Watch out for fees with ameritrade. If you don't do so many trades in a certain time span, or if you balance falls below a certain dollar amount, they charge you like $15 every 3 months.
Originally posted by: KK
I'm not understanding your 48% return statement. He bought 50 shares at $50 for 2500. $24 dollars in transactions fees would be made up if his stock went up ~50 cents. You don't pay a transaction fee for each individual stock.
KK
Originally posted by: Hector13
Originally posted by: Epiphany
I'm only 18, but I don't see the point to ever diversify in the stock market, unless we are talking about an obscene amount of money ($1mil plus). I say with good research you limit your risk while enjoying the upside of the potential when you put "all your eggs in one basket". Diversifying just minimizes the risk and gain. thats the way i see it..
not to be offensive.. but the way you see it is wrong. In theory... the goal is not to minimize risk. Doing so is easy; stick your money in a CD. The goal is to minimize risk subject to a given rate of return (or, alternatively, maximize return subject to a given level of risk). The idea is, people probably have a given amount of risk they are willing to take (though it may be almost impossible to measure) so they should maximize their return for that level of risk.
Here is where an "information ratio" comes into play (or sharpe ratio). Simply put, it is a portfolio's (or stock's) return divided by risk... in other words, it is the amount of return you get for each "unit" of risk (here, we measure risk as the standard deviation of a stock's return). Assuming you are okay with this measure of risk and that you believe all the CAP-M mumbo-jumbo... it turns out that the "market portfolio" has a higher IR than any other portfolio out there.
So, if you want to target a return that is higher than what you expect the "market portfolio" to do. Your best bet isn't to pick a more risky stock that you think will outperform... your best bet is to lever up on the market (ie, borrow money and invest). Conversely, if the market is too risky, you should put some money in the bank (the "risk free asset") and some in the market.
Originally posted by: SuperMachoMan
Originally posted by: KK
I'm not understanding your 48% return statement. He bought 50 shares at $50 for 2500. $24 dollars in transactions fees would be made up if his stock went up ~50 cents. You don't pay a transaction fee for each individual stock.
KK
He bought 50 shares at 1 dollar a piece for 50 bucks total!
Originally posted by: Hector13
Originally posted by: Epiphany
I'm only 18, but I don't see the point to ever diversify in the stock market, unless we are talking about an obscene amount of money ($1mil plus). I say with good research you limit your risk while enjoying the upside of the potential when you put "all your eggs in one basket". Diversifying just minimizes the risk and gain. thats the way i see it..
not to be offensive.. but the way you see it is wrong. In theory... the goal is not to minimize risk. Doing so is easy; stick your money in a CD. The goal is to minimize risk subject to a given rate of return (or, alternatively, maximize return subject to a given level of risk). The idea is, people probably have a given amount of risk they are willing to take (though it may be almost impossible to measure) so they should maximize their return for that level of risk.
Here is where an "information ratio" comes into play (or sharpe ratio). Simply put, it is a portfolio's (or stock's) return divided by risk... in other words, it is the amount of return you get for each "unit" of risk (here, we measure risk as the standard deviation of a stock's return). Assuming you are okay with this measure of risk and that you believe all the CAP-M mumbo-jumbo... it turns out that the "market portfolio" has a higher IR than any other portfolio out there.
So, if you want to target a return that is higher than what you expect the "market portfolio" to do. Your best bet isn't to pick a more risky stock that you think will outperform... your best bet is to lever up on the market (ie, borrow money and invest). Conversely, if the market is too risky, you should put some money in the bank (the "risk free asset") and some in the market.
Originally posted by: dxkj
Thanks for your advice guys. I just started picking what I had been looking into and gotten advice on. I didnt really figure the transaction fees so much.
My goal? To hit 2% in a year or higher... pretty low goal.
What I think I will do.
sell my 5 shares of KKD, 100 shares of SYBD, 50 shares of HEC
Put another 50 into lucent (250 total). Lucent would have to go up a total of $250*1.02+11=266... so 16 dollars total... 50 shares, so thats a total of 32 cents for the year, in order to hit 2% gain.
