Unofficialbmw.com

[dale]

Well, I screwed up in the tranfer. The SIRI/XM post has gone to the great bit-bucket in the sky.

Let's start fresh!

[donaldan]

Like what one former boss of mine said, if it is worthwhile doing, it is worthwhile doing badly. Dale, thanks.

[bkbrouwer]

Looks to me like all the post are gone!

[dale]

It's a brand new forum. There are no posts yet, except these.

Dale

[JRS]

The Lounge is open! The Lounge is open!

Ok.. Let me begin by stating a few things about the stock market:

1. It's legalized gambling.
2. You can make and lose tons of money.
3. Win or lose, your stock broker makes money. If your trading costs are over $15 (Buy or Sell), you need to re-evaluate your broker. I have a friend using a brokerage firm charging him $35 per transaction. They provide him tools to help him invest but not Level II access. He recently switched to AmeriTrade.
4. Timing (just like timing belts for E30s) is important. A missed timing will cost you money.
5. Unless you got some insider-trading, treat every information as bogus until you verify it's worth.
6. Greed can get the best of you. Know and accept a reasonable amount of money won/lost. I set my profit-bar at "Double". Anything above that is determined by my level of greed. But I also have to live with any sudden losses. Break-even is great but have you ever heard of a person playing Blackjact that wins every hand ?
7. Repeat: See #1 above.
8. Use the tools on the internet to help you determine the risks of a given stock.
9. Your age is a determining factor for what type of stocks you should get into. There are two (2) "types" of stocks: Aggressive and Conservative. The common statement is: 21-48 yr olds should have a more aggressive portfolio and 49-65 should have a more conservative portfolio. Repeat: See #6 above.
10. Uncle Sam.. Don't forget about Uncle Sam taking his cut. If you make $10k on a stock, set aside $3500 for taxes... unless you used an IRA portfolio.

So, to begin with, let me give you guys (and gals) a website that provides a somewhat "Level II" access to the market.

Click Here

For news on the stock market, I highly recommend CBS.Marketwacth.com

Ragingbull.com has some "bull-chitters" but sometimes there's someone with reliable news.

Freerealtime.com has great information on after-market closing. For one, it tells you who the biggest gainers and losers are for the day.

Clearstation.com has charts. Tons of charts. Everything on MACD, etc. Want technical stuff - this website has it.

Bigcharts.com has after hours trading information. Put in the stock symbol and it will tell you how many shares exchanged hands between 3:00pm (CST) and 4:30pm (CST). Sometimes there is last-minutes news that makes/breaks a stock.

I could provide additional website information but I'll leave this Lounge and see if you guys/gals want more information.

Have a great day!

JRS

[Greenhornet84]

So OK, now we can joust!
Why is it tha NOONE will admit to being a SPECULATOR? Even you. And you admitted to buying and selling the smae stock within several weeks? Is speculation a pejoritive? I'm a liberal. Most Republicians use thst word as a pejorative. So what? I'm proud of who I am.
Talk to me.
Mark

[bimmer_boy]

So you mentioned the part about age ranges buying which stocks...what about us 17 year olds? where do we fit in? i may be young, but i would like to get in to it!

[donaldan]

bimmer_boy, good for you. I started investing in stocks soon after I got out of high school (didn't have money in high school). The stock investment I accumulated in undergraduate school financed my graduate school. Don't ask what stock to buy yet. Learn the process first. Read up on it, economics, accounting, business finance, etc. It is a lifetime learning. It is quite amazing that so little empahsis is place on these subjects and yet, we live in an intensely money oriented society.

[board_nerd]

quote

Quote:

i may be young, but i would like to get in to it!

The gambling analogy is appropriate. Like Vegas, be prepared to lose in full whatever you put down. Will you lose? That's largely governed by how patient you are. Leave an investment alone for 20 years and the data says you'll probably show a profit. That approach is far less sexy than the lure of a big trade, or some get rich quick plan. Whatever you do, there's no shortage of people (dressed in suits, or with MBA beside their name) who will gladly take the money you give them...

