A little investment fun

[IGBT]

You're killing it!  Started with $2500 in July 2018 with no additional deposits?  Is this an IRA?  If not, what about taxes?

Thanks, yes no additional deposits since the initial $2500 in July 2018.   Unfortunately it is not in a IRA (Robinhood doesn't do IRAs) so taxes are starting to be of significance as the account makes gains.   I am paying them from other money since everyone's tax bracket is different and someone who only had $9,000 in capital gains in a year wouldn't even pay tax.

 

[gojo]

I received a message from TD Ameritrade, announcing $0.00 commissions on online stock, ETF and Option trades for all new and existing clients, starting on Thursday, Oct. 3...…………………...

 

[IGBT]

I did see the several brokers now offering free trades although option trades are still not free like Robinhood since they still charge a per contract fee (I think E-trade still charges $0.65 per contract)

I just crossed $12,500 today, which is a 400% gain since starting this thread.   The three year target for keeping on track to turn $2500 into a quarter million is $10,240 so well past that at not yet even 1.5 years in.

Seems crazy to think someone could trade $2500 into $250,000 but I am feeling good about the chances.

 

[squire]

Both brokerages that I use now offer free trades. The $10 profit on a $1000 trade that was needed just to pay the commissions is now profit.
Very small investments can now show a profit.

 

[IGBT]

Both brokerages that I use now offer free trades. The $10 profit on a $1000 trade that was needed just to pay the commissions is now profit.
Very small investments can now show a profit.

I thought e-trade was going to be free, and to some degree it is now but they still charge a per contract fee for option trades, which Robinhood does not.   They no longer charge a commission for stock and options but they still have the per contract fee which is significant if you trade a lot of options.   For example I bought and sold 30 contracts on Merck the other day in Robinhood.  Totally free.   The option contract fee at E-trade would have cost me around $60 total.

 

[squire]

I thought e-trade was going to be free, and to some degree it is now but they still charge a per contract fee for option trades, which Robinhood does not.   They no longer charge a commission for stock and options but they still have the per contract fee which is significant if you trade a lot of options.   For example I bought and sold 30 contracts on Merck the other day in Robinhood.  Totally free.   The option contract fee at E-trade would have cost me around $60 total.

I understand what you are saying and you are right but you are overstating your cost. E-trade does charge for option contracts but the price is $.65 a contract, so 30 contracts in and 30 out is a total of 60 and 60x$.65=$39. For those who do not know, 1 contract is for 100 stock shares.

 

[Cammalu]

I wish I knew how to do this. My savings account interest earned is so low it doesn’t even count. It’s pathetic and I can no longer look at my statements.

I thought about buying short term CDs but my bank only gives 1.25 interest. Again pathetic. I don’t want to do any long term investments because I’m too dang old.

The stock trading thing you all are doing is Greek to me. I’d be afraid I’d lose everything.

 

[ckelly78z]

I just set up an account with Charles Schwab, that has also gone to commission free trades (a limit of 5 per week). I plan on playing the NASDAQ penny stocks with an initial $1000 investment. I am now in the research phase of figuring out how/when/which stocks to trade, and how long to hold.

I'm trying to look at what has the potential, and analyst predictions of having an upward trend from an upgrade, good news, or heavy trading . I have been using this site for looking at individual stocks....

https://www.marketbeat.com/market-data/biggest-percentage-gainers/

 

[MG1912]

Meh, if that were true everyone and his brother would be stock tycoons.

Lenny, everyone and his brother can be stock tycoons.  But they have to start investing young, investing steadily, and investing for decades.  Someone making federal minimum wage ($7.25/hour) who starts investing 15% of his gross income at 20 and never makes a penny above today’s federal minimum wage, will have $1.3 million saved at age 65 (assuming historical averages of 9% returns).  What everyone and his brother cannot do is expect to average 60% returns over 10 years.  I don’t know what the OP is thinking.  Even hedge fund managers don’t dream of those numbers over 10 years.  Even the Yale Endowment team headed by David Swensen averaged 15.6% from 1987 to 2007 (i.e. before the crash).

The OP wrote, “Long term you win in the stock market.”  That is true for investors.  It is false for day traders.  Historically, the market has returned 9% real, as mentioned above.  That’s the entire market, i.e. that maxim applies to those who invest in the entire market, i.e. index investors.  Day traders?  I think long term, 99.9% of them fail in the stock market.  And the remaining 0.1%?  Most likely, they just got very, very lucky, which the OP has sort of acknowledged, but not with sufficient warnings for the financially unsophisticated here.

