I’m interested in the US stock markets. But like @Anusha2917 I know nothing about it. All I know is you need to have an account with Fidelity, Robinhood etc. How to play safe and still make money? Apart from few famous Tech stocks I have no idea about others which are safe and profitable.
Tell me about it! Btw, what’s your take on real estate? Specifically from an India standpoint? Will we ever recover from the slump? I feel like exiting now is a great strategy but no buyers are available these days.
I think it’s a good idea to start a new thread about US markets. The general idea is the same but a lot of things are country specific.
We can start a thread on stock recommendation thread, we can discuss on the stock and then buy. @shravs3 its difficult to make money on the big company stocks, it’s easy to buy the right stock that is less than $10 and sell it. AMC stock was $2.98 on Jan 21 and it peaked to $19.90 on Jan 27 and it is currently trading around $13, so if you invested $10,000 on Jan 21 you could have got a return of $66000 by selling it on Jan 27.
OP, @shravs3 , You need to invest lot of time and energy. I have been doing this almost 6 years and DH over 13 years still we are learning a lot. I would say its like gamble. We both have different type of brokerage account/platform. Here is some basic things to start with Stocks - A share of ownership in a company or corporation. 2 types of stock. 1) Public Stocks - when a corporation on public issues stock that the general public can buy and trade on stock market. 2) Private Stocks - Shares available only to internal investors. Public Stock Types - · Common stocks – this is the type of stock we think of when referring to stocks. You can make money either by buying and selling (trading) when the price goes up and down or through cash dividends offered by companies when the corporation is in profit. This stock holder gets voting rights. You can vote on who is elected to a company’s board of directors. · Preferred stocks - gives a fixed dividend per share that a company needs to distribute before there’s a payout to shareholders of the common stock. It’s a more reliable stream of income. · Classes of Stock - refers to how many voting rights a shareholder has. 3 Types Of Market on which companies, investors and their brokers can buy and sell shares. 1. Primary Market - where companies directly sell shares to investors. This happens when a company first goes public in an IPO. Usually companies are not selling to individual investors at this point. They often sell to major institutional investors like pension boards, hedge funds and mutual funds that manage money for large groups of people. 2. Secondary Market - is just between investors, and it doesn’t involve companies. This is where individual investors can buy stocks. 3. Over-The-Counter (OTC) Markets - Major Stock Exchanges have certain requirements that companies must meet in order to be eligible for listing. If companies those standards, they have the option of going with an over-the-counter (OTC) stock sale. Understanding Stocks Fluctuation - When there’s a high demand for a particular stock and few people holding that stock are selling, the price goes up. Conversely, if there’s a low demand with many sellers, it drives the price of a stock down. Other factors like economic conditions, company’s performance and earnings, anticipated new product coming out. Bull Market - Bull markets happen because there is widespread optimism about the economy. Generally, when people think things are going well, they tend to put more money into the stock market because there’s more opportunity for a higher return. Bear Market - Generally, this is triggered by economic events that seem to signal economic distress. Ways you can invest in the stock market - It depends on Your time frame, target date, tolerance for risk. 401(k): defined contribution that the employer, the employee, or both make regular contributions to the plan. IRA: Whereas you have to go through an employer to open a 401(k) account, an IRA is a type of retirement account that you can open on your own. Note that IRAs aren’t an investment, but rather a type of account for your investments. The two main kinds are Roth IRAs and Traditional IRAs. Buying Individual Stocks: You will need to understand industry trends, and stay afloat of news about companies you are buying stocks. Mutual Funds: A mutual fund is an investment program that pools funds from many investors to buy assets. The goal is to invest to achieve income or growth. Mutual funds are professionally