Tackling the market.....

[JFrank]

Hey all, I've been doing very well at poker and am deciding whether to start putting some of my money into the market (seems like a good time to jump in, or what?)... Only problem is I have ZERO trading experience.

I've been flipping through trading/investing magazines and websites and have come to the conclusion that playing the market, though similar to poker in many ways, is in fact much different. While there are a few tools to use in poker, and strategy is relied upon heavily, there is seemingly ENDLESS information when it comes to trading and investing. I can't even figure out where to start. I don't want to just buy on a whim, but I don't think I can absorb the information necessary to make smart buys. I guess I can just throw it into some mutual funds, but that seems like a cop-out. What do you suggest, whats the best way to get into the market?

[adios]

There have been many threads and posts on this subject. Look through the archives.

FWIW

1. Educate yourself on why stocks are generally thought to be a better investment than bonds in the long run including what the long run is.

2. Educate yourself on the fundamentals of valuing equity.

3. The standard recommendation on this forum for folks in your situation is buy an index fund representing the valuation of the broad market that has low transaction costs and minimal management fees like SPY (an Exchange Traded Fund), Vanguard, etc. and expect to hold it long term.

[Paluka]

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I guess I can just throw it into some mutual funds, but that seems like a cop-out. What do you suggest, whats the best way to get into the market?

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I hardly think this is a cop-out. This has been a winning trade over the long haul in general. I think trying to be a pro in an area where you are an amateur is folly.

[MaxPower]

Amazingly adios and I agree on something.

In addition to what he said, don't think that you are going to make money by trading stocks or timing the market. You should treat your purchases as investments (long term). You are purchasing businesses, not stocks.

An index fund like SPY is good place to put your money while you research individual companies.

Here is the difference between poker and investing for me. In poker, you have to play a number of different hands to maximize your profit. In stocks, you can just play pocket aces. Invest all of your money in pocket aces. There are plenty of companies that are pocket kings, but why should you invest in them when pocket aces are available.

The trick is figuring out which companies are pocket aces.

[goodedesign]

[JFrank]

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I guess I can just throw it into some mutual funds, but that seems like a cop-out. What do you suggest, whats the best way to get into the market?

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I hardly think this is a cop-out. This has been a winning trade over the long haul in general. I think trying to be a pro in an area where you are an amateur is folly.

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Really - I may be an amateur but I know that balancing your portfolio is a requirement for successful investing so why would I want to put everything into mutual funds?

[adios]

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Really - I may be an amateur but I know that balancing your portfolio is a requirement for successful investing so why would I want to put everything into mutual funds?

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I'll barge in and ask you what is the criteria you recognize for having a "balanced" portfolio?

[topspin]

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Really - I may be an amateur but I know that balancing your portfolio is a requirement for successful investing so why would I want to put everything into mutual funds?

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You are aware that mutual funds (especially the index funds that others have suggested) are composed of lots of individual stocks, right? Buying SPY, for example, is much more balanced than if you were to go out and invest all your money into 5 or 10 stocks. It's very possible to be diversified by owning only mutual funds.

There's also nothing to stop you from owning a few funds and picking a few stocks yourself. That way you get the added fun of competing with your funds to try to beat the managers' performance /images/graemlins/grin.gif

[JFrank]

So a balanced and diversified portfolio can be attained by just investing in various mutual funds (and good money can be made?) So seems there is not really much reason for me to attack any other types of investments until I REALLY know what I'm doing. Sounds like the concensus of the replies...

[lehighguy]

Some advice form a wall street poker player. Mutual funds are a rip off because they can't beat the market over the long run. They charge large transaction fees and management fees.

If you still want to diversify buy index funds. They are like mutual funds except they aren't "actively managed" they just hold the index which represents the whole economy. To find a good index fund go to:
www.etfconnect.com (http://www.etfconnect.com)

For specific stocks I give this advice. Don't try to be an active trader unless you have at least $25,000. Even the discount brokers charge high fees if you investing less then that. They also won't let you short or use margin.

ALso, for a beginning investor I would suggest what I would call value investing, finding cheap companies. You might not make quick money but its safer.

[djc]

Well for what it's worth I have used Investors Business Daily and their systems for investing with much success. Much like poker, stocks require knowledge, paitence and discipline. If you do use IBD's principles you have to be sure to stick to them and not let ego get in the way. Just my 2 cents on the market!!

[therockofgibraltar]

I have never used IBD's service but I do follow O'Neill's CANSLIM trading tactics. They are pretty good.

[AceHigh]

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I have used Investors Business Daily and their systems for investing with much success

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I agree, it is the best investment strategy I've come across.

[cwsiggy]

There is no such thing as a billionaire trader but there are lots of billionaire investors. I used to work at a hedge fund and guess where all the rocket scientist analysts and traders with Ph'd's in chemical engineering etc. put thier personal money? yep - you guessed it - the S&P 500. In general - no one can beat it in the long run. It's been proven time and time again.