Leave 10 shares of MVL. Purchased at 33.70 * 10= 337... 337*1.02+11=35.47.. a total increase of 1.77 per share to gain 2% for the year.
Leave 300 shares of AVR ... .28*300 = 84*1.02+11= .32 cents per share.. a total increase of .04 per share (which is what it did today). So unless that drops over the course of the year, Im still g2g
purchase ~ $400 of an Index fund..... should be fairly easy to hit 2% on the year.
Any opinions on that? I would like to keep Lucent MVL and AVR (AVR moreso out of a passing fancy, and an 84 dollar investment isnt much)
Originally posted by: Shockwave
Where do these hard ons for mutual funds come from?! They freaking UNDER PFERFORM people!!
Anyways, I do what I have the money for. I snatched 40% return off on stock in approx a month. Not too shabby. My banker wont give me half that for my savings so....
Invest smart, and remember theres about 10 schools of thought and a 1000 sub sections to it, so whats right for me wont be right for you. Find your road and run man!
Originally posted by: Epiphany
actually I made 50k (12k to 62k) in the last 7 months using my method in my mothers roth ira. To each his own i suppose.
Originally posted by: SuperMachoMan
Investing in "the market" is a completely different discipline than investing in individual securities.
You invest in an individual security because you believe in the future earning potential of that company and that the shares of that company are selling at a discount to their intrinsic value. It is impossible to assign a definitive risk/reward value to an individual stock. You are investing in a business and nothing more.
Timing the market requires a different line of thinking entirely. I am of the Warren Buffett school of thought in that I have absolutely no interest in that type of "investing".
Originally posted by: Hector13
Originally posted by: Epiphany
actually I made 50k (12k to 62k) in the last 7 months using my method in my mothers roth ira. To each his own i suppose.
you know what? somoene won the NY state lottery on friday. Payoff: $3 million dollars. Cost: $1 (and a dream). Damn, the lottery must be the greatest investment ever.
Originally posted by: Hector13
Originally posted by: SuperMachoMan
Investing in "the market" is a completely different discipline than investing in individual securities.
You invest in an individual security because you believe in the future earning potential of that company and that the shares of that company are selling at a discount to their intrinsic value. It is impossible to assign a definitive risk/reward value to an individual stock. You are investing in a business and nothing more.
Timing the market requires a different line of thinking entirely. I am of the Warren Buffett school of thought in that I have absolutely no interest in that type of "investing".
read my post above... no matter what you think you know about a stock, you are never going to know it better than some wall street "pro" who does this for a living.
Just anser me this: if most of them can't consistnently beat the market, what makes you think you can?
Originally posted by: Epiphany
Originally posted by: Hector13
Originally posted by: Epiphany
actually I made 50k (12k to 62k) in the last 7 months using my method in my mothers roth ira. To each his own i suppose.
you know what? somoene won the NY state lottery on friday. Payoff: $3 million dollars. Cost: $1 (and a dream). Damn, the lottery must be the greatest investment ever.
geez, first you say you're not trying to be offensive then you say that after i retort your statement. sorry to take you off your pedestal hector but like i said before.. to each his own. what's your point by stating that anyways? To act like a condescending stock whiz?
Originally posted by: Epiphany
Different people, different perspective. You think like my mom and i would guess a lot of people. My track record shows that I have consistently beaten the market. But saying consistently is relative. Over my trading history I have taken losts but have gained much more. Gotta aspire great things to achieve great things.
Originally posted by: Nuriko
Hector~ So how does one find/calculate the sharpe ratio? Also, could you explain some more about your strategy, I'm interested in hearing it. As for my current strategy, I'm sort of falling into a contrarian model and have about a 15% return for over a month of trading (of course, 15% of 8k is peanuts to some and nowhere near where I want to be, but then, I do have an entire 11 months left of trading before the tax man gets his bite)
Originally posted by: Hector13
Originally posted by: SuperMachoMan
Investing in "the market" is a completely different discipline than investing in individual securities.
