Stupid Stocks

[Sarvis]

So I finally got around to buying some stock. BAsically with the economic stimulus dealie, since even if I screwed up I didn't lose anything (sorta.)

So Microsoft went down a few points at the end of last week, and I figured hey, it's Microsoft... long term they'll be ok.

Now I'm still pretty confident about that, but can anyone explain to me why a news story about them having INCREASING 4th quarter profit is causing the stock to drop? Or is it because the executive who screwed up the Yahoo deal is leaving? Wasn't MS getting bad press for that in the first place?

I'm confused...

[shalath]

Stocks and shares are a long term investment. Put the certificate away somewhere and forget about it for the next ten years. Then cash in and be rich.

Sod's law says that the moment you buy a stock, the value will drop. Especially during an economic downturn. But over the long term, stocks and shares have consistently out-performed other forms of investment.

[Sarvis]

Yeah yeah, but it's still annoying and I can't help but watch.

Probably won't get rich either, only got 22 shares. They'd have to be worth $100k/share before I'd be rich. ;)

[teflor the ranger]

It's called market jitters. Even good stocks will often lose value over the short term for no specific or good reason. The only reason you're noticing is because you're having the jitters. Stop looking at the day-to-day price unless you're going to be trading day-to-day!

[Corth]

Sometimes good news is not as good as expected, or bad news is not as bad as expected. Stock markets are forward looking. Participants try to anticipate future results. If the consensus is that GM is going to lose $3 Billion dollars next quarter, and they announce that they are losing $2 Billion, then despite the fact that it is not good news, you may very well see the stock go up because the news was expected to be worse.

Also, short term movements of stocks are basically just noise. In the long term there will be some sort of relationship between the current price of a stock, and the income of the company. However, in the shorter term there isn't always a ready explanation for movements in price. There are big participants.. institutions, buying and selling according to whatever their own internal criteria are, which impacts the price in the short term, sometimes in a counterintuitive manner.

[Alta]

Microsoft dropped for one major reason and that MS's guidance for the rest of the year was lower than analysts had expected and projected. Because the analysts have published their projections and taken up positions, the market builds that into the stock price before the earnings report and guidance.

[Sarvis]

Guidance?

[kiryan]

guidance is predictions for earnings for future quarters and theoretically should be very accurate since its coming from the source. When there is a discrepancy in expectations you'll see a stock move, up or down depending on who the market based the current stock price on and which predictions the market believes more.

You have to realize that stock prices price in expectations very quickly. For example, the fed and interest rates. No one "knows" whats the fed is going to do with interest rates, but the market "prices in" their predictions weeks to months before they actually do anything. Remember the emergency cuts, stocks bounced 700-1000 points over a couple days because the market hadn't priced in those cuts yet. The fed's emergency cuts literally create value in financial stocks because its the same as making flour cheaper for a baker. On the other hand if the market has priced in a 75% chance for a quarter point reduction and the fed holds pat, stocks will drop because people had already priced in the cut even though it hadn't been made yet.

If you thought that MS was going to have a great 4th quarter, wouldn't you buy a ton of it right now.. or would you wait until just before earnings announcement after 4th quarter?

[Sarvis]

Is there some utility that will give desktop alerts for any news stories posted about stocks you define? Basically I ditched MS for a much cheaper stock which was having a good day, with the intention of selling it at the high point and then maybe buying back into MS.

The thing is, there was a news story that made it obvious even to me the stock was going to start going down... but google finance had stopped refreshing and I didn't notice the price falling, or see the news story so I missed it and am now way down. So just something that would alert me when something was posted would be nice. Is there something out there for that?


(Oh, and of course MS has been going way up ever since I sold it... :( )

[avak]

Google news has a really nice feature called Google Alerts that you can customize pretty extensively. I'm sure there are others.

[Sarvis]

Thanks, that will work for now... got it going to my work email, so I'll get screenpops on it.

If there's something else out there that would be independant of email though that would be nice. A service running on multiple PCs that will create a screenpop...?

[Corth]

Like a lamb to the slaughter...

[Sarvis]

Quiet you. I don't need your "rationality" here.

[Corth]

Heheh, and apparently you don't need your money either!

