Maximizing University Savings: Is Investing in Stocks the Best Strategy?

[Nikitin]

If so, post your portfolio.

I'm currently working to increase my university savings (I'm about to finish high-school and start at uni in one year) and I think it'd be a waste to keep the money in the bank. I mean, here you get a 3% bank rent? After taxes it's actually around 2,2%, while inflation is somewhere around 3%.. 1.022/1.03 <1. So basically you're losing money by keeping them in the bank.

If one takes the time to learn about accounting (a few ratios and such, nothing complicated) & the market, and use a "buy high-dividend stocks from large, stable and efficient companies when they're cheap" strategy it's quite hard to lose money. At least I think so, I bought my first stocks 1 month ago and it seems to go fine until now..

Anyway thoughts?

My portfolio is:
Excelon - 5% dividend yield
TEVA Pharmaceuticals - 2,5% dividend yield but it'll get better
Banco Santander - 10% (sustainable, unless the Spanish economy really does go into a recession) dividend yield
Apple - 0% dividend yield, but I think the market beat this stock too far into the dirt. I don't trust an Apple without Steve Jobs, but I think it will rise a decent amount in the short-medium term (after the Euro-fears decline) due to quite high iPhone 4S sales, new concepts, untapped Asian market etc.
Vimpelcom - 8% (sustainable) Dividend yield.

 

[Jimmy Snyder]

Bear Stearns told us to buy and Morgan Stanley told us to sell. First we went with Morgan Stanley and sold short, but the market rose and we lost money. So we had to drop our shorts and go with Bear Stearns.

 

[Nikitin]

I don't understand, you're telling me you just listened to what some analyst told you? Well going into the market clueless is like gambling basically.

I don't trust analysts or investment banks. What I do is when I have identified a decent, cheap stock through recommendations from websites like seekingalpha.com or fool.com, I start checking the company's numbers (using nasdaq.com). If it looks good, then I'll start seeing what people are saying about it and what analysts think about it. Also I only buy stocks from large companies.

As for derivatives.. I duno it's kind of scary. I don't do trading (attempting to suck money out of the market by buying and selling stocks at a high frequency), trading is for professionals.

 

[Willowz]

Trading is for supercomputers placed meters next to Exchange computers.

 

[Cuauhtemoc]

I invest, but since it's in brazilian stocks it may not be that interesting to you guys.
If you know what you're doing, it's the best thing to do with your money. Especially since maintaining a business down here is near impossible, with terrible worker laws and taxes.

 

[Nikitin]

I was thinking about buying either gazprom or petrobras as an energy stock. You own petrobras I assume, since it's a big brazillian company?

 

[Evo]

I don't think that people should be sharing personal investment information.

 

[edward]

Bear Stearns told us to buy and Morgan Stanley told us to sell. First we went with Morgan Stanley and sold short, but the market rose and we lost money. So we had to drop our shorts and go with Bear Stearns.

:rofl:

 

[Cuauhtemoc]

I was thinking about buying either gazprom or petrobras as an energy stock. You own petrobras I assume, since it's a big brazillian company?

Yes, Petrobras, Vale, Banco do Brasil, all brazilian blue chips. I sold tons of Vale when it was almost 50 reals a share, and I bought a lot back when it went to 39 I think(it went even lower, but I missed it)...now I'm hoping for it to go back up. It's at 42 right now...
I kept petrobras, because it has been mostly stable, it goes up one day, and down the other...not much happening since I bought it.
About Petrobras, I don't know how they are faring in the USA, since it's a different stock, but since the crisis in europe most brazilian big companies have been on the decline, but they recovered a little starting in the last week.
I think petrobras is a pretty solid company especially after they found tons of oil in the brazilian coastline, and since the government could in theory help them with any big financial problem it will hardly ever go into serious debt.
It doesn't pay much dividends, it is giving about 1% per share each 3 months.

