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10/6/12 3:58 PM
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Liyon
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Karasu, total newbie question, but here goes:

How do you go about picking stocks. I understand there are systems and methods that help you decide on which stock to buy, but how do you decide what handful to analyze from the thousands of stocks on the market to begin with?

Do you start off specializing in one industry then moving on to others or what?
10/6/12 5:47 PM
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karasu
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Liyon - Karasu, total newbie question, but here goes:

How do you go about picking stocks. I understand there are systems and methods that help you decide on which stock to buy, but how do you decide what handful to analyze from the thousands of stocks on the market to begin with?

Do you start off specializing in one industry then moving on to others or what?

you must first have/develop an interest. Then you have to immerse youreself in the culture, reading books and magazines, watching the financial news networks, etc.

It's really no different than baseball cards or Pokemon. Look how they can remember and know all the statistics. Why/How can they do that? Because they find it interesting.

Look at gamers. Amazing what they are capable of. Remembering all the codes, button combinations, etc.

Also people who love/play music knowing/remembering all the songs/artists etc.

If you have the interest and immerse yourself you will slowly over a few years begin to become familiar with the subject.

Finally, the stock market is not the easy street to wealth. There are many paths. So if you find it boring then you should find a path excites you.

I think stocks are pretty much Pokemon for big people. Well, I still think Pokemon are pretty cool too :)
10/6/12 5:52 PM
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karasu
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Joe Ray - I get overly bored at weekends now because markets are closed.

I was off work all week and spent most of the weekdays watching financial markets and following the newsflow.

I think there is something wrong with me.



This is a great example to Liyon's question. If you are to become a stock nerd then it will excite you. One positive side effect may be that you actually find yourself looking forward to Mondays.

Great Post Joe Ray.

I hope that I have created a good portfolio to last me a few months or more so that I can now spend more time focusing on my other interest, Spiritual Development through things like meditation, Yoga, TaiChiChuan, etc.

I had made a thread about that and now need to study the links the generous posters provided:)
10/6/12 5:59 PM
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Rick Harrisons Buddy
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10/6/12 8:18 PM
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Liyon
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"you must first have/develop an interest. Then you have to immerse youreself in the culture, reading books and magazines, watching the financial news networks, etc."

Any tips on where to get started? What books, magazines, networks, etc... I should be looking at?

Say a nephew asked you where to start, what are some specifics you would point him towards or things you would have him do.
10/7/12 12:32 AM
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karasu
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Liyon - "you must first have/develop an interest. Then you have to immerse youreself in the culture, reading books and magazines, watching the financial news networks, etc."

Any tips on where to get started? What books, magazines, networks, etc... I should be looking at?

Say a nephew asked you where to start, what are some specifics you would point him towards or things you would have him do.

The "Dummies/Idiot's Guides" to investing, personal finance, stock investing, etc. These guides do an excellent job of doing what they are supposed to do, teach/familiarize a person with no knowledge of a subject how to understand that subject which they wish to learn.

A lot of people will rip on these and the people who read them. Do not feel insecure about that. We aren't born with this information. We have to learn it somehow. Many books are designed for people who have a basic understanding. The "Dummies/Idiot's" guides for those with no understanding but wish to learn.

I started with these books and still re-read them. In fact I can look up from my computer right now and and they are lining to bookshelf space on my desk.

Use these books as your introduction to teach you the basics and build a good foundaton and then go on to read many different books. No one book will have all the answers. Good luck :)
10/7/12 12:44 AM
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karasu
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My recommended 5 stock portfolio is NO substitution for self-education. These are my holdings. Like any other stocks, they carry substantial risk.

Of course I hope that like my former stock picks, that they will perform well and good people will benefit from my sharing of this information :)

As I stated, they could all turn out to be Market Sucks and perform poorly and lose you money. They could also do very well short term, experience great volatility, stay flat, and/or perform very well long term. Markets gonna Market. Good luck :)
10/7/12 12:56 AM
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Marion Cobretti
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Sprint 3.15

BAC 7.00

INTC 25.00


losing on intel at the moment.. shitty news about not using their processors in the new smart phones.. But they make money hand over fist every quarter.. the only stock I would hold onto.. so will probably average down and buy more..

Id like to dump all after the elections..
10/7/12 1:00 AM
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gusto
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why waste time picking stocks

just become a boglehead
10/7/12 4:45 AM
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Joe Ray
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Liyon - "you must first have/develop an interest. Then you have to immerse youreself in the culture, reading books and magazines, watching the financial news networks, etc."

Any tips on where to get started? What books, magazines, networks, etc... I should be looking at?

Say a nephew asked you where to start, what are some specifics you would point him towards or things you would have him do.

My 2cents, I have found the Little Books investing series to be educational and easy to read.

You can finish one in an evening.

