I have been reading the other thread (bumper yield on wall street) and it makes for some good read, but it is also not really helping a lot of nepalese that have little or no experience/knowledge about the market. I am reading up on all these proclamations by the threaders (and maybe they are telling the truth), but I can easily see the ramifications -- ever seen those auto commercials where they say 'do not try this at home"? This is one of those things.
Forget options, futures and currency swaps unless you know what you are doing. Heck, even stay away from individual securities if you can help it. for beginners, go after mutual funds. try cheap mutual fund houses such as Vanguard, Trowe and Fidelity. go to morningstar.com and look for the 4 and 5 stars; and then most important, create a well diversified mix--have proper controls in place so you dont have everything correlated to the market; go after index funds to minimize costs, and place your equity exposure in accordance to your age (for example, if you are 30 go after 30% in bonds and cash and the rest in stock exposure)
by the same token within the stk exposure break it down 50/50 between domestic and international-- choose an index fund copied around the wilshire 5000, and an international index fund chasing the msci (international index)---with fixed income (bonds) have 1/3rds in mmkt, an bond index fund, and a high yield.
there, that should do it. Dont forget to rebalance it every year though.

Samsara: My son.. We are talking about investment strategies here. Not gambling strategies... People with little knowledge will be better off heading to Vegas than what you are suggesting. At least they know the rules of the game in Vegas...

Exogenous factors will remain what it is and no one will be able to predict them with precision all the time. So, ALL trading and investment strategies are a gamble. However, I'd still gamble with an educated guess when the probability of winning is higher rather than have the odds totally against me in Vegas.

I am a novice in trading and investments. My portfolio is 100% in mutual funds in 401(K) and I have been able to build a decent well balanced portfolio through consistently contributing, monitoring, and rebalancing the portfolio.

I would like to start diversifying into stocks and options in 2007. My questions to the experts are as follows:

1) Which online brokerage houses would you recommend for IRA or brokerage accounts? I am looking for good investment and monitoring tools and mimimum commissions, and maintenance fees.

2) Since I will probably be starting with a small amount (couple of grands), what is the least amount that should be invested in one company considering the commissions.

3) Everyone says that recession is in horizon. Would you guys hold on to your mutual funds and stocks in the bear market or go into cash? If you go into cash, what is the right time to sell your mutual funds and stocks?

4) Also since the stock market is in all time high right now, would you recommend to wait until the market falls to start investing in stocks or invest right now?

Son: Investing with proper risk control is anything but gambling. Your speculative FX trading would be closest thing to Vegas... And yes, good luck with that...

Ahh...I love talking about this..and I am so happy we have others just like me. Lets just keep it civil though guys, cause I think all of us know what we are doing here..different strategies and different objectives work for different people. lots of variables, such as age, availability of surplus funds,knowledge, resources and of course time plays a major role in choosing the route u wanna go.
going with forex, options, margin trading as well as futures are extremely risky, but the rewards are tremendous. look no further than some of our other peers on this thread to find proof. However, if you do not have the variables I mentioned above, dont do this.

for those without the variables, please go back to the original post that I started this thread with. this is not sexy, but will get you way better returns over time than your savings acct will. This is how you should invest for retirement, for kids college and for long term growth. getting 8% a year may not sound as much, but if you can get that over 20 yrs and if you keep adding to your nest egg over that span..believe me you will be quite happy! set aside a part of your paycheck and contribute to a 401k (if your employer provides you with one) or just open an IRA as well as a brokerage acct.

beyond these contributions, if you still have surplus cash..now you can start trading stks, but only after careful research. and then as you learn more, you can afford to be more exotic-- kinda like some of our savvy peers on this thread.

hey pats,

try TDameritrad "www.ameritrade.com". I think they have first 45 days or 1000 trades for free. Give it a try!

Cheers!
haami

jhyalincha,

would you mind sharing some of your research in stks. I agree with you in trying to keep this thread more civilized, and not disgust people.

Thanks,
haami

Nice thread guys... Rather than the principle of trading which I can read in other books or by goggling, can you guys throw out some list of stocks that you think are good( based on your research) to trade on short term basis- say sell within 1/2 months?

