online investing in stocks?

jamma...i sent you a long email....i dunno if you got it so i'll just post it.


hey whats up man...i just saw your post. i've tried to get help from people on here but most of the time it turns out people telling you not to do things and saying you will fail. i've met one other guy through here that i talk to online a couple times a week who wants to get involved in stock trading in the future. he might reply to this post or email you too since he did that with me when i first posted something on here about wanting to know about investing. anyhow...since i've graduated with my valuable history i've discovered stock trading and i have been pretty much spending everyday i can learning more and reading more about it. it's pretty much consumed my life since May. I don't know if you are looking more for investing or trading but i use scottrade. they are pretty good overall. good service and research and the $7 trades are good too. if you are looking for books to read about picking stocks to invest in then i'd start with peter lynch's books. that's what i started with. i know buffett is pretty much the most powerful investor around but the way he made his money doesn't really translate as well to normal people as well as lynch's methods do. i have gravitated away from wanting to invest to wanting to trade after realizing i have talent for trading and i enjoy it more even though it is hard work and not something i would recommend. i have also realized you can make much more money trading if you are good at it and if you are humble and willing to learn from your mistakes. if you want to learn more about trading after you become more familiar with the market the best book by far that i have read is by Edwin Lefevre "Reminiscences of a Stock Operator". It was written back in 1923 and it is by far the best book you will ever read if you want to do trading. It shows you that nothing really ever changes with the markets and that they have always been the same and operated on the same principles. It might not have the same effect on you if you don't trade because the mistakes and the states of mind that he talks about are the same ones that I have made in my limited experiences and that almost every other trader has made. He talks about stuff from a hundred years ago but people like myself still make those exact same mistakes today...very cool stuff. also, once you start to get familiarized with things you should learn more about techinical analysis as well. it is typically frowned upon by fundamental investors but it is a valid way of looking at the markets. i used to look for companies with low p/e ratios and all the things fundamental investors look for but i have changed to be almost a person who only looks at charts and i don't care about the company unless i find one that really stands out that i just want to stay invested in that i don't want to trade. for books on combining fundamental analysis and technical analysis look for books by the guy who started Investor's Business Daily William J. O'neill. BTW...technical analysis is just basically a way to look at the market to determine whether buyers or sellers are in control of the stock at that particular time. For instance, the company could be great but lets say at that time the stock has become overpriced and it is getting ready to start down trending or maybe the stock is just stagnant in price. Well if it's at one of those points then your money isn't doing as much as it could for you. You could be invested in something else that is actually going up in price rather than something that is flat or going down in price. Technical analysis just basically uses the charts to determine what is going on with the stock price. It is completely valid and you can time the prices of the stock market. I have done it over and over and over again. I just did it with my Dad's portfolio. He wanted to sell T (AT&T) and buy LMNX (Luminex). Well I looked at the chart and it was clearly a poor decision and today the stock's finally broke in price and that saved him a good amount of money.

Ok well I am completely rambling...sorry I tend to do that now when I get started talking about stocks since I have no one to talk to about it. Anyhow...if you want more info on what to start reading or what to do email me at robbie31580@hotmail.com

 

I would invest in the new sexual gold that grows it's portfollio by banging against other metals and producing random alloys or new solid gold babies.

 

just give me all your money, you'll be fine.

 

Start with Lynch and Buffet. Once you've got rudimentary knowledge of how markets work, pick up a finance textbook. I recommend Brealy-Myers or Fabozzi. If you're serious about investing, try to find a local invst. club where you can share ideas. Identify a couple of products or services you're interested in, and then research those products and services as well as companies that produce them. As you're building a knowledge base, start applying your theory to these companies.

If you're serious about investing, get a full-service broker who listens- at least in the beginning. Only discount broker I would consider is Schwab, who has pretty good support.

If you're serious about investing, either find yourself a good broker, get yourself a finance education, or work in the industry. You can look at charts and price momentum until the cows come home, but in the end these guys are no different than gamblers.