Just go down the library and find 5 books that cover various aspects of investing and finance, there's lots of beginners guides out there and many do the job.

After that, learn about the various investing styles. Value, growth, global macro, long term investing vs short term trading etc and learn about the great investors, what they do right and what they don't do.




10/7/12 3:07 PM
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karasu
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Joe Ray - 
Liyon - "you must first have/develop an interest. Then you have to immerse youreself in the culture, reading books and magazines, watching the financial news networks, etc."

Any tips on where to get started? What books, magazines, networks, etc... I should be looking at?

Say a nephew asked you where to start, what are some specifics you would point him towards or things you would have him do.

My 2cents, I have found the Little Books investing series to be educational and easy to read.

You can finish one in an evening.

Just go down the library and find 5 books that cover various aspects of investing and finance, there's lots of beginners guides out there and many do the job.

After that, learn about the various investing styles. Value, growth, global macro, long term investing vs short term trading etc and learn about the great investors, what they do right and what they don't do.





I agree those are excellent reads but to learn the basics and build a foundation first start with "The Idiot's/Dummmies" guides, then follow up with the Little Books as recommended by Joe Ray and just keep devouring whatever your library system has to offer.

If certain books really seem to suit you, then you can purchase those as reference guides.
10/7/12 3:08 PM
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karasu
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gusto - why waste time picking stocks

just become a boglehead

why waste time doing anything?

Because it's fun, challenging, and rewarding when you succeed.
10/7/12 3:21 PM
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WEB
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i also look forward to monday, but i feel some relief on fridays, because i can take a break on saturday. i spend most of saturday looking at charts and reading up on the stocks im holding and in my watch list.
10/9/12 2:53 PM
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karasu
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Update:

Markets are getting volatile again.

This is why I recommended to purchase portfolio insurance (SH).

I am still holding these names and will continue to do so. If they drop low enough(it would have to be a great deal lower by half or more) then I will look to add or if the markets present opportunities, I will look for other names to add to my portfolio while holding the original 5.

I usually try to pick what I think are undervalued stocks at what I feel to be a good price but reserving cash on the side to add to those or to add other attractive stocks if given the opportunity. I take smaller positions, keep insurance, and always maintain cash on the side. This is my risk management strategy.

By taking smaller postions it is less bothersome when the markets change and allows you to add to those positions or make new purchases.

So if the markets go up, I benefit and if they go down I wait patiently, collect dividends, and look to add.
10/9/12 3:00 PM
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karasu
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An example here is that Warren Buffet purachased Bank of America at $7-something.

After his initial purchase the shares dropped to $4-something(that's quite a drop). $7 was still a good buy.

Getting the perfect bottom is very difficult. Getting a good price is easier. Patience and Risk Managment(due to Fear&Greed)is the difficult part.
10/9/12 3:04 PM
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bryanand
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LOL@volatile.

If I am going to pick stocks it's either really volatile shit(like BP after the oil spill or Goldman on the trading scandals) or crazy speculative stuff like GLUU(down 18% today)

Picking blue chip stocks is fucking boring, you aren't going to get rich collecting a 4% dividend on GE or Intel at this point because there is no growth.

You either need to catch on stock on the wrong side of market psychology or get in on the right spec play to make big money.
10/9/12 3:30 PM
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karasu
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bryanand - LOL@volatile.

If I am going to pick stocks it's either really volatile shit(like BP after the oil spill or Goldman on the trading scandals) or crazy speculative stuff like GLUU(down 18% today)

Picking blue chip stocks is fucking boring, you aren't going to get rich collecting a 4% dividend on GE or Intel at this point because there is no growth.

You either need to catch on stock on the wrong side of market psychology or get in on the right spec play to make big money.

do you REALLY believe GE is going to remain $22 forever? Seems like an EXCELLENT way to build wealth. Buy at a good price, buy on dips and market volatility, safe/stable company that pays a decent dividend.

NOTHING wrong with boring. Nothing boring about watching your wealth increase and being able to rest easy while doing so. Markets are always going experience volatility, they will rise, fall, and recover. Opportunities for Bulls & Bears.

Sorry this thread is not COOL enough for you. I'm not here to show off. I REALLY hope to use this as a teaching example to those good responsibly boring people who save some of their earnings and wish to increase their wealth through investing in the markets.

"Boring" investing is usually smart investing.

I do not disagree with your method, just your presentation on this thread.
10/9/12 3:38 PM
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karasu
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To those curious and interested persons who read the above^ watch this thread and my stock picks as a learning example. Do NOT expect instant results. I may hold these picks for months or years.

They may turn out to be terrible stock picks. I could lose money or they could turn out to be terrific stock selections and I will be rewarded for my efforts.

Watch and learn :)
10/9/12 3:48 PM
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Joe Ray
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Boring is good.

