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Question about stock market

Established Contributor

Question about stock market

I know this is a terrible time when it comes to the stock market but I am wanting to educate myself on this subject. Also what is the minimum amount of money a person needs to open a account with etrade or some other online broker and does anyone have any advice on good books or sites to read where a person could educate themselves.
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Contributor

Re: Question about stock market

Books I recommend:
Peter Lynch "One UP on Wall Street", "Beating the Street", and possibly "Learn to Earn"--tho' it's been years since I've read the last one, so can't say for sure.

More advanced, for the future:
"Common Stocks" Philip Fisher
"Intelligent Investor" Benjamin Graham (the version with the preface by Warren Buffett)

I'd read anything that Warren Buffett writes/says, including his writings on berkshirehathaway dot com (including the "Owners Manual" and the letters to shareholders for the last several decades).

I'd stay away from etrade; I can personally vouch for scottrade ($500 min to open) and schwab ($1k min to open).

A couple of general points: expect a hard inquiry upon opening-- don't listen if they say otherwise.

I recommend keeping as little cash in the account as possible, the interest paid is laughable. Better to keep it in a high-yield saving account linked to your checking, then deposit a check in your brokerage account when you are ready to make a trade. With Schwab, for instance, when you deposit a check in a branch, the funds are immediately available for trading (tho' there is a hold if you want to withdraw this within two weeks or so). Incidentally, the CSRs at schwab are phenomenal. For scottrade, the customer service is handled by your local branch-- mine is fantastic.

Do not put in "market order"-- rather put in a "limit order" even if for the current market price-- market orders are too easily... umm.. let's say "manipulated".

I would urge extra caution picking individual stocks; I'm a big fan of index funds including index-ETFs. Investment timeframes should be long and proper diversification is extremely valuable.

I'd be very dubious of the plethora of so-called investment "experts" --even (?especially) of the prominent ones from prominent firms. Personal finance/investment magazines of which I'm a big fan: Kiplingers, Money, Fortune.

Best of luck... er fortune!! Smiley Happy

ETA: just to pass along the following to which I always refer-- from Warren Buttett tho' perhaps originally from Ben Graham in the 30s:

"Buy stocks with a margin of safety.
A stock is part of a business.
The market is there to serve you, not instruct you."
Also from Buffett:
"Be feaful when others are greedy, be greedy when others are fearful."
Message Edited by JayToo on 10-31-2008 02:53 PM
Recent Ficos 815+
I do not do business with crooked companies.
crap1, United Airlines, Home Depot, Volvo will never make a dime from me.
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Moderator Emeritus

Re: Question about stock market


wildcat wrote:
I know this is a terrible time when it comes to the stock market .....

Now's a great time to buy!!

 

IMO, stick with mutual funds, especially in the beginning. Try to go with a 401(k) first.

Message 3 of 4
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Contributor

Re: Question about stock market

Roth IRAs are awesome, too! (Possibly Roth 401ks, too, if the employer offers one.)

Something like:
Roth IRAs > sliced bread
Roth IRAs >= nice wine and bread
Smiley Very Happy
Recent Ficos 815+
I do not do business with crooked companies.
crap1, United Airlines, Home Depot, Volvo will never make a dime from me.
Message 4 of 4