[Sarvis]

Remember, this is the economic stimulus money. Not anything in my budget or that I would have expected to have, so if I lose it I didn't really lose anything. It's more of a learning experience/trial run... not that I don't want to make money from it, but I'm pretty willing to take some risks with it!

[Corth]

If you were a good patriotic american you would have purchased consumer goods with that money! </sarcasm>

In all seriousness, learning how to invest and handle your own personal finances is among the smartest things you can do. I would suggest, however, taking a more academic approach and learning some theory first. In the long run that will serve you better than pissing away money on intraday trades based on news stories and hunches.

[Sarvis]

If you were a good patriotic american you would have purchased consumer goods with that money! </sarcasm>

In all seriousness, learning how to invest and handle your own personal finances is among the smartest things you can do. I would suggest, however, taking a more academic approach and learning some theory first. In the long run that will serve you better than pissing away money on intraday trades based on news stories and hunches.

*swat* What did I say about you and your "logic?" ;)

Although, on that note... are there some good books I can skim through? I tend to learn best by actually doing things, but having a good reference tends to help with that.

[Corth]

Well...

I'm not really sure.. I never read any 'into to trading' books per se. I read a lot of sources online on a daily basis.

Jim Jubak's column is at the link below. I think he would be good reading for introductory traders.
http://articles.moneycentral.msn.com/Co ... Jubak.aspx

I also read fleckensteincapital.com (subscription)
The Big Picture blog - http://bigpicture.typepad.com/
Calculated Risk - http://calculatedrisk.blogspot.com/
http://globaleconomicanalysis.blogspot.com/

These sources generally provide the sort of big picture (major long term trend) perspective that I trade off of. I think that there are a million different ways to skin this cat. Some people, for instance, will be more inclined towards technical trading based on charts, volume, etc., and then they really should be reading much different sources than the ones I listed.

[kiryan]

Jubak is good, I read him constantly.

Its good that you're thinking about investments. Your approach is unlikely to produce good results.

Do you remember "day traders" from the late 90s.... If you are lucky, reasonably intelligent and diligent in monitoring your stocks, you'll make some money here and there on "momentum trades". Until you get wiped out or get nickel and dimed to death on fees and taxes.

You're basically just going to lose your money. Investing in the stock market is a lot safer than trading, and it sounds like you're flying blind.

Good luck, seriously. I hope you make money, and look into the tax liabilities.

[Sarvis]

Jubak is good, I read him constantly.

Its good that you're thinking about investments. Your approach is unlikely to produce good results.

Do you remember "day traders" from the late 90s.... If you are lucky, reasonably intelligent and diligent in monitoring your stocks, you'll make some money here and there on "momentum trades". Until you get wiped out or get nickel and dimed to death on fees and taxes.

You're basically just going to lose your money. Investing in the stock market is a lot safer than trading, and it sounds like you're flying blind.

Good luck, seriously. I hope you make money, and look into the tax liabilities.

Yeah, I know there's tax liabilities. Not that I have to worry about that until something actually goes _up_.

"Investing" may be safer, but I don't think it gets you anywhere unless you start out with a good amount of money. The shares I bought of Microsoft would have only netted $1200 if the stock doubled, and that would mean going from 20-something to around 50. Not really a big improvement...

That was part of why I went with the new stock, it was cheap enough that I could get a lot of shares and doubling happens faster when you start at $2. Of course... so does halving.

So putting in $600 and hoping for 10% each year ($60) seems a little pointless. Now if I had 10,000 and it grew at 10% each year I'd be more inclined to just let it sit somewhere.

[kiryan]

You're really gambling vs investing or trading. As long as you realize that great. Taking $600 and turning it into $1200 over the course of 2 years would be just absolutely phenomenal, but is really not that much cash even when you do double it... If you want to turn a little money into a lot, I would look for investments other than penny stocks.

If you are a computer person, maybe you could invest your $600 in certifications to get a better paying job a couple years earlier than expected? or in a professional resume writer. Or in a business venture... Those are probably too much work, but it is something to consider if you want to get the most bang for your buck.

One last comment, Warren Buffet said something about 4 years ago primarily about the US... There is too much money chasing too few companies/assets... That is why he set a new course for Berkshire Hathway which is towards foreign investments, primarily in Europe. We may see a return to stock prices based on fundamentals of the companies now that the financial giants and fund managers got their asses kicked where it hurts... their jobs. The difficulty here is now you have to think about exchange rates. Is the dollar going up or down.