managed, and the majority invest in a diversified portfolio made up of many types of assets such as stocks, bonds, and other securities. Index funds and ETFs: If a stock and a mutual fund had a baby, you’d get an exchange traded fund (ETF). Like mutual funds, ETFs hold a basket of assets, such as stocks, bonds, commodities and currencies, only they trade just like stocks. As for how their prices are determined, they’re determined by the forces of the market, and they’re traded throughout the business day on a stock exchange. These can be good for a beginning investor who isn’t sure what to buy. Services like Acorns Choose the Right trading platform/online brokerage account – Before choosing any brokerage account consider things like monthly fee, commission fee, how many day trading stocks option you get, does it allow to trade OTC stocks, fund transfer charges, does it allows after hours trading, available features. Choose your stocks – Diversify your portfolio means owning stocks in a variety of companies, across numerous sectors, to protect against adverse events. Invest only in businesses you understand. Avoid high-volatility stocks until you get the hang of investing. Always avoid penny stocks as beginner due to high risk. Learn the basic metrics and concepts for evaluating stocks. Main Types of Stock – Growth stocks - are shares bought purely for the goal of capital growth. Companies will reinvest profits rather than pay dividends, meaning investors’ only route to profit is through capital gains. This makes growth stocks inherently risky. However, while capital losses may be incurred, the payoff from stocks that are expected to grow fast can make this risk worthwhile. Dividend stocks/ yield stocks- have paid regular (usually quarterly) dividends to company shareholders. That means if a company pays an annualized dividend of 10 cents per share, it will pay a quarterly dividend of 2.5 cents a share. Defensive stocks - are companies with reliably high demand for their products and services no matter what the state of the economy; industries such as healthcare, consumer staples and utilities. This makes them ideal to analyze during recessions but may not be the best choice for general bull markets.
@shravs3 What is your goal on investing, is it for retirement or fun money, if it is prior I would first checkout if your employer has 401k plan, if there is one and it does offer match with your contributions, start with that and contribute until you get employer match. Inside your 401k pick target date index fund depending on your projected retirement year which will be 59.5yrs, find that year by adding number of years to your age and get that number. If you are eligible for Roth IRA, you can contribute upto 6k in the year 2021. Pick a firm and open a ROTH IRA with them and contribute upto 6k until April 15 of the fiscal year, you can pick index funds (if it is vanguard I do VTI, VOO, for fidelity FXAIX) and so on. Once you are done setting up these, focus on investing after tax money into brokerage account. No one can really predict the market, if you want to play safe invest in index funds/Blue chip funds where it is a bucket of funds and is balanced out with in the bucket. If you in believe in a company do the research and go forward.
The basics are the same everywhere. Investing in stocks is a GAMBLE. Even people with finance doctorates and trends knowledge with 40 years experience - they will say investing in stocks is a GAMBLE. It is NOT SAFE. Nothing in this world is guaranteed. But, over long term, small amounts at a time, looking for good stocks at a lower cost, averaging the cost price you pay - do give you a good Growth in the end. Currently, the markets in India are at an all time high. So, it is better to keep cash. OR put it in debt funds, or do a systematic investment plan. Try to read the US trends - what is the graph? Many companies are making losses. But out of them, some might have given good returns in the past few years - but are down due to the pandemic. So, research it - are they able to ride the wave and return with a bang? If their price is low, invest in them. So - look for good stocks - who is investing in it, what is their fundamentals, are they in debt, what is their turnover, what is their vision, mission, principles, what is their return over the past few years etc. Else, try investing small amounts in the Tech stocks you know - after researching. Then follow the trends - where is that stock going. Do NOT be carried away by short-term gains or "tips" from people. Do your OWN Research.