[JRS]

quote:

---

Originally posted by Greenhornet84:
..(snip).. Why is it tha NOONE will admit to being a SPECULATOR? Even you. And you admitted to buying and selling the smae stock within several weeks? Is speculation a pejoritive? I'm a liberal. Most Republicians use thst word as a pejorative. So what? I'm proud of who I am.
Talk to me.
Mark

---

The stock market is filled with stocks that show a rollercoaster effect. You basically BUY on the lowside and SELL on the highside. Selling Short is the opposite but I don't like to take that kind of risk.
Speculating is done everyday by everyone. Driving to/from work you speculate that you will arrive fine and for the majority of the time - you (thankfully) do. But one day there will be an accident that will set you back 1-5 hours. Not having jumper cables in your car is an accident waiting to happen. But if you speculate and prepare, then the reward will be big. I have jumper cables in all of my cars and people have been stranded - and I have helped (as long as they didn't look suspicious).
If you speculate on a stock then you essentially are buying without doing any 'homework'. I define 'homework' as taking 5-60 minutes to investigate the stock. If a major news breaks out, then it takes 5 minutes to realize that the market will react accordingly. Just look at Nortel when Verizon announced that they chose NT to help with their VoIP venture. NT is now trading at $6-$6.15.
Goto Freerealtime.com and look at the biggest losers for the day. Rule of thumb is that bellweather stocks tend to bounce back from any big losses. It may be a long-term (60-days+) hold but nevertheless, you know that the company will not 'go away' that easily. Just look at UNP (Union Pacific Railroad). Take a look at their 5 year chart. With the merger of two railroads, UNP stock dropped to as low as $35/share. Then it rebounded in under 4 months.
Why do stock splits happen ? For a few reasons but the one I want to point out to is that it makes the price of the stock more affordable for investors that want to get in. For those that are already in - they are even more happier because they essentially get more stock. Look at the stock splits for MSFT.
I would have to say that Day Traders would end up doing more speculating. Their goal is to achieve 10-50% return in a very short period of time. Some as short as 20 minutes.
The rewards are a great as the risks but if you speculate and not do some level of 'homework', then prepare yourself to lose.
It's legalized gambling. I like to start the Blackjack tables with $5. If I win, then I add $1. If I win the next hand, I add another $1. Then I play $7 hands until I lose. If the shoe is 'hot' then I play $15 hands. The key person is the tail-end. He makes or breaks the dealer. The delight in winning is when you win with a 12 and the dealer busts. But everyone must understand the cards they are dealt and must know when to hold and when to hit.

JRS

[JRS]

Bimmer_boy,

Glad to see that you're interested in your future... a comfortable one at that.

Homework is the key. Learn about the market. Some of the best stocks are 'in your backyard'. For example, Nortel is a Canadian corporation. They've definitely rebounded since that day-low of $0.55/share.

It takes $1000 to start a cash account on some of the online firms (e.g. E*Trade, Ameritrade, etc). I suggest that you start the account and keep the money in their money market. Then reaad-up on how the stock market works. PUTS, Sells, Sell Shorts, margin calls (I don't recommend this action), Limit sells, MACD, etc.

Setup an account on Yahoo!Finance and just 'play'. Put in a fake 'buy' and let Yahoo! track that stock for you. If you lose, you didn't lose real money. If you did great, you didn't make real money. However, you do learn a lesson.

Go watch the following movies:

Other Peoples Money
WallStreet
Boiler Room

Each has a 'flavor' of the stock market.

Rule of thumb for stocks: If it looks too good to be true, it usually is. But if it's a major-stock (e.g. PG, MCD, HNZ, CSCO), then it's worthwhile to investigate.

JRS

[Greenhornet84]

JRS,
I stand here chasened (and obviously out of my league).
Maybe sometime you can take a break from your homework and explain Selling Short to the undereducated masses. I heard Rush Limbaugh explain it once and he dosn't know either.
I think I'll be quiet for awhile and see if I can learn something.
Mark

[JRS]

Selling Short...

Simply put, when you sell short your view is that you anticipate a particular stock's share price will drop. To execute this type of order you sell shares you do not own (you borrow shares from your broker to sell).The proceeds from this sale go into your account, once the share price drops to a lower price you repurchase the shares with these proceeds, thereby pocketing the difference. (this is called closing out your short position,
re-purchasing the shares to repay your broker for the shares you borrowed).

Now let's look at this further with an example:

Let's say you think "XYZ" stock for example (currently trading at 55) is going to drop in price. You anticipate this because "XYZ" may miss their earnings estimate when they report earnings, or maybe there is a competitor of "XYZ" that is announcing positive news that may affect "XYZ" negatively. Whatever the case you feel this is a good opportunity to sell short.