[Corth]

Kiryan makes very good points here. If you want to turn $600 into $1,200 in a short period of time, your better off putting it all on black. There are other ways to invest money, such as in yourself, which can have far greater returns than the markets. Also, if you carry a credit card balance, the guaranteed rate of return you get by paying off that debt will far exceed what you could reasonably expect to see in investing in the markets.

One thing that made a great impression on me when I first started investing was the "Rule of 72". Basically, it approximates how long it will take to double your money given the rate of return you are getting. Divide 72 by the rate of return you are getting on your investments, and the result is how long it will approximately take to double your money if that rate of return is consistent. So, for instance, if you are getting at 10% return on your money, it will double approximately every 7 years. http://en.wikipedia.org/wiki/Rule_of_72

As Albert Einstein purportedly said, "The most powerful force in the universe is compound interest". If you are 25 years old now, and you can maintain a constant 10% return over the course of your lifetime, $10,000 invested today will be approximately $640,000 by the time you turn 67 and your ready to retire and collect your social security. Now instead of $10,000, do $100,000 or so and your looking at potentially a very nice retirement. Moreover, you can increase your overall return by taking advantage of certain investment vehicles that are tax advantaged, like the IRA and Roth IRA.

I really believe this stuff should be taught in schools. Its scary to me how most people tend to lack even the most basic understanding of financial concepts. Being Financially aware and possessing basic money management skills will almost undoubtedly increase your standard of living over time.

[Sarvis]

Also, if you carry a credit card balance

I don't. (Well, one but it's no interest and I have the payments timed to pay it off before the no-interest period ends.)

As Albert Einstein purportedly said, "The most powerful force in the universe is compound interest". If you are 25 years old now, and you can maintain a constant 10% return over the course of your lifetime, $10,000 invested today will be approximately $640,000 by the time you turn 67 and your ready to retire and collect your social security.

Except that I don't have $10k, and there's nothing that gives a constant 10% return. The stock market averages 10%/yr... but you're still taking a risk with that even if you go with mutual funds.

Not to mention, I'd be about to die before I actually saw the benefit. Color me unimpressed.

[Sarvis]

If you are a computer person, maybe you could invest your $600 in certifications to get a better paying job a couple years earlier than expected? or in a professional resume writer. Or in a business venture... Those are probably too much work, but it is something to consider if you want to get the most bang for your buck.

My job would pay for certifications if I had the time/inclination to pursue them.

I can't imagine any business venture you could start for $600 that would be hands off enough for me to keep working my current job.

I don't think my resume's that bad... now if I could get an interview stand-in for $600, it might be worthwhile. ;)

One last comment, Warren Buffet said something about 4 years ago primarily about the US... There is too much money chasing too few companies/assets... That is why he set a new course for Berkshire Hathway which is towards foreign investments, primarily in Europe. We may see a return to stock prices based on fundamentals of the companies now that the financial giants and fund managers got their asses kicked where it hurts... their jobs. The difficulty here is now you have to think about exchange rates. Is the dollar going up or down.

Interesting thought, and there's always asia and emerging markets where you can probably make a killing. Unfortunately I understand those markets even less than our own! :(

[Corth]

You may be unimpressed but if you gamble away your money each time you have a few hundred bucks, you probably will never have very much saved up. That leaves me quite unimpressed.

[Sarvis]

One time is not every time, Corth.

EDIT: Not to mention your advice involved going back in 6 years with $10,000 I still don't have...

[Corth]

Good luck with your one time gamble.

[Sarvis]

Good luck with your feelings of superiority for earning compound interest. :P

[Corth]

Sarvis,

I don't really understand this.. I am not attacking you.. I used $10,000 not as a way of rubbing it in that you don't have that much money.. but as a convenient amount to illustrate how money can grow over time. Using the same 10% return, your $600 would become close to $40k over the same course of time. You may not care much for my advice, but I would like to see you refute the notion that investing over the long term is a great way to build wealth.

[Sarvis]

Sure it's great, if you don't mind waiting until you're on your deathbed to get that wealth. I'm not aware of many stock market moguls that got rich by waiting until they were 60. Are you?

