Invest in Stock Market During Market Drop - Tips & Advice

[Ghost803]

Well I figure since the market is going to hell and a lot of stock are dropping in price across the board, this would probably be a good time to invest. But i am a noob concerning the stock market and was wondering if anyone would care to share their knowledge/tips on how to take advantage of this situation.

The only idea I've had so far is that I'm thinking about buying some Google stocks if they drop a little bit lower.

 

[Ben Niehoff]

My [largely-uninformed] guess is that it's not quite time to buy just yet. But once the market hits bottom, there will be some huge opportunities.

 

[Greg Bernhardt]

Keep sitting on the sidelines, don't try to time the bottom. It's better to be a little late on the upside then to get tanked right away.

 

[Ghost803]

I'll keep that in mind and just wait till it really hits rock bottom.

 

[Monique]

One tip is to only invest money that you can really miss. That way you can just sit out the ride, or in the unfortunate event of bankruptcy you can say you tried but at least didn't loose all you got.

 

[BobG]

Take a look at how companies that produce supermarket goods have done the last week or so. A credit crisis can cause them operating problems, but won't decrease their sales that significantly (unless the operating problems are severe enough that they can't produce enough to meet demand, in which case grocery prices are going to go up).

Same thing with utility companies, etc; the things people have to buy no matter what.

If their drop has followed DJIA, it's mostly for psychological reasons.

On the other hand, a credit crisis can cripple home sales and auto sales. I wouldn't even look at auto companies for quite a while.

 

[rootX]

Take a look at how companies that produce supermarket goods have done the last week or so. A credit crisis can cause them operating problems, but won't decrease their sales that significantly (unless the operating problems are severe enough that they can't produce enough to meet demand, in which case grocery prices are going to go up).

Same thing with utility companies, etc; the things people have to buy no matter what.

Investing in necessity goods is safe but I don't think that will bring any big profits or will it?

 

[Gokul43201]

Take a look at how companies that produce supermarket goods have done the last week or so.

Like Campbell Soups:

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?symbol=CPB&E1=0&LPR=2&C1=0&C2=0&D5=0&D2=0&D4=1&DD=1&width=612&height=258&CA=1&CC=1&CE=0&CF=0

Chicken soup for the financial crisis.

 

[rootX]

Like Campbell Soups:

http://data.moneycentral.msn.com/scripts/chrtsrv.dll?symbol=CPB&E1=0&LPR=2&C1=0&C2=0&D5=0&D2=0&D4=1&DD=1&width=612&height=258&CA=1&CC=1&CE=0&CF=0

Chicken soup for the financial crisis.

Who consumes Campbell soups for dinner?
Even my ramen noodles are better

 

[FrancisZ]

It's Depression Era food, soup is. Same goes for soft boiled eggs and toast. I'll bet they'll be a lot of cheese get sold too. People are trying to economize.

 

[chroot]

Stay out of the market if you're a newbie. And, for God's sake, don't buy poster-boy stocks like Google just because of the name! Google is an advertising company, and advertising companies sink like stones in poor economic times.

- Warren

 

[Jimmy Snyder]

I just bought GM. Not the stock, the company. From now on it will be known as the Jimmy Motor Car Company. In order to satisfy conservatives, each car will come with a whip. And to satisfy liberals, it will come in any color you want as long as it's black.

 

[edward]

Buy old mobile homes already set up in mobile home parks. You can get them for $6,000 to $8,000 each. They rent for $400 to $500 per month.

If you don't mind being a bit of a slumlord and having to occasionally evict a drug addict, the return on investment is tremendous. And you can still work full time at Jimmy Motor Car Company.

 

[BobG]

Investing in necessity goods is safe but I don't think that will bring any big profits or will it?

If you want big profits, you have to take big risks ... in which case the auto companies are good buys. They can't go any lower ... unless they declare bankruptcy.

GM was at $43.20 on Oct 12, 2007. They're at $4.89 this week.
Ford was at $26.40 on Nov 18, 2005. They're at $2.17 this week.

If you were an employee at one of those companies and took advantage of their company savings plan (similar to a 401k, except you get GM stock or Ford stock instead of diversified investments), you'd be drunk right now.

 

[Astronuc]

GM was at $43.20 on Oct 12, 2007. They're at $4.89 this week.
Ford was at $26.40 on Nov 18, 2005. They're at $2.17 this week.

Buy a thousand shares of each on sit on them for several years. Unless they declare bankruptcy - which is conceivable for both - they won't recover until they retool and realign their product lines, which will take about two years. Meanwhile - the Japanese car companies are ahead of the game with their hybrids and electric vehicles.

