4 ms·

Do not "play the stocks game" if you think it's a game. The point of investing is to make money. Don't invest in any company unless you have valid reasons to

by vlad 18y ago

Do not "play the stocks game" if you think it's a game. The point of investing is to make money. Don't invest in any company unless you have valid reasons to believe the company will go up in value in whatever time frame you're looking for results. And this should be true every week, or you should sell when you don't feel comfortable with the stock any longer. Because the way you feel, so will other investors, and if for whatever reason they don't feel comfortable, they will pull their money, so you might as well react on that feeling first. If the stock continues its devaluation, then it was a good call by you, if the stock actually gets more valuable, then you still might feel good about leaving it since it might now be even more likely to drop now at its higher price. Don't invest in stock simply because you don't know what else to do with the money. And don't invest money you might need in the next six months; the point is to keep money but make logical bets from time to time on companies when you feel you have a much larger informational advantage than most everybody else, using money you won't need in the near future. The point is not to lose money, though if you do lose a bit, it won't be tomorrow's mortgage payment. The most important thing to realize is that the best thing you could with the money is to put it in a savings account and try to release lots of software or web apps for feedback and practice in running a business. Your salary and job opportunities will increase, as well as give you a chance to make money on the side, as well, pay for retirement, and a small runway for you to go full time if you want to take your ideas further. Because with stocks, you're buying companies, not pieces of paper, and finding a company that returns 2x or 3x the investment will be hard to do at the scale of companies listed on NASDAQ, and a micro-cap company where you have enough knowledge or control would be hard to find either. But if you invest your time towards creating things, you'll raise the worth of your skills (or at least, remain competitive and diversified), get "free" business lessons from your experience, and may be able to make thousands of dollars on the side per year or month, on top of that, as a bonus. This is almost a guaranteed investment. And if you could use some of the money you saved up to start a company and figure out the accounting behind it, so the only thing you have to worry about is creating stuff, then you'll be basically set for life. Why? Because as someone trying to run a business, as well as someone who follows the latest in technology, you'll be in a better position than almost any other investor regarding knowing when to invest in tech companies. On top of that, I can imagine that at some point you could even be a seed investor in companies that are not even on the stock exchange. You will also be the go-to guy at your company. Finally, your company might even become profitable enough for you to go full-time or worth enough to somebody that they'll pay you five, six, or maybe even seven figures for it. Investing is not gambling. And you're paying $7-14 a trade, so it's probably better to stick with 5 companies or so, which helps to diversify, and if you have to sell your whole position to buy a better one, you can sell all of it for just that fee, instead of trying to sell a bunch of different ones for $7-14 each. Don't invest in companies you wouldn't buy from. Invest in companies that seem well run and on the upward trend, that at the same time, you feel that other people, once they find out how good it is in the next few months, will invest in as well, and therefore you would make your money back and then some, based on lots of new people learning about the company and buying their product and increasing their earnings, as well as the influx of buyers of their stock, sending the price of it up by way of more means than one. Finally, the trends of the last 40 years are irrelevant to what will happen in the next 40. This is 100% true. Investing is not a tax, and you should not treat it as such (i.e. it leaves your bank account, and if it comes back to help you in any way, then that's great! No, it's not how this works.)

pj 18y ago
Oh, it's a game all right. The points are dollars. You want to make as many dollars as possible by playing the game right. The hard part is figuring out the rules. Because a lot of people don't know and they still get paid a lot of money to tell the world the wrong ones.
- vlad 18y ago
  >> Oh, it's a game all right. You want to make as many dollars as possible by playing the game right. No, you don't. You want to make as many dollars as possible regardless of what you're doing, be it trading stocks or otherwise. But with trading, you're risking what you already have, so you want to invest, and not confuse the word investing with gambling. And with that, it's entirely possible that not investing in the stock market whatsoever may be your best option throughout your whole life, if you're a software developer. If you're not one, then try to run a business in a different area to learn about the way things work, while saving your money to make a very reasonable bet on a few bets, not feeling like you have to have your money tied in the stock markets just because other people do. Now, if we knew that the stock market in general would go up 5-15% on average every year for the next 40 years, that would be different, and I would buy an index fund at the very minimum. But we do not know what will happen, nor can we even slightly base our financial decisions on what happened before. That would not be investing, that would be time machine traveling or being hopeful things will work out. And as software developers, we have more control over more things such that running one's own tech business while learning about new developments will put us in the right mindset to understand and evaluate the rare great buys in the stock market correctly, as well as how consumers think based on having first hand experience running a company oneself. And true investing is not just putting money into "the stock market" void every month, but actually following developments and researching every week for at least an hour a week per stock (this is actually Cramer's advice.) And you want to have 5 stocks to diversify (Cramer's advice.) So with those 5 hours a week, could you not create and maintain a web app, or two or three? Have fun reading Hacker News like you normally might do, sure, whether you invest in stock or not. But just take the time you would spend researching and discussing the companies you hold (as well as new companies you might be interested in) and take that time to actually develop software. In either case, you might only make a few hundred or thousand dollars a year profit. That alone shows you might as well be investing in yourself. But that's not all! With creating your own software, you learned new skills, kept current ones sharp, created a portfolio, became confident in yourself, and all of this may raise your salary by $20,000-$50,000 a year and work the same amount of hours, be confident in pursuing contracting opportunities based on the evidence you can create stuff, sell off various web apps you created, even for just a few thousand, and establish a reputation. So those hundred to thousand dollars a year, or any money made, or even a loss of $200-$500 a year due to web hosting and such and zero profit, can easily return ten, twenty, or thirty thousand dollars for a 21 year old, more than anything else, in just one year. But with "investing" as a 21 year old, making a hundred or thousand dollars a year is about the best you could do. In fact, it is possible to lose the entire investment, as well. So the net return might be negative (e.g. you'd be better off not putting money in the stock market.) Subtract account fees as well. And now, subtract all that research you did, and how many hours you spent on it, at let's say $10-$30 an hour. And subtract the lost opportunity cost of being able to have used that time to create anything, anything at all for experience and other reasons I mentioned previously! Subtract the stress and worry! Let's go nuts here. Even if you were guaranteed not to lose money you invest in the stock market, and you turn your $2,000 into $4,000, and let's say you did it by luck so you spent zero hours researching anything and just left your money in the account, investing the time and money towards furthering your own education is just a much better use of resources for a 21 year old, even in the best case scenario here. And, as he mentioned he has debts, he should just try to pay them off. If the debt is at 7% for college, 15% credit card, and other, pay those off first!