I have done very different approach than you guys and it has worked for me. I look at the highest percent losers on the yahoo finance everyday and if I think their fundamentals/PE are good and the market is driven because of the emotion or some flaky news. I buy them that day and sell them when the stock goes high which can happen within few days sometimes. Then again, you have to some research about the company very carefully.

good approach marketwatch, considering you make trading your full-time job.

Try "gnvc"; it's stk price went upto ~ $2.90, and now it's down to $2.12 with the news of company selling around 9 million stks @ $2.05. Now the company has raised it's money and the stk price has steadied. The price should creep up slowly in coming days.

Let us know if you have some suggestions as well.

Cheers!
haami

hehe.

jhagada huna thalyo.

anyways. dont make war. make peace and money.

i think i'll choose a career as a trader too.

far lesser hours than i banking!

folks,

watch out, here comes "gnvc", it's sitting @ $2.22 now.

hey marketwatch, did you end up buying some gnvc stks? If you did when I told you, it's your lucky day, because it's now $2.30.

Haami,
Nice pick.. But I missed the boat cause I didn't see your message sooner. Hope to lock it in around 2.25 . Thanks.

another one that you might be interested in is "wfii". They recently closed multi million dollar deal with US Army, and the price of the stk is quite cheap.

I agree...wfii is one stk I have been tracking also...it has a very low price to book value, has excellent growth potential, price/cash flow is pretty low compared to peers, and stk price/ttm trailing 12 mo sales) is around 0.6, which means the stk is not overvalued. good selection haami!

I tumbled upon this fairly simple read....its got few interesting points. so thought i'd share it wit you guys here.

Crash Warning Still in Effect
Published on 12/28/06
The IMF says investors are "too complacent." Bill Bonner agrees.

--------------------------------------------------------------------------------

Crash Warning Still in Effect
It is like Siberia here...or at least as we imagine Siberia; we've never been there. This morning, everything - trees, grass, houses - are all covered in white crystal - not snow, but thick frost.

But the stock market is hot. The Dow hit a new record yesterday. With only two days left to go in the year, traders and investors are getting in position...adding the shares they want to own for 2007...snorting with confidence...chaffing at the bit to begin another run around the track.

The IMF says investors are 'too complacent.' We agree. That's why we have issued our Crash Warning. Not that we know something is going to go wrong soon...it's just that if something were to go wrong, a lot of people would be greatly inconvenienced. The are so many optimists...betting so heavily that things will continue as they have been...that the odds favor the naysayer, the contrarian, the pessismist, the crank doom and gloomer.

The typical investor owns stocks that are too expensive...compared to the dividend yield he receives. And the typical householder owes too much money to too many people - especially the people who've lent him money on his house. His house, too, is over-priced for what it is; if he had to rent it out, he'd never get enough money to cover his costs and give him a fair return on his capital.

But the news dribbles in day by day...and so far, the news is not bad. New house sales are greater than expected, according to the most recent report. So, investors and economists are beginning to think - as Alan Greenspan has proclaimed - that the worst of the housing slump is behind us.

'The worst is behind us' is a remarkably upbeat assessment. We turn our heads and we don't see anything bad back there. Stocks have been hitting new highs...consumers are still spending...and even house prices are, officially, holding at their highs or even creeping up a little. If that's the worst there is - well, bring it on!

Oops...there, we've said it, haven't we? Like George W. Bush, we've tempted the gods. Now, they will want to teach us a lesson; that there are some times when you don't 'muddle through.' Most of the time, trends in motion tend to stay in motion. But not all the time. Sometimes, they stop and a new, different trend begins. That is when the gods 'bring it on' and give it to us good and hard. And that is when you discover that all those things that you thought were so smart, were too clever by half.

Who are the smartest people around today? Derivatives traders and hedge fund managers, of course. They're the ones earning millions of dollars each year. They are building huge houses in the Hamptons and bidding up prices of Picassos.

What do they do to earn so much money? What do they produce? What do they make that so improves others' lives that they deserve to get filthy rich? Don't bother to ask, dear reader. You won't get a clear answer. Instead, you will be told that they 'allocate capital' or 'arbitrage discrepancies' in the modern capitalist system. What they are really doing, of course, is the same thing that people do in Las Vegas - they are gambling.

