Teach me to be dumb in the stock market?

Well, some of you may remember this thread from about a year ago:
http://grassrootsmotorsports.com/forum/off-topic-discussion/teach-me-the-stock-market/13527/page1/

Since then, I've started investing and bought some stocks, and am actively researching mutual funds, IRA's, etc. I've got most of my money* in, or going to go in, relatively safe bets. But I've set aside about 10% to be risky with. I figure that this is the time to do it--nothing tying me down, college I'm almost done paying college off, and my college employment has been stellar.

Any advice, warnings, or other idea's to be looking into for this? Basically what I'm looking for is something that has the potential to make a good amount of money for me, on a relatively short term basis--less than 2 years. And I am not talking day trading, I've been doing that with play money (pretending I'd buy/sell...) and I've only barely broken even, and gotten worse at it over time. So I'm not going to risk that.

*This is not most of my money, just most of my money that is in/going in the markets

I've got no advice, but I'm dying of curiosity...

...Have you made anything?

BTW- sounds like you are approaching it from a smart approach.

SVreX wrote: I've got no advice, but I'm dying of curiosity... ...Have you made anything? BTW- sounds like you are approaching it from a smart approach.

Made anything? No, I haven't sold anything yet.
In the three months that I've been in stocks, I'm up about ten dollars including the commission price. Last week I was about even, I've been as high as 250 up, and as low as 100 down. I've also probably made something from dividends because that was a big factor of what I was/am buying, but I don't plan to sell what I have until the market turns around.

My take is that the current market is a 100% rigged game. It is not really a market per se as it is controlled now by high frequency trading algorithms that move the market up/down/all around at the whimsy. The trading volume is suspicious as well - there are very few actual trades being performed. In short, unless you have an in with Goldman Sachs, JP Morgan, or one of the other big Wall St. banks or maybe even a hedge fund manager, I'd stay out of the market for now. It is a sucker's bet.

Last quarter when 4 of the big Wall St. banks managed to make money every single trading day is enough for me to know to stay away, They tell their clients one thing and then do the opposite. They pretty much control the market. Let's say the guys at the trading desks of Goldman are smarter than the average bear and really know what they are doing when it comes to buying and selling stocks. Let's give them a probability of making a profit on any given day of 75%...what are the odds that they can make a profit 54 days in a row?

Something is more than fishy with the way the market has behaved over the last year or so. It is like going to a casino, except the house wins 99% of the time. "invest" at your own risk.

I'd buy exactly the opposite of what the big Wall St,. banks say to buy - that is what they are buying and they will win, get on their team and you can win too.

Interesting...

TJ, you have an interesting take. Any opinions on who could rig things? Are you suggesting it is just the individual corporations, the SEC, the administration, etc?

I'm no Wall St. insider, but if I put on my tinfoil hat I would say it's the very same banks that we bailed out. The ones who currently are given money at almost 0% interest from the Fed that they then turn around and use to buy Treasuries to get paid 2-3% on. That's right we are just giving them money, as much as they want. Since that is not making them loan the money out, the Fed is now buying the bank's 'toxic' assets so the risk can be put on us and the profits can continue going to Wall St.

Google high frequency trading and market manipulation.

TJ's advice is sound. If you have billions to fling around, you can move the market to your choosing.

mtn, here, I'll teach you to be dumb in the stock market: Do what your broker or CNN or whoever tells you to do.

The only people making money in the market are those that have inside information. The stock market itself is broken. If you must invest in it, find a fund that is even or better in the past 6 months, past year and past 3 years. Any fund that has done that is probably well managed. TIPS (Treasury Inflation Protected Securities) are the safest "bet," and they are all "bets," out there right now (IN MY OPINION.) You can't just print an extra $Trillion anytime you want and not expect some consequences at some point. Inflation is a stealth tax (or theft) on all of us. Here's another example: In 2003 I bought tires for my Truck at Wally World. They were $45 each plus the add-ons (mount, insurance, etc.) Last week, I replaced those 4 tires and bought 4 identical tires at Wally World. They were $85 plus add-ons. That's inflation. Good thing my wages went up to match that. Oh, wait, that didn't happen. I get a 1% raise and they think their Santa Clause. Eventually, the government numbers on inflation will have to approach the real inflation level we have, and at that point, TIPS yeilds will crank up as well. It isn't much, but as I said, it's the safest place to park funds right now.

"I asked my broker what stocks I should be buying. He said 'Canned goods and ammo.'"

To try to answer your question, keep in mind that the big Wall St. banks are the primary owners of the Federal Reserve. I think they pretty much own the government, including elected and appointed politicians. It's not a right versus left, Republican vs. Democrat issue here. It is the banks have managed to enslave the entire world in debt and now everybody owes them. I think we live in a real life version of the Matrix where notning is really as it seems.

TJ you paint a grim, but plausible picture.

don't waste your time with intraday trades "day trading" you will end up losing. Here is my view: the market is overvalued, all the fundamentals that traders were using prior to 2008 haven't fallen back into place(ie too much chop), this recession or depression is a W curve (not a V) and we have one more big crash like the fall of 2008. also, i still think we have some inflation coming maybe even in the double digits.

