Stock market investment

[4444]

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.

[Rich_in_CT]

I've actually heard that folks are selling tickets to the shareholder meeting on Ebay.  I guess it's quite a popular thing to go to.

[71tr]

4444,

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.

[Bluemoon06]

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.

[allagash]

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:

http://chart.bigcharts.com/custom/cnnmoney2/profile-chart.img?pg=qu&symb=GOOG&sid=1795093&time=3yr&uf=8192&type=256&ClientID=44711&mocktick=1&symbtype=0&country=US&style=2108&size=1&rand=9521

Whomever shorted home builder stocks in a big way back in 2005 is probably sitting pretty good right now.

-Mike

[rookieNYC]

Bluemoon...

Forget all this and pass me what you are smoking... 

[4444]

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!

[fdjake]

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.   

[Rich_in_CT]

Good article for you guys to read:  http://www.fool.com/investing/value/2007/12/11/turning-1000-into-277-trillion.aspx