"The worst global financial crisis since the Great Depression "

[Jugghaid]

I no nothing about stocks. Besides my 401 k and other various retirement stuff I own a whopping 2 stocks of companies I'm involved with daily (both of which are actually doing quite well still). I have heard other people say this...and I don't understand. I get the whole buy low thing, but how can the "movement up or down I make money" be possible? If you buy a stock and it goes down, you lose money.

There are many ways to invest. Buying short, selling short, margin calls, etc etc etc.

[catphish]

 

There are many ways to invest. Buying short, selling short, margin calls, etc etc etc.

 

 

I understand short selling (regular and naked...thank you NPR) and margin calls, but they still don't guarantee gains. They're more like hedging bets.

[Jugghaid]

okay, fine, but there's a reason casinos in Vegas make millions of dollars a day.

 

 

So does the stock market. Over time it consistenly goes up and up and up.

[Thumper]

Here's a ray of hope...

http://money.cnn.com/2008/09/18/markets/markets_newyork/index.htm?cnn=yes

[Jugghaid]

I understand short selling (regular and naked...thank you NPR) and margin calls, but they still don't guarantee gains. They're more like hedging bets.

 

 

Of course they are. That's what the market is. Gambling. In many cases it's educated gambling but it's still gambling.You can bet on the market going up or going down.

 

If you want guaranteed gains, put your money in t-bills, certificates of deposit, etc. There are money markets with guaranteed returns as well.

 

If you want one of the most traditionally lucrative investments over time, go with real estate. It's almost the perfect time to buy if you have the capital.

 

There si a significant difference between long term and short term investing as well. Long term investing is generally much safer and consistent, but the big money can be made in short term investing.

[bluedogaudio]

Your Avatar makes Baby Jesus burst into flame.

 

Thankfully Jesus was nothing more than a Jewish mortal man. He has nothing to worry about.

[catphish]

If you want one of the most traditionally lucrative investments over time, go with real estate. It's almost the perfect time to buy if you have the capital.

 

 

I'm very much considering this. I ahve one investment property. Considering another, or upsizing.

[Jugghaid]

I'm very much considering this. I ahve one investment property. Considering another, or upsizing.

 

 

You can never really go wrong, long term, with real property. Even with the current housing market "crisis", my home value is going up over 5% per year. No, it's not getting the 20% rise like we had here 6 or 7 years ago, but I'm building equity every year.

 

If you are willing to wait out the markets and buy at times like we have now, when everyone is bailing, and sell when the markets peak......you can make a small fortune.

 

Most people aren't aptient enough to wait 5, 10, or 15 years though for the big return.

[isaac42]

I no nothing about stocks. Besides my 401 k and other various retirement stuff I own a whopping 2 stocks of companies I'm involved with daily (both of which are actually doing quite well still). I have heard other people say this...and I don't understand. I get the whole buy low thing, but how can the "movement up or down I make money" be possible? If you buy a stock and it goes down, you lose money.

There's more to the market than just buying stocks. For instance, there is selling short, where you sell stock you don't own. Say you sell 100 shares of International Widgets (IW) for $10 a share. Then it drops to $8. You then buy 100 shares at $8, and give them to the guy who bought them at $10, and pocket the difference.

From there, you move into options. That's where I generate a lot of my cash. I take a stock I own, and sell someone the right to buy it at a given price. That's referred to as a covered call. Covered, because I own the stock. Call, because I have sold someone the right to call my stock, that is, to buy it at the agreed-upon price. So, I have my 100 shares of IW, at $10. I sell a call at $12.50 for, say, $1.00. I get $100. If the stock price goes down, the buyer doesn't buy my stock. Why would he, when he can buy it elsewhere for $8? But let's say it goes up to $14. Now, he buys my stock at $12.50, and turns around and sells it for $14. I get $12.50 for stock I bought at $10, plus the $100 I got for selling the call in the first place. It's true, I would have made more money by selling it at $14, but I didn't know it was going to go that high. Most times, it never reaches the strike price, and I get the money for nothing. But the beauty of it is that I never lose money. The only risk is in not making as much as I otherwise might. And if you're ballsy, you sell naked calls. Naked calls are calls on stock you don't own. You can make a lot of money that way, but you can lose a lot, too.

Puts are the opposite of calls. With puts, you buy the right to sell a stock at a certain price. If I think IW is going to go down, I might buy a put at $10. Then, when it goes down to $8, I buy 100 shares and sell it to the person I bought the put from for $10, making $2 a share. Subtract from that the amount I paid for the put, and that's my profit, or loss.

