Your Questions About How To Invest In Stocks

Daniel asks…

If i want to learn how to invest in stocks, where should I start?

I’m 18 and in college, but I know nothing about investing in stocks. What websites or books would you recommend. I’m willing to do heavy reading..

John answers:

Before you enter into any transaction, you should first know what you’re doing, why you are doing it and how to do it and the rules relating to what you are doing.

Before you invest in any security, the first investment you should make is in yourself, and the best investment you can make is by educating yourself.

Start your education by learning why you should invest and the importance of being able to make your own decisions or how the pro’s make theirs.

Here is some reading material that can get you started in the right direction,
Beating the Street by Peter Lynch
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
From Riches to Rags, by I.C. Freeley
Millionaire Traders, Lein & Schlosberg
How to Make Money in Stocks” by William O’Neil
24 Essential Lessons for Investment Success by William O’Neil
The Intelligent Investor, by Benjamin Graham
Common Stocks, Uncommon Profits, by Philip A. Fisher
One Up on Wall Street by Peter Lynch
Stocks for the Long Run, by Jeremy Siegel
The Interpretation of Financial Statements by Benjamin Graham
Trading for a Living, by Alexander Elder
What Works on Wall Street by James O’Shaunessey
You Can Be a Stock Market Genius by Joel Greenblatt
Your Money and Your Brain by Jason Zweig

Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance. (http://moneycentral.msn.com/home.asp , http://finance.yahoo.com/ . While at MSN following the strategy lab analysts to get a feel for what the pros are doing and why. This site has some basic information for beginners. If any site offers free information, take it.

Other website that can provide instructions and help with procedures and terminology are Investopedia – http://www.investopedia.com/ Stock Charts – http://stockcharts.com/, http://www.investorshub.com/ http://www.1source4stocks.com/, http://www.tradingstocksguide.com/tradin…

Visit some of the more professional websites like Zacks – http://www.zacks.com/ Smart Money – http://www.smartmoney.com/ Schaeffer’s http://www.schaeffersresearch.com/ Some of these web sites will have advertisers who are worth looking into also. And remember, if they offer free information, get it.

Attend all the free seminars you can, just be careful and don’t get pressured into anything you really don’t want or need. Most schools offer courses in finance and economics, but very few will have courses on the mechanics of the investment markets, if they do try taking the course. You may want to consider on-line courses, the New York Institute of Finance use to have such courses. Try to get some fee information from the stocks exchanges they all have (had) free booklets, SIAC and some of the regulators (FINRA SEC MSRB CBOE) may provide some free literature.

You at least have made the right decision to start investing, this is the first big step and it won’t be your last. Keep taking those steps forward and along the way never take the advice from people that are not in the market or try to tell you not to invest.

Good luck on your journey

Ruth asks…

How do you invest in stocks, options, puts, calls, etc without losing more than you invest?

I am interested in learning how to invest, but don’t want to lose more money than I invest. Is this possible? Is there a safe way to do this?

John answers:

With standard investing it isn’t possible to loose more than you initially invested with stocks or options.

That is, if you buy a stock for $10,000, the most you can loose is $10,000. If you buy an option for $1000, the most you can loose is $1000.

The one “trick” that might catch you off guard with options if you don’t know what you are doing is automatic execution at expiration. If you own an option that is in the money at the expiration date, it will most likely be automatically executed by your broker….even if it is only in the money by a single penny. This will not automatically result in you loosing more than you put in the option, but it can give you unexpected results.

John asks…

How/Which stocks should I invest in?