Your exit could depend on the returns you have made - are you satisfied with it? Do you need the cash right now? Or do you have a better opportunity of better returns to invest that cash in the next 6 months? Real estate is at an all time low. No buyers unless someone has extra cash and wants to capitalize on this opportunity to buy at a slump and sell when it peaks. Most tech people who can work online went "home" from their cities - to their parents or to their villages or small towns, Their kids are attending classes online. At least till June I dont see even rental incomes coming back. Most are just paying maintenance - not even rents. Many have moved their things to storage. So many empty flats & houses, empty PGs, most restaurants are making losses, office spaces and WeWork, shared workspaces are under losses. If your investment horizon is > 10 years, it is a good idea to look for some trusted honest builder and buy some fenced/gated property with properly checked papers. You know the law & order situation in India - unless you have someone to manage the property here, someone can come and claim it and litigation takes years. Farmlands and Resort Getaways are the trends. The trend is going to be away from the cities. Many large companies have found that at least for tech industry, investing in small towns can reduce infrastructure costs and manpower costs. Our nexgen could be working from home or village or resort or from the top of Everest or middle of Pacific Ocean - and still be productive. If you're looking at infratsucture - yes - Government is going to spend a lot of money on infra, many companies are going to make money - so you could check out some companies with good fundamentals! If you or your kids are coming back to India to settle, then real estate makes sense. Otherwise, better to invest in infrastructure related Equity or Debt funds. Disclaimer: Am just sharing my thoughts and opinions. Please take it with a large pinch of salt. Do your own research
RFLOL... that reminded me of an old conversation.... Age 4 asked: What is a stock ? Age 7 responded: Not stock, share...share... Age 4 (hiding whatever he held in his hand behind his back): NO.... I am not sharing. Eventually Age 4 became a financier/accountant. Still not sharing as much as parents would like. I like @hrastro 's detailed posts above, and the definitions in @Flyhigher . However, investing in stocks is NOT a gambling. When you buy a share of stock in an enterprise, someone else is selling that same share of stock, and a middle-agent is enabling that trade. Because there are only a finite number of shares in an Enterprise/company. The middle agent makes a commission from the seller/buyer (either directly or indirectly). In a simple model, the Seller is thinking that the price of the share would go down in the future, buyer thinks that it will go up. Each has information to believe what they believe; Who is right? Investing in stocks is not Gambling. One has to be well-informed of the prospects of whatever enterprise that one buys a share in. That is all. Chamath Palihapitiya: [venture capitalist] This is how you entrench inequality: We let the poor “invest” in lottery tickets, sports gambling and casinos but not startups. The first three are perennial losers. Startups have returned 15% over the past 50 years.https://twitter.com/chamath/status/1355936829048979460?s=20
First and foremost thing is assessing your funds. Think how much you want to invest.Never takeout emergency funds to invest in stocks and invest only extra left over money if you a newbie. if you are a newbie to stocks I suggest to open Webull brokerage account. Webull gives free stocks on first money deposit and also you get 1,000,000 paper money(fake money) to play and understand things. You need to watch things like What type of recession and what all the industries it is affecting. For example 2008 recession real estate, banks got major hit. This time travel, hotel, cruise and so many other things affected. Watch out the boom. See which industries going to get profit. Other than pharmaceutical industries. When pandemic started few other companies stocks went up like personal protective manufacturers(3M, DuPont), Purell, Clorox, Netflix, zoom, oil tanker companies(nordic american tanker, Frontline Ltd), bear ETFs(TMV, TVIX,SPXS), Walmart, Home Depot, Lowe’s Amazon, Akamai Technologies, PayPal Things went down during pandemic and recovered back are oil industry( Marathon oil, Exxon, Murphy), bull ETF stocks, Denny’s, extended stay, Hilton, Disney, Viacom Watch which industry receives government bailout in case of crisis. Cruise corporation didn’t receive bailout because most of the cruise liners aren't incorporated in the United States, meaning they set up their operations offshore. Which companies filing bankruptcy. During normal times like when there is no recession things to observe like during every presidential election what are the new president plans, actions and new agreements with different nations, holiday seasons affect retail industry, new product release like every time new apple iPhone release apple stock goes up. Watch daily shares news, follow market experts Based on the market predictions buy bull or bear stocks. Example Suppose If the prediction is recession coming in a year buy bear ETF/stocks. Once the market goes down buy bull ETF/stocks. With this can make more money on ETF stocks but it’s risky. Once you buy any stocks watch things like reverse split, delisting stocks.