So there's more to it than "buy low, sell high", although that's a very good place to start.

[Kindness]

I understand short selling (regular and naked...thank you NPR) and margin calls, but they still don't guarantee gains. They're more like hedging bets.

 

 

Absolutely. The people that do this best are on the floor and can make momentum calls within seconds, not minutes. As a sideline participant the best I can do it judge swings on a long term perspective and shift weightings in my portfolio based on expected movement. Long term prospects are pretty good that this is not a high point in the market over the next 10 years, so now is a good time for me to buy. I sell "those" shares when the market reaches high enough above this level to make it worth my time/money.

[catphish]

I understand short selling (regular and naked...thank you NPR) and margin calls, but they still don't guarantee gains. They're more like hedging bets.

I understand margins too. I guess I know more than the "nothing" I originally stated. How to utilize them successfully is what I don't know. Sort of like black jack. I know the rules, I just suck at playing.

[JacieFB]

I love it when a thread becomes educational. It does happen around here occasionally.

[catphish]

I love it when a thread becomes educational. It does happen around here occasionally.

 

You're right! I better lock it.

[lug]

You're right! I better lock it.

+1

I don't want any budding investors to get a piece of my pie!

[xXSOURCEXx]

Biggest problem of course being: America doesn't make anything anymore. We move money around. It's all money markets. Our cars made for GM/Ford are made in Canada and Mexico. Chrysler's money goes to Germany. Our TVs are made in Japan/Taiwan. Our clothing is made in Malaysia. What we DO make here, are like Toyota and Honda plants goes to Japan. We simply don't make anything anymore.

 

 

FWIW Working for Toyota Motor Manufacturing of Kentucky, All of the production at the Georgetown plant is produced solely for the North american market. This includes the Camry, Solora, and used to be the Seinna van and there new crosseover coming out this year.

 

So not entirely true. The majority of Toyota's North American production is kept in North America.

[Reverend179]

FWIW Working for Toyota Motor Manufacturing of Kentucky, All of the production at the Georgetown plant is produced solely for the North american market. This includes the Camry, Solora, and used to be the Seinna van and there new crosseover coming out this year. So not entirely true. The majority of Toyota's North American production is kept in North America.

 

 

His point was that in the end, the money goes to Japan. Doesn't end up in the American economy nearly as much as it would if it were a wholly-US product.

[Jugghaid]

His point was that in the end, the money goes to Japan. Doesn't end up in the American economy nearly as much as it would if it were a wholly-US product.

 

 

Not as much, true, but it is still very good for our economy.

[walkerci]

Truth.

 

 

Money doesn't disappear, it merely changes hands.

[Jugghaid]

Money doesn't disappear, it merely changes hands.

 

 

Not entirely true.

 

 

Wealth is not a zero sum game. Just as it can be created, it can be destroyed.

[J-chot]

Money doesn't disappear, it merely changes hands.

 

 

if you set it on fire, it sure as hell does.

[Reverend179]

Not as much, true, but it is still very good for our economy.

 

 

This is true. The more production we have here, the more jobs, the more money goes into the US division of whatever car company, etc etc. It's one of the reasons I'm glad that VW is talking about building production facilities in America, as opposed to Mexico.

[bbl]

Not if you don't sell it. There are other issues at work (short selling) but my point is I've not yet experienced a market where every investment drops simultaneously. If the Dow drops, that money is moving to another investment thereby increasing its value.

 

 

Well, systemic risk is real. Like Jugghaid said about wealth, investment is not zero sum, either.

 

If an investor moves their money to cash, I don't see how that increases the value of another investment.

[Kindness]

Well, systemic risk is real. Like Jugghaid said about wealth, investment is not zero sum, either. If an investor moves their money to cash, I don't see how that increases the value of another investment.

What if I'm the one loaning the cash?

[bbl]

How long after the election should we wait to reinvest in the market? I've been sitting on a fund(secured) waiting to see what happens.

I wouldn't try to time the market. I believe in dollar-cost averaging and diversification.

Just my 2 cents.

Oh, and on a related note, if it's a penny for my thoughts, and I throw my 2 cents in, someone's making a penny.

Thank you, Steven Wright!

[Kindness]

I wouldn't try to time the market. I believe in dollar-cost averaging and diversification.

I play full on dollar-cost averaging for all retirement accounts. I drop occasional lump sum investments when the time is right. The last time was Sept. 2001.