Your Questions About Stocks
Helen asks…
Stocks?!?!?!?
I have 2 questions:
1. what is the difference between common stocks and preferred stocks?
2. If you were to start a business of your own, would you organize it as a sole proprietorship, a partnership, a corporation, or a nonprofit organization and why?
mikey answers:
1. Preferred stocks get priority if the company is liquidated. For other differences — do a search online!
2. The structure of a business would depend on what the business is doing. While the first three can apply to almost anything, something that’s a non-profit is not likely to be in the same line of business as a for-profit. The different types generally provide different (if any) legal protection. Do a search!
Lisa asks…
stocks??????
i’m 14 and i want to invest some money (make it grow) how much money should i have to buy stocks and which stocks have low risks?
I’m a beginner please tell me everything there is to know about stocks.
mikey answers:
Greg ur wrong. Im 15 and started with $1000. Now $6,800 since July 18 . Although ive packed away about $4000. But ive made 23% ytd in 3 months.
1) how much cash do u have?
2) do you get allowance, have a job, or do odd jobs?
3)are you prepared to actually read a few books and follow a fake stock market on a virtual trading website for a few months?
I say u need $1000 minimum, if ur really good at it maybe $500. The only reason ive made so much is because its pretty much all i do.
Donna asks…
STOCKS?????????????????
How do you invest? What is the best website? what are stocks all about? how do you make money from them?
mikey answers:
As the answer below states, you should start at investopedia.com. They are a very good resource for starting out. If you have cable TV in the United States (or elsewhere), you should find CNBC on cable TV. They have a major US cable station and CNBC worldwide, that follows stock markets in Asia, Europe and the United States. You can also follow them on their website for all kinds of financial and political news that affects the financial markets.
I have also included a few more, marketwatch and smart money.
Http://www.investopedia.com/university/beginner/
http://www.investopedia.com/university/stocks/
http://www.cnbc.com/
http://www.marketwatch.com/
http://www.smartmoney.com/
The next thing you will need is to find yourself an online broker. Smartmoney magazine runs a survey every year and below is their results for 2009.
Http://www.smartmoney.com/investing/stocks/smartmoney-2009-broker-survey/?page=8
Good luck in your investing! I’m not sure that my answer is the answer you were looking for, but investing in stocks is something you will have to read about online. All of the websites I have listed have tutorials and very good information to help you get started.
Happy investing!
Joseph asks…
What are stocks? How do they work and how important are they in the stock market?
I’m 16 and I’m just curious about stocks. I’ve been hearing them a lot these days, and I know that they play important roles in the economy. However, I’ve never gotten to know a solid, concise description of stocks, and how they work. Why invest in stocks? How do stocks fall? Are the amount of stocks owned by businesses proportional to their size?
Thank you. 
mikey answers:
If you’re a rookie in investing or stocks, go to
www.finance.yahoo.com.
Open up a portfolio without using real money. You can give yourself as much or as little money to try out the market. The stocks you want to focus on is consumer staples, consumer discretionary, and healthcare. These are DEFENSIVE stocks that will survive through good and bad times. Most of my positions are in these stocks. Some names include 3M, Procter & Gamble, Kimberly Clark, Exxon Mobil, Walmart, Costco. Everybody’s got to eat and wipe their butts regardless of the state of economy. Many of these companies survived through the Great Depression.
That’s the benefits. You can sleep at night knowing your money is doing well. There are NO guarantees that you won’t lose money. It’s just that these stocks are the best. They pay good dividends too.
Then once you’re comfortable and test the waters of the market, you can finally put some real money in. Go to Scottrade.com. They’re excellent for beginners.
If you’re new to stocks, DON’T DAY TRADE. You’ll a rookie in a world of professionals. I tried day-trading with Citigroup and AIG when they were a little bit over $1. I had some luck at first, making about $30 a day but I was way over my head. My luck didn’t last long and I had to rethink my strategy.
Day trading involves A LOT of commissions to the broker. With all the commissions deducted from each trade, you’ll be lucky if you only lose half your money.
I would just day trade using Yahoo! Finance. Open a stimulation account, give yourself $100 worth of fake money and play it in the stimulation format. You’ll see what I mean by losing money every easily.
Good luck.
Ruth asks…
What stocks will be a wise investment to hold long term?
I am sick and