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Hey all
Just curious, what do all of you think of investing in the stock market right now? I was thinking, what if instead of the regular pair of michlin pro 3's, i get cheaper tires that my lbs would hook me up with, and invest the difference of price on stocks. For example, Ford is a company that i believe will not go out of business because of this recession and their stock is at 5.00 right now. Imagine if it would double or tripple in the next decade or two? Would it be a smart idea to spend a couple of hundred bucks on ford stock?
 

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Kilt wearing, old man
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A piece of advice from a one-time college professor I had was to only invest as much moneyas you are willing to lose. So if you feel you can throw away $200.00, then go ahead and invest that. If the price goes up, you can always sell.

A better tactic right now might be to put that same $200.00 into an interest bearing bank account. (Assuming that the bank's minimum deposit amount is under that, of course). Then add to that amount on a regular basis.
 

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The stock market is up like 20% in the past 5 weeks. Seems like it is a no brainer now, but we are in the lounge so I would have to say go buy some H&B
 

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Gruntled
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Remember the transaction costs. Even through a discount broker like Scottrade, there's a $7 commission per trade. That means if you invest $200, your stock needs to appreciate 7% for you to break even.

While I emphatically do not give investment advice in the Lounge, I'd advise anyone who thinks stocks are a 'screaming buy' right now to look at what happened to the Japanese stock market after their real estate bubble burst in the early 1990s.
 

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Jim Nazium said:
While I emphatically do not give investment advice in the Lounge, I'd advise anyone who thinks stocks are a 'screaming buy' right now to look at what happened to the Japanese stock market after their real estate bubble burst in the early 1990s.
This is correct...

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

There has been a lot of volatility in the market since October so long term gains might not be realized for quite some time, especially if history repeats itself as in the example above.
 

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gazing from the shadows
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Jim Nazium said:
Remember the transaction costs. Even through a discount broker like Scottrade, there's a $7 commission per trade. That means if you invest $200, your stock needs to appreciate 7% for you to break even.

$7 is 3.5% of $200. But it was early in the morning, right? :)

But even if there are small transaction costs, low balance accounts often get charged fees at discount brokers. Less than 20k means $x a month in fees. So check that out too.

Timing, right now is pretty risky. Big bounce off the bottom, and the market levels right now are at an important level. 8k dow might be a ceiling. If it breaks through 8k might be the floor.

But one thing is for sure, if you buy tires they will quickly go to zero value. So as an investment, Ford will surely beat that. Or at least do no worse! There's no dividend currently, so you will only be concerned with price appreciation. Without looking into the numbers (to see what the chances of bankruptcy are... because BK--even reorganization-- means stock goes to zero), I don't know if it is a good play or not, but the "in the best shape of the bunch and so most likely to survive" is a sensible strategy.

Sensible might mean right, but it might mean, "It sounds sooooooo good at the time!".
 

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dr hoo said:
$7 is 3.5% of $200. But it was early in the morning, right? :)
You get charged both when you buy and when you sell. 2 x $7 = $14 = 7% of $200 :)
 

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Captain Obvious
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i'd rather have nice tires.
 

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still shedding season
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dr hoo said:
But one thing is for sure, if you buy tires they will quickly go to zero value. So as an investment, Ford will surely beat that. Or at least do no worse!
Right. And a good lesson on how the markets work, etc without losing a lot of money. Warren Buffet says "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market." so this might be a good way to see how it works, but like JN says you might want to throw in a bit more so you have a chance of making something out of it.
 

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gazing from the shadows
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kykr13 said:
.... but like JN says you might want to throw in a bit more so you have a chance of making something out of it.
But set your target when you BUY. If you are looking for a 2x, set a stop loss at $10 when it breaks through the target. Keep moving the stop loss up if it rises, but when it drops to the stop loss, let it go and move on.

And that's another cost to investing in individual stocks. Time to research, time to monitor, time to manage.
 

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I thought about buying F..

about a year ago...when it was $8.00/share...thought it was at the bottom then...:D
hey, if it tanks, you can always sell it and write off the losses in the capital gains box of your 1040....
 

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Captain Obvious
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dr hoo said:
But set your target when you BUY. If you are looking for a 2x, set a stop loss at $10 when it breaks through the target. Keep moving the stop loss up if it rises, but when it drops to the stop loss, let it go and move on.

And that's another cost to investing in individual stocks. Time to research, time to monitor, time to manage.
or figure that at least you will get use out of the tires. i wouldn't call buying stock in F or GM "investing". more like buying an expensive lottery ticket. you may make some money on it, but you need to go in assuming you are throwing money out the window.

that's what i did with freddie mac anyways.
 
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