Post: #1

I don't know too much about finance and investing but I would like to learn a bit. I recently came into about a few grand that I would like to invest. I got some money stashed away in a broker managed mutual fund but I am not learning much by just letting it sit there.

I was thinking about opening an etrade or Ameritrade account and being more active in managing my investments, hopefully learning some valuable lessons along the way. I am not planning on going crazy and making 10 trades a day or anything.

My question is whether you guys can recommend one trading website for what I am looking for. I am only aware of the two I just mentioned.

I am in my late 20s and I think investments are something every man should know a fair bit about.

Post: #2

It depends what investing method you think suits you best. Basically, you'll have to do a ton of reading before you can assess that. Are you picking stocks or do you want to build a portfolio using mutual funds or ETFs?

Building a portfolio can get complicated and I unfortunately do not have a book to recommend. The basic idea is diversifying your risk across various sectors and asset classes. You'll want to choose weights based on the research you have done or read. Once that is done, you'll have to choose the best fund/ETF that most appropriately fits the asset class or sector you are trying to represent. This is done by comparing sharpe ratios, expense ratios, r-squared to benchmarks, alphas, etc, basically, the modern portfolio statistics (MPT) & other stats you find relevant. Ultimately, I would keep it as simple as possible by focusing on stocks/bonds and choosing mutual funds/ETFs with the lowest expense.

For picking stocks:

I'm 27 and tend to be risk-seeking so I focus on growth stocks and use options for leverage. One popular method, CANSLIM, for finding and riding growth stocks is discussed in How To Make Money In Stocks by William O'Neil. You can easily find a PDF online. Another similar method is the Darvas method. Lastly, a popular blogger who focuses on this method is Joe Fahmy.

If you want to explore the value approach, I would read One Up On Wall Street by Peter Lynch and probably also The Intelligent Investors by Benjamin Graham.

There are also quantitative or systems investors/traders so if you have a keen interest in combining math, programming, and finance. I would google Bigger Capital and Hamzei Analytics and see what books/readings they recommend.

Ultimately, I would probably recommend you start off with forming a fundamental base then informing yourself on the CANSLIM/Darvas spin-off. Quant methods can be very interesting but you need to have a good basic understanding of investing & trading and a great math & programming skills.

Post: #3

Put the money in VFINX s&p 500 index fund and call it a day, you will not out trade the market, 75% of the mutual fund managers who have analyst, and tons of staff and money cannot beat the the S&P 500 they are guessing just like the rest. Best return will be in your own micro business.

Post: #4

(03-12-2013 10:21 AM)txbeachbum Wrote:  Put the money in VFINX s&p 500 index fund and call it a day, you will not out trade the market, 75% of the mutual fund managers who have analyst, and tons of staff and money cannot beat the the S&P 500 they are guessing just like the rest. Best return will be in your own micro business.

You can not compare a mutual fund to an individual investor, unless the individual investor is a billionaire. As an individual you have the advantage of being nimble, the ability to buy or sell a stock whenever you like. It takes about three weeks for the majority of mutual funds to sell a position due to the size of their trades. Also mutual funds have guidelines that they have to follow on how they can invest and how much of their portfolio has to be invested.

Post: #5

Open a brokerage account with low trading fees and provides a paper trading account.

Don't make any real trades until you learn more. I suggest you read any books by william j oneil. Probably the greatest trader in the last 50 years. He also has some proteges that have their own books and systems. Check out http://www.investors.com. A lot of great info for free on that site. It will help you form a trading a strategy.

Post: #6

I did forget to mention that IBD is a supplement to the O'Neil methodology.

Post: #7

(03-11-2013 02:32 PM)juice Wrote:  One popular method, CANSLIM, for finding and riding growth stocks is discussed in How To Make Money In Stocks by William O'Neil. You can easily find a PDF online.

I have only found an edition of this book from the 90s for free. Is that worth reading? If not can somebody send me a link to the most recent edition?

Post: #8

Most editions are very similar so the methodology does not change. I dropped a few bucks (<$10) on a used newer edition on amazon