The stock trading thing you all are doing is Greek to me. I’d be afraid I’d lose everything.

This is a very healthy fear.  If you want to make $250,000, the best way to do it is to have someone just give it to you.  Barring that, the second best way is to be a surgeon who makes $500,000:  you spend half of it, save half of it, and boom – your $250,000 goal is reached in one year, and you got to eat lots of caviar and steak along the way.  Barring that, the third best way -- and the only way available to most of us -- is to start early enough in life, accept market returns, rebalance as appropriate, invest as much as you can, weather the market storms, and think long-term.  Gambling or day trading isn’t even an option in my book -- any more than lying on your back in a field and hoping a winning PowerBall ticket flutters into your mouth because the probability of that working is about the same.

$2,500 invested today with returns of even as high as the historical average of 9% real (i.e. 12%), would yield you $14,000 in 20 years.  Planning to turn $2,500 into $250,000 with day-trading in 10 years is nonsense.  Even the pros (think Wall Street analysts with Harvard MBA’s, six monitors in front of them, and proprietary algorithms) can’t get it right in the short term, never mind the long term.  Even Warren Buffet hasn’t significantly beaten the market in recent times.  So Joe Blow in his living room hoping to score big on day-trading is doomed.

 

[SLB_SA]

$2,500 invested today with returns of even as high as the historical average of 9% real (i.e. 12%), would yield you $14,000 in 20 years.  Planning to turn $2,500 into $250,000 with day-trading in 10 years is nonsense.  Even the pros (think Wall Street analysts with Harvard MBA’s, six monitors in front of them, and proprietary algorithms) can’t get it right in the short term, never mind the long term.  Even Warren Buffet hasn’t significantly beaten the market in recent times.  So Joe Blow in his living room hoping to score big on day-trading is doomed.

How Inflation Affects S&P 500 Returns 

"One of the major problems for an investor hoping to regularly recreate that 10% average return is inflation. Adjusted for inflation, the historical average annual return is only around 7%. There is an additional problem posed by the question of whether that inflation-adjusted average is accurate, since the adjustment is done using the inflation figures from the Consumer Price Index (CPI), whose numbers some analysts believe vastly understate the true inflation rate."

 

[gojo]

Well, I'm giving my opinion on investing, don't expect big fancy words. I just have a HS diploma. Right now I'm drinking my first morning cup of coffee with one eye open and the other one still closed. So expect some mistakes and please forgive me.
For new investors, I recommend you invest in big stocks like AT&T, ticker (T). T pays a good dividend of $0.51 per share, 4 times a year. It has a steady increase in dividends, when I bought it, it paid .050 quarterly. A year ago I paid 27.37 per share, today it's 36.91 , with all the ups and downs. That's about $9.54 profit, at about 35%.

The dividend, an average of $0.50 quarterly, 4 times a year, at the price of $27.37= .50 x 4 = $2.00, that's about  7% on one share. Say you bought 100 shares at 27.37, would be $2737.00. OK.., a dividend profit of $50.00. Now a stock profit of 35% + 7% on dividends would now be 42%.... 

Now lets sell some covered calls on this stock. Now I'll go to TD Ameritrade and see what some (out of the money) covered calls are going for. Why out of the money? I'll have a better chance of not being called away (someone buying the stock from me, at the price I sold the covered call for) for this to happen, the stock would have to go up higher than my price, than I sold it at. And if I'm called away, I can always buy the stock again and start over again.

The stock price today is $36.91. A 38.50 CALL is going for 0.48 X 100 = $48.00 per 100 shares, expires Nov 22,2019. OK now I get extra $48 - .65 commission = 47.35 into my cash account. If I don't get called away, I could probably do this 9 to 10 times a year. On average of 9x47= $423.00... That's a profit of 15%...…….. 35%+ 7% + 15%=57%.. OK $2737 X 1.57 = 4297. or a profit of $1560.00 annually on a small investment. 

Now lets not compare Big Billion Dollar investment firms with small investors. Saying if that could be done, everyone would be doing it... Couldn't you see a firm selling 10,000,000 shares of a stock? That would bring the stock down to nothing. That's where a small investor has the advantage over large financial firms.

BTW: I've been trading since 1989.