 

nycrocket....i'm sorry you disagree with technical analysis as a valid way of looking at the markets, but i have to tell you that you are being closed minded. if you have spent as much time as i have looking over charts and patterns you will see that they have a tendency of repeating themselves. you do understand that technical analysis is just a way of seeing the supply and demand of the stock. it's not magic and it's not bs. support and resistance are not bs...i don't really feel like going into an in depth explanation of everything for someone who doesn't even feel like exploring the possibility of it being worthwhile but i guess i will. stocks are the same as any other thing that is bought and sold....people are only willing to pay a certain price for it at a certain time. eg. support and resistance. it is not magic that prices tend to hover around areas for awhile. it is the fact that people are not willing to pay more than $X for that stock at that time. the stock may be worth more in your eyes but at that point in time the market says it is worth X amount. this is not magic...it is supply and demand. even if you don't want to believe in support and resistence even though they have been around for hundreds of years of stock trading then that is fine. it is like not believing in supply and demand but it is fine if you don't want to believe that it exists. support and resistance are some of basic things in tech analysis that's why i started with those 1st.

if you don't want to believe chart patterns exist then that is fine too, but you are only choosing to be ignorant and closed minded. i have seen these chart patterns repeated over and over again and i have kept them in daily diaries. no they are not 100% accurate and yes they do fail to materialize sometimes but that does not mean they are not a valid way of trying to find a stock that will make you money. when they do not materialize or when they do fail is when you take your money out of them or choose not to trade them in the first place. i can give a list of stocks that i have seen that i thought would do good and they did. these are not just stocks that i have picked selectively to back up my point but they are some of the few ones that i have seen that have setup like they should if you are going to invest in them. they do not come around everyday and they take time to develop. it is a basic bowl pattern. price gets run up at the beginning of the bowl on strong volume. then as volume dies down so does the price until it calms to a point where you see that price has reached an equilibrium point. then interest int he stock starts picking back up and investors and traders come back. the price starts running up again as the only people left in the stock are mostly ones who want to hold it. supply and demand...not magic. you can tell if the formation will work if breaks through certain points with the price. again...this is not magic it is simply showing that there is enough buyers to continue to drive the stock up in price. all of this should be taking place on rising volume. examples of this are seen with SIRI in late Aug., and CVM around the same time. again with these chart patterns you don't necessarily want to try to nail the bottom because there is no confirmation of whether or not the price will continue up or if it has further to slide. anyhow...SIRI i called at the bottom because i had been following that stock for awhile and i was pretty familiar with how it traded and i knew volume would pick back up in company like that. CVM i only knew would breakout after it was able to hold up past 1.30 meaning that there were more people willing to buy it past its previous high. There are other stocks that have bowl formations that I have called that don't look as perfect as these but these 2 were the most dead obvious. GLGS and MRY are ones that i have also called....in fact those 4 are the only ones that i have seen. it's not as if there are others that i am lying about and leaving out. and i will go out on a limb here and tell you the other one that i have found developing...NWD. Volume is starting to pick up in it and if it can continue this progress upward then it would give further confirmation of it being a bowl formation that is coming close to ending.

i could write about this stuff forever....now i understand how college professors don't think it's a big deal to write a 20+ page paper. it's easy when you are interested and passionate about something. these are just a couple examples of things and i probably explained them poorly because a lot of my knowledge has come from watching how things have played out and learning how these stocks work and through a ton of reading. they just start to make sense. fundamental analysis works...technical analysis works. to say that technical analysis is bs is being closed minded and to say that there is nothing that drives the markets other than fundamentals which we both know is 100% false. fear, greed, emotion, intelligence, ignorance, wisdom, and foolishness are all factors in the market and to say they don't exist is a lie. they always have and they always will. technical analysis is not a science either and i would not recommend it if you only try to treat it as if it were a science. it only gives you an idea of where things are going and what might happen and it is not magic. ok i need to shut up or else i will just keep on talking....bye

 

robbie: don't be discouraged from further refining your technical analysis methodology. Pick up this book if you already haven't:

'Tape Reading and Market Tactics' by Humphrey B. Neill - originally published 1931.