Even if they did, I'd really rather enjoy the money now than spend it on a nursing home later.

[kiryan]

Its your money and you should spend it how you want to, but try and be objective. Not only in whether your proposed actions are likely to result in the desired outcomes, but also in the way you trade. One of the easiest way to get killed in the market is by making emotional trades.

If you are committed to making money in the stock market you probably can. If you don't put the time and effort in, you'll probably just lose and would be better served putting your money into a ROTH IRA. I believe most places have aggressive growth funds you can put your IRA into which would give you slices of risky investments and foreign investments along with some milder investments designed to keep you from losing your shirt.

Most serious stock or commodities traders I knew (several years ago) had non Internet based feeds. IDSN lines connected up to some service or satelite. This negates the problem you described earlier where you didn't get refreshes and didn't notice stock price drifting down. I don't know if Internet based is standard now or not, but I would guess any of the online stock trading companies targetting individual investors would provide a strong service. They also ALL got up a good hour before the market opened to review any news and after market activity. The market tends to trade heavily in the morning and its necessary to be there to mitigate potential losses. This was about 4:00 am (since we all live in PST). Not really the "easy" money that people think it is.

Work those certifications. Find the time, make a deal with your wife and kids if applicable. I can see how not getting certified over the past 14 years has cost me money. The certs don't mean anything technically IMO, but each one is one more reason why you should be hired or paid a little more. Plus, your company may have some sort of bonus program. I've collected $1,500 in certification bonuses this year and gotten reimbursements for about $2,500 in exam fees and mileage. I'm expecting my 2nd promotion in 2 years, and I'm turning down at least 1 interview request a week for $90k+. I'm very good with computers, but I definitely get more interview requests now that I am certified. All it cost me was 9 months of studying every night and the risk of not getting reimbursed if I fail a test. Consider spending the $600 on whatever you need (like baby sitting or books or sending your wife to her parents for a month) to earn some bonuses and increase your earning potential.

Here's an example of a low cost business venture. Mod XBOX and Wiis for $125 a pop. I'm not sure how legal that is, but you can find it advertised in Craigslist all the time and most of your "advertising" will come word of mouth. The risk you bork someone's console is pretty low if you practice soldering skills and have moderate dexterity. Most people are scared and unwilling to put the time in to figure it out which is why this work would command a premium. I'm not in any way endorsing this business, its just an example.

[Sarvis]

It's not as if this is the only thing I'm doing, I'm contributing to my 401k, and that's split between two mutual funds. One of which is an aggressive growth emerging markets, similar to what you mentioned and another which is a bit safer. Neither are doing well lately though... :(

I wouldn't do the modding thing, partly because I think it's unethical if not illegal. People, who happen to be a lot like me in fact, put a lot of work into creating those games. I'm more than willing to pay them for their time.

Even if I were willing to, I wouldn't need $600 to learn. It's the kind of thing you can look up on a website. Although I don't know how much a soldering iron costs...

So try again! ;)

[kiryan]

I added some to that post on certs.

Modding is not for everyone. The principle is find a niche that doesn't require much and exploit it for premium fees.

Mechanis is a good example. I replaced the power window regulator in my minivan in June. Shop wanted $500, I bought the part online for $100 and installed it myself in about 3 greasy hours... Saved $300 after I paid the shop diagnostic fee. Fixed my Jeep too, rear lights weren't working. Bought a $15 Jeep book, traced all the circuits, determined the problem was the brake switch, replaced it for $8. Saved myself at least $100 in the shop fee. And trust me I know nothing about cars, but I've saved myself at least $400 bucks this year.

People who know cars tell me its stupid easy, but people fear working on them. Think about all those Tax preparation places. They file the 1040EZ for you and charge you $80 bucks... Maybe you could sign yourself up for "Tax" school with HR block and do tax returns for people next year.

Anyhow I know you want to just invest in something and have your money do the work, but I really don't think its that easy unless you put it into a managed fund.

And don't let bad results this year rattle you... the market has been really really volatile this year... pretty much across the board. Most people are playing defense and trying not to lose too much money. Its unreasonable to expect much gain in this market.

[Ambar]

The discussion on investing, stocks and savings often came up in my previous job venture .. 18 year olds think they have a full lifetime to start investing, but truthfully it is never too late to start ..