 

[Borg]

Bear Stearns told us to buy and Morgan Stanley told us to sell. First we went with Morgan Stanley and sold short, but the market rose and we lost money. So we had to drop our shorts and go with Bear Stearns.

:rofl: Another excellent one Jimmy!

 

[Pengwuino]

I invest my money in sandwiches.

 

[JaWiB]

I invest my money in sandwiches.

 

[Vanadium 50]

It is true that stocks have a good long-term track record. But year to year, it's not so great. In the last 110 years, in 42 of them the DJIA traded lower than the previous year. Most investment advisors will start by asking "when will you need the money"? I think that's a very good question: I have money I will need in 1 year, in 5 years and in 20 years in different places. For good reason.

 

[OmCheeto]

I don't think that people should be sharing personal investment information.

Drats! Every time I share my personal investment information, my share prices go down, and I buy more!

 

[jtbell]

here you get a 3% bank rent?

Where is "here?" :tongue2:

In the US the highest rate for a one-year bank certificate of deposit is 1.15% according to bankrate.com. Even for a five-year CD the highest rate is 1.9%.

I don't invest in individual stocks because I don't have the time or inclination to keep up with the research to do it effectively. Instead I use mostly mutual funds. Right now my savings are distributed approximately like this:

8% bank accounts (including CDs)
55% stock mutual funds (jumping up and down a lot)
27% retirement annuity (currently growing about 4% annually, above my contributions)
10% bond mutual funds (currently giving about 3% annual dividends)

I'm only a few years away from retirement so I'm more conservative than someone in his 20s would be.

 

[jobyts]

I don't think that people should be sharing personal investment information.

People usually share the portfolio and percentage allocation. In fact most of the stock blogs require the authors to declare their position on the stock they mention.

No one shares the actual $ amount they put in.

 

[Nikitin]

Well, the bloody Greeks have done it again. I think their prime minister was pressured into accepting the referendum on the European rescue pack.. Funny that two weeks ago he was flying around Europe begging for money. Greece really is a mess, with politicians fighting for dominance, even if it will force Greece into a default.

It is true that stocks have a good long-term track record. But year to year, it's not so great. In the last 110 years, in 42 of them the DJIA traded lower than the previous year. Most investment advisors will start by asking "when will you need the money"? I think that's a very good question: I have money I will need in 1 year, in 5 years and in 20 years in different places. For good reason.

Well, it depends. If you wait until after a panic, you could get stocks cheap and thus earn a profit fast. Right now the market is fear stricken so buying stocks could be smart.

It's actually kind of funny how irrational the market can be, with traders and investors trying to predict other traders' and investors' behaviour and reactions. Not to mention the overreactions.

Where is "here?" :tongue2:

Europe :)

 

[Jimmy Snyder]

It's actually kind of funny how irrational the market can be, with traders and investors trying to predict other traders' and investors' behaviour and reactions.

So don't try to guess where the market is going, try to guess where other people guess the market is going. Before you invest real money, you should try making a few mental investments. That way, if the stock goes down, you don't lose any money. You just lose your mind.

 

[Vanadium 50]

Well, it depends. If you wait until after a panic, you could get stocks cheap and thus earn a profit fast. Right now the market is fear stricken so buying stocks could be smart.

You could. Or you could end up investing in more panic.

As they say, "Buy a stock, and when it goes up, sell it. If it doesn't go up, don't buy it."

And as I said before, the first question should be "when do I need the money?" If the answer is "next year", volatile investments are unwise.

 

[AlephZero]

It's actually kind of funny how irrational the market

Most of the the "fun" is watching economists and commentators explain everything rationally, the day after it happened.

On the other hand, if markets WERE completely rational, it would be a lot harder to make money.

 

[Nikitin]

The markets have a habit of overreacting, so an initial shock shakes the market, and then the market goes up again. A trader think that other traders are going to sell, and thus the trader sell. Or the trader just panics and sells because other traders panic and sell.