 

I have read about how accounting and fundamental play a role in valuation and I have come to the decision that emotion and supply and demand plays an extremely significant role as well. If you are only an investor who just wants to let their money sit in the market then fundamental analysis is probably a more valid technique to use because it is less hands on. Technical analysis is much more involved and it is for people who are looking to try to make a living off of the market. It is not exact and neither is fundamental analysis.

Have you ever even studied technical analysis? Just by your statement that you think relying on technical analysis will cause you to fail it shows me that you haven't. There are many successful traders who almost solely rely on technical analysis or a combination of techincal and fundamental analysis who have made returns that run circles around investors. These guys have done it for years as well, not just during the boom in the 90's. Read some of the Market Wizards books by Jack Schwager. Read Reminiscences of a Stock Operator by Edwin Lefevre. One more thing...when I say many successful ones I don't mean to imply the majority. I mean that if you are willing to be humbled and put in long hours and think for yourself then you will more than likely be successful. Those requirements weed out a pretty large amount of people right there. But back to what I was saying...if you think that techincal analysis fails then you are just completely ignoring the people who have used it and been extremely successful with it...much more successful than regular fundamental investors.

And if you want to dismiss my calls as luck then that is fine as well. I can lead you through my most recent lucky call. I am in one stock right now PIII. I made a mistake because I let my emotion come into play. As I said I am still a rookie. Since early August I have called every single thing that the stock has done before it happened. This is not random luck or me having some psychic ability. It is me learning how this and other stocks that follow this pattern work. I can go thru every little up and down in the stock but I will just go thru the mistake I made. Recently, on 10/14 it ran all the way up to 1.40. I held onto it even though I saw that its recent run was based on pretty low relative volume. Lower volume and rising stock prices usually equals bearish signs. Why? Because there aren't enough people looking to buy the stock at that time. More buyers = higher prices. However, I held onto it because I started to hope that it would come back and people would start buying it when I knew that I was more than likely wrong. Hoping and emotion is where people fail with this method and it's the same way people can fail with fundamental analysis if they start to fall in love with a stock. Now if you want to say I will fail using technical analysis because I will not be able to detach myself from the emotions then that is fine, but if you want to say that it doesn't work then you are just dismissing everything that I have called in this stock as a pure run of amazing luck. That mistake that I made is one that ate up my profits in that stock that I should have taken. However, I still feel that it is FUNDAMENTALLY undervalued.

I am not saying that I can call everything, but there are things that can be called thru technical analysis that are not magic. I would really like you disprove some of my points because I want to hear your arguments. I can take you through my exact thinking in other stocks where I have called exactly what they are going to do and where I have been right and wrong. Most of the time when I have been wrong is when I have not taken adequate time to understand the stock and how it works. Ok well reply if you want if not thats fine too.

 

one more thing...my passion is only based on the fact that you refuse to believe that it is a valid way of looking at things when it clearly is. it is not as if i am a religious follower of it. i only advocate techincal analysis because it works and it has worked far too often for it to be considered a freak coincidence or lucky. my passion for this argument comes from how someone can deny something works and that it is invalid when it is clearly valid if you spend any amount of time learning it.

 

Post 9/11, Post-Enron with the energy stocks, and in my experience in stocks I have followed the selloff and quick recovery of XMSR's stock price after earnings even though earnings were overall good, the run up of SIRI's price before earnings even though they are nowhere near the level of XMSR as a company. Quick note...I refer to these companies by their stock symbols because it's easier to type out. PIII=Peco II....they mainly make power systems for the communications industry and their main customer is Nextel. They are significantly below book value and they were near cash value when I found the stock. They are trying to trim off unnecessary manufacturing facilities. I really don't care about them to invest in. I just saw they had a huge volume spike and their price action followed the exact pattern of other stocks with huge volume spikes like that. They more than likely are not undervalued because the communications industry is not doing well overall right now. I just meant they were below book value and near cash value when I found them...I should have been more specific.

