Invest in Stock Market During Market Drop - Tips & Advice

[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.

 

[russ_watters]

Well, the value of a company is based largely on their assets, their ability to make money, and their debt. A company like GM might have a lot of assets, but their ability to make money is not very good right now and their debt is sky high. That equates to low stock value.

 

[Moonbear]

I just think that if you're riding on the stock market right now, you better take some anti-nausea medication...it's one BUMPY roller coaster!

My boyfriend has been in Japan for the past week, and that's the big question everyone there is asking, how is the economy in the US? He said he draws a series of up and down arrows and says, "Today, Tomorrow, the next day, etc." then tells them, "If you want to know how it'll look next week, turn the drawing over." (I don't know if he really did this or was exaggerating his story for humor value, but I thought it was a pretty good summary.)

 

[misgfool]

Only question here is that, what is the direction of the real economy. Stock prices are low at the moment. But in a few years scope buying any relatively large company with P/E < 10 is a good guess.

 

[OmCheeto]

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.

Hard to believe. But it's true.

10/31/2008
Mattel: Mkt Cap: $5.38 billion, up 7.9%
GM: Mkt Cap: $3.28 billion, down 4.6%

Maybe Mattel should buy GM.

After all, they've been stealing detroits design ideas for years. They might as well own them.

 

[Vanadium 50]

I'm going to take a contrary position here.

First, you have to decide if you are gambling or investing. The strategies are different. Nothing wrong with gambling - the problem is when you are gambling and think you are investing.

Second, your question should not be "which stocks do I buy?" It should be "how much do I have to invest every month, and what fraction of that should be in stocks". If you can't afford to invest every month, I suspect that the right investment is a savings account. If you need the money soon (some say 5 years, I would say 10), I would not put it in stocks.

Third, it doesn't matter if you buy stock when it's moving up or down. All that matters is the price when you buy it and the price where you sell it. Good thing too - analysts make good money trying to figure out the top and the bottom of the market, and frankly, they aren't very successful. Amateurs like you and me would be expected to do worse than professionals.

Finally, I am a big fan of index funds. They have lower fees than managed funds, and you're automatically diversified and have less volatility than individual stocks. The central limit theorem is a beautiful thing.

 

[Evo]

Cronxeh, please refrain from posting actual companies to invest in.

 

[cronxeh]

Well that is odd. I thought we were talking stock picks. What do stocks have to do with companies? Besides the ETFs I posted are not company stocks they are a basket of company stocks. Anyway seems pointless