Do you agree with the following statements about stock market & stocks? (amateur statements)?

Question

I was extremely pissed of at my sister (she is a stock broker's assistant) for putting 6500$ of my money into stocks(without letting me know a thing), so I made the following rant.. ( I didn't figure out it was in stocks till months after. I didn't lose money(besides the fact, it is not really MY money if it is in a stock) but I am still pissed off.)

I don't know much about stocks but I do know the following..

FACT: it does not make sense to EVER put money in a stock!!! EVER!!! Unless, it is YOUR money AND no one else relies on YOUR money AND you are VERY educated and know the stock INSIDE OUT & you do at least 3 hours of research on the stock every week.

-For the past approx 10 years(including now) the stock market has been in a slump and it is loaded with roachs!!!

Using a "very stable" stock instead of a GIC or savings account is a HUGELY short sighted decision because it is very common knowledge that stocks can be unpredictable and they could turn upside down at any time(be it rare).

side note: my sister has never really impressed me with her stock market knowledge, granted the fact, I probably would not know what she is talking about anyway.

Answer 1

Basically I agree

with your points, esp the first one.  You might have added that money should not be invested in stocks unless you can afford to lose it (ie the added risk vs a cd for example).

Examples of unpredictability of the stock market:  Enron, Worldcom, the.com stocks a few years back, Indy-Mac, Other Mutual funds that are highly into the Home Mortgage mess, etc. etc.

Answer 2

I disagree.

There are many sound mutual funds (you buy shares in the funds which use the money to buy individual stocks) which have shown substantial growth over the past 10 years.  That being the case it makes sense to put your money in those funds.

Pick a sound fund and let the managers worry about and watch the stocks they invest in.  All you have to know is that they have a good track record and that in the long run your funds will grow.

The returns on the average mutual fund far exceed the interest you can earn on even a high rate internet savings account.

Yes, there are some stocks that are dogs.  The good funds don't buy them.

Look at companies like Fidelity, Vanguard, T Rowe Price and a whole slew of others to find funds with a good track record.

Jerry-the-bookkeeper