GE recovered nicely today - up 2.49 (13.10%) to 21.50.

JP Morgan Chase (JPM) - up 4.96 (13.52%) to 41.64

GS might be a good buy - but look at their balance sheet. They've lost quite a bit of value this week, and particularly today. But they are one of the best in their sector.

 

[Moonbear]

As others have suggested, now is NOT a good time to invest. Prices are still dropping, and nobody knows yet how low they'll go. You'll never be able to time the rock bottom, but when stock prices start on the upswing again, there'll be plenty of time to buy while they're still low and starting to rise.

I still would suggest that even when stocks start to rise, if you're new to investing, start out small. Don't sink your life savings into investments. Think of it just like gambling at a casino...only spend what you can afford to lose. If you get lucky or get the knack of it quickly, you'll make some money and can keep reinvesting the profit. If you get unlucky or make bad choices initially, you won't lose money you needed to live on.

 

[Redbelly98]

Here's a funny email I just got this morning.

Subj: investing advice

Here is some wise investing advise!



If you had purchased $1,000 of shares in AIG one year ago, you will have


$33.00 today.





If you had purchased $1,000 of shares in Lehman Brothers one year ago,


you will have $0.00 today.





But, if you had purchased $1,000 worth of beer one year ago,


drank all the beer,


then turned in the aluminum cans for recycling refund,


you will have received $214.00.





Based on the above, the best current investment plan is to drink heavily & recycle.





It is called the 401-Keg.

 

[Garth]

Also at the other side of the pond:
If you had purchased £1000 of Northern Rock shares one year ago they would now be worth £4.95; with HBOS, earlier this week your £1000 would have been worth £16.50; £1000 invested in XL Leisure would now be worth less than £5; but if you bought £1000 worth of Tennents Lager one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant, you would get £214. So based on the above statistics the best current investment advice is to drink heavily and re-cycle.

(Crossed with Redbelly - Great minds think alike, fools seldom differ)

Garth

 

[russ_watters]

One tip is to only invest money that you can really miss. That way you can just sit out the ride, or in the unfortunate event of bankruptcy you can say you tried but at least didn't loose all you got.

My advice would be to diversify so that the risk of bankrupcy is essentially nonexistent. For a low risk, good (but not outstanding) return and no effort, you can't beat an S&P index fund.

 

[rootX]

If you were an employee at one of those companies and took advantage of their company savings plan (similar to a 401k, except you get GM stock or Ford stock instead of diversified investments), you'd be drunk right now.

I was wondering about technology sector for long run: companies that provide VOIP, internet security, ..etc.

And for short run, other than inferior goods I don't know which other companies will make big profits. Obviously, there are some people (companies) who would take advantage of the economic downturn.

 

[Astronuc]

Consider the companies in which Warren Buffett invests.

 

[Redbelly98]

For a low risk, good (but not outstanding) return and no effort, you can't beat an S&P index fund.

And consider opening an IRA.

Also, if you don't make you're investment all at one time, you avoid the risk of buying at a time that the market is hitting a high. (Not too likely right now, but in general ...) Invest some of the money every month or couple of weeks. I think some IRA's can be set up for this to happen automatically.

Consider the companies in which Warren Buffett invests.

Yes, but do it before it becomes public knowledge what he has invested in.

 

[russ_watters]

And consider opening an IRA.

My IRA is an S&P Index fund.

 

[Monique]

My advice would be to diversify so that the risk of bankrupcy is essentially nonexistent.

What if the whole country goes bankrupt?

 

[russ_watters]

What if the whole country goes bankrupt?

Well it has never happened before and I don't see how it is even possible in theory, but I guess if every single entity with money in the entire country went bankrupt simultaneously, you'd have bigger things to worry about than where your retirement savings went. Starvation would become a problem in relatively short order. But hey, at least there'd also be no one available to kick you out of your house/apartment for not paying your mortgage/rent.

Bankrupcy isn't what causes a stock to become worthless anyway. Bankrupcy happens when your ability to pay your bills is greater than the cash you have on hand to pay them. But for most businesses, that doesn't have a direct relationship to the value of the company -- except with financial companies. All financial companies do is move money around. The only real assets those companies have are the buildings they work in and confidence in the company is based on money, so when they go bankrupt, the company is ruined. When companies like Lehman folded, they were bought for basically the cost of their buildings and other asundry assets.

