# Short term investments

1. Aug 3, 2009

### rootX

I want to make short term investments (currently, stocks I believe). Currently, I don't have any investment knowledge so wanted to know if stocks are better or forex?
(edit: learning about them in next few days)

I found this website:
http://individuals.interactivebrokers.com/en/main.php
If there is any better website or if this is appropriate for small short term investments (few weeks to a month max or to a year at max)?

Last edited: Aug 3, 2009
2. Aug 4, 2009

### tiny-tim

how much can you afford to lose??

Hi rootX!

How much can you afford to lose??

If at least getting your money back is important, then you should invest in a fund, not an individual stock.

Even then, it's not guaranteed.

And investing for only a few months is really a bet rather than an investment.

(and what sort of profit are you expecting? i hope it's not more than a few percent)

3. Aug 4, 2009

### Pengwuino

Do NOT trade currencies if you do not know what you're doing. Currencies are far more complicated than stocks. You have to look at entire economies instead of single companies or single industries.

Stocks are a gamble at the moment as the economy is way too unstable. If you're going short term, remember that it'll be a gamble if you don't know what you're doing (and if you do, you probably wouldn't invest in the first place right now), and any gains are subject to fairly heavy taxation.

4. Aug 4, 2009

### rootX

Re: how much can you afford to lose??

Currently, about 10K $(max) and 4 K$ (min) and I would still be able to continue living my normal life without them.

Anything that's above my saving account.

5. Aug 4, 2009

- Warren

9. Aug 4, 2009

### junglebeast

So true..nobody really wants to share their full wisdom, which means everything you ever read is all just half-truths, some of it half-false intentionally, and even more of it half-false due to other peoples' ignorance. The funniest thing is all the books with catchy titles that are filled with complete BS. But you've got to keep reading through this junk to assimilate knowledge, you just need a really good filter!

10. Aug 4, 2009

### rootX

Thanks, all the responses were very helpful.

I think I will go with the CD option. I have about >10K in my saving account which I am not hoping to touch any time soon so I wanted to make sure that I am not missing on stocks/other short term investments.

11. Aug 4, 2009

### chroot

Staff Emeritus
Absolutely. There's a huge inherent conflict of interest involved in producing books or TV shows on investing. It has been shown time and time again that all of the books and TV shows which bill themselves as small-investor advocates (Mad Money, CNBC in general, for example) are really selling snake-oil, encouraging novices to play a game which they cannot hope to win.

It's very instructive to remember that short-term movements in stock prices have absolutely nothing to do with the underlying company. When you make short-term investments, you are choosing to compete directly with other investors in a very abstract way that has nothing to do with how good or bad a company is or might be in the future. It's just a symbol on a screen.

Investment firms spend ridiculous amounts of money developing computer systems which allow them to covertly move vast quantities of money through the market, trickling it through thousands of small orders placed through market makers around the globe. They do this to simulate "real" market movements. All it takes is a few million dollars to literally make any stock go up or down at will. They have access to vast amounts of statistics that allow them to see quite plainly when the stock has been oversold or overbought, and they can act instantly to take advantage of that knowledge, turning a bump of a few pennies in a stock price into a windfall, when multiplied by millions of shares.

The high-profile, poster-boy stocks like AAPL, MSFT, etc. are actually those which violate the efficient market hypothesis most egregiously. They are, quite simply, the most manipulated stocks. It is not coincidental that these poster-boy stocks are the most attractive to novices.

Day trading, as an individual, is a fool's game.

- Warren

12. Aug 4, 2009

### chroot

Staff Emeritus
Good idea. You might also want to consider finding a credit union or internet bank, etc. that offers an interest-bearing checking account. Often, these rates are as good as CDs, without requiring you to lock up your money.

- Warren

13. Aug 4, 2009

### Pengwuino

One thing that might be an idea is to get a real broker. They are knowledgeable and have an incentive to make money for you. Then again, brokers these days are telling people to stay out of the market in the first place.

@chroot: I wouldn't exactly say that nearly every share of stock is being controlled by "the big boys". For example, microsoft has only 60% institutional ownership. Private ownership got a boost earlier in the decade when there was a push towards joe schmo to start investing in things. Not sure how that all panned out though haha.

14. Aug 4, 2009

### junglebeast

All that you say is true, Warren, except that the market is still not perfectly efficient. The big companies may spend millions on their software, but they do not benefit from all of the world's smartest minds..and their algorithms are not so dynamic as to be able to work perfectly efficiently at all stocks and all time scales simultaneously, or robust enough to not make mistakes. They are also incredibly low risk, which leaves a good deal of money to be made by people with slightly higher risk tolerances. I know of several full time day traders who make a good living off of this.

15. Aug 4, 2009

### damit

The market is organic, no number of expert people or algorithms are 100% accurate in predicting the market, of course this depends on which market we are talking about but holds true to most markets. It particularly does hold true for forex and the stock market, sure there maybe some manipulation, but with practice, skill, and good knowledge one can see this false trend in price very easily. Actually you could even make a system which can be successful 75% of the time and would lessen your chances of falling into such traps.

Those that say not to use your money because it is a recession are people afraid of risk. There are strategies you can learn to manage your risk and risk then becomes a friend rather then a enemy. Personally, I have done best in bad economic times when the market is volatile in making the highest return on my money. I do not prescribe to the buy and hold strategy, or standard, that is foolishly given to those starting to place money in the market.

Also I suggest that people know the difference between investing and trading. What I think the OP is saying is he wants to trade, which is rather short term, and just because it is a zero-sum game it does not mean that it is gambling. Most of the time when I here such statements I think to myself that this person does not understand risk. Remember there is risk in every venture and ultimately every action you take for reward and gain in almost everything you do in life.

On that note I say participating in the market I believe is always good because you add to the liquidity of the market and the economy, but one should know what they are doing. Also remember that no amount of practice with fake money will guarantee success when you use your real money because real emotions will be tied in then. I believe if one wants to be successful at the market they must really learn to control or even separate their emotions from their actions.

16. Aug 4, 2009

### Ivan Seeking

Staff Emeritus
Or you could just donate your money to the Ivanwantstoflyamig fund.

17. Aug 4, 2009

### MakeUpPlz

Short term investment=saving money for diseases

18. Aug 4, 2009

### lisab

Staff Emeritus
Wait...what?

19. Aug 4, 2009

### MakeUpPlz

You mean "wait" as in "wait a sec" or as in "what am I waiting for" ?

<edit>It takes me some time to blend and correct my statement, sorry I still owe you.

Last edited: Aug 4, 2009