 

[MG1912]

So you feel comfortable advising new investors on stock picking… in fact, you are encouraging them to go out and buy individual stocks.  You even have a hot tip for them.  And you feel comfortable giving this advice because, as you noted, you have been day trading since 1989 – 30 years of experience.  You even threw out an example above of an almost 60% profit on a day trade – I assume because that is exemplary of what you do. 

So after 30 years of stellar investment success… tell me why you are on cheap RV living and not on an exclusive billionaire’s forum with Jeff Bezos and Richard Branson?  Perusing your posting history, I see you’ve been having discussions along these lines on this forum since 2014.  Tell me why, back in 2014, you said you had been day-trading for 20 years, and yet you also said you only “hoped” that stocks would help supplement social security.  Those don’t seem to me like the words of a man who has been successful in investing for 20 years.  Have you tallied your total performance over 30 years?  The total cost you’ve paid in trading fees, expense ratios, broker’s fees, contracts, “exclusive” forums and newsletters, etc.?  Your losses, as well as your hot picks?

In a 2016 thread, you wrote, “The only bad luck I had with stocks, were the first year I traded them.”  And yet, as I mentioned above, you also said you only “hoped” stocks would supplement social security.  Okay, so you’ve had 29 good years with stellar performance.  So what is the story?  I'm confused.  Are you a multi-millionaire?  Or are you poor, which you claimed in a 2017 post:  “I know a lot of poor people, including myself that has 401Ks, company pensions and or IRAs. It's up to you, on how you want to invest.”  You can’t have 29 years of stellar stock picking performance and be “poor.”  Like I wrote above, after 29 good years in the stock market with results like your example above, you should be on a private island, living it up with Jeff Bezos and Richard Branson.  So what’s the story?

What you and the OP apparently haven’t realized, even after multiple posts along these lines, is that not everyone on this forum is completely financially ignorant and easily wowed by a post bragging about a good trade.  I’m sure you get a tickle when someone goes, “Wow!  I wish I could do that!  How did you do that?!”  But some of us know that it doesn’t work, and that the only people making money off of day-trading are the people on the other side of these trades (for example, the invisible institutional investors) and the gurus, apps, and websites making money off of “membership fees” and trading fees from day-trading compulsive gamblers.

Actually, all the above questions are rhetorical.  I know what the story is, and I know what your “method” is because you laid it out for people yourself in previous posts.  In 2014, you wrote, “I'm a member with StockCharts.com. I used a lot of their chart indicators. If it wasn't for charts, I wouldn't know where to get in or out. Some may disagree. I would probably do better throwing darts.”  What did your “membership” at StockCharts.com cost you?  How much money did you make with them?  You also mentioned being a member of Stephen Bigelow’s website.  I see he charges at least $97/month these days… and up to $197/month.  Yikes!  I hope you haven’t been a member since 1994… you would have lined Mr. Bigelow’s pockets with $17,500 to $35,500! 

Here's a simple question:  if Mr. Bigelow was so good at picking stocks, why is he bothering to “teach” you about it and make money that way?  Shouldn’t he be a billionaire many times over with his “exclusive” stock-picking strategy?  Why in God’s name would he be sharing it with random people for $97/month?  If his system actually worked, he could sell it to an institution for billions.  Shouldn’t he be enjoying his life on his private island, in a gold brick castle that looks over the bay?  The reality is that Mr. Bigelow makes his money from his members and the ridiculous sums they pay for his “hot tips” and “methods.”  I doubt he has ever made money in the stock market, and I doubt he knows any more about stock-picking than his members do.

Technical analysis is baloney.  Stock picking methods and pattern-seeking, in general, are baloney.  It’s compulsive, addictive behavior for a thrill.  That’s all it is.  And that, folks, is why us investors call this behavior “gambling,” and not investing.  And just like in gambling, the house always win.  Don’t believe any stock-picker who claims to have a special “system” that allows him to strike it rich in the stock market.  It never adds up.  Just like gojo’s story doesn’t add up.

You were correct in your 2016 post, gojo:  you probably would do better throwing darts.  The same will be true of the OP.  The house always win in gambling, and day traders never win in the long run.  They only have a few hot runs, which they love to brag about, just like gamblers in a casino, but in the long run… they end up in the poor house because that’s what happens to compulsive gamblers.  And make no mistake, folks:  gojo and the OP are compulsive gamblers.  Look, they have given you all the evidence.  In this very thread, the OP has mentioned how he was once snowmobiling in the backcountry without cell phone reception, found a spot with reception, got excited and immediately placed a trade.  Gojo has said in past threads that he hated weekends because he couldn’t trade, and he was happy when Monday came around so that he could trade again.  Those are signs of a compulsive gambling addiction if I’ve ever seen one.

