How does one get started investing in the stock market?

[Subdivisions]

With the markets' continuing their downward trend and the stocks for companies like GM at $2.50 or so, it occured to me that I might like to get my toe wet and test the waters. I know about and have a 401K and I know I have some control over my choice of risk there. But, how does one get started trading stocks right from their computer? How much money do you have to have? How does it work?

Any stock players here in GD?

[av8rdave]

1. Want to know how to make a small fortune in the market?

Start with a big one!

[NJmaverick]

2. I am not a stock expert, but I do know this much

if you know nothing of the market,you might want to go with mutual funds. That way you can play, but let an expert play the market for you.

[RB TexLa]

19. Or ETFs

[RB TexLa]

3. Search discount online brokers. There are many you can use with pretty much no minimum

and very low commissions.

You link your bank account, deposit some money and buy. And it really is that simple.

[lapfog_1]

11. Set up an account

buy some stock (do your own research if possible).

Always put a stop loss on your stock (make sure your brokerage provides this).

As the stock moves up, if it does, move the stop loss up as well.

Due to the volatility of the market right now, make the stop loss something like 20 % lower than the current price.

IMHO, I'd wait another 6 months to get in.

[Critters2]

4. Prob'ly the best thing to do is call a broker--Edward D. Jones, or one of those.

Then you have some advice about what to buy, etc.

[endarkenment]

5. Just send me all your money and I will burn it up for you.

I won't even charge a commission.

[Lerkfish]

6. 1. locate the stock market, 2. face the opposite way, 3. run like hell

:)

[ixion]

7. exactly

now is not the time one wants to involve themselves in the market.

[Subdivisions]

10. ROFL! n/t

[SteppingRazor]

8. It's way safer to buy mutual funds. Stay away from putting all your eggs in one basket.

And, for that matter, if I were you, I'd wait at least another six months or so. Things will get worse before they get better.

[DrDan]

9. stick with quality stocks - do not try to get rich quick

there are good buys right now - and many on-line places to purchase.

Be patient - and do not panic over market shifts. The prices will fluctuate - just be prepared and do not panic.

[RB TexLa]

13. That's all about risk and amount you are risking.

There are plenty of small cap stocks out there that are worth putting a small amount in. Small of course being a relative term. I have a few bucks on some green stocks that in five or ten years could provide a nice gain, but no more than I am willing to lose on them.

[ipfilter]

12. I read about investing in stocks

and "paper traded" (that's simulated stock trading using fake money) for over a year before committing real money to the market.

Here's a good place to start:

www.investopedia.com

You can use the "Stock Simulator" on that site and paper trade for free. I learned some valuable lessons paper trading on that site. The only stock advice I would give is this. Don't put any money in the market that you couldn't live without.

[Imperialism Inc.]

14. Zecco.com is a place where you can buy and sell stocks on your own.

They offer 10 free trades per month and after that $4.50 per trade.

Edit/ Minimum is $2500 to receive the free trades. Otherwise they are all $4.50. A margin account requires $2000 minimum /edit Margin means borrowing money to buy stocks. You really don't want to do that (right now especially). If you do want a margin account then there is a $2000 minimum. I actually have a margin but only because it allows you to buy even if you are waiting for a deposit to clear. Also if you sell a stock it takes 3 days for the money to actually show up in your account A margin allows you to go ahead and buy like the money from the sale is already there. Just be sure you understand how it works if you decide to open it as a margin account.

[Coyote_Bandit]

15. You need to understand

the difference between trading and investing.

Investors typically look for stocks that are priced low relative to their earning potential. They buy the stocks (while minimizing their trading costs) and hold them for an extended period of time (usually several years).

Traders seeks to capitalize by timing the market. They typically buy a stock and then sell it just a few hours, days, or weeks later. They often incur high trading costs relative to their return.

Careful investors can do very well. Some traders get lucky. Most traders make their financial advisers a substantial sum while losing money over the long run.

At one point I worked as an investment portfolio manager in the international private bank of one of the large multi-nationals. My personal opinion is that it is very difficult to build and manage a well diversified equity portfolio unless you have at least $250,000 available to invest into stocks. Generally, you will incure lower costs and earn greater long term return buying and holding a well diversified low fee mutual fund. YMMV.


