Your Questions About Stocks And Bonds Basics

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Joseph asks…

I want to learn the basics about stocks, bonds and trading?

Im a senior in high school and im really interested in these fields … what kind of basic things should i know for the future
I want to know the basic fundamentals so can anyone help me or recommend some good books on these topics…
thank you

financi4 answers:

If you’re a rookie in investing or stocks, go to

www.finance.yahoo.com.

Open up a portfolio without using real money. You can give yourself as much or as little money to try out the market. The stocks you want to focus on is consumer staples, consumer discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and bad times. Most of my positions are in these stocks. Some names include 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody’s got to eat and wipe their butts regardless of the state of economy. Many of these companies survived through the Great Depression.

That’s the benefits. You can sleep at night knowing your money is doing well. There are NO guarantees that you won’t lose money. It’s just that these stocks are the best. They pay good dividends too.

Then once you’re comfortable and test the waters of the market, you can finally put some real money in. Go to Scottrade.com. They’re excellent for beginners.

If you’re new to stocks, DON’T DAY TRADE. You’ll a rookie in a world of professionals. I tried day-trading with Citigroup and AIG when they were a little bit over $1. I had some luck at first, making about $30 a day but I was way over my head. My luck didn’t last long and I had to rethink my strategy.

Day trading involves A LOT of commissions to the broker. With all the commissions deducted from each trade, you’ll be lucky if you only lose half your money.

I would just day trade using Yahoo! Finance. Open a stimulation account, give yourself $100 worth of fake money and play it in the stimulation format. You’ll see what I mean by losing money every easily.

Good luck.

Chris asks…

what are some good books for someone that knows nothing about stocks/bonds and wants to learn the basics?

i really want to get into investing long term and right now im just saving money and trying to learn as much as i can about investing while im doing my army enlistment, ive been reading some robert kiyosaki books and i want to learn a llittle about everything to get a feel for what i want to do, so can anyone recommend some books explaining stocks and bonds to someone who doesnt know very many technical terms? ty

financi4 answers:

First off, I recommend not reading Robert Kiyosaki. He’s a con artist, and it’s fairly well known (if you do any research) he never made any money at all, until he got into the business of telling other people how to make money. Here’s a guy who’s done an obsessive amount of research into Kiyosaki, http://www.johntreed.com/Kiyosaki.html .

Anyway, as to your books. I always recommend, for a first investing book David Bach’s book, “The Automatic Millionaire”. This is not a get rich quick book. It’s a get rich slow book. It talks about much more than investing, including the decisions and lifestyle choices you have to make over three decades or so to end up rich. A lot of it seems like common sense, except that most people just don’t do it. If you read only one book, this is the one to read. If you follow it, you’ll end up better than 90% of the people out there.

If you’re interested in investing theory, Burton Malkiel’s classic and historical book, “A Random Walk Down Wall Street”. This is the book that, for academics, turned wall street on it’s ear, and lead to the efficient market hypothesis, which essentially argues that individual stock picking is a useless endeavor. Shocking at the time, but widely accepted by acedemia (now) as true.

If you’re intersted not so much in theory but more on specific advice, I’ve yet to see a book (and I’ve read a ton) that beats William Berstein’s book, “The Intelligent Asset Allocator”. Excellent book, which talks about not only how to “allocate” your assets among various possible investments, but also how to allocate them among tax protected and non-tax protected investments. For example, certain investments, such as REIT’s, have significant annual tax ramifications, these should be held, if possible, in a 401k or an IRA and not held in a taxable account, to protect yourself from taxation. Other investments are more tax friendly, and can be held in a taxable account.

Berstein’s book, while fantastic, does have considerable math and statistics involved. If you don’t have a college math/stats background, it’s still an excellent read, but you may have to skim some sections and kind of “take his word” for it.

Good luck!

William asks…

Recommend a book that gives a good overview of financial products (stocks, bonds, futures, forwards, etc.)?

I am looking for a very beginner level, plain English type book that goes through a variety of financial products such as bonds, stocks, derivatives, options, etc. that explains the basics of all of them. The field I work in has put me on a job where I need a general understanding of each of these products (dealing with a hedge fund that invests in every medium imaginable) and would like to do some background research. Bonus points for people that can recommend a good book focusing on hedge funds as well! Again, something in plain english that is a very basic level so I just have an idea of what I’m looking at to start out with–nothing crazy please!

financi4 answers:

Http://finance.yahoo.com will answer many of your questions. Check them out.

George asks…

What books/sites to learn basics & trips on investing?

Hello,

I’m totally new to investing because my environment when growing up wasn’t the most susceptive to it. However, I really would like to learn the basics and more of investing (stocks, bonds, mutual funds, etc.). Are there any good books and/or websites out there that can help me? I’m looking for something that explains the bare-bone basics, as well as general tips (what to look for, when to invest, what to invest, when to buy/sell, etc.)?

Thanks guys!

financi4 answers:

There are a few good sites about what to invest, what are stocks, bonds and what the experts are saying about these.

Check out this site for common terms used in investing and a few good resources on investment guru Buffet has to say

http://www.onemint.com/2008/04/27/pe-multiple/

Other websites for general reading and news:

www.fool.com
www.moneycontrol.co.in

Daniel asks…

What is a good overview book on investment management?

I’m starting an internship very soon at an investment management company, and I could use a refresher, to say the least. I’m looking for a concise book that explains the basics of investing (stocks, bonds, mutual funds, options, etc) so I don’t sound like an idiot when I show up to work. Preferably a book available in ebook form. I suppose a sufficiently detailed web article would work as well. Thanks, from my boss as well haha.

financi4 answers:

How to invest, by benjamin franklin, its available free of cost

David asks…

18 yrs. old, interested in Investing/Saving. Ideas?

I’m graduating this year. (Thank God) I’m reading all these articles about how saving early is a really good idea. I’ve been learning the basics about stocks, bonds, 401k plans etc. As of right now, I’m making $300/2 weeks and when summer comes along i will be making $470/2 weeks. Any ideas on how i should get started on investing to make money and saving for expenes,house, retirement?

financi4 answers:

If you have a 401K plan at work and they contribute, put as much money as you can into that. Many companies will match a percentage of what you contribute – that’s free money. The downside is that you can’t dip into that money without paying a penalty until retirement.

If your company doesn’t offer a 401K, try a Roth IRA. It’s like the same thing but you can often get a little better return on your investment and you can take money out without penalty.

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