When I refer to supply and demand I refer to supply and demand of the stock at that point in time. If I were to invest in anything right now that I know will keep going up in price there is one that I have found that I like the most. XMSR....if I would have bought them and stuck with them then I would be up around 100%, but I also would not have learned as much as I have about trading. I also like SIRI, but they are the laggard and not the leader...as you should know you always go with the leader and the more well known company in a young industry. I won't go into others that I like because that is the industry that stands out most to me and that I am most familiar with. Now with this investment all I would have to do is buy it and forget about it. Maybe just check up on its news and so on and make sure things are still going good but other than that I don't need to look at what's going on everyday. That is what I mean by less hands on.

Yes....most of those analysts are trying to make a living off of other people buying the stocks they pump up. I bet you love those guys on CNBC....how about Jim Kramer? Was he great too? What about those Motley Fool guys? Those guys certainly do make a living off the market...by selling you what they tell you.

Well at least we agree on one thing here

Well you should understand how it works then if you've actually tried trading with it rather than just in school.

Yes that is what can be used. One guy William J. O'Neil who started Investors Business Daily uses it. It is a good way to do things, but it is not the only way. There are other guys like Marty Schwager who started off as a fundamental/security analyst for 10 years and then started making a killing off the market when he became a pure technical analyst.

Those guys aren't traders....they are just buy and hold gamblers. Don't change it to something it isn't. Anyone who trades like that will get murdered and they aren't traders.

A Random Walk Down Wall Street, right? I'll read that and you can read some of those books. If anything just read the first Market Wizards book since it was before the boom. Then if you get around to it read Reminiscences of a Stock Operator....probably the single most influential book any trader has ever read.

Agreed.

In down markets anyone who didn't learn from their past losses and educate themselves on the past is dead. A lot of those analysts you talk about didn't do so hot during the crash since they started to believe things had fundamentally changed on Wall Street. If they learned anything that any decent trader would learn it would be that NOTHING ever changes on the market. The same forces still rule it and have always ruled it. You can ask old Ben and Warren about that and you can go back and read books like Reminiscences of a Stock Operator and see that. Don't tell me it's technical analysts...it's anyone who lets their emotions sweep them up in things and tries to hold on to something that just won't win and that just isn't a good company.

Well I talked about how much I knew about it above. And you were right...I was not comfortable enough with the company to stick around with it. So I sold...and you know what I got lucky as hell and still made my profit on it. This trading decision was hopefully my last one that I will make based on impatience and not waiting for a better opportunity. The only companies that I feel comfortable with understanding fundamentally are SIRI and XMSR. Out of those I would only tell anyone to buy XMSR. Anyhow...maybe you can compare it to gambling...which might not be a completely off base comparison but I have developed more patience so I won't do stupid things like that and right now I am in cash waiting for my next opportunity to develop. That is one of the biggest problems traders have and the successful ones are able to learn when to take profits and when to know let the stock sit. I am learning that.

Ok well...I am limited to these crappy charts that Scottrade offers that only go back 4 years weekly and not daily which is what I need to see to get a better idea of what you are talking about. And I am trying to verify the data with Yahoo's charts. However, from what I do see on the weekly charts is that you really didn't learn much about technical analysis. Granted I am not looking at the best info possible, but nothing here seems to point to the stock settling around 40. If anything it seems to point the exact opposite and the stock topping around 40. From what I can see the stock went above 40 a couple of times and then got the crap beat out of it back down....not something you want to see if you are looking for a stock that is consolidating in price. Also...I am not investing in it...I only got in it because of what it's chart was doing and its chart did what I thought it would do. When I realized the buying pressure was not present and it was not acting in a way I felt comfortable with then I wanted to get out and I was right in my decision. Anyhow...I am not investing in it and I was only in it and because of the chart pattern that I thought looked good but then things started to fizzle out.

