So there is a yetti!!! I have heard of the little old janitor that worked at the college and invested in the stock market with every paycheck and when he died he left millions to the college where he worked. It can be done, just like you can win the lottery.
My problem with stocks is a function of my being an engineer and having an MBA. When I look at statistics, you have to design for the 97.5% not the 2.5%. Statistically there is no human being taller than 6’-7". We see them all the time, but we don’t design anything for them. That is why these people don’t fit into cars well, they don’t fit in house very well, and they have a hard time finding clothes. Nothing is built for them. That is like the person that invests in the stock market. 90% will retire at or below poverty income levels. That is just the facts. I don’t make them I just read them. You guys know how to invest it stocks, and I have talked to people who are supposed to be experts in stocks, but they still have no idea how to make money in stocks. I ask them what I should buy so that I can get rich, and they tell me to diversify.
It is like being at a casino. Nobody is hitting the jackpot, but everybody has heard about the jackpot winner. Opps I forgot except for fdjake’s buddy and that little old janitor guy.
When you think of real estate, how many “investors” would you say fail? How many succeed? Simply buying any house for any price is obviously not a good investment. I would assume buying any stock for any price would be the same.
I have never invested in stocks and am looking to get into real estate first because I feel, using leverage, I will currently get a greater return than putting my money into a the stock market(at 22 my funds are limited :banghead2 ). However I would like to get into the stock market someday… Once I have done my homework and am confident in an investment, of course. (not trying to say someone is right and someone is wrong, just stating my opinion…and that is all it is an opinion) :beer
Thanks for the link Rich! Will be reading it soon.
bluemoon,
I have to say you remind me of my brother in law…MBA and a few other degrees and still hasn’t learned a thing,nor does he have 2 cents to rub together.But boy does he have formed opinions based on zero experience…
The only reason why %90 will retire below the poverty level is because Americans spend more than they make…They also have one of the worst saving rates per family in the world…If they did invest regularly and dollar cost averaged their way into their 401k and took advantage of their employers matching offer they would have a bundle in less than 10 years,like my wife…But discipline,sacrifice and focus isnt part of the American culture toward investing or much else except living too large …It’s SUV’s,fancy watches,houses that are too big with a mortgage that fits producing children that are just as clueless as mom and dad…
At first your posts annoyed me but the more you write it clearly shows you are probably a kid who just graduated college…That’s the reason why you don’t know anyone who has made any money in the markets or anywhere else for that matter…Wealth is built over time…Just like a solid cashflow portfolio,stocks are chosen and bought and put away for gains…Being the real estate guru you clearly are I’m sure you have heard the old line you real estate moguls use…" You don’t wait to buy real estate,you buy real estate and wait"…The stock market is no different…The reason why you don’t know anyone that has made money in the market is because you are hanging around overeducated underachievers too hung up on BS degrees and spewing their opinion…Another old saying for you…If you want to fly like an eagle you can’t hang around with pidgeons…Money from the markets is everywhere…And for you to come forward being a college educated person (which means squat to me) you should know better,but you don’t…I know more overeducated,underpaid nobodies in this world than I care to talk to,most work for me…( NO MBA here)…Yet the funny thing they ALL have in common is how knowledgeable they are about finance…LOL…Quite comical to listen to…
I actually know more people who still talk about the devastating real estate bust in 1988-1990 here in NYC than the stockmarket bust of 2000-2002…Does that mean I should deem real estate a hoax?..There can’t possibly be anyone who really made a fortune in it?..Successful people all have one thing in common and it’s the knowledge to know when an oppurtunity arises that is worth the risk…Whether it be a stock,house,business opp etc…
…Since you never met anyone who has ever made money in the equity markets and firmly believe there are hardly any this offer should interest you…Christmas Eve you are invited over my home…I will have about 25 people over and my guess is ALL are firmly well above the poverty line and heavily invested in the equity markets for over 20 years…And very well off…Best part is you won’t find one overeducated know it all there…Just real business people talking REAL LIFE stories…Not some nonsense that some teacher with no business experience reads out of a book because he couldn’t make it in the real world…
FDjake and others: I was wondering how you felt about the idea of cyclical stocks vs. business trends. It seems like industries are leaving the United States because of high labor costs. How do you think Ford will position itself to make the value of the company greater? Currently I own one share of berkshire hathaway class B. I am sitll in high school so real estate is not viable for me right now. Since I have a job (good ol minimum wage, I have been able to put around 6k into the markets so far). How much lower do you think centex is going? Thanks a lot for your time I just do not want to feel like I am catching a falling knife! :beer
Well that BRKB is going to do well for you, Berkshire is a good performer. Heck if you’ve owned it for a year you are up 40% or so at this point. That’s hard performance to beat. Anyone have another liquid investment method that sees 40% gains per year with no intervention? It’s hard to argue that you can’t get rich in stocks when you can park some cash in some BRKB or BRKA and get 40% gains. Oh and if you bought shares 5 yrs ago you’d be up about 140% or 28%/yr. Can’t make money in stocks? Well you’re doing something wrong.