Of course, the really big crashes usually happen over several days with constant panic - though this definitely isn't what's happening today. Further falls in the market can only be brought about if it gets obvious that the Greeks will default.

 

[DoggerDan]

The markets have a habit of overreacting...

That they do.

I'm not your usual investor. I do analyze companies, following Berkshire Hathaway's lead in always investing in solid, under-valued companies, then holding on for the long term. Well, except for that last bit. I use a few additional filters, including proclivity in the market news. In the end, I trade on the basis of what what I think others are going to do, as that seems to drive the swings to a much greater extent than fundamentals. I'll often buy and sell the same stock over and over, but I do that with a core dozen stocks. As Dad said, "buy low, sell high."

I know some don't consider that acceptable," but it's how most investment management firms make their money.

 

[Nikitin]

Buying when there's blood in the street and selling when there's a massive relief sounds smart, but I don't really have the experience or the capital to take such a risky approach. Besides, it is pretty immoral to try and suck money out of the market instead of investing into ones favourite companies.

Which one of the investment firms are the most successful, and you know where I kind find information about what kind of stocks these firms are buying, selling and holding? As for Berkshire hathaway.. Well I wouldn't count that Warren Buffet is their ace, as that guy is like 80+ years old.

 

[Vanadium 50]

It sounds like your mind is made up. You think that you can take money you need next year and that it is smart to stick it in an investment that his highly volatile but might produce a few percent more return.

This is not smart. This is stupid.

 

[jobyts]

There are two kinds of investors:

Those who don’t know where the market is headed, and those who don’t know that they don’t know where the market is headed.

 

[rhody]

Bear Stearns told us to buy and Morgan Stanley told us to sell. First we went with Morgan Stanley and sold short, but the market rose and we lost money. So we had to drop our shorts and go with Bear Stearns.

Oh God, :rofl: :rofl: :rofl: I just looked at this thread for the first time. Add my rofl to Edward's and Borg's. That is too funny and it's subtle message has been missed by more than a few in this thread. Where are BS and MS now ?! That is too funny... I got totally out of BS six months before the lights went out. I must have good karma.

Rhody...

 

[DoggerDan]

...it is pretty immoral to try and suck money out of the market instead of investing into ones favourite companies.

Why's that? I know of at least one very rich (multi-millionaire) local person who isn't so rich anymore because instead of sticking to investment basics, he became greedy and tried to multiply his wealth quickly by trading on margin.

He lost his mansion in the Broadmoor. I feel sorry for him, but he and he alone is responsible for investing his money unwisely.

It sounds like your mind is made up. You think that you can take money you need next year and that it is smart to stick it in an investment that his highly volatile but might produce a few percent more return.

This is not smart. This is stupid.

Was that directed at me? I do not need the money I have in the market next year. There's my retirement base, and there's my play money. I keep the two separate.

If if was directed at me, why were you assuming otherwise?

There are two kinds of investors:

Those who don’t know where the market is headed, and those who don’t know that they don’t know where the market is headed.

Is this what people say when they've been unsuccessful in the market? I put x into the market 2.58 years ago. I now have y. No additions, just reinvesting the profits, as as of close today, y/x=2.3858, which is a hair over 40% annually. Here's how: http://www.fool.com/. That, and following BH's advice (not their actual investments), as well as sticking to markets I know well, and finally, throwing in my years of working with people, and bottom line, folks, the market is still driven by people. Well, mostly. There's an awful lot of programmed trading going on these days, enough to make my few dollars equal a drop in an olympic-sized swimming pool. So, Nikitin, if I'm doing any damage, it's almost certainly against the billion-dollar a day trade houses whose trades total dump-truck loads in the market rather than your average investor.

Why do you think some folks consistently loose their shirts in the stock market, while others consistently do well?

I must have good karma.

