Stock investing question?

Question

I asked a question this morning about investing in stocks. Someone answered buy some good companies like GE, Walmat and Staples etc and then dont touch them or look at them for 20 years. I am new to investing and I dont understand how that would work. Am I to believe that if I buy the stock a one price it will be worth hundreds more in 20 years and I can sell it then? I have no idea how this whole stock investing works. Can someone please help?

Answer 1

Good companies grow with the economy over time, look at the Dow Jones chart or the S&P 500 over a twenty year period and its gone up significantly.

When you buy stocks, you are not buying pieces of paper to be flung about and traded without care, you are buying part of a BUSINESS. Therefore, it makes sense to think like a business owner before buying stake in a company.

The problem with traders like Jim Cramer that can be misleading is that he used to trade in a HEDGE fund. Hedge funds have millions in capital that is at their disposal from private investors (minimum investment is usually $500,000). Hedge fund style trading is a discipline that for folks who are less capital intensive, is not feasible.

In fact, most hedge funds can do heavy trading because their very act of trading affects market volatility. When a hedge fund changes a position, the whole market ripples from the splash. Jim Cramer has a charitable fund that is capital intensive (comparable to a hedge fund), which is why he trades the way he does.

All the bells and whistles doesn't necessarily translate to profits for you. The long position is easiest way to make returns.

Answer 2

What you were told was to "buy & hold".  This form of investing was a good policy to follow in the period after World War II, but today this policy is not a practical investment technique.

Here are some books for you to read that will get you started and provide some investing practices

What Works on Wall Street by James O'Shaunessey

Beating the Street by Peter Lynch

One Up on Wall Street by Peter Lynch

How to Make Money in Stocks” and 24 Essential Lessons for Investment Success both by  William O’Neil

Get into the habit of making daily visits to some websites like MSN Money and Yahoo Finance.  (http://moneycentral.msn.com/home.asp http://finance.yahoo.com/ )

While at MSN following the strategy lab analysts to get a feel for what the pros are doing and why.  This site has some basic information for beginners. If any site offers free information, take it.

Other website that can provide instructions and help with procedures and terminology are

Investopedia - http://www.investopedia.com/  Stock Charts - http://stockcharts.com/

http://www.investorshub.com/  http://www.1source4stocks.com/



Visit some of the more professional websites like Zacks - http://www.zacks.com/

Smart Money - http://www.smartmoney.com/  Schaeffer’s – http://www.schaeffersresearch.com/

Just try to educate yourself, listen to what the professionals are telling you to do.  Becareful of some of the responses you receive in this type of media.

Answer 3

You know it sounds good at first, but the reality of corporate failures makes that model a little hard to work with.

Get educated first.  Try some of Jim Cramer's books, they are interesting and easy to read.  Also do some online programs that are offered at Etrade.

Take a course and check to see if there is an investing group or club in your area.  You don't have to do it alone and the investing groups can be fun.  Listen only to people that make money.  Remember if someone tells you something is too risky it is because they have not mastered it.

Try meetup.com for an investing group in your area.

Answer 4

Well first of all, if you are going for the big companies such as the few one's you have stated, you need tons of money in order to buy undreds/thousands of stocks. But, you don't know that Staples or even Wal Mart have a stock that's worth more in 20 years from now. You have to do your research if your going to take a big gamble like that. I advise you to invest in a company that is actually projected to go up in months rather than years (as it's harder to predict). Goodluck!

Answer 5

The market gains 10% on average per year.  So in 20 years you could get a return of 200% if you have a well diversified portfolio.  Wal-Mart, GE, Staples etc. are stable companies who should do well for the next twenty years but you should do your own research and see which companies you think will solidify your investment goals.  Or talk to a professional which I suggest if you do not know much about it.

Answer 6

That might have worked over the past 50 years or more. It is less true now.

That would called buy and hold. But companies act different these days and things change faster.

You have to pay more attention to your investments than that imo.

Answer 7

stocks are for trading

you have to trade them to make money

learn how to trade