Wednesday, February 23, 2011

A naif with great instincts.

I need to understand the costs of buying and selling stock. As well as the tax implications.

I turned to my wife on Sunday and said, "I wish I had sold everything last week."

I know when I bought Barnes and Noble stock, that there was a cost involved. When it reached a peak of 15% higher, I thought I ought to sell, but I wasn't sure how much it would cost.

As of today, the stock is 10% lower than when I bought it, for a swing of 25%.

It was a small amount I invested, just to experiment. But obviously, I need to do more research, because what stopped me from selling was fear of costs, and I'm not sure about that.

I'm a naif.

A naif with great instincts, I think, which come from watching the collectibles market rise and fall for a few decades. It appears to me that there are many similar characteristics in customer behavior.


OHDG said...

What is the cost to sell? And why? Is it because not enough time has elapsed and you'll be penalized? Sounds like a rigged game to me.

The only people who want you to keep your money in, are the ones who want to sell their stock and make money off you, right?

Duncan McGeary said...

That's a big fear,that it's all rigged.




Real estate?

I'm trying to do what I always advise new small business owners to do -- start small, make your mistakes early and cheap, learn from your experience.

I need to know, first hand, the foibles of the stock market.

Yes. I'm going to read books, I already read blogs, but if ever there was an arena with conflicting advice....!

Meanwhile, with B & N.

I actually like the business move of not paying dividends and reinvesting in both the new ventures and any other opportunities that come along. They surely can pick up some cheap leavings from Borders.

But it sucks as a stock market move...

Leitmotiv said...

Man I have a bunch of new questions for entering the stock market like you're doing, but it's so overwhelming and I don't know where to start or what information to trust.

Or where do I even go to purchase stock?

Duncan McGeary said...

I used the group that had been advising my family for the last 40 years or so.

Second generation.

But in some ways, that's been a bit inhibiting.

I think I may set up a small account where I can buy and sell on my own.

Like you, I'm not sure how to go about that...

OHDG said...

sorry for the different user posts on the same subject... Toanime, OHDG, Leitmotiv...

It's because I have several Gmail email accounts. One for spam, one my personal use, for my caving club... sheesh!

RDC said...


If you have an account with a low cost broker, or for that matter a semi-low cost broker such as Charles Schwab the cost is set per trade plus a slight fee (tax). The cost at Schwab is $8.95 per trade. The fee (tax) goes for the SEC regulation and compliance.

Anonymous said...

I have played stock for 40+ years, and never made money. Just for fun, its fun to lose money.
A few years ago I signed up on vanguard, and bought some WELLESLEY income fund. The bugger has consistently made money. First time ever :)

I don't think anybody can make money 'playing' the market, but I think these balanced retirement income funds do their job, .e.g. if you got some cash, and want a steady reliable income, then let the other guy not sleep at night.

If you just play stocks like you have done with B&N, your essentially do the old game of buying on news, and selling on rumor, which is exact opposite of pro's. Let the pro's do what they do. I found WELLESLEY by searching the internet for the best managed, best returned, and lowest cost 'retirement' fund of all time.

Just remember when you play B&N its all for fun, for cheap, there is an account called ING-ORANGE, where you can even buy partial shares, hell you can buy $10 of BRK-A ( buffet ), an just have fun, and the trade cost is almost zilch, ... but if your serious about 'investment', ... dump your money into a good Vangaurd Fund or equiv.

Now I have said my opinion on the stock market. What do I do personally? I keep my money offshore. I have had excellent return for 20+ years. I plan to go into the YUAN next year, having been in EURO(DM) for the prior 20 years. I think the YUAN will 4X over the dollar in the coming decade, and besides the dollar will become worthless.

Choices: Stay out of auto's and homes, they're going to be worthless. Commodities like food&fuel will skyrocket, but like all 'trading', you'll not sleep at night. Annuities suck dick in my opinion, they rob you on management fee's. CASH, hell yes, but you got to watch your offshore bank like a hawk, and have many banks and know how to do online transfers with skill.

Anonymous said...

Buy Stocks Online and invest your money at ShareBuilder
ShareBuilder Securities Corporation is a subsidiary of ING Bank, fsb. Brokerage Financial Statement. © 2006 - 2011 ShareBuilder Corporation. ...


Here it is above dunc, this outfit through ing-orange bank is the best for a little guy, you can buy toy amounts and play all day and pay virtually nothing to play 'stock market', and they have some of the best software around. This way you can learn all you want, and play stocks, but not get eaten alive, ... the best thing because you can buy fractional shares, you can buy anything you wish. Like brk.a which is $124,000 a share, .. but hell you can buy $10 of it and tell people you own Buffet :)

Start with say $500, and buy a few dozen things you like and watch everyday what makes money, and then you'll know how to play.

If you want to know about the real shit then read Benjamin-Graham the mentor of warren-buffet. The only good book around about stock picking, if your serious about learning the art of value investing. Sadly from reading your shit I think most your investing ideas come from herd reading and your love and hate of particular industries. I don't know if you know, but I'm going to go ahead and tell you, back in the 1960's they had monkeys through darts at the newspaper to pick stocks, and the monkeys beat the experts every year.

It's impossible to predict the future, and stocks are based on greed and fear. But its an easy bet on the USA economy, its going down and hard and for a long time, and when it gets back up, you'll not even recognize the bitch.

RDC said...

Keep in mind that stocks in a similar category such as B&N and Borders, are similarly impacted, if one of the main players reports bad news. In the long term one might benefit but in the short term one reporting bad news will often drag down the stock of the other.

I have done quite well in stocks. At this stage I tend to be using stocks of good companies (verizon is an example) that pay a high dividend. With the current interest rates and the state of the bond market I can collect more in dividends then I can putting a similar amount into grade A bonds, and also have the opportunity for capital appreciation. If the stock drops in the short term I really don't care as long as the Dividend continues. There are a number of solid companies with a long track record of increasing dividend payments.

RDC said...

The problem with Grahams book today is that the market today is far far more aggressive. So you very rarely find stocks that meet Grahams metrics. There were a number after the drop in 2008, but very few today. It is a good book to use as a basis for developing a set of principals for value based investing, but it does have to be adjusted for todays market.

H. Bruce Miller said...

"But it sucks as a stock market move..."

Too soon to tell, Dunc. Bob Chandler used to say, "The only time you want your stock price to be high is when you sell it."

And when you look at the almost invisible ROI on other investments today, as I'm sure you have, stocks look like the only viable alternative.

H. Bruce Miller said...

"I think I may set up a small account where I can buy and sell on my own."

You thinking about becoming a day trader? That way lies madness!