But you are right about me never trading Peco II at those times that you listed in 2000. I would not have touched it unless I felt comfortable with it as a short term swing trade and more than likely I would not have even felt comfortable with it like that because there was not enough info to base its future performance off of. And if I would have bought it and it did not act how I thought it would act then I would get out ASAP and I would not hold onto it. That is what I did with SWBD...I bought it thinking it would do something else. The upward trend faltered so I got out after like 9% or so. That is something any successful trader has to learn. When they are wrong...and when you are wrong you have to accept it and fix your mistake by selling. If you are trying to lose your money and hope that the stock will come back then of course you will get killed...anyone knows that. But also any techincal trader should know when to cut their loses and it would be way before 50%, probably closer to 7% or 8%.

That is another reason too, but it is still the same thing I just said. No people wanting to buy it...prices drop. We both came to the same conclusion different ways.

You are making it sound like I should not be a human and I should not make mistakes. Tell that to any other fundamental investor who made the mistake of holding onto those BS internet companies. And I am not using it as an excuse for my mistake I am using it as the reason for my mistake. If I want to not make that mistake anymore then I have to know the reason why I made it and not let my emotion into the equation. It is something I have worked on fixing and that I will continue to work on fixing. I started to do the thing that makes people fail at this game and if I don't want to fail then I cannot do that. My feelings about what the stock would do were right and I look at that as a strong positive that I can read the chart well, but I look at the negative and see what I did wrong and I work on fixing that mistake. If anything I am glad I made this mistake rather than knowing that I was fundamentally wrong in how I read the chart which is what I am trying to learn as well.

Well I will keep you up to date on my luck.

I did that earlier, but those reasons were not enough for me to stick with this stock for now.

Let me find some and I will post them tomorrow...I've spent all the time I had writing this post. lol...now I know why you didn't want to get into this....too much freaking time.

 

now that i think about it...it will probably take me longer than tomorrow to find some i am comfortable with saying. i need to find some to learn and see if some of the ones i have been following are in the s&p 500

 

Well after finally getting some charts where I can look closer at what you are referring to now I really have no clue how you decided that the price would consolidate above 40. Between Aug. 22 and Sept. 12 of '00 after the IPO the stock initially soared on higher volume and then died off on weaker volume. The rate at which the price fell off is kind of alarming. It went like this. It was at 21 on Aug. 22 then it soared to 40 in 9 days and came crashing back down to 25 in 7 days. That sort of volatility does not lead one to thinking people are trying to hold this stock...especially just after the IPO. So say you buy in on Sept. 13 since you want to bottom feed on a stock and hope for the turn around. Kind of risky and not something I like doing. Then you get lucky and the price starts going thru the roof....however there is a MAJOR red flag. The same red flag that I saw with PIII that made me uncomfortable and made me get out....not enough volume for the price rise. Between the 12th and the 29th of Sept the price rose insanely again and actually broke through 40 and peaked at 47 on the 29th...however the volume on this stock is so freaking obvious that you would not buy it. I really don't see how you could come to the conclusion that it would be a great investment at that price. If you want to look at it technically....the most obvious and basic indicators price and volume accelerators would confirm what your eyes saw on the chart. Price accelerating and volume decelerating....RED FLAG. You never ever want to see that in a stock you want to buy. That is one of the most basic things you learn. Listen I could go on and on about why I would never even touch this stock then...the chart of PIII today was completely different than that of it back in late 2000.

This is not hindsight either and if it is hindsight then you should have seen it too because it is so obvious. I'd rather stick to things that I have confidence in what they will do rather than look at things that I don't have much confidence in. I would have had very low confidence trading a stock like PIII back in '00.