I started looking into buying some stocks when I saw the x-plan thread in the 2010 section. Well after looking into buying stocks as a whole and the idea of day trading came up. Now, I dont have the time to be a full time day trader; but is it possible buy a few stocks like from Ford and other select companies and be able to monitor and trade on a part-time basis. Like a hobby, but with a serious mindset to it. Nothing much (below $1k for total initial investment) but I like to be able to turn a profit on some degree and test the waters.

 

My brother in law is an investment broker with edward Jones. He has always said that the most dangerous thing anyone could ever do is do thier own investing.

 

Well I strongly disagree with that. He says that because he lives on commission. And before he talks about their 'research department', brokerage companies most often have large positions in the companies they are pushing - so that when the customer follows the advice they are increasing the brokerage's gains - usually before the customer's. If the brokerages were so good, how come they've lost their *** recently along with everyone else?

The best thing anyone can and should do to win the money game is educate themselves thoroughly on all aspects of money - budgeting, investing, retirement funds, emergency funds (a must!), dollar-cost averaging, insurance, bank products, loans, debt mgmt, stocks, bonds, mutual funds, etf's... and most importantly the 'magic of compound interest' and the financial cancer called inflation. Then, even if one chooses to use an investment professional, they won't get hood winked into a high commission/low return or high risk product, or an investment that neither matches their goals or their risk tolerance.
[give a guy a fish (for a commish LOL)
and you feed him for a day...
teach him how to fish (and save/invest for tomorrow)
and you feed him for a lifetime. Right? ]

There are many sites to get an education online without pressure or sales tactics such as vanguard.com, fidelity.com, schwab, or tdameritrade.com. When I first started learning in '82 (pre-internet back when Paul Volcker was Fed chair) a lot went over my head. But I kept listening and reading and it started to make sense. Marketwatch.com has been my home page since it first went online like 12+ years ago. Lots of good learning tools there too. (I do not own positions in any of the companies mentioned nor am I making any recommendation... forever... throughout the known/unknown universe... LOL)

Day trading (momentum investing) is high risk short term trading - gambling. Most people get their hat handed to them. But one thing is for sure, one has to watch the position almost constantly throughout the day so part time won't cut it. The problem is the quick moves on the 'hot stock' are often due to expert day traders watching momentum changes constantly, and are quicker on the trigger which leaves the part time guy missing the exit. I realize education costs money (and I've paid my tuition in the market...), but don't play day trader unless you can afford to lose. Mean it.

In contrast, long term investing - especially with tax umbrella's/incentives like 401k's & IRA's thru payroll deduction - is a solid way to build assets. Historically over 10+ year periods the S&P 500 has beat government bonds, real estate, CD's and most importantly the inflation rate. But there will be downturns along the way like we are experiencing. If you panic and sell when the market is in the tank you lose. We buy tires, clothes, cars on sale right? When the market goes down, it is 'on sale' - providing you are a long term investor. With stocks you own a portion of real companies that have equipment, buildings & real estate assets, and products, and in general are a reflection of the economy. Learn about 'total stock market' funds/etf's. Stock (& bond) investments definitely will fluctuate so that's why they are long term - like minimum 7-10 years before starting to draw from them - better if you have 20-40yrs before retirement (investing regularly along the way of course). It's the 'get rich slow' / the tortoise v the hare thing. (Past performance is no guarantee of future results...)

One thing that is important is maintaining a balanced portfolio... spread your eggs in several baskets (easy with mutual funds & etf's), but also between growth companies (large and small stocks) and defensive positions like cash and bonds (although I don't like bond funds). The older you get (closer to withdrawal needs), the more defensive positions you should incorporate into your portfolio. Compare commissions, expense ratio's of funds & etf's, so you get what you want without paying too much. After all, its your money!


PS: Cash is King! Stocks are your employees scurrying about selling their wares (while you're at your day job), bonds are your tax collectors reaping dividends (haircut)...