Investing in individual comapnies

[AllBlackBimmer]

OK, so I know this topic could get out of hand quickly but...

I am 27, have a steady job, good 401k plan..

I wanted to start to invest in stocks, but not sure where to get started.

There are a few publically traded companies that I have an interested in investing in...

How should I approach this?

Take $2,000 and put it into e-trader or something and just buy individual shares of each company? ... is it really as "simple" as that?

... obviously the goal is to make money, i am reading through some investment books now, but say the stock starts to go "up" in price... at what price point do you try to sell to make money or know when to hold onto it if you think the company will continue to climb

- I guess, the real question is, how do you know when a company has reaches its "peak" ?
Example: Google - great company, great stock, but at whatever price per share it's at now, google already grwe years ago, and seems to more "maintain" its stock, rather than increase it... I.E. when you bought in for $200 a share, and nows its $400, rather than buying it at $375 and it levels off at $400


... the companies I am interested in and more technology related, with some poteintial to grow... hopefully..

[Joekerr]

Well, when a company reaches its peak, they normally release a report to the public stating this, in order to provide their shareholders with appropriate notice.

So I would hold onto the stock and wait until that happens.

[Patrick303]

Originally Posted by Joekerr

Well, when a company reaches its peak, they normally release a report to the public stating this, in order to provide their shareholders with appropriate notice.

So I would hold onto the stock and wait until that happens.

LOL!

Basically Joekerr is saying you don't really know when a company reaches it's peak. Constant research is necessary when investing in individual stocks yourself. Keep reading those books and learning more about Price/Earnings multiple, trends, and what factors really move a stock price.

[KingOfJericho]

You need to diversify. You might like tech companies but you don't want to put all of your money into a single industry. What you could do is play around with ETFs. I use Scottrade for online trading and made good money during/after the credit crisis but finding that type of value is much harder now (I owned AAPL at $88). You should look at a good charts site and try to familiarize yourself with the market before blindly buying any stock.

[AllBlackBimmer]

Originally Posted by KingOfJericho

You need to diversify. You might like tech companies but you don't want to put all of your money into a single industry. What you could do is play around with ETFs. I use Scottrade for online trading and made good money during/after the credit crisis but finding that type of value is much harder now (I owned AAPL at $88). You should look at a good charts site and try to familiarize yourself with the market before blindly buying any stock.

I understand the need for diversification... but...

I work in the construction industy, focusing on new technologies within the contruction industry... just by working with some of these companies and seeing their position in the market and how they are precievd, I feel there are a few that I want to invest in, since I feel in the coming 5-10 years, these new technologies will take off...

I only want to invest a little bit of money - couple of hundred bucks - with hopes they start to really gain traction.

I would invest in other companies as I got familiar with the stock market - but I know they say to invest in things you know and understand, and I feel that with my job and knowledge, i have a better than average understanding of the market shares these companies have and can invest accordingly...

[bolinp78]

If you are looking to enter into the market with a couple hundred bucks with the intent of learning how it works, how to execute trades, the experience of watching a portfolio then great. If you're looking to get into the market with a couple hundred bucks to make money, you're going to be disappointed.

As an aside, having a better-than-average understanding of an industry because of your job doesn't necessarily make you any more advantaged than someone that is not in your industry. In fact, I would say that as a beginner you would have a much higher risk profile than someone that has general experience in the market but not in the construction industry. You also have to understand the macro impacts of the industry, what makes it tick, what economic numbers to watch, etc etc etc. If you are just invested in construction, what happens when the economy takes a hit and new construction is negatively affected? The narrowness of your field lends itself to being a slave to the macro economy of the U.S. and the construction industry in particular.

Not trying to discourage you but you need to realize that just because you know an industry like the back of your hand, it does not necessarily translate into an understanding of that industry in the stock market and the management of a healthy portfolio. As another important aside, there isn't a financial adviser or market guru in the world that would tell you that a portfolio that is 100% filled with construction stocks is a good idea in the long term.

[gatorfast]

lol OP if there was an easy answer to your questions we would all be very rich

[AllBlackBimmer]

Originally Posted by gatorfast

lol OP if there was an easy answer to your questions we would all be very rich

Trust me, I get that...

... but just like sports gambing, its all about stacking the cards in your favor, doing your reserach, so hopefully you come out on the winning side 60+% of the time...

There is no easy answer, or just "one" answer... just looking to gather some more info.

[AllBlackBimmer]

Originally Posted by bolinp78

If you are looking to enter into the market with a couple hundred bucks with the intent of learning how it works, how to execute trades, the experience of watching a portfolio then great. If you're looking to get into the market with a couple hundred bucks to make money, you're going to be disappointed.