The way I see it (and by no means am I an expert) you have to look at investing as a long term thing .. a shorter input of cash over a long period of time, smarter for people with less to START with ... it is what we have for our future because if you believe you will have "retirement" at age 65 you are crazy :) Buying 600$ of anything won't make you rich, especially if you are going it alone and not taking people's advice about how to invest (people who do this for a living and advise people how to invest for a living)

I started a Roth IRA like 7 years ago as an older investor, it is not fully funded since I am unable to make that financial commitment, but I do steadily (100/month) add to it .. I also have 401k's available to me, and do make a small input there as well, but the Roth is more easily managed .. think of the Roth as your investment and the 401K as your savings .. BOTH are long term .. check on them as often as you want but dont take their fluctuations too seriously, they are low risk investments .. the mutual fund company uses those funds and their experts make the decisions on what to invest in .. You do have your say in what type of funds you buy, whether it be low medium or high risk, you can decide what funds to buy into and that's where your money comes from .. you can adjust the risk as you want, but I just let it sit..

So your investment .. you contribute 100/month for 5 years but need a loan on your account of .. o say 3k since you just NEED a new car and can't finance it through a bank .. you withdraw that money since it is yours after all, but you just killed your investment over the long run .. do not TOUCH your 401k or your Roth!

Your 600$ Could have been used a little smarter, heck go find a company that can handle your shorter, high risk investments for you .. for as small fee they can turn that money around very fast for you, but do realize the higher the risk the higher gain but also the bigger loss .. and .. "don't put all your eggs in one basket"

Sarvis as a whole I get the feeling you are a very rash person who makes rapid decisions then has to live with them .. Stocks may be an option for you but don't do it uneducated .. don't take tis the wrong way but start by looking at websites designed by younger folks .. heck I found this one .. http://library.thinkquest.org/3096/ that is run by and managed by kids! I didn't look into it too much, it was just an illustration on the materials you can find. Most colleges have "stock games" you can learn a lot by playing, there is most likely something similar run by mainstream folks .. we did one in my accounting class a few years ago .. was a great experience!

Anyway .. good luck!

-J

[Ragorn]

Sure it's great, if you don't mind waiting until you're on your deathbed to get that wealth. I'm not aware of many stock market moguls that got rich by waiting until they were 60. Are you?

This is the wrong attitude to take when approaching your investments. The stock market is not easy money. You don't take $600, invest it in some stocks, and then retire young.

If you're interested in long-term investments, then a 10% annual rate of return is actually very healthy. If you're 30, then investing $600 into a fund with a 10% annual ROR will give you $10,000 when you're 60. That's how your 401(k) works... you put in a little at a time, every month, when you're young. Your financial manager continues to grow that money over time, and when you retire, you have a nice six-digit balance to withdraw and retire on. The only hiccup you need to consider is inflation. Your money devalues at about 3% a year due to inflation, so that $10,000 is really only going to be worth $8,500 in today's terms.

It sounds like you're more interested in day trading, which is another word for short-term investing. The basis of day trading is making very fast trades based on information you have about the day-to-day trends in the stock market. The market may go up 10% in the course of a year, but day to day, the value fluctuates a whole lot more than that. If you can buy a stock at 8am that increases in value by 20% by 5pm, then you sell it and pocket a fairly nice chunk of change. Repeat that every day for a year, and you'll be rich beyond your wildest dreams.

That's the theory anyway.

The hard part is identifying stocks which are likely to rise on a day-to-day basis. How do you know which stocks will increase in value tomorrow? You can't count on big-name companies providing you with any kind of guaranteed value... Exxon earned more profit last quarter than any company in the history of business, and their stock still dropped 3% when they released their earnings report. You have to know how market trends work, you have to read corporate forecast reports, you have to analyze earnings statements. All those stock moguls spend hours a day sitting on conference calls, reading business reports, subscribing to journals, and tracking trends. Are you willing to do that? If not, how are you going to know which stocks to buy? Do you think your financial advisor is going to call you at 7:59am every day with a hot stock tip that's guaranteed to make you money by the end of the day? If your financial advisor had that kind of information, he'd already be rich and he wouldn't need to work for you ;)

Day trading is putting your money at risk by making calculated trades. It's literally gambling. Some people make fantastic amounts of money day trading. Some people also make fantastic amounts of money playing poker professionally. It can be done, but it takes a lot of time, effort, and research. You have to study the economy to help minimize your risk.