Ok so i am 15 years old and my dad said i could invest in some stocks for him using my money if i wanted to. I know the basics of investing in stocks but i was wondering is their is someone who has experience that can tell me if their are specific signs or patterns pointing to stocks that will grow? Thanks

John answers:

This isn’t exactly a stock I think you would want to risk investing in, but its super cheap so about $100 would get you a decent amount, and if you lose the money, whatever, its 100 bucks, no biggie:
Blockbuster.
Yeah, go ahead, run around in circles and scream “You’re an idiot”, I get that a lot. But before you jump to conclusions, hear me out.
Right now BLOAQ:US (Blockbuster) is at 7.4 Cents a share, super cheap. Now we all know blockbuster filed bankruptcy, but DISH Network bought them out. Everybody thinks blockbuster is dead, but it’s not. Blockbuster has its own online streaming service, which few people know about due to netflix and hulu.
Why not invest in netflix? Well, one, you wont get very many shares considering NFLX is at 211.2 a share. And, this month hasn’t been a good month for Netflix. One, they increased their prices by over 50%, and are expecting to lose over 15% of their customers. And on top of that, STARZ announced this month that they will not be renewing their contract with NFLX, meaning NFLX will lose rights to Sony Pictures and Disney.
Because of this, NFLX is dropping(No they aren’t going to take a huge hit like BLOAQ did a while back, but still, its a hit) and now DISH Network has announced it will be using BLOAQ to launch their own streaming video service to their customers. No further details such as price or release date have been announced.
Plus, BLOAQ has video games, one thing NFLX doesn’t have.
So, I’m not saying you should invest in BLOAQ, its your choice. But what I’m trying to say is that you need to research your companies before you buy. Know their weaknesses and strengths. Most people don’t know the information I put here, because they don’t take the time to look into companies. A little research goes a long way. I suggest Bloomberg.com, or wsj.com (wall street journal) for a start on research. Just follow the headlines. Heck, even go through random stocks until you notice something out of the ordinary with their history (ups or downs), and learn to recognize dividends so you don’t research a company only to find the jump was a dividend.
Take a notebook, a pen, go to freestockcharts.com and start going through stocks. Find something interesting, research what happened. History repeats itself. Learn what causes a stock to fall, and what causes one to rise. So that when you do have money in stocks, you can see the signs of a failing company, or a successful company.
One more thing, one thing that some people here don’t understand… You CANNOT predict the market. I don’t care what people think, you cannot predict it. It’s like the weather. Yeah , you may be able to guess close to what’s going to happen, but I’ve been in a tornado late at night when the weatherman said it would be a nice night. No matter what people say, always remember that you cannot predict the market.
Need any more information, just ask.

Charles asks…

How Do I Invest In Stocks?

I want to know all the requirements to start investing in stocks. Also which stocks to invest into (only high performing companies such as Dow jone, Nasdaq, S&P 500, etc) I only have 15k that I can use to invest and please tell the risk and warnings about investing and the market.
what are some good companys for brokerage accounts

John answers:

You need to open a brokerage account with a full service, or discount, or internet broker. Then research any company you are thinking of buying into…due dilligence al the way. There any number of good companies for sale. Where do you shop? Why do you go there? (That will get you to think of a retail investment.) Use the same comon sense to begin the process…but, ultimately, research is the answer. Good luck.

Donald asks…

How can I invest on Stocks?

I am new to stocks and investing. So I was wondering how I can learn about them, and invest in them. This isnt something I’m looking forward to get rich off of, but something I can count on to have an extra dollar or two if I needed. What is the best, and I guess simplest way to start investing? What are some good companies to invest in. How do I start all this?? Thanks.

John answers:

I have spent years as a broker, investment advisor, money manager and professor. Go to Edward Jones. They are a good broker, they have strong internal monitoring for ethics, and most importantly they will keep you out of trouble.

After that, start reading “The Intelligent Investor,” by Benjamin Graham, I believe the last printing was 1972. Then, if you are near a college, go to the academic bookstore and find an introductory textbook on accounting. Preferably a book designed for new MBA students. Accounting texts designed for accountants tend to be very dense and contain tons of information you will never need. Accounting texts designed for MBA students contain the type of accounting information managers need to know. They are a little simpler and cut away the really technical stuff only someone who is going to practice accounting as a profession needs to know.

Finally, I strongly recommend going to www.marketocracy.com and signing up. It is a stock simulator and you can win money. Practice is very important. You can find me there through my portfolio.

Http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=CaHiHdImDlIfEbAoMaKiAbOa

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