by vlad 18y ago

pj 18y ago

Oh, it's a game all right. The points are dollars. You want to make as many dollars as possible by playing the game right. The hard part is figuring out the rules. Because a lot of people don't know and they still get paid a lot of money to tell the world the wrong ones.

vlad 18y ago
>> Oh, it's a game all right. You want to make as many dollars as possible by playing the game right. No, you don't. You want to make as many dollars as possible regardless of what you're doing, be it trading stocks or otherwise. But with trading, you're risking what you already have, so you want to invest, and not confuse the word investing with gambling. And with that, it's entirely possible that not investing in the stock market whatsoever may be your best option throughout your whole life, if you're a software developer. If you're not one, then try to run a business in a different area to learn about the way things work, while saving your money to make a very reasonable bet on a few bets, not feeling like you have to have your money tied in the stock markets just because other people do. Now, if we knew that the stock market in general would go up 5-15% on average every year for the next 40 years, that would be different, and I would buy an index fund at the very minimum. But we do not know what will happen, nor can we even slightly base our financial decisions on what happened before. That would not be investing, that would be time machine traveling or being hopeful things will work out. And as software developers, we have more control over more things such that running one's own tech business while learning about new developments will put us in the right mindset to understand and evaluate the rare great buys in the stock market correctly, as well as how consumers think based on having first hand experience running a company oneself. And true investing is not just putting money into "the stock market" void every month, but actually following developments and researching every week for at least an hour a week per stock (this is actually Cramer's advice.) And you want to have 5 stocks to diversify (Cramer's advice.) So with those 5 hours a week, could you not create and maintain a web app, or two or three? Have fun reading Hacker News like you normally might do, sure, whether you invest in stock or not. But just take the time you would spend researching and discussing the companies you hold (as well as new companies you might be interested in) and take that time to actually develop software. In either case, you might only make a few hundred or thousand dollars a year profit. That alone shows you might as well be investing in yourself. But that's not all! With creating your own software, you learned new skills, kept current ones sharp, created a portfolio, became confident in yourself, and all of this may raise your salary by $20,000-$50,000 a year and work the same amount of hours, be confident in pursuing contracting opportunities based on the evidence you can create stuff, sell off various web apps you created, even for just a few thousand, and establish a reputation. So those hundred to thousand dollars a year, or any money made, or even a loss of $200-$500 a year due to web hosting and such and zero profit, can easily return ten, twenty, or thirty thousand dollars for a 21 year old, more than anything else, in just one year. But with "investing" as a 21 year old, making a hundred or thousand dollars a year is about the best you could do. In fact, it is possible to lose the entire investment, as well. So the net return might be negative (e.g. you'd be better off not putting money in the stock market.) Subtract account fees as well. And now, subtract all that research you did, and how many hours you spent on it, at let's say $10-$30 an hour. And subtract the lost opportunity cost of being able to have used that time to create anything, anything at all for experience and other reasons I mentioned previously! Subtract the stress and worry! Let's go nuts here. Even if you were guaranteed not to lose money you invest in the stock market, and you turn your $2,000 into $4,000, and let's say you did it by luck so you spent zero hours researching anything and just left your money in the account, investing the time and money towards furthering your own education is just a much better use of resources for a 21 year old, even in the best case scenario here. And, as he mentioned he has debts, he should just try to pay them off. If the debt is at 7% for college, 15% credit card, and other, pay those off first!