stock tips

[joel]

to all you financial saavy people out there and for us financially clueless people. what are some good tips for a newb when it comes to stock investments.

[Wetundies]

Don't lose all your money.

[[JT]]

let someone who knows what theyre doing handle your investments haha

[joel]

[Wetundies]

an insider trader.

[jeSteR]

You can do it yourself, but it takes a LOT of persistence and attention. It's easier and SAFER to let someone who does it for a living manage it for you. Sure you can save the commission fees by doing it on your own, but honestly, even with the right tools and instincts, you really do need to put about 10-20 hours a week of reading and research to make it worth your while. You don't need to go to a full brokerage house that works on commission only. Most banks will have a private banking division that can work with you on a non commission basis with minimal fees.

I personally deal with CIBC Imperial Services for this. They do not take a commission as my client manager's bonus is based on the increasing size of my portfolio. That means the only way that she makes money is if I actually put more money in or if she is actually successful in continually making a good return with my money, thus increasing the size of my porfolio. If you're with CIBC or PC already, it should be a free session to see if you qualify. Off the top of my head, I think a net worth of +$100K MIGHT qualify you. I've also dealt with RBC personal banking too, and they were good for me, I just moved as it was easier to consolidate everything to one advisor.

If you're not risk adverse and have good equity in your place, as long as the interest rates stay below 5% for borrowing, leveraging might be a good option for you too. You can ask me about that in person as I'd really need to know your financial situation before recommending it and showing you how to do it.

[joel]

what sort of return do you inspect on your investments, long term ones and short term ones? when going with these portfolio managers.

[jeSteR]

Totally depends on current market conditions. I personally don't like to be below the 11% / year average over a 5 year span.

[[JT]]

bernie madoff can get you like 25% return, look for him!

[nature boy]

hey joel, doesn't your dad trade stocks? why not ask him?




i didn't say he was good at it, though.

[joel]

a net worth of 100k? does that mean you have to have 100k of investments funds? also with these banking services/financial advisors managing your investment portfolio how much control do you have over your investment still? is it locked up for a certain period of time? how much visibility are you given over what stocks they are purchasing? Or is it just pooled with everyone that investment manager is managing and the return is averaged over his clients.

[jeSteR]

I don't think that you need $100K liquid, I think that you just need to be netting a total of $100K, with your condo, it shouldn't be hard for you. My portfolio is actually set up as a private investment account. I can choose to pool or manage it individually. I've signed trading authority to include my advisor so essentially, the only two people that can effect a trade is myself and her. I have full visibility to all funds and transactions that is made on the account. This is more of an investment portfolio of funds and equities and less so individual stocks as trading US stock is more cumbersome through Canadian financial institutions. But that being said, it can be set up for that too.

[nature boy]

my tip:
buy low. sell high. profit. repeat.

you're welcome.

[tiger]

If you don't have to the time to study and understand what really happens, don't invest in stocks. By the time that you hear news that your stock is dropping like a rock, it's too late. You can have a portfolio manager look after it, but you still have to sort of understand what is going on. The best returns are buy low and sell high, but you have to know when it's low enough to buy (yet not risky) and when it's high enough to sell (before the bubble bursts).

Minimum returns should be greater than any debt interest that you have. If you have a mortgage of 4%, then your return should be greater than that AFTER TAXES (you're paying your debt with after tax money). This usually means that your investment would have to give you a return of 1.6 times your debt interest. If you can't get that return, then it's better for you to pay off your debt first. If you have credit card debt @ 22% interest, then you need a guaranteed minimum return of 35.2%.

Stock returns aren't guaranteed. Also be careful of misleading returns b/c they don't factor in compound interest.

i.e. Stock price in 2006 $10. Now $15. 50% return over 5 years = 10% return/year. => bad math. The stock needs to be $16.1 for it to be a true 10% annual rate of return. Compound interest (1.10^5). Also the stock could have been at $10 for 4 years and then it suddenly jumped to $15 in the last year. Average looks good, but the stats are a bit skewed. For you stats geeks, think about standard deviation. Because stocks aren't going to jump up 50% every year.

My advice, always pay down your mortgage (debt) first. Always better to be debt free and invest with money that isn't tied to your home. Plus the return is guaranteed. When you have a clear title (no mortgage) piece of property, it's easier to get loans, line of credits, etc.

IMO, prices of stock are dictated a bit by supply and demand. Same goes for real estate. Everyone is jumping into the real estate market, so it's driving up the prices, which in turn attracts more investors, which drive up the price more. One of the reasons is that the stock market is in the tank b/c the US economy is doing so poorly. So actually it could be a good time to pick up blue chip stocks at a cheap price before the prices shoot back up. But do your research.

[joel]

to offset the compound interest thing. i know some stocks over regular dividends on anything from quarterly to annually i think.

one thing that i have noticed so far about stocks is tracking earnings announcements for companies, they sometimes can swing a stock a few % depending on results. i guess unless you are an accountant for that company though you won't know whether the earnings will come out good or not until it's actually announced.. so it's just a guessing game.