The low volatility anomaly is very real.
10/9/12 3:54 PM
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bryanand
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Edited: 10/09/12 3:58 PM
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Your methodology for picking stocks is why people pour money into mutual funds. You want boring just pick 5 ETF's and be done with it. 40% of your portfolio is ETF's as it is. Why not just go all the way with XLF, VNQ, and BND while you are at it?

The risk of a single blue chip stock getting wiped out isn't worth the risk of a 3% yield.

There is nothing wrong with having a boring portfolio but if you want to pick stocks I think you should pick them with some balls and take risks. Leave the ETF's for income and stability.

Intel and Microsoft are not good long term plays, look at the processors and OS's going onto smart phones and tablets for an indication as to why. They will soley be a business market and we have seen how that has played out for someone like RIM.

10/9/12 3:57 PM
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karasu
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I'm not predicting the markets are going to tank but I do believe that volatility is beginning to pick up.

"Brace for worst earnings since recession's rebound
This earnings season threatens to be one of the roughest since the height of the financial crisis -- even if, as usual, results don't live up to the worst of the gloom-and-doom forecasts."-----

"Q4: Be afraid, very afraid
Think election, Washington gridlock, the "fiscal cliff" and Europe in crisis. Despite gains, investors are still uncertain about stock market's staying power."----


"The 7 scariest profit outlooks this quarter
Brace yourself: This earnings season threatens to be one of the roughest. Here's a look at the seven most worrisome profit outlooks this quarter.
• Do Alcoa's results matter?"----

"Bear market begins today?
Oct. 9, for better and for worse, is a big date for the stock market, writes Mark Hulbert."----

"Dollar rises as IMF sounds warning
The U.S. dollar rises, finding safe-haven support after the International Monetary Fund cuts its projections for global growth."-----

"U.S. stocks fall hard on earnings caution
U.S. stocks decline as investors brace for quarterly earnings and after the International Monetary Fund offered another outlook of slower global growth"----

all headlines from today found at:

http://www.marketwatch.com/?link=MW_Nav_FP
10/9/12 4:04 PM
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karasu
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bryanand - Your methodology for picking stocks is why people pour money into mutual funds. You want boring just pick 5 ETF's and be done with it. 40% of your portfolio is ETF's as it is. Why not just go all the way with XLF, VNQ, and BND while you are at it?

The risk of a single blue chip stock getting wiped out isn't worth the risk of a 3% yield.

There is nothing wrong with having a boring portfolio but if you want to pick stocks I think you should pick them with some balls and take risks. Leave the ETF's for income and stability.

Intel and Microsoft are not good long term plays, look at the processors and OS's going onto smart phones and tablets for an indication as to why. They will soley be a business market and we have seen how that has played out for someone like RIM.


Do you REALLY think GE is going to get permanently wiped out? If it does drop a bit that simply creates a great buying opportunity?

Why not just invest in funds? Why pay the commission?

In fact, I do believe funds can be a decent investment but making your own picks allows you to pick them when prices present attractive opportunities. Actually, it's really not much different than the method you recommended.

I am not advocating buy and forget about it. I am advocating investors take an active role by learning how to pick their own stocks at attractive prices and to take profits when appropriate.
10/9/12 4:05 PM
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Seemore Butts
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Joe Ray, how are you playing the vix?

I would not by ETFs that play the VIX, for instance ishares vxx. VIX related ETFs in no way mimic the performance of the actual VIX, and you will find yourself in a losing position through time decay and degradation. Believe me, I have experience. Even in days of selling, you can see VIX based ETFs take a beating. Best play to short long ETFs, like VXX. Much better imo. Some times it is hard to find shares to short, but you don't want to be long the VIX through an ETF as long as there are HFTs and Hedge Funds ready and able to rape you.
10/9/12 4:13 PM
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karasu
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Edited: 10/09/12 4:13 PM
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^just checked Yahoofinance, nice gain on the VXX today up $1.46, nice gain.

I was right, volatility is picking up. We'll see, tomorrow it could be back to up trend and stability or more volatility, who knows? Markets gonna market.

That's exactly why I am recommending a SAFE bluechip strategy of: buy on dips and collect dividends if market goes against you approach :)
10/9/12 4:15 PM
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Seemore Butts
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karasu - ^just checked Yahoofinance, nice gain on the VXX today up $1.46, nice gain.

I was right, volatility is picking up. We'll see, tomorrow it could be back to up trend and stability or more volatility, who knows? Markets gonna market.

That's exactly why I am recommending a SAFE bluechip strategy of: buy on dips and collect dividends if market goes against you approach :)

Like I said, the VXX doesn't always mimic the actual vix. I day traded VXX all summer, it is absolutely not a safe vehicle to hold. I think your blue chip strategy is good. I used to be into short selling, I find it mentally rewarding. After taking losses I am re-evaluating my approach.

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