Jake00 knocked an idea loose in my head for a new thread (question about the IPO status of Internet Brands), and it got me wondering how many of us are actually involved in the stock market in some way. Who is a big believer in the market....who hates the market.....who is simply afraid or not trusting of the market....etc.. I'd like input from persons on all sides......and it's none of my business what kind of money you might have in it, or how you pick stocks.....But I would like to at LEAST introduce a fairly recent (mostly within about 10 years) vehicle for investing that really gets those of modest means into the "game" (the stock market).......This vehicle is the growth of online investing through companies like ShareBuilder, or ScottTrade, or eTrade.....Most of whom are partnered with major banks, and are fully accredited and legitimate companies.

And the wonderful aspect of investing in stocks through these companies called "dollar-cost-averaging" (more later).

I've only been in the game for a few years....(not including retirement vehicles with mutual funds like the 401-K, or the 457.....these are separate issues). It USED to be that if you wanted to invest in stocks, you had to go through major brokerage houses like Smith-Barney, Price-Waterhouse, etc.....and you usually had things like minimum balances, minimum dollar amounts to invest, etc......Usually, only persons with goodly amounts of liquid assets got into that game, and the "little" guy was pushed out (or kept out)........Nothing really wrong with that scenario (I'm not pointing fingers, by no means), but the vast majority of people just never got into investing in stocks and found it too expensive or troublesome to do so.

Enter the online trading companies (I do Sharebuilder through the State Employees' Credit Union).

This is the way it works. You open an account online, and the account is funded through a traditional funding source (i.e. checking account or savings account). All accounts have a money market account created.....and when the trades are done.....the "traditional" monies go through there first before they purchase the stock that you designate. The basic plans operate on a set funding date. Let's say you get paid once/2 weeks. The "automatic" trades are done on Tuesdays......So if you order the plan to purchase a designated stock bi-weekly, then every other Tuesday, your designated amount of money is withdrawn from checking (or savings), and is used to purchase that amount of stock.......

For example......I have the plan set to purchase stocks at the amount of $50 per week (I get paid weekly)........I have one "active" company right now that I'm purchasing, so every Tuesday, $50 is withdrawn from my checking account....goes through the money market account in ShareBuilder, and ShareBuilder purchases that stock...........

YOU set the amount and the frequency of trades. YOU do the research and decide which companies you wish to purchase. You can do one company at a time, or you can purchase a couple or several companies at a time. Pretty soon you are creating your own stock portfolio (You can do Exchange-Traded-Funds....ETFs also....which are like mutual funds....but they are traded like stocks......NOT like mutual funds which trade once per day).......You can stop purchasing at any time........Change the companies that you are actively purchasing.......Sell off companies (more on this later) if you wish...Whatever.

When you do this......YOU have an actual piece of a company. If you invest in ExxonMobil stock.....YOU are actually an owner with voting rights on company executives, policies, etc......Also....If you own enough stocks in a company, you can actually petition to have an idea or policy entered into shareholders voting.

This is the American dream folks........."Owning" companies, and actually having the chance to soberly (this is NOT the lottery) make a good deal of money. With this chance to make money ALSO comes the chance to lose it (risk).........

Some of you know a s--tload more about this than I do. I'd like to hear from the experts AND the novices.......I'd also like to hear from the cheerleaders as WELL as the skeptics......Anyone wanted to get into the stock market as a long-term savings/investing vehicle, but are just afraid to do so?.......This is the right thread for you!!!....(haha).......

Let 'er rip!

 

sharebuilder is not a very good deal if you are paying $ 12 a month and $4 a trade, there are a lot of companies that have drips or direct stock buys with no fees. from a believer in the market

 

Sharebuilder has 3 plans:

Basic........No program fee.......Just a straight $4/trade.........

Standard...........$12/month program fee........6 free trades/month........(other pluses)

Advantage...........$20/month program fee.......20 free trades/month.......(other pluses)

Other benefits for the higher programs......Lower costs for "real-time" trades ($15.95 for basic.....$14.95 for standard......$11.95 for advantage).......more investment and advice tools, etc........

I'm not here to plug one online trading house over another.....Don't really know about the others......ScottTrade and eTrade are just two common names I threw out there.......

 

great post idea, I'm here to learn

 

Welcome, Jake....Welcome......

Didn't know if you were just pulling some legs in the "Internet Brands" thread......

Hopefully a bunch of peeps jump in.....Startin' kind of slow right now.......

But ask away

 

I don't do any online trading. All my investments are through funds. The thought of buying a few shares of some smaller companies is good, though. I won't invest deeply into the stock market simply because I don't want to take the risk. If my funds are growing at a good rate (10-12% is not that uncommon), why risk large sums of money on singe stocks? On the other hand, if you were to invest in a Tandy (Radio Shack)type stock and get into it before it exploded, you could become exceedingly well-off.