If a company like an airline or a car manufacturer goes bankrupt, they reorganize, shed some debt, and keep going. The stock gets hammered, but those companies rarely disappear/dissolve. They have a tangeable value even if they are not paying their bills. Causing a major airline to completely dissolve would essentially require all of its planes to crash at the same time, leaving them with nothing left to use to generate money. That's essentially what happened to these financial companies.

 

[Ivan Seeking]

Well I figure since the market is going to hell and a lot of stock are dropping in price across the board, this would probably be a good time to invest. But i am a noob concerning the stock market and was wondering if anyone would care to share their knowledge/tips on how to take advantage of this situation.

The only idea I've had so far is that I'm thinking about buying some Google stocks if they drop a little bit lower.

If you want investment advice, ask a rich person.

There is nothing more comical than watching poor people give financial advice.

 

[russ_watters]

One thing I forgot to mention, though: the risk/reward calculus changes with the age of the investor. A 30 year-old isn't even allowed to touch his/er retirement savings for 35 years, so for them it is a no-brainer: all of their retirement savings should be in the stock market.

A 70 year-old uses their inestments as income so stability is much more important. There is a rule of thumb equation (that I don't know offhand) that relates your age to the disbursement of your retirement funds in stocks vs bonds (which are insured/guaranteed). Ie, the older you get, the more of your money should be in bonds instead of stocks.

 

[russ_watters]

If you want investment advice, ask a rich person.

There is nothing more comical than watching poor people give financial advice.

Wow, Ivan. That is such a simpleminded and useless thing to say. There are more than two types of people in the world (and I doubt anyone in here would qualify as "poor" anyway) and even still, a "rich" person doesn't necessarily know how to make their money on the stock market any more than a "poor" person. By this point, I'm sure Bill Gates knows a thing or two about investing, but he didn't get rich because he's a shrewd investor. Besids which, a "rich person's" goals are far different from a "poor person's" so you won't necessarily even get good answers from them. Ask Bill Gates what to do with $10,000 and he may just say to use it as a napkin.

If you don't have anything useful to contribute, don't post.

 

[Monique]

I also find it strange advice. When they're honest I think a lot of the rich people will say that they got their money by being in the right place at the right time. Being rich doesn't mean you have all the knowledge.

 

[Moonbear]

I also find it strange advice. When they're honest I think a lot of the rich people will say that they got their money by being in the right place at the right time. Being rich doesn't mean you have all the knowledge.

I agree, it seems like very strange advice. If they started out rich, they may know nothing about investing, but just know how to run Daddy's business. If they got rich through investing, then they started out poor, which means they had the knowledge when they were poor too. Likewise, someone poor could know a lot about investing, but not have the money to spare to do it. There were several times in my life that I saw stocks I'd have loved to invest in, but didn't have anything to spare to invest at the time. If you have a lot of money, you can afford to take higher risks too.

Of course, rich people who are about to become poor if their stocks and businesses tank would advise everyone to invest now to drive prices back up and keep themselves in business. Don't mistake that for good advice, it's purely selfish interests.

 

[OmCheeto]

If you want investment advice, ask a rich person.

There is nothing more comical than watching poor people give financial advice.

Ha ha! Reminds me of a conversation I had last night with a homeless person. He claims to have worked for a stock market company for 5 full years back in the 80's and claimed to know everything about investing and how the market was supposed to work. I asked him why he was homeless and had no money. He said it was because he never had money to invest.
I asked the bartender for a bat...

Another person at the bar, a young broker of commodities, when I asked him how to invest, said that I should invest cautiously and strategically. No one really knows if this is the right time to get into the market.

Having never had much cash on hand, I've never had the opportunity to invest in the market. Most of what I invest in are durable goods: house, cars, boats. The one durable good that struck me as a fail safe investment has been solar panels. They appear to sell used for about the same price as new ones, so they don't depreciate. Every time the sun comes out, you get a dividend. And no one knows how long the modern well built models will last. The best thing about investing in them is that you can start your little personal energy market for about $350. So it's well within the grasp of anyone. Even people who live in cardboard boxes would only have to turn in 20 5 cent containers a day for a year.

I'm sure I'm going to get blasted for the above recommendation for being some kind of soap box crusade sales pitch. So to the conventional market investors, I would recommend looking to the future. What is going to be selling in 1, 5, 10 years? Obviously more hybrid vehicles. So electric motors are going to be in demand. So copper should be a good investment. Even though it's lost 50% of its value over the last 6 months, copper stocks are still worth 3 times what they were 5 years ago. (http://www.lme.co.uk/copper_graphs.asp )

I wouldn't invest in any of the American car companies until they fire all of the executives(and no severance packages!) and replace them all with engineers. The CEO's should be the most junior electrical engineers on staff. That way they wouldn't complain about only making a million dollars a year.