Having said all that maybe invest in a couple large company's you like (spg, dell, dis, etc) but when the floor falls out which they will throw some cash in an ultra short fund like SKF.

TJ wrote: Google high frequency trading and market manipulation.

You know what's interesting? The big banks put their supercomputers with Infiniband (crazy-fast networking) connections under the floor of the NYSE, to make the cable run as short as possible. This means ultra low lag so they can trade faster than anyone else, with millisecond precision.They can capitalize on the slightest sub-second fluctuations in stock prices, and other traders can't do this. Seems kind of unfair, but maybe I'm a commie.

Sounds a lot like racing:To make a small fortune, start out with a large one.

To quote the WOPR, "The only way to win is not to play."

How about a nice game of chess?

Dr. Hess wrote: The stock market itself is broken...

This I believe is fundamentally true. The stock market is currently no way what it is "intended" or "supposed" to be. It is a VERY dangerous game they are playing though. The economy of the US is basically dependent on it, if the sentiment that you are seeing here (its a huge scam) becomes widespread, look out!

One positive thing I would point out (sort of going down the conspiracy path here), is that since there is SO much money in it, and ALL the big players are dependent on it, they realize it's failure is theirs, they are VERY self interested in keeping it afloat, they will do whatever it takes.

That high frequency trading stuff is total crap. Adds NOTHING to the system, just a tax on investors.

They were $45 each plus the add-ons (mount, insurance, etc.) Last week, I replaced those 4 tires and bought 4 identical tires at Wally World. They were $85 plus add-ons. That's inflation....

You may be seeing a bit of inflation, but I am pretty certain most of that is because of oil prices:

Crude Oil Prices (actual, inflation adjusted):

2003 - $27.69 - $32.62

2010 Partial - $69.85 - $69.85

In reply to mtn: Buy BP. No, not kidding. And Toyota. Walmart is at a low and will rebound.. Ford. If you had asked a week ago, you should have bought Tesla's IPO, then dumped it this week. Unlike your play money, I've been doing this with real money since January, and am in the green. There are others, but remember, DO THIS ONLY WITH MONEY YOU CAN AFFORD TO LOSE. DON't USE THE SCHOOL MONEY. One more TJX, aka TJ Max clothing stores. Back to school is coming up, and they do well. If I were you, I'd be putting that money in long-term investing, not touch it and let it grow. There's your retirement money--as odd as that may seem to you now. One more, railroads CDX. My opinions. Your money

If you want to make money find companies building factories in Africa.

Don't listen to the "market is rigged" people, that kinda thinking will hold you back. Think.. "how can I get a piece of that pie"...

In reply to ignorant: Exactly. Like, whose making the components in the Droid, i phones/Pad; who makes the screens for flat screen TVs, Try to get ahead of the curve. The company that built the Blow Out Preventer (that didn't) in the Gulf. Why were they designing and now building a BOP with 4X the pressure capability than current blow out preventers? You know they are going to be selling those to ANYONE who wants to drill in the Gulf oor off Egypt in the future.

One more item and I'll shut up. DO NOT, DO NOT go anywhere near penny stocks. You'd be better off betting 37:1 horses at the track.

The smartest investment I ever made was in myself. I pulled every cent I had in the market out 5 years ago to open a company. The first year I doubled my money, the next I doubled it again. If I had stayed in the market...you do the math. Any investing I do in the future will be local, with the guy like me trying to get ahead in the world and willing to work his butt off to get there. Publicly traded companies are a crap shoot. The people invested in BP thought they had it made until a drill rig blew up. Look where they are now.

My advice might indeed hold you back. I agree with the idea of getting ahead of the curve. In that vein I submit that by the time a stock is identified as a good buy by an anonymous internet poster that you are already behind the curve. Not to poo poo those stock ideas - they very well may be a good investment.

My point wasn't to say that you cannot make money in the stock market. My point was that it is a sure bet for some and a fairly risky bet for most. It's your money, If I were you I'd put little faith in any advice freely offered in a public forum, consider what people are saying, do your own research, and make your own decisions.

Good luck.

Find companies you like in industries you think will grow, or are currently undervalued, and then stick with them for 3 years. Basically, what Buffet does.

I got into the stock market last year and followed this advice (I went after financial stocks, shipping and pharmaceuticals) during the middle of the downturn and I'm getting pretty good returns, 17% last year.

Be patient.

Toyman01 wrote: Publicly traded companies are a crap shoot. The people invested in BP thought they had it made until a drill rig blew up. Look where they are now.

In a related note, it is now an excellent time to buy BP stocks. Go where people are irrationally afraid and you'll get good deals more often than not.

Full disclosure.. Most of my investments are in index funds or targeted retirement funds.. I'm not stupid with my money.

I play with a very very small percentage of it.

Now heres a wild thought... What if.. Toxic assets become profitable again.. You can buy assets once worth $2.7M for $30k.. .... Not all the mortgages are in default..

Buckhead wrote: also, i still think we have some inflation coming maybe even in the double digits.

Really? All the indicators are pointing towards deflation right now.