I agree with the satment below, that's why I wouldn't mind trying a small amount- as a hobby. So, slow growth through a mutual fund is low risk. So I only have 1.5 million when I retire, darn! ('course I won't retire until I turn eighty)

 

No *****, no blue chips. At least that's what my dad used to say. I guess this explains where my head it at on this.

 

I used to play the "penny" stocks. My uncle got me into it. Other than that no experience and too afraid to get into it. May do it again when my girls are grown and gone. Until then money will be to tight.

 

Good points, Stu......

There are ways to minimize risk, of course.......And even mutual funds carry some risk (like in 2000-2002 when my Fidelity Magellan fund went from about $130/share to about $68/share)........

The concept of automatic investing practices the use of dollar-cost averaging. If the price of the stock happens to be lower when your purchase goes through, then you buy MORE of the stock.....If the price of the stock happens to be higher when your purchase goes through, then you buy LESS of the stock.......In the end.....(and provided it's a solid company with long-term growth)......the money you invest in the company grows......No timing is involved (an inexact science, in any event).....

Also.....I'm a blue-chip believer (still trying to figure out your dad's "saying", hkiefus...haha)........If it don't offer dividends, I (almost always) ignore it......Now my dividends are re-invested in the stock, but still........Case in point....Most of the hyper-inflated tech and internet funds in the late 90s did NOT offer dividends.....Believe it or not, there's such thing as having TOO much cash in a company....Even Microsoft (a notorious "no-dividend" company) paid out a one-time cash payment to their investors a couple of years ago to bleed off some of the excess......

My "traditional" retirement (401-K) is totally separate from all of this, of course.....Mutual funds, all....and still set with an "aggressive" bent......Like all of you, I also have savings.......

What to do with the extra....Hmmmmmm....I could continue to add mods to my Ford (haha.....not a bad idea, really).........

I wouldn't call this "play" money, but it's money that I can afford. If it all disappeared in a nuclear blast in the stock market.....I'd still survive.....BUT....I'm in the game, and there's a good payoff in the end...and I'm an ardent capitalist by nature.....Soooooo....I want to own parts of individual businesses.

I'm an "investor".......NOT a "trader"........BIG-A$$ difference.......

 

Ranger......I was gonna make a point about purchasing "undervalued" stocks......That's the concept that gurus like Benjamin Graham (RIP) and Warren Buffet believe in.......

Caveat. Undervalued does NOT necessarily mean "cheap".....It may mean a great company that's not yet been discovered by investors........Penny stocks, however, by and large deserve their valuation......and they DO mean cheap (not always, but mostly).........

With online investing.....you can buy stocks with little money.....I would advise, however, that it's money you can put into the pool and with which you can take risk.......And ALWAYS make sure you're funding your retirement and have savings on hand first.......

In my case, it's a long-term investment that will complement my savings and retirement (and I'm fortunate enough to have a traditional pension to look forward too also)........

 

i'm a tad surprised that those that aren't invested haven't jumped the tread.
i fully expected a wash of "big labor bad and or evil" threads.
haliburton this, GE that.
my respect is renewed. oh by the way.... i inhiereted GE and Haliburton.
i drink Busch beer now, but someday i'll be dringking real Bud.

 

hell no, I wanna know how to buy an ipo?

say I sign up for an online trading deal then what? is buying stocks online like buying books at amazon?

 

It better not.....I purposefully put this in the "general" thread instead of the Club.....Don't want it political.......

Hopefully this can be a semi educational thread.......

 

As far as I know, IPO's are restricted to certain investors. Something about having a yearly salary of a quarter million, or have at least a million in the bank.

 

IPOs are just the Initial Public Offering of a company stock (think "Google")........When a company decides to go public (to raise money for growth), they might decide to issue 10-million shares........These shares are then dutifully gobbled up by individual investors, investment firms, mutual funds, etc..........

After that, the shares are out there for trading.......The share that I buy of google might come from Joe-Blow of Wichita Kansas......and has nothing to do with the "initial" offering......The number of shares of the stock stays the same UNTIL.......

a) The company decides to issue another 10-million shares of the stock (I think called a "secondary" offering)......or

b) The stock becomes "overvalued" and it splits......(i.e. That 10 shares of stock that you own worth $100/share now becomes 20 shares of stock worth $50/share).

Jake....Depending on the trading house you join and the investment plan that you opt for....upcoming IPOs are announced to members FYI........

Buying stocks CAN be like buying books on Amazon....You still do it through the trading company, but you CAN make one-time (and "real-time") purchases of stock....Generally for a set fee ($11.95 to $15.95 in ShareBuilder).....But if you absolutely HAVE to have 1000 shares of Viagra stock right-the-hell-now (haha)....You can make the order, plunk down the trading fee (and the $50/share for the stock) and make that one-time purchase.........It then becomes part of your overall portfolio, and you can do with it what you will (buy more....hold.....sell...whatever)........