 

[Jimmy Snyder]

It's no use to conjecture about it. I decided to put it to the test. First I asked a couple of rich people. Bill said that microcomputer software has done well for him in the past. I asked him if the market was oversold right now. Oversold is a technical term used on Wall Street for a stock for which more shares have been sold than bought. For instance, last week millions of shares of General Motors were sold, but not a single one of them was bought, hence the price went down. He said no, so I asked him about a company that I like, Bear, Tyco, Enron, Lehman and Stearns Brothers. He said that stock is overbought. Overbought is also a Wall Street technical term that refers to a stock in which Jimmy has shares. Next I asked Warren. He said it's always best to invest in shirt manufacturers.

After that, I asked the poorest man in town. He had a lot of good advice on many subjects such as carboard boxes and wine. However, his stock advice left a lot to be desired. He said that if I select stocks that market consumer items that I personally use and like and perform due diligence on the company, take advantage of dollar cost averaging and reinvest the dividends, then eventually I will have too much money to continue receiving welfare.

 

[Zantra]

I also find it strange advice. When they're honest I think a lot of the rich people will say that they got their money by being in the right place at the right time. Being rich doesn't mean you have all the knowledge.

I think Ivan's point was that a wealthy person is more likely to have sound financial advice because he has wealth to invest, and because the more weatlth you have, the more likely you'll have access to investment opportunities that the poor and middle class do not. That of course doesn't make him a financial genius- Just someone with access to better resources than the average joe.

 

[Monique]

I think Ivan's point was that a wealthy person is more likely to have sound financial advice because he has wealth to invest, and because the more weatlth you have, the more likely you'll have access to investment opportunities that the poor and middle class do not. That of course doesn't make him a financial genius- Just someone with access to better resources than the average joe.

If you're rich, you have people that manage your money for you. I know people who invest and they're certainly not illiterate in what they're doing.

 

[edward]

Who do they interview on the financial news programs, Rich people or poor people ?

Being rich doesn't make a person a financial genius. On the other hand most wealthy people I know do keep track of where their money is invested.

I have a brother in law who definitely fits into the wealthy category. He just cashed in a huge Vanguard fund after losing over $100K. He put the remaining cash into several CD accounts until the crisis is over.

 

[wolram]

My tip is pheasants, the rich guys love them, but i think may be you are to late.

 

[Andre]

My tip is pheasants, the rich guys love them, but i think may be you are to late.

The best thing to do, is buying next week financial news.

 

[bassplayer142]

Invest in alcohol. The more the market drops the more turn to the bottle.

 

[Zantra]

If you're rich, you have people that manage your money for you. I know people who invest and they're certainly not illiterate in what they're doing.

There are exceptions to every rule. I'm sure Bob down the street manages his $10K portfolio quite well, but I think perception counts, and someone who trades large sums of money as a means of making a living versus Bob using his vacation money to do some options trades is a no brainer. I'll take the guy with more to loose. And maybe his accoutant makes the trades, but that doesn't know he doesn't know where his money is invested. Also, wealthy people live off of their investments, so they tend to take their investments more seriously, so they consult experts in the finacial industry who may be unavailable to someone doesn't invest large sums of money. Of course this a generalization, and there are always exceptions, but it deos tend to be true..

If it's Bob or Warren Buffet, I'll take Mr. Buffet, thanks

 

[tribdog]

I'm thinking about dealing drugs. Pretty good return on investment.

 

[BobG]

I'm thinking about dealing drugs. Pretty good return on investment.

Plus they have a pretty good state run retirement plan. Not luxurious, but it's free room and board.

 

[Moonbear]

Who do they interview on the financial news programs, Rich people or poor people ?

How long have those rich people on the financial news programs been telling people that bonds are the "safe" investment, and put more of your funds into bonds if you're approaching retirement age and need to keep your investment more stable...lower returns, but lower risk? Do you think the people who had half their retirement money in those "low risk" Lehman bonds believe that advice was all that good now?

If I were rich and greedy, I'd be telling people to invest in whatever I was investing in...raise the prices of my stocks, then I'd sell, buy something else, and do it all over again. It doesn't make it a good investment, it just means you can make a lot of money tricking other people into making bad investments and then bailing out before everyone else figures out how bad it is. And guess what, that's exactly what the rich Wall Street sleeze resting comfortably in their golden parachutes were doing!

 

[BobG]

Does anyone else think e-trade is running their commercials with that baby a little past their expiration date?



Recent events seem to give a whole new reason for that kid to puke after buying stock on-line.