Day trading without putting in the legwork is like playing poker without looking at your cards.

[Kifle]

^^ What he said. Anything but long-term investment is gambling, and I'm going to assume you're better at and have more information when it comes to poker than stocks -- and it's more fun. My advice would be to jump in an online game of poker and you'll have more fun losing your money that way -- unless you want to stuff it into a Roth. I'd personally go for the Roth IRA or save a bit more and get a CD with decent interest. The stock market is so 80's.

[Sarvis]

I think I only need to reference Adriorn's post in the Jokes thread to point out that long term investing is gambling too. It's just better odds.

Also, I'm no good at poker. Can never remember which groups of cards beat the other groups...

[Kifle]

Wanna play poker?

[Ragorn]

I think I only need to reference Adriorn's post in the Jokes thread to point out that long term investing is gambling too. It's just better odds.

Also, I'm no good at poker. Can never remember which groups of cards beat the other groups...

Corth is telling you which cards beat the other cards. You should probably listen to him.

[kiryan]

Sarvis is a positional person. once he's taken a position, its near impossible for him to relinquish it.

be careful, this is a terrible way to trade. If the market turns against a company, it doesn't matter how good the fundamentals are the stock will lose value in the short term. One question you have to always ask when you are looking at a stock (in a trading scenario instead of an investment one) is how does the market feel about the industry and how does the market feel about the company within that industry. When you are investing long term, you worry less about that. If its got good fundamentals, then the multi year trend should be positive regardless of how the market feels this week.

[Sarvis]

how does the market feel about the industry and how does the market feel about the company within that industry.

How do I find that out?

[Sarvis]

Sarvis is a positional person. once he's taken a position, its near impossible for him to relinquish it.

This is, of course, untrue. It's not my fault no one around here can make a worthwhile point.

For instance, all the recommendations Corth has given have involved waiting until I'm retirement age to benefit. Not particularly swaying as an argument, especially since I have that base covered on other fronts.

Many of the other recommendations have involved things that don't require the $600, such as getting certifications which my job will pay for. Or doing things I'm unwilling to do (help people pirate software.)

So how about this, someone tell me how I can take what's left of the $600 and turn it into enough money to do <a href="http://www.aircombatusa.com/store/store.php?crn=214&rn=383&action=show_detail">this in one year's time</a>

[Kifle]

No, Sarvis, there has been a lot of good advice here, but you seem to want reality to bend to your will. The fact of the matter is, investing requires time and that is the major use of the stock market. What you're pushing for is something that virtually everybody here is telling you not to do as it is blind gambling unless you are willing to put in hours a day just to research -- not to mention the extra hours it would take to trade. You may as well dump that money into lottery tickets at this point.

There have been many good points -- especially Ragorn's analogy to poker. Simplified, everybody is telling you put that money towards a long-term investment or don't even bother with the stock market because you'll just piss your money away.

[Ragorn]

Sarvis is a positional person. once he's taken a position, its near impossible for him to relinquish it.

This is, of course, untrue. It's not my fault no one around here can make a worthwhile point.

Sarvis. Please, listen to me for one second. Turn off your defensive shields, and just listen.

You came into this thread to ask a question. The question you asked was a legitimate and reasonable question about earnings vs. stock price. It was a fairly basic question, asked by someone who has a relatively limited level of knowledge about the stock market. You came in here looking for an answer.

There are several people in this thread who are trying to help you. Most of the people here seem to have a fairly firm grasp on the fundamentals of investing, and they're doing their best to explain the reality of investment to you. Nobody here is trying to trick you, lie to you, or deceive you. This is not an argument. Nobody is "making points." You asked a question, and now half a dozen people are all trying to give you an answer. It's really up to you whether you like the answer or not, but the answer is the same: It's possible turn $600 into $1400 in a year, but it takes a tremendous amount of either effort or luck to make that happen. We can tell you how to research your own stock decisions, but nobody here is going to be willing to do the research and tell you what stocks to buy. I'm sorry... if I knew how to effectively pick stocks, I'd be playing the stock market myself and not telling someone I've never met how to get rich.