There’s a reason why I’m calling these folks out hard.  To protect other members here.  This exuberance is very common of stock pickers and day traders.  They tend to be vastly overconfident in their own ability, despite often having terrible long-term results, and they tend to see themselves as experts.  To any new investors here, be careful taking advice from a day trader.  They may point you to some “guru” with a “secret” formula… available to members for a limited time only for the low price of $99.99!  I certainly hope they are not the gurus!  Whatever you do… don’t give any of these “gurus” a single penny of your money.  Never pay anyone for a “hot stock tip.”  Everything you need to know about investing is out there, and, except for some excellent books (books cost a little money), it’s free.

Best of luck to all out there.  As Bill Bernstein once said, “Finance isn’t rocket science, but you’d better understand it clearly.”  I hope it works out for everyone here.

 

[ckelly78z]

Compared to my naive post #108.

 

[SLB_SA]

Investing (including reinvesting dividends) in a diversified portfolio over a long period of time (5-10 years minimum) is almost guaranteed to make you money.  Day trading is probably going to cost you money.  For my long term investments, 2017 was a good year, 2018 was a flat year and 2019 has been an okay (not great) year so far.  I doubt that I could say the same thing about day trading but I have never tried it.  Don't gamble with your money.

 

[IGBT]

Of course it is gambling.   There is no chart or formula that will give you an advantage.

It is very different from playing in a casino however, because the overall trend of the market is higher and there is no house.

Life is kind of a gamble though.  If you smoke you are gambling that you will not be one of the many who get lung cancer.   If you buy the van with 200,000 miles, you are gambling that it will not cost you more than it is worth to keep it running.

 

[IGBT]

Investing (including reinvesting dividends) in a diversified portfolio over a long period of time (5-10 years minimum) is almost guaranteed to make you money.  Day trading is probably going to cost you money.  For my long term investments, 2017 was a good year, 2018 was a flat year and 2019 has been an okay (not great) year so far.  I doubt that I could say the same thing about day trading but I have never tried it.  Don't gamble with your money.

I think day trading is different, at least the type of day trading professionals do.  They close out losing positions on some kind of schedule, use stops and other tricks, and many use charts.  Buying a stock and selling it in the same day because it went up then buying it again at the end of the day when/if it falls back again might seem like day trading but at any point I am willing to hold what I buy for months if needed.

 

[Cammalu]

Any comments on farmland investing?

 

[bullfrog]

When I see questions like that I always think back to the Woody Allen movie where he was very proud that his father was one of the few land owners from the motherland. He carried in a shoe box! LOL!!!

 

[SunnyandFiona]

I have considered investing in real property. Rarely, does unimproved land depreciate and it's less volatile than stocks. If held longer than one year, gains are taxes at lower rates. Losses can be carried forward to offset other passive gains, and $3,000 per year can be used to offset ordinary income. It is also still eligible for Section 1231 like-kind exchange the would allow you to swap it for another property and defer the tax on the gain (in simple terms).

While you own the farmland, you can either lease it out to a farmer, a hunting club, etc for annual income that will help cover property taxes. Or, if you're ambitious, you can operate a legitimate farm (too much work for me and it limits travel).

Sent from my LG-M430 using Tapatalk

 

[SLB_SA]

I think day trading is different, at least the type of day trading professionals do.  They close out losing positions on some kind of schedule, use stops and other tricks, and many use charts.  Buying a stock and selling it in the same day because it went up then buying it again at the end of the day when/if it falls back again might seem like day trading but at any point I am willing to hold what I buy for months if needed.

Stock options cost money, as do transaction costs in trading stocks, and a person can lose money in many ways. Stop-loss orders can be especially dangerous for several reasons (For example: 1. HFT (and others) can drive down the price of a stock, activate your stop-loss order, buy your shares at a cheaper price and allow the price of the stock to regain its higher "natural" level. 2. "Another thing to keep in mind is that, once you reach your stop price, your stop order becomes a market order and the price at which you sell may be much different from the stop price. This fact is especially true in a fast-moving market where stock prices can change rapidly." link)