 

[Astronuc]

GEN ELECTRIC CO(NYSE: GE) Closed at $21.00 (after hours 20.85 -0.65 (-3.02%))

However if they make target and pay dividends, GE is attractive.

P/E (ttm): 9.77
EPS (ttm): 2.15
Annual Div & Yield: 1.24 (5.80%)


Watch this one. If GE Capital recovers quickly, they will grow with the economy.

 

[BobG]

Investing in necessity goods is safe but I don't think that will bring any big profits or will it?

If you want big profits, you have to take big risks ... in which case the auto companies are good buys. They can't go any lower ... unless they declare bankruptcy.

GM was at $43.20 on Oct 12, 2007. They're at $4.89 this week.
Ford was at $26.40 on Nov 18, 2005. They're at $2.17 this week.

If you were an employee at one of those companies and took advantage of their company savings plan (similar to a 401k, except you get GM stock or Ford stock instead of diversified investments), you'd be drunk right now.

You should have gone for it. GM was up 30% and Ford up 22% in just one day. If you were an employee at one of those companies and took advantage of their company savings plan, you'd be drunk right now.

 

[rootX]

You should have gone for it. GM was up 30% and Ford up 22% in just one day. If you were an employee at one of those companies and took advantage of their company savings plan, you'd be drunk right now.

Wow, I missed such a good opportunity! I should have bought some Asian American European shares last week
http://news.bbc.co.uk/2/hi/business/7666608.stm
http://news.bbc.co.uk/2/hi/south_asia/7666618.stm

I have lost one about Asian markets.

 

[Astronuc]

Railroads have been a good stock investment since 98 if you know what your doing.

NEW YORK (AP) --
Shares of some top railroads companies are down at 10 a.m.:
Burlington Northern (BNI) fell $3.47 or 4.2%, to $78.38.
CSX (CSX) fell $3.47 or 7.2%, to $44.67.
Canadian National (CNI) fell $2.28 or 5.4%, to $39.92.
Canadian Pacific (CP) fell $3.99 or 9.0%, to $40.28.
Kansas City Southern (KSU) fell $2.68 or 8.0%, to $30.75.
Norfolk Southern (NSC) fell $2.61 or 4.7%, to $52.72.
Union Pacific (UP) fell $4.08 or 6.5%, to $58.88.

Railroads move a lot of freight, particular grain, coal and intermodal, and they are generally provide a good indicator of several other market sectors. CSX and NSC shares almost doubled with the dot.com and tech bubbles burst.

Also GE is a good buy now:
P/E (ttm): 9.88 (most companies are more like 20+)
EPS (ttm): 2.036
Div & Yield: 1.24 (5.90%) good yield compared to most other stocks.

and Wells Fargo (WFC) didn't do as badly as expected.
http://biz.yahoo.com/rb/081015/business_us_wellsfargo.html

NEW YORK (Reuters) - Wells Fargo & Co (NYSE:WFC - News), whose planned purchase of Wachovia Corp (NYSE:WB - News) will create the largest U.S. retail branch banking network, said on Wednesday third-quarter profit fell 25 percent, hurt by higher credit losses and investment write-downs.

Net income dropped to $1.64 billion, or 49 cents per share, from $2.17 billion, or 64 cents, a year earlier, the fourth straight quarterly decline. Revenue rose 5 percent to $10.38 billion, while expenses fell 3 percent.
. . . .
San Francisco-based Wells Fargo was able to wrest Wachovia from the arms of Citigroup Inc with a $15.1 billion all-stock takeover, largely because it never dove deeply into the risky mortgages and exotic debt that strangled Wachovia and rivals such as Washington Mutual Inc, Countrywide Financial Corp and IndyMac Bancorp Inc. . . . .

But one must do the research before investing. Look at balance sheets and fundamentals, e.g. sector, market share, long term strategy of management.

 

[rootX]

http://money.cnn.com/2008/10/17/news/economy/buffett_op_ed/index.htm?postversion=2008101709

Buffett: I'm buying stocks

 

[Danger]

I haven't had a chance to read this thread, but I'll mention that the advisor on Canada AM said that you can't go wrong with established food manufacturers such as Kellogs, General Foods, etc..
Personally, I'd rather have a good GIC or Canada Savings Bond. (Right now, though, I'd settle for having more than a couple of hundred bucks in my savings account.)

 

[kronon]

I heard that the market value of the dinky toy-car manufacturer Mattel is now greater than that of General Motors.

And buying bankruptcy protection is cheaper on McDonalds than the US govt.

Some strange dislocations out there.