If you're not willing to devote some time each day to researching the financial market, then you're really just playing poker with your money. You're picking a stock at random and hoping the value increases. If that's your investment strategy, then I wish you the best of luck.

[Sarvis]

We can tell you how to research your own stock decisions,

You say that, but no one is. I even just asked Kifle how I would learn what the market thinks of a stock, and he chose not to answer. The closest I've gotten to advice on learning how to do this stuff is a few blogs Corth posted along with the disclaimer that they probably aren't what I'm looking for.

So I'll ask again: Where do I find good information on how to research stock decisions?

Of course, I expect another few posts telling me that I just shouldn't bother instead of an actual answer...

[Ragorn]

We can tell you how to research your own stock decisions,

You say that, but no one is. I even just asked Kifle how I would learn what the market thinks of a stock, and he chose not to answer.

Potential resources include:

- The Wall Street Journal
- Fortune
- Forbes
- Money
- Google Finance
- Companies' press releases

Stock prices go up and down based on the demand of investors. As more investors seek to buy stock from a particular company, the stock price rises. So what you're looking for is not necessarily information that your company of choice is doing well, what you're looking for is information that indicates that more people will want to invest in that company in the near future. You make money by being one of the first to buy up stock in a company. Then, as other investors fall over themselves trying to buy the stock, they raise the price bit by bit and your own holdings go up in value.

So generally, you're looking for companies that are about to become more desireable. If you believe a company is going to exceed their profit estimates, that's a good bet. If a company is about to put out a new product that you believe will be successful, that's a good pick. But it's even harder than that... because you have to determine whether other people will want to follow your lead. If you bought Microsoft stock in 2005, expecting that the release of Vista would generate interest in the company, you would have lost money. That's because most industry analysts predicted that Vista would suffer lukewarm sales, and there wasn't a lot of excitement in the investment world for Vista. If you knew about Vista, but you didn't read about the investors' feelings, you would have bought MS stock and gotten burned.

That's why nobody will tell you what stocks to buy. Because if I knew what stock was about to become hot, I wouldn't tell you until AFTER I put my own investment into it. When you buy it, the price is going to go up... so unless I'm in on the ground floor, I have zero interest in sharing my information with you. That's also why you should ignore 99.99% of "hot stock tips" you see... most of the time, they're false hype being generated by someone who has a huge investment interest in the company in question and is hoping YOU will invest too so his value increases.

http://www.amazon.com/s/ref=nb_ss_gw?ur ... ng&x=0&y=0

That link will point you to books that go into much more detail about the process. I've just told you that heart surgery is performed "by removing the old heart and putting in the new one." If you want to learn how to actually follow the market accurately, you're going to need to do some reading.

[Lathander]

www.equitytrader.com

[shalath]

I've just told you that heart surgery is performed "by removing the old heart and putting in the new one."

And Sarvis, bear in mind that even this is misleading - he's described a specific type of heart surgery (a transplant), and not all heart surgeries in general. Such is the nature of advice.

There is a lot of good advice on this thread. Heed it. Do much reading and research. Or come back next year with a thread about how well or, and unfortunately this is more likely, badly you have done.

-simon

[Sarvis]

We can tell you how to research your own stock decisions,

You say that, but no one is. I even just asked Kifle how I would learn what the market thinks of a stock, and he chose not to answer.

Potential resources include:

- The Wall Street Journal
- Fortune
- Forbes
- Money
- Google Finance
- Companies' press releases

Unfortunately those aren't learning guides so much as news. I already check out Google Finance and Money on occasion... but need something that tells me how to interperet their information.

http://www.amazon.com/s/ref=nb_ss_gw?ur ... ng&x=0&y=0

Yeah yeah, I'm halfway through ordering one of those. Then again, if everyone just linked to Amazon every time someone asked about a router the forum traffic here would be practically nil.



On that note, the company I'm currently invested in has announced they're releasing an earnings report on Monday. What do I need to know about earnings reports to tell if theirs is good news or bad news?

[Ragorn]

You aren't allowed to buy stock in the company you work for based on knowledge that isn't available to the general public (like knowing your company's earnings are up). That's called insider trading, and it's what Martha went to jail for.