So why would you place a limit sell short order?

Ex. say you placed a market order to sell 100 shares short at the open. now the stock closed yesterday at 55, however now at the open the news you were anticipating is out and the stock trades down to 50. Because you had a market order your order gets filled at 50. Now however despite the bad news some traders are viewing this as a buying opportunity and they start to buy, and the share price moves up to 53. Throughout the morning the share price moves as high as 55 as low as 52 but never again as low as 50 the price it traded at the open. Finally the share settles in -3 at 52 for the day. Now while the stock is -3 from yesterday's close you have not made any money, in fact you have lost $200. Why? Remember you want to sell at a higher price and re-buy the stock at a lower price. You sold 100 shares at 50 at the open, and the stock closed at 52. You could now sit tight and hope the bad news released will move the share price lower in the days to come. But what if an analyst steps in and after further analysis of the company's projections decides to upgrade the stock.....now your stuck with a loss that could progressively get worse if you don't close out your short position.

But had you placed your sell short order as a limit order you could of specified a price , say 55? (yesterday's close) Meaning your sell short order would only get filled if the stock traded up to the price you set. In this case you would have been ahead $300 at the end of the day instead of a loss of $200.

Note...NEVER place limit orders or market orders prior to the open when the S&P futures are heavily + or - side if you are trading in the same direction. Ex. don't buy when S&P futures are heavily to the plus side....and don't place a sell short order when S&P futures are heavily to the negative or if bad news was released before the open. It is better to wait to see how things settle out before deciding if the move (profit opportunity) has already occurred.

Another important key point, if you place your sell short order and it subsequently gets filled, remember to place a protective BUY STOP order to save you from potential capital loss if the stock trades against you and moves higher

Some key points:
You do not earn interest from the proceeds of the short sale that temporarily go into your account. But unlike a stock purchase you do not get charged interest even though you have used the leverage of your margin account.

Short orders are very tricky, so you should feel fairly confident of a continued price decline before you consider placing a short sell order.

One last and MOST important point regarding short sell order.
Have you ever heard the term "short squeeze", it is an event that happens when a stock in many short sellers view was expected to decline, but for whatever reason starts to rise in price, either from positive news, rumors, or an analyst upgrade initiating coverage.
Because of the positive sediment the buyers come in thereby causing the short sellers to protect from losing their capital to close out their short positions. Because closing out a short position means re-purchasing the stock to repay their brokers for the shares they borrowed- this action further enhances the buy side causing the stock's share price to move up even more rapidly.

It's important to note that a short squeeze is another trading technique that the analyst, brokerage houses can use to impact share price movement. This can burn many technicians. Just when a stock appears overbought (short positions are high) or another technical indicator shows probabilty of continued selling, and many short sellers establish short positions, this sets up the short squeeze.

It is always good to do research to see what short interest your stock is currently at, this way you can determine if the stock your interested in may have neg sediment, as well as what stocks might be prone for a short squeeze. You can also search for stocks that have had their shorts interest decrease as well.

Next question....

JRS

[alanfp]

Re: the quote about being prepared to lose it all...

You don't actually have to do this.
I read a book once, and, with hindsight, if I had stuck to the advice (and had the time/energy to check on my stocks every day!) I would be thousands better off.

Basically, the book said that when a stock has fallen in value by 10% of what you paid for it, SELL IT NOW. The most you can ever lose is 10% on any trade. What you actually do is sell when it has dropped by 10% from the highest price that you have ever held it at. [A potential problem is that you can get 5% swings in one day that can catch you out. In that case, you might lose 14% (assuming that the stock was 9% lower the day before). But this is rare.]
eg I have some British Telecom shares which rose to £15 from the £6 that I paid for them. When the TMT bubble burst and they started dropping, did I sell at £13.50? No, cos I felt that they would soon turn around and get back up to £15 - £17 again. They didn't! I'm now sitting holding them at a value of £2.65.
Have I learnt my lesson - YES.

"Experience is rarely cheap, but it's always good value"

[donaldan]

alanfp, we may be talking about 2 different stock plays. Long term vs. day trading. In day trading, nothing is held for more than a few days, mostly sold within a few hours. Ten percent swing within a day is extremely rare. We are talking about pennies and cents gain or loss per share. Obviously, one needs sizable amount of money to play because margin is extremely slim.