You can hedge against this by investing in different companies from different market sectors, so drops are likely to be off-set by rises elsewhere. http://www.share.com is a great website and an easy way to get into this.

    Broadly, you can invest in shares for income (where companies pay their shareholders a dividend, typically lower risk) or growth (where you hope to make a profit because you think the share price will be higher in future, typically higher risk).

    If you don't want to invest in shares directly, invest in a fund (see share.com) and a fund manager will invest for you.



    Given that you've just blankly asserted that an ISA is safer than dealing in shares (including an ISA invested in central African equities, presumably?) and got the currency completely wrong on an investment carrying exchange risk, I'm not sure you are in a postion to be talking down to people.
    You're a moron. An ISA is clearly lower risk than shares, what planet are you living on?
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      (Original post by Fynch101)
      I've been trading since the 11th of august 2009, and not really made much, however I've just got to grips with a strategy which is comfortably making me money on a reliable basis. Very few private traders make money in their first year. I know 65% of trades on IG index (spread betting) lose money.

      If it wasn't for one company, gulf keystone petroleum, which I bought on said date, I would be seriously in the red right now. Its not that stock investing is risky, but it is if you plan to make ****loads out of it fast.
      I started earlier this year.
      Bought £2k worth of shares.
      BP
      PartyGaming
      SportsBetting

      Am 30% up on BP, 35% down on partygaming and 10% down on sportsbetting.

      At one point was up 40% on sportsbetting.

      Why? God only knows. Very random. (except BP who are a great investment - bought at 390)

      One bit of advice is factor in the cost of trades.
      Some places charge you per transaction i.e £10 to makea trade.

      THat means you have to make in profit at least that to break ever.
      That means you must invest considerable amounts of money to follow some of the 'golden rules' some people talk about.
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      (Original post by Zakky)
      Euros weren't around in 1997...
      Maybe he means ECU, which is essentially the Euro....
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      (Original post by Jmzie-Coupe)
      You're a moron. An ISA is clearly lower risk than shares, what planet are you living on?
      You shouldn't call someone a moron when your reply is equally moronic.

      You could invest in a stock such as google, facebook, bp, that in the long run will always increase, and so pretty low risk as they are unlikely to go bankrupt. On the other hand you could invest in a stocks and shares ISA and it declines, or you could equally invest in a normal ISA that has a rate say, 0.3% which is very common after the first year rates. This ISA would then be losing you money as it will give you a return lower than inflation and so your original investment will be worth a lot less in say 5 years time.
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      (Original post by Jamie)
      I started earlier this year.
      Bought £2k worth of shares.
      BP
      PartyGaming
      SportsBetting

      Am 30% up on BP, 35% down on partygaming and 10% down on sportsbetting.

      At one point was up 40% on sportsbetting.

      Why? God only knows. Very random. (except BP who are a great investment - bought at 390)

      One bit of advice is factor in the cost of trades.
      Some places charge you per transaction i.e £10 to makea trade.

      THat means you have to make in profit at least that to break ever.
      That means you must invest considerable amounts of money to follow some of the 'golden rules' some people talk about.
      Besides IG Group, my advice would be to stay away from gambling firms.
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      (Original post by Carlo08)
      You shouldn't call someone a moron when your reply is equally moronic.

      You could invest in a stock such as google, facebook, bp, that in the long run will always increase, and so pretty low risk as they are unlikely to go bankrupt. On the other hand you could invest in a stocks and shares ISA and it declines, or you could equally invest in a normal ISA that has a rate say, 0.3% which is very common after the first year rates. This ISA would then be losing you money as it will give you a return lower than inflation and so your original investment will be worth a lot less in say 5 years time.
      Let me clarify. I meant putting it into a Cash ISA, not a stocks and shares ISA. You can get around 3% fixed for one year, after that you can move it to an equally proportionate rate. I think you're misleading people, after the first year only a muppet would keep in at a low rate below 1%, you would obviously move to higher rate than inflation, inflation will not 'lose' you money, if he was to Invest £500, he wouldn't lose that £500 or have less, he would just get less money from the AER %.
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      (Original post by Jmzie-Coupe)
      Let me clarify. I meant putting it into a Cash ISA, not a stocks and shares ISA. You can get around 3% fixed for one year, after that you can move it to an equally proportionate rate. I think you're misleading people, after the first year only a muppet would keep in at a low rate below 1%, you would obviously move to higher rate than inflation, inflation will not 'lose' you money, if he was to Invest £500, he wouldn't lose that £500 or have less, he would just get less money from the AER %.
      If he invested £500 at a rate below inflation, he would still have the same £500 yes, but at the time of the original investment that £500 could buy you 500 loafs of bread but now that same investment can only buy you 450 loafs, due to the cost of bread increasing with inflation but your investment not. So in that sense you have 'lost' money as your investment isnt worth as much anymore. The same as if you had just given £x away at the end of the invetment.
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      (Original post by Zakky)
      Euros weren't around in 1997...
      LMFAO.
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      (Original post by Summergirl.x)
      *subscribing* as my shares are going into my own name in the coming few weeks
      You have the right attitude Summergirl. Do not rush into ANYTHING right away. Read 'The Naked Trader' it is a great start. Would also recommend it to the OP.