Once all the numbers have been crunched, there's still the matter of "intuition" or "hunch," which I chalk up to the fact our brains remain the most powerful computers, all around, on the planet. If it's something that can be programmed, you can bet your bippy the big boys have already done so. There's some things, however, you just can't program, at least not yet. Whatever success I'm having, I chalk it up to knowing people and how they tend to react under various situations.

Take the Greece fiasco, for example. The market took a dive today on the news that Greece might not accept the EU's plan. Why? I dunno! Frankly, I don't care. I chalk it up to overreaction, as the inherent value of 99.999% of all publicly-traded companies didn't change a single twit. That was exacerbated by dozens of doom and gloom articles as to the global economy as a result of Greece's issues. So, "buy low, sell high," I bought. Tomorrow, perhaps next week, people will come to their senses and realize they overreacted, and the market will come back up. So, buy low, sell high, I'll sell.

I'm wondering how much of these "doom and gloom" articles are objective reporting, and how much is some Waternoose-type publisher telling a reporter to type up a doom-and-gloom headliner so that he (or his friends) can do the same thing with his millions of dollars that I'm doing with a few hundred or a couple thou.

 

[Nikitin]

Well, the result would be a Greek default which would wreak havoc on all the Greek banks + a few European ones. If these banks fail then other banks would fail as well due to loss of income from rents and loan repayments etc. I guess basically that'd be a good opening for a solid worldwide recession.

Anyways dogger, can you please share your portfolio?

 

[Vanadium 50]

Was that directed at me?.

No, it was directed at the OP. It's not all about you.

 

[mheslep]

I was in wait and see on Apple, waiting to see Cook make some moves. He started with a particularly stupid one, giving money away:

http://news.yahoo.com/tim-cook-ridding-apple-steve-jobss-evils-133836248.html

Less than a month in, Cook announced a charity matching program. Apple matches employee donations to non-profits of up to $10,000 a year, explains Vascellaro, which is a huge contrast to Jobs's tude. "Mr. Jobs said at a company off-site meeting last year that he was opposed to giving money away, according to a person who attended," she writes.

Making "insanely great" products in a worldwide, ruthlessly competitive market is hard, requiring fanatical dedication if Jobs and old Apple were any guide. In my opinion it is highly arrogant of Cook to indicate Apple can coast into the next great thing while indulging the company's time and resources in philanthropy. The single job of the company has to be making the product, to the benefit of customers and shareholders. Then it is the shareholders that can give money away.

 

[DoggerDan]

Anyways dogger, can you please share your portfolio?

Wouldn't do anyone much good. Other than the fact I know the companies pretty well, it's not what I invest in. It's when. If I were experienced in pharmaceuticals (I'm not), for example, I would be doing what I do with a handful of pharmaceutical companies instead of working the market segment in which I do have some know-how.

 

[SW VandeCarr]

I invest my money in sandwiches.

Good idea. Most of the advice I've gotten is baloney anyway. At least you can eat a sandwich.

 

[Nikitin]

I doubt any decent company gives money to charity out of good will... Tim Cook is probably using this to advertise apple.

I have this hunch that Apple's stock will do good in the medium term.

 

[OmCheeto]

I doubt any decent company gives money to charity out of good will... Tim Cook is probably using this to advertise apple.

I have this hunch that Apple's stock will do good in the medium term.

I never invest in hunches.
I have to "know" that a stock is going to increase in value.
And if my stocks value should go down? Well, I hold on to it until it goes up.
I've only been investing since the early part of this crash, and have never lost a penny on a sale.
(Now my purchases on the other hand... )

 

[SW VandeCarr]

I never invest in hunches.
I have to "know" that a stock is going to increase in value.
And if my stocks value should go down? Well, I hold on to it until it goes up.
I've only been investing since the early part of this crash, and have never lost a penny on a sale.
(Now my purchases on the other hand... )

That's the kind of advice that makes a good baloney (bologna) sandwich.