Novice in the Stock Market

JPB and Hamburger have given you some fine advice regarding dividend reinvestment plans. That's how I started investing as a teenager with lawn mowing money back in the 70s. Given patience and decades this method of investing can grow very nicely.

There are hundreds of companies that have dividend reinvestment plans (DRIPS). To join these you must first be a shareholder with the stock held in your name (not held for you by your broker). However, many, possibly most of these companies allow you to buy your initial shares directly from the company, without ever having an account with a broker. What I recommend is go to the website of a company you are interested in investing in. They will have a link on the screen saying something like "investor services" or "shareholder services". Click on this, and you will find out if they have a DRIP, and what the details are.

Some of these companies might require an initial investment of $500 or $1000 to buy stock directly from the company. If you want to start with a far smaller amount, then many discount brokers charge a flat fee of only $5 or $10 brokerage fee for any stock purchase, whether it is 1 share or 1000 shares. So, if you want to start of with General Electric (I know they have a DRIP - I set each of my kids up in their plan) it will cost you $38 (the current price of one share) plus $10 brokerage for a total of $48. Then get the share issued to you in your name, and then follow the instructions on their website to get enrolled in the DRIP.

There are several really good investment magazines. I'd recommend you go to your local library for an hour or two a week and start reading them. Forbes, Smart Money and Kiplingers are my favorites, though there are several others that are also quite good. Barrons and The Wall Street Journal are also worth reading. After a month or two of library work it will all start to make some sense.

In general, most pundits recommend you invest only what money you won't need for at least five years. Invest in companies that pay a historically increasing dividend with a low to moderate PE ration. If you do not feel comfortable picking individual stocks, then investing in no-load mutual funds (Vanguard and T. Rowe Price are two of many well thought of families of mutual funds) can be considered. Vehicles similar to mutual funds are also available on the stock market (called ETF or Exchange Traded Funds), but these are usually bought through a broker. One very popular ETF is SPY, which tracks the Standard and Poors 500 - anyone who buys one share of SPY is investing in the 500 largest US publically traded companies.

Good luck, and have fun. If you have any specific questions there are many of us here who would be happy to try to answer.

BM

Thanks, I will look into the advice given and I'm sure I'll be back to re-read this thread.

PS, Will somebody please tell me what bm means. I tried to figure it out but I only come up with what it means at work.

Bookmark, unless you are speeding down the highway.... :wink:

Thank you Rockhead, that's been plagueing me for months!

Don't listen to RH, MB. BM is short for bowel movement. It's a euphemism for excrement or poo.

In this case, Montana is telling Jim exactly what she thinks of his post.

Start with investopedia marty, get some good stocks in there and follow
their course. I usually buy what I also use and like, like Apple computers the stock has been very good, if you follow the past year. Plus
I love Apple products, and one trip to the local mall will show you that
every Apple store is packed with people and they're buying, not just
window shoppers. Their after christmas profits will soar.

Solar companies are going to be good, as more and more companies
and private homes are equipped with solar panels.

Blue chips (General Electric, Exxon, Johnson & Johnson etc.) are always
good.

Also look out for dividends. Some company pay quite nice dividends,
like Phillip Morris.

Look out for new trends and where the economy is heading, and it
will give you pointers at what to buy and when.

Marty,
I remember the day I asked what BM meant. Use to drive me crazy when I didn't know what people were saying with their BM, LOL, WTF, etc....

This time my BM means bookmark, but now Tico has given me a whole new meaning, which I can whip out when the mood strikes

Montana, we call that #2 on you....

It means the same thing as code brown at work

BM #2

Ok, I think I derailed this thread enough with all my BM and BM #2.

So sorry all

CJ, I'm happy for you that you bought into Apple and I considered it last year but thought 74.00 was too high for me. Man am I kicking myself now.
I'm going to just sit on Coca-cola and see what I can do with the rest of my stocks. I'd like to add to my portfolio. I like the idea of buying directly from the companies and will look into that this weekend as I plan on reading through investopedia.com and a trip to the library.

Invest in oil/energy stocks.

Do it 35 years ago.

:wink:

Right. Buy it when it's cheap, and sell it when it goes up. If it don't go up, don't buy it.

I think Will Rogers said that.

will rogers also said :

Edgarblythe,

Do not listen to any of the other posters investment advice regardless of their good intentions, beliefs and experiences!

Listen to me.......Chumly.

Do not buy individual securities such as stocks, bonds, REITs, commodities, commercial paper, T bills etc and do not buy / sell on the advice of brokers and/or advisers.

Buy a properly balanced, broad-based set of Index Funds, learn what the Efficient Market Hypothesis and the Random Walk are all about.

Use dollar cost averaging and not market timing.

Balance your portfolio in terms of equities versus fixed income based on your investment time horizon and risk tolerance and not on predictions of future earnings and/or interest rate trends and or other predictions.

Understand the implications of MER's, portfolio churning, and buy and hold.

Configure your portfolio in light of your given tax implications.

More to come!

Here is the book you must buy:

Burton Malkiel's A Random Walk Down Wall Street

Random walk hypothesis




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

Efficient market hypothesis



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

You refer to Fundamental Analysis, and it's trounced by the Efficient Market hypnosis / Random Walk.

Prove to me that you beat the market averages, after taxes and expenses, over consequential time, in a manner that embraced predictive efficacy, and you'll have a case.

Otherwise, you are just one of millions of monkeys throwing darts at a stock table, as are brokers, advisers and mutual fund managers following Fundamental Analysis via PE, debt to equity, dividend yield, etc.

Then of course, there is the huge group of brokers, advisers, mutual fund managers and individual investors following Technical Analysis and its spawn Momentum Investing, they are on even shakier ground than the Fundamental Analysis faithful such as you Phoenix32890.