And as long as the pot is getting bigger...they will probably do all right.

John Succo, a hedge fund manager, addressed a letter to the New York Times, explaining:

"The Federal Reserve creates credit through its open market operations like REPOS and coupon passes. If the Fed wants to inject liquidity (credit) into the system, they simply call up large broker dealers and buy some of their bonds with credit they create out of thin air (this expands their balance sheet). The dealer then passes this credit on to "the market" by making loans to mortgage companies or margin accounts or whatever. Because each layer of lender is only required to keep marginal capital on hand, a $1 billion REPO done by the Fed eventually creates as much as $100 billion in new credit to the consumer.

"That credit creates the liquidity for additional consumption in the U.S., but these days we are buying our stuff from China (other countries too but we will just say China to make it easy). When a Chinese company receives dollars in trade, this normally would drive up U.S. interest rates: the company goes to the central bank of China to exchange Yuan for dollars; the central bank of China would normally sell those dollars into the currency market for Yuan thus driving up U.S. interest rates. But in our world of today these dollars are being sterilized: the central bank of China prints the Yuan to give to the company and takes the dollars and buys U.S. securities.

"It is not the excess savings of Chinese investors that are buying U.S. securities. It is central banks creating credit themselves to buy those securities. The tick data that measure foreign inflows of money does not distinguish between private investors and central banks going through brokers to buy U.S. securities. We believe that as much as 90% of foreign money buying U.S. securities (not just Treasury bonds, but corporate bonds, mortgages, and yes, stocks) is not private investment, but central banks.

"In order for other central banks like China's to print the Yuan necessary, they too must create credit. Public debt in Asian countries is expanding as a result and creating worries: this is why Thailand came out essentially raising margin requirements to reduce speculation that is occurring as a result. Notice how they were quickly slapped down by their trading partners who do not want to rock the boat at this time.

"This situation is very unstable in the long run. The Federal Reserves' balance sheet this year alone has expanded by $30 billion in this way and created $3.5 trillion of new credit in the U.S. Public debt around the world is growing exponentially and total debt in the U.S. now stands at nearly 3.6 times GDP (1929 was 2.8 times).

"My hedge fund's position is the opposite of the carry trade you mention. There is coming (timing is unclear where it may be tomorrow or may be years away) a massive correction in debt and derivatives whose magnitude is only growing with time."

It could be tomorrow. It could be years away. But it will be eventually. And the more complacent people are, the more they will suffer when it does come. But we will have more specific guesses for the New Year soon...

Bill Bonner is the President of Agora Publishing.

wow. nice article.

The FED gives the rokerage houses money in the form of IOUs. The broker gives insurance companies that money as loan, those companies give individuals loans. the brokerage houses also create loans in the form of magin accounts.

What an elaborate system.

what if one day china demands US to pay back on its bonds and it panicks? US would raise interest rates haina? Cuz it would want more money, ani more money by fed means less money to banks, less money to banks means less money anywhere else. Ani when people get no loans, economic activity stalls= depression.

I can soo see it coming. It's gotten me thinking about my career. Ke garne hola....

is it me? or do i see this stock's value as $0.01 at the end of september 2004?
haha, it rose to about 7 bucks the same day. 700x return!!! HOLY COW!!! lolol

Anyways....what screener did you guys use to come across those two?

timetraveller, you bring up a great point about china! that is going to be a huge bargaining chip for them down the road.

stx109ditto, funny you mentioned NFI. been watching it for over a year now and its recent 20% drop in stock price in a month makes it a real attractive buy...not to mention over 15% dividend. i think the housing market in general has hits it rock bottom and is slowly on its way up, which directly coorlates to NIF's business. looks like a great long term short investment (meaning hold it for a year and it should double its stock price). plus you want a couple high dividend stocks in a balanced portfolio. another high dividend paying stock i know and like is FDG (also an attractive buy esp after its recent price drop).

Stk: Do you need my SSN? How can I inpress you? I feel insecured and pathetic in this anonymous message board where I need to make stuff?

You said you trade stuff, why don't you post your P&L. Don't tell us that your broker doesnb't provide it.