As an aside, having a better-than-average understanding of an industry because of your job doesn't necessarily make you any more advantaged than someone that is not in your industry. In fact, I would say that as a beginner you would have a much higher risk profile than someone that has general experience in the market but not in the construction industry. You also have to understand the macro impacts of the industry, what makes it tick, what economic numbers to watch, etc etc etc. If you are just invested in construction, what happens when the economy takes a hit and new construction is negatively affected? The narrowness of your field lends itself to being a slave to the macro economy of the U.S. and the construction industry in particular.

Not trying to discourage you but you need to realize that just because you know an industry like the back of your hand, it does not necessarily translate into an understanding of that industry in the stock market and the management of a healthy portfolio. As another important aside, there isn't a financial adviser or market guru in the world that would tell you that a portfolio that is 100% filled with construction stocks is a good idea in the long term.

I get that... not looking to open an account to "make money" ... (I would open it with 1500-2000 anyway) ... but def to learn, and hopefully, make a little money... obviously I will not become rich this way.

And, I would argue, that while i agree with the "narrowmindedness" of the construction industry, the poistion i am in, I am not out building new buildings or worried about a "lag" in the economy...

What i am directly interested in, is the technology, and companies assocaited with that tech, and how it impacts the construction industry. I would argue you have an ignorant mindset on what I am trying to say, no offense. The term "construction industry" is VERY general, just like saying the "food industry" ... just because the industry as a whole could suffer, does not mean certain aspects of it will not flourish.

I am very in-tune with new tech and how it is being applied to construction... ever think a 60 year old foreman would be walking around a jobsite with an Ipad? there are many NEW emerging markets with tech in construction, and I am just looking to jump on board some of them, with some small investments at first, learn how it works, and then hopefully be able to pick out the elite few companies and really sink some money into them.

[RandomHero]

Originally Posted by AllBlackBimmer

I get that... not looking to open an account to "make money" ... (I would open it with 1500-2000 anyway) ... but def to learn, and hopefully, make a little money... obviously I will not become rich this way.

And, I would argue, that while i agree with the "narrowmindedness" of the construction industry, the poistion i am in, I am not out building new buildings or worried about a "lag" in the economy...

What i am directly interested in, is the technology, and companies assocaited with that tech, and how it impacts the construction industry. I would argue you have an ignorant mindset on what I am trying to say, no offense. The term "construction industry" is VERY general, just like saying the "food industry" ... just because the industry as a whole could suffer, does not mean certain aspects of it will not flourish.

I am very in-tune with new tech and how it is being applied to construction... ever think a 60 year old foreman would be walking around a jobsite with an Ipad? there are many NEW emerging markets with tech in construction, and I am just looking to jump on board some of them, with some small investments at first, learn how it works, and then hopefully be able to pick out the elite few companies and really sink some money into them.

As a Financial Advisor by trade, I'm telling you right now that his advice was very relevant and helpful. Do you actually want help, or do just want confirmation that you're doing the right thing?.....you're not (I'm sorry to say).

He's not calling you an idiot, and he's not being a jerk. He's giving you helpful and relevant advice about a topic you know almost nothing about.

[Uber V8]

Originally Posted by RandomHero

As a Financial Advisor by trade, I'm telling you right now that his advice was very relevant and helpful. Do you actually want help, or do just want confirmation that you're doing the right thing?.....you're not (I'm sorry to say).

He's not calling you an idiot, and he's not being a jerk. He's giving you helpful and relevant advice about a topic you know almost nothing about.

I see you're a Financial Advsior. I'm actually in a similiar position as the OP, but instead I wanted to know who/how you would suggest me finding a broker/investor who has studied the market for years and can coach me when to buy/sell?

I'm assuming this is somewhat your field. What costs are associated with securing a broker? I'm figuring there's a startup cost and they take a percentage of my profits?

[jophish17]

You can't really diversify with only 2k$. Investing that in 1-3 stocks is very risky - I'd call it more like a legal gamble. Invest in more companies with 2k and you'll notice that commissions will kill you.

I'd suggest investing in a broad etf. If you insist on investing in construction/building, there are a couple of etfs for that industry. I know ishares has one. But I wouldn't suggest investing all of your money in the industry that you work in: Construction is very cyclical, and do you really want to be in a spot where you may lose your job in the next downturn AND your portfolio has lost a bunch of value?

[AllBlackBimmer]

Originally Posted by RandomHero

As a Financial Advisor by trade, I'm telling you right now that his advice was very relevant and helpful. Do you actually want help, or do just want confirmation that you're doing the right thing?.....you're not (I'm sorry to say).

He's not calling you an idiot, and he's not being a jerk. He's giving you helpful and relevant advice about a topic you know almost nothing about.

No I understand, I don't think he was being rude at all.

I'm not looking to do this to make money per say... I mean profit is great, but also as a learning tool to get myself into it. Start with a few companies and a few shares and work my way up to more.

I know I can't really diversify 2 g's , I would Invest in 3-4 companies...

For example... A company like SSYS that does the whole 3d printing... (This is not one of the company's I'm looking at, just using it as an example). So ex, if I was nuts over this company, what harm does it do to invest $500 bucks into them and see what happens?