Edit to add: There are tax managed mutual funds.

[Speck Tater]

16. Simple

1. Pick an online broker. (I've used E-Trade and they're OK).
2. Fill out the application form.
3. Send them some money.
4. When they notify you that your money has arrived and been deposited...
5. Buy some stock.
6. Watch as your money evaporates into thin air.
7. Repeat from step 5.

[Idealism]

17. Honestly, it is the best time to invest

When prices are low, you want to buy, period. Prices will rise again, without a doubt, so why would you want to buy when they are rising? By getting in on the ground floor, or close to the bottom, you can really only go up if you can afford the risk. If you have extra cash I'd say invest in fortune 500 stocks or real estate, but the key here to remember is its a long term investment. You mentioned GM being traded at SICK low prices, well some stocks are even better deals. Ford preferred shares yield 9% dividends and by all accounts I have read, they are the most fiscally responsibly automaker and have a decent horde of cash yet to be touched. Its about doing research, deciding what investments you can sustain if the markets do turn a bit more to the south, and making sure that you realize its a long term yield that will return. As the great recession investor Warren Buffet has said "When people are fearful, I buy and when everyone is buying I am fearful."

[T Wolf]

18. ala Steve Martin - "First, get a million dollars." After that, it becomes easier.

[FormerDittoHead]

20. Invest in mutual funds like Fidelity, Vanguard, etc.

Part of investing is risk management. The market price of stocks is determined by risk as much as reward. One of those risks is the lack of diversification. That is, if a single company were to have a problem, then the return of your investment would be seriously hurt if you had all your eggs in that basket.

The rule of thumb is to have your money spread out in at least 30 stocks to cushion the risk of having an individual company go bad on you.

Or you can invest in no load mutual funds:
http://www.mfea.com/GettingStarted/LearningTopics/Basics/Benefits.asp

Fidelity offers many, many mutual funds that you can invest in depending upon where you want to invest. They have funds just for gold, for example.

[Cleita]

21. You pretty much have to buy stuff through brokerage firms.

Sometimes you can buy bonds directly and some mutual funds, but you really need to know what you are doing. Probably online brokerages would be your best and cheapest bet, especially if you want to make small buys. Also, read anything by Warren Buffett. He has the best advice for investing.

[MazeRat7]

22. Open an account with one of the on-line brokers...

such as ETrade, TDAmeritrade, Scottrade, etc. You can generally do this for around 5k (maybe less).

I started out with that amount a while back and continue to trade stocks and options, even in this market.

The key is research, diversification, and discipline.

While many here hate the man, I would recommend Jim Cramer's books as a good primer for the lay person to see how it all works. However I would urge you not to follow his advice on trades to closely. Even the best only bat about .500.

Good luck, go slow, and your right there is a fire sale right now on many stocks (including many large caps that pay dividends). With the DOW in the low 8000's I've been increasing my position on many that have fallen from grace but in the long term will recover.

Peace,
MZr7

[SheilaT]

23. One huge problem with mutual funds

is that your fund can be down and yet somehow there was a capital gain and now you have to pay taxes on money that never even passed through your hands.

At least if you buy and sell individual stocks you can control when you sell and if you'll own capital gains.

As others have said, do your research first. This is probably a very good time to be buying. One important thing is not to invest all of your money at once, but some percentage of it each month. Everyone tends to forget that for someone who had the money to invest, starting to buy anywhere after 1930 and hanging in there, a lot of money could have been made. Yeah, you were going to have to wait years to realize very much gain, but in my childhood during the 1950's I'd hear lots of adults claiming they'd had the opportunity to buy IBM or Coca Cola or some other major company at a low price twenty years earlier and turned it down.

Oh, and the other important thing about investing is don't use the rent money or the grocery money. Use discretionary money, such as what you'd otherwise spend at Starbucks or Borders or on buying a fancier car than you really need.

[lib2DaBone]

24. Stay away from Stocks. What you are seeing now is the final fleeceing of the faithfull..

Up 600 points one day... down 800 points the next day.

Always just enough to suck out your capital and allow the big guys to cash out and run.

The stock market is an "insider" game... and believe me... you (or me) ain't no insider.