You invest in an individual security because you believe in the future earning potential of that company and that the shares of that company are selling at a discount to their intrinsic value. It is impossible to assign a definitive risk/reward value to an individual stock. You are investing in a business and nothing more.
Timing the market requires a different line of thinking entirely. I am of the Warren Buffett school of thought in that I have absolutely no interest in that type of "investing".
read my post above... no matter what you think you know about a stock, you are never going to know it better than some wall street "pro" who does this for a living.
Just anser me this: if most of them can't consistnently beat the market, what makes you think you can?
Originally posted by: SuperMachoMan
Originally posted by: Hector13
Originally posted by: SuperMachoMan
Investing in "the market" is a completely different discipline than investing in individual securities.
You invest in an individual security because you believe in the future earning potential of that company and that the shares of that company are selling at a discount to their intrinsic value. It is impossible to assign a definitive risk/reward value to an individual stock. You are investing in a business and nothing more.
Timing the market requires a different line of thinking entirely. I am of the Warren Buffett school of thought in that I have absolutely no interest in that type of "investing".
read my post above... no matter what you think you know about a stock, you are never going to know it better than some wall street "pro" who does this for a living.
Just anser me this: if most of them can't consistnently beat the market, what makes you think you can?
I think the better question is why can't Wall Street "Pro"s beat the market? There are reasons why they are underperforming the market, not the least of which is they are holding a couple percentage points back for themselves both on top of and beneath the table.
You said you are aware of the fact that actively traded funds tend to underperform the passively held ones, yet you concede most mutual funds are actively traded. You claim to be a Wall Street professional, yet you have stated that you try to time the market. Do you have any idea how much money you are losing your clients with that strategy? Do you also use crystal balls in your "market forecasts"?
Don't you think the better strategy would be to buy and hold your stocks and to not try to time the market?
A trained monkey throwing darts at a newspaper will do better than the average wall street professional. This is an empirical fact.
Wall street professionals are human beings like everyone else, subject to the same biases and errors in judgement as everyone else. The fact that they are schmoozed regularly by CEOs is not a point in their favor. I have many friends and acqaintances who work and teach in the finance industry. I take investment advice from the likes of Warren Buffett and Benjamin Graham, not from them.
And yes I assure you I do know more about my industry and the companies I deal with than you do.
Originally posted by: Epiphany
Originally posted by: SuperMachoMan
Originally posted by: Hector13
Originally posted by: SuperMachoMan
Investing in "the market" is a completely different discipline than investing in individual securities.
You invest in an individual security because you believe in the future earning potential of that company and that the shares of that company are selling at a discount to their intrinsic value. It is impossible to assign a definitive risk/reward value to an individual stock. You are investing in a business and nothing more.
Timing the market requires a different line of thinking entirely. I am of the Warren Buffett school of thought in that I have absolutely no interest in that type of "investing".
read my post above... no matter what you think you know about a stock, you are never going to know it better than some wall street "pro" who does this for a living.
Just anser me this: if most of them can't consistnently beat the market, what makes you think you can?
I think the better question is why can't Wall Street "Pro"s beat the market? There are reasons why they are underperforming the market, not the least of which is they are holding a couple percentage points back for themselves both on top of and beneath the table.
You said you are aware of the fact that actively traded funds tend to underperform the passively held ones, yet you concede most mutual funds are actively traded. You claim to be a Wall Street professional, yet you have stated that you try to time the market. Do you have any idea how much money you are losing your clients with that strategy? Do you also use crystal balls in your "market forecasts"?
Don't you think the better strategy would be to buy and hold your stocks and to not try to time the market?
A trained monkey throwing darts at a newspaper will do better than the average wall street professional. This is an empirical fact.
Wall street professionals are human beings like everyone else, subject to the same biases and errors in judgement as everyone else. The fact that they are schmoozed regularly by CEOs is not a point in their favor. I have many friends and acqaintances who work and teach in the finance industry. I take investment advice from the likes of Warren Buffett and Benjamin Graham, not from them.
And yes I assure you I do know more about my industry and the companies I deal with than you do.
what do you do?