Not using this for my sole investments as I have Roth IRA and my 401k which both are well diversified. Want to use it as fun, learning tool, and my knowledge of my industry to serif that can help me in some way. Would also do non-construction type related companies such as Apple or google as an example.

[Nkc]

Learn by experience. No advice on here would do you any good if you are already set on doing something. Just trust your gut and invest since its a small amount. The financial market is a totally different monster, nothing really makes sense when it comes to investing into future perceived value.

[RandomHero]

Originally Posted by AllBlackBimmer

No I understand, I don't think he was being rude at all.

I'm not looking to do this to make money per say... I mean profit is great, but also as a learning tool to get myself into it. Start with a few companies and a few shares and work my way up to more.

I know I can't really diversify 2 g's , I would Invest in 3-4 companies...

For example... A company like SSYS that does the whole 3d printing... (This is not one of the company's I'm looking at, just using it as an example). So ex, if I was nuts over this company, what harm does it do to invest $500 bucks into them and see what happens?

Not using this for my sole investments as I have Roth IRA and my 401k which both are well diversified. Want to use it as fun, learning tool, and my knowledge of my industry to serif that can help me in some way. Would also do non-construction type related companies such as Apple or google as an example.

If you want to learn then your head is in the right place. You have to start somewhere and it sounds like you have a good basic approach. It seemed that you responded to him a bit defensively which is what prompted my post. Even though I do this for a living, I always consider myself a student of the market. I learn something new every day and I remain very humble when it comes to investing.

Peter Lynch’s book called “One Up On Wall Street” follows the same method you’re planning to use: invest in what you know about not what someone else tells you to invest in. Peter Lynch is considered to be one of the greatest investors of our time so again I'd dare to say that your head is in the right place.

Originally Posted by Nkc

Learn by experience. No advice on here would do you any good if you are already set on doing something. Just trust your gut and invest since its a small amount. The financial market is a totally different monster, nothing really makes sense when it comes to investing into future perceived value.

Good advice.

In theory things SHOULD make sense and I honestly believe that many changes in the market can be explained. However, there are also many market anomalies that largely cannot be explained.

[AllBlackBimmer]

[QUOTE=RandomHero;14488693]
Peter Lynch’s book called “One Up On Wall Street” follows the same method you’re planning to use: invest in what you know about not what someone else tells you to invest in. Peter Lynch is considered to be one of the greatest investors of our time so again I'd dare to say that your head is in the right place.

[QUOTE]

One of the exact books I am reading! And yes, he does argue to invest in what you know... which is the approach I'd like to take as well.

[BayMoWe335]

For $2,000, not even worth wasting the time messing with it. Keep it in a checking account.

[hudamang]

You gotta start somewhere. $2K is $2K.

If I invested $20K in Tesla like I was telling my friends in February(I didn't), I would have an M3 by now haha....

[BayMoWe335]

Originally Posted by hudamang

You gotta start somewhere. $2K is $2K.

If I invested $20K in Tesla like I was telling my friends in February(I didn't), I would have an M3 by now haha....

You would have sold it earlier than now had you bought it anyway. If I had kept all my winners until now, I'd be retired. Easy to look back, hard to actually hold stocks long enough to double or triple. You'd be stupid not to take big gains.

[Nkc]

Originally Posted by BayMoWe335

You would have sold it earlier than now had you bought it anyway. If I had kept all my winners until now, I'd be retired. Easy to look back, hard to actually hold stocks long enough to double or triple. You'd be stupid not to take big gains.

I wouldn't. I have a different approach to investing, I buy and and don't sell. Been doing this for nearly 4 years now and I have to say, I have failed lol.

[AllBlackBimmer]

Originally Posted by BayMoWe335

For $2,000, not even worth wasting the time messing with it. Keep it in a checking account.

I mean, i hear you, but don't you have to start somewhere?

I'm 27, trying to buy a house, a have other bills, like this damn BMW

I don't have a ton of money to just throw into the stock market, espeacially since I really don't know much about it.

I relate it to sports gambling... only put in what you are willing to lose, no?

[bolinp78]

Originally Posted by AllBlackBimmer

I mean, i hear you, but don't you have to start somewhere?

I'm 27, trying to buy a house, a have other bills, like this damn BMW

I don't have a ton of money to just throw into the stock market, espeacially since I really don't know much about it.

I relate it to sports gambling... only put in what you are willing to lose, no?

After looking through all your posts on the thread it sounds to me like you need to do a lot more reading/researching before you throw money into an account and start buying. You do have to start somewhere but your base knowledge does not seem to be adequate to even begin investing in my opinion. In real life this could be totally wrong though, all we have to work with is your words online. That book you are reading is great, but you also need to learn basic market fundamentals and the basics of portfolio management. I understand that some aspects of this must be learned by experience but you will help yourself a great deal by reading as well.