I got the stock in early september (3950) and bought another one later for 4200. I could care less about the price movements as long as I get in on what I think is a good price. I plan on never making a stock purchase without a 5-30 year timeframe. I also bought KKD when I was 13 but that did not pan out :). I am pretty happy with the price increase, but it wont last forever. BRKA and B has been undervalued for a long time, and from what I have read it is still slightly undervalued. The whole purpose of my shares is that I am going to the shareholder’s meeting. I am reading Margin of Safety right now and am fascinated. I think the problem in America is we don’t manage our money ourselves and rely on pensions and other corporations. Then people in America really do not learn anything about money and don’t understand the significance. That is good for us investors because we have less competition for smaller sized assets in places outside of frothy markets and large cities. Imagine if everyone in the United States knew about investing and real estate investing. We would have a lot of competition! I plan on living frugally because business is my passion so I should keep as much as possilbe to do what I enjoy. The Dhandho investor is also a great book for people interested in investing. It goes along with the same themes as FDJAKE’S.
I commend you. You say you are still in high school and yet have $6k invested, that’s more than many 40 somethings. As interesting as it might be to pick stocks and enjoy a few real gainers you will learn (maybe already understand) that the real kicker is compound growth over the long term. If you invest no more money that $6k will be worth $271k in 40 years at 10%. If on the other hand you were like so many Americans and did not start putting away money for another 10 years that nest egg would only reach $104k. Keep up the good work.
This is what I have been saying, the money is not made in the stock market it is made by dollar cost averaging and compound growth. I can put money in a Christmas club account at my local bank, and if I deposit over time I will have bunch of money. The only thing the stock market does is allows you to keep up with the growth of the economy. The stock market is too efficient to allow enough of a separation between a stocks worth and its price. That means that you can’t make any money on it.
One of the problems you have when you tell people you are rich they hate you because people hate rich people, when you tell them you have degrees they hate you because people hate people with degrees. I was just trying to explain my use of statistics in decision making and not to brag. rookieNYC I am sorry I prejudiced you by talking about my degrees. I did, whoever live in the country for a while when I was growing up, so let me appeal to you with my country wit. Ok it is not relevant to the argument if I am 18 years old or 50 years old, if my friends are dirt poor or rich. I ask you a direct question, do you know a person that got rich in the stock market. I know it is not fair asking you, because you may not know a person that is rich at all.
If we look at the way people become rich it is by spending less than you make. That will get anybody rich. You then have the get rich quick or get rich slow model. In the get rich slow model you find the stock market used almost universally. In the get rich quick model you have to earn a lot so that you can live like a rock star and still out earn your spending. The stock market is not going to get you there.
The only thing the stock market does is allows you to keep up with the growth of the economy. The stock market is too efficient to allow enough of a separation between a stocks worth and its price. That means that you can’t make any money on it.
This is Google’s chart since it went public back in 2005:
It is true that if you are invested in a mutual fund that is invested in over 50 stocks you most likely will just be making sure your cash increases with inflation. That is the same thing with everything. If you diversify to a certain extent you are trying to attain probable mediocrity. THE WHOLE PURPOSE OF THE BOOK IS TO TEACH YOU HOW TO INVEST SO YOU DO NOT NEED TO REACH FOR PROBABLE MEDIOCRITY. READ THE BOOK, IT MIGHT CHANGE YOUR LIFE FOR THE BETTER!
I have to agree with Bluemoon here…just a little bit.
The gentleman I know who became a millionaire by investing in a half dozen stocks tells me all the time. " I never hesitate to tell people what stocks I’m buying, the key to making money is to buy these stocks when they have been beat up bad. Most people will not make money investing in them because they buy in and then read the newspaper EVERY DAY about how bad the company is doing. They can’t deal with it, so they sell."
He is EXACTLY right. I have told close friends of mine to buy as much Ford stock as they can. I go into GREAT detail about the mechanics of the turnaround presently under way at Ford. They have all bought in…Some at $8, some in the $6 range, some at $9. Not ONE of them has been able to hold the position. They sell out when Ford starts contract talks, they sell out when an earnings report comes out, they sell just because the stock goes down for 2 days in a row. I’ve been doing this for over 15 years. This pattern has NEVER changed. Each stock I have recommended was in the toilet. None of my friends made any kind of substantial money on this information because the WATCHED the stock too closely. I too did this in the beginning. Luckily my friend guided me though this period. He taught me that the toughest part about investing in stocks is the pyscological disipline. It took a while but I did finally learn to just buy the stock and forget the short term price movements. Once I did this it gave me confidence and it became easier to do it again.
These investments take time. Your not picking bottoms here, your waiting for a REASON to buy. My reason to buy Ford was Alan Mullaly, and the fact that the Ford family by hiring an outsider has FINALLY come to the realization that they could LOSE THE WHOLE BUSINESS. This has given Mullaly NEVER BEFORE seen power to make structural changes at FMC. I can assure you, this is EXACTLY what he is doing. Watch the newspapers, when you read about a long time Ford exec. “retiring” that is code for he was shown the door. The laundry list of these guys is a mile long. They’re being replaced by executives from a company Mullaly used as an BENCHMARK when he revamped BOEING…That company???
TOYOTA
In 5 years, American car companies are going to be studied in business schools because of this turn around. Don’t believe it? Go drive the new Chevy Malibu. It blows the Camry out of the water. Car & Drivers words, not mine. Go drive a new Lincoln MKX. BEAUTIFUL car. Wait until you see what Alan Mullaly is bringing over from Fords European stable!!! I could care less if I bought this stock at $6, $7, or $9 a share because in 5 years it’s going to be in the $40’s.
What Bluemoon said is true in a sense. 90% of the people here could know this and not make money on the info. Don’t get me wrong I think his views on stock investing are incorrect for the most part. But FOR HIM, he may be right. He knows his personality and maybe acknowledging that he couldn’t ride out a investment like Ford.