Investing in stocks

Started by Jesus M.
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Deleted user

At a very basic level, stocks are an ownership stake in a public company.

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Michael S.

When investing in stocks, the goal, of course, is to buy low and sell high. It quickly gets more complicated than that, though. I recommend investing in companies that you interact with often and personally believe in. We should do our homework and research stocks before buying them, but safe investments are a good place to put money and hopefully watch it grow over time!

Deleted user

What are good stocks to invest in?

Invest in stock only for those companies that you've researched and that you've determined meet your personal financial goals and risk tolerance. There is no one-size-fits-all approach. Are you looking for capital appreciation? Dividends? Diversification?

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Michael S.

I agree with Aaron G. It depends on what you're looking for. I believe in long-term, value-based stocks. For example, I invested in a company called Neste Oyj (NTOIF) because they are sustainability company (personal area of interest for me), but also because they seem have a solid financial foundation that I think will lead to a long-term, growing future!

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Lee P.

What are some Good starting stocks and what about $@!#% stocks

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Michael S.

Not sure what type of stock you're trying to reference with the 2nd part of your sentence. Good starting stocks, in my opinion, are those with a proven track-record of earnings. You want companies with long-term success. This is considered a "value" approach, and while returns may not be as high as "growth" stocks, they will be safer and steadier, and…usually larger over the long-run. Here is an article on this topic (https://www.fool.com/investing/stock-market/types-of-stocks/value-stocks/). If the stock in question costs too much for a single share, platforms like Robin Hood and Stash allow you to invest in partial shares of most U.S. public companies. Happy investing!

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Nancy S.

I always invest in companies I know are going to matter. Companies like manufacturers, battery makers, electric car related stuff
And I try to invest for as close to the "weekly low" as possible

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James H.

While you're looking into stocks, it usually helps to buy them inside of tax-advantaged accounts.

If you have a 401k at work, make sure you're earning the full match. Outside of work, investing in a low-fee IRA or Roth IRA will save your tax bill now or in the future :)

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Michael S.

James is 100% right. It's all fine and good to invest and hold investments long-term (holding them over 1 year gets beneficial tax-treatment, so you want to invest in value that you can hold on for the long-term), but if you can do inside a tax-advantaged account that you hold until retirement, how long you hold onto the investments does not matter. Of course, you can't touch that money, whether cash or invested in stocks, until retirement (excluding exceptions), but it's a great way to save! As James said, if there is a 401k match at work, it should be a no-brainer, as I tell my students. Do it. It's free money!

Deleted user

When investing in stocks, the goal, of course, is to buy low and sell high. It quickly gets more complicated than that, though. I recommend investing in companies that you interact with often and personally believe in. We should do our homework and research stocks before buying them, but safe investments are a good place to put money and hopefully watch it grow over time!

But is right now with the DOW due for correction a good time to invest? I have shares like Pfizer that mainly pay a stable dividend and it will weather a downturn and may become a buying opportunity at worse but I'm weary of index funds right now.

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Michael S.

So now wait. I would not invest in the market right now. It's the highest it's ever been. Wait for it to come down a bit, and then hop in.

Deleted user

So now wait. I would not invest in the market right now. It's the highest it's ever been. Wait for it to come down a bit, and then hop in.

If you've got a crystal ball that tells you whether the market will go up or down, then timing the market is a good play. Otherwise, it's not prudent to compare the current state of the market with past states. Being at an all-time high doesn't necessarily mean that the market is destined to go down. Stay on the sidelines if you must, but it's not necessarily the most rational play.

Deleted user

When investing in stocks, the goal, of course, is to buy low and sell high. It quickly gets more complicated than that, though. I recommend investing in companies that you interact with often and personally believe in. We should do our homework and research stocks before buying them, but safe investments are a good place to put money and hopefully watch it grow over time!

While generally you're right there are exceptions. For example some stocks are mainly for income with perks and the stock price mostly stays the same.

For example I've owned Pfizer pre-Covid and it would stay around $36 and pay a stable dividend better than savings accounts. Today I received a check because they spun off a division plus thanks to the Covid drug the price increased to over $40, though that probably won't last.

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Michael S.

You both have good points. You have to tailor your stock investing plan to your own individual needs. Even in a good economy, you can find underperforming stocks that meet your needs. Also, as was stated, investing in stocks is not always about capital appreciation. It can also be about stable dividends that can be reinvested in stocks or a nice little bonus for your savings. Also, when the market is strong, you can look into investing in stocks / commodities that tend to move against the market. There are so many different ways to approach this stuff!

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Christine N.

So now wait. I would not invest in the market right now. It's the highest it's ever been. Wait for it to come down a bit, and then hop in.

Not necessarily–it depends on the industry. For tech, perhaps, yes–but there are stocks such as ROKU that will only continue to rise. They will not drop back down to the lows we saw in May/June. Honestly, look at the recent earnings reports for stock companies that you're interested in to understand what's impacting them currently (isolated or long-term trends). Then, evaluate their upcoming rollout plans, such as investments or potential mergers/acquisitions (Livongo and Teladoc were an excellent example of this)!

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Michael S.

Great advice. I also suggest deciding how you plan to invest. You can look at recent trends and make short-term decisions if that is how you would like to try and grow your wealth. However, be advised, short-term (less than 1 year) investments do not get you a beneficial tax rate. This is why I prefer long-term investing. If you are doing long-term investing, I also advise looking at a company's financials and various ratios over the past few years. This is not indicative of future performance, but it does give you an idea of if the company has been stable and is likely to continue to do so.

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Ming C.

I have looked at those ratios too, but tech stocks like Apple, etc, already have high P/E ratios but still keep going up. Maybe these fundamentals are no longer valid, I don't know?

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Grant B.

I find "The Most Important Thing" by Marks a worthwhile book on this.

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