      (Original post by You Failed)
      I read that actually, investing in stock actually almost always guarantees a return? The problem is, people see the stock falling and they panic and sell the stock, however, if you keep the stock in for long enough, ignoring the falls and waiting, it's pretty much always going to rise again. In fact, I read it was better in the long term than investing in bonds.

      I'm just regurgitating what I read in a book quite a while ago, I don't actually know anything about it.
      (Original post by TravelGuru)
      That is utter nonsense. My uncle invested 80,000 euros in Mercedes in 1997, those shares today are worth 60,000. You must have mis-read or do not understand how the system works.
      Sorry 'You Failed' you have either mis-read that or been mis-guided.

      TravelGuru has the correct idea. Say if Mercedes went bust in the recent economic downturn, would his uncle ever of made a guaranteed return? Is the company ever able to reach its peak business when he brought the shares? If not he will never get his full return again.

      (Original post by TravelGuru)
      Stocks and shares are very high risk, it's almost a gamble, so unless you know what you're really doing, I really wouldn't advise investing. Also you should only invest if you have a considerable amount of money (£5,000) + otherwise your return will be very minimal. Do you have these monies? If not, just stick your money in an ISA as it is low risk and safer.
      Agree to that. OP he basically summed up the 'game' for you.

      I have gained lots of experience and knowledge to make sure the 'gamble' makes the odds far more in my favour. Use of a diversified portfolio etc make sure however, my 90% winning streak say.... 1 position does bad, 9 are doing good. All is good. I have shown you a clear example of how knowing what you are doing can help. The game is all about knowledge, but most importantly EXPERIENCE.

      Do not touch any money. Play Virtual. Read, read and apply to the virtual account for now! The virtual account will give you that inital experience.

      When you enter the 'game' your on no special beginner level you enter the markets with all the traders in the world, the 'best' will eat you alive if you do not know what you are doing :eek:.

      (Original post by whiplash)
      Just put it into FTSE linked ISA, UK equities are cheap at the moment and 2011 should be good.
      Agreed that 2011 should be a good year for equities as things look at the moment. Will provide more analysis at a later stage.


      (Original post by Lyonstt)
      I would love to get into it, have a fair bit of money saved for it. Please teach me the basics of it! Anything and everything you know, just post it to me as it all helps!

      Thanks so much for reader (and posting!)
      Toby
      Hope that helped mate.

      Any questions feel free to contact me.


      (Original post by nomad22)
      11) short gold long silver
      Interesting mate, seems like you know your stuff.

      Silver has been a good buy this year.

      Gold I currently have a short position for the SHORT term ONLY. I would not go short on gold though for anything longer it would be a foolish thing to do. It is still on an upper trend over longer periods.

      It may be a bubble ready to burst in the future, but I would wait until I see any initial proof of that.
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      (Original post by Carlo08)
      If he invested £500 at a rate below inflation, he would still have the same £500 yes, but at the time of the original investment that £500 could buy you 500 loafs of bread but now that same investment can only buy you 450 loafs, due to the cost of bread increasing with inflation but your investment not. So in that sense you have 'lost' money as your investment isnt worth as much anymore. The same as if you had just given £x away at the end of the invetment.
      I know exactly what you're saying, however that won't mean he will have anything less than what he originally put in, its virtual if you like, he won't be purchasing anything.
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      The naked trader is a good book to get started.
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      (Original post by T.Reid)
      Maybe he means ECU, which is essentially the Euro....
      Exactly.
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        (Original post by Fynch101)
        Besides IG Group, my advice would be to stay away from gambling firms.
        meh, am already in and my gamble is that in the next 5 years they will consolidate interent gambling companies and several large markets like the US will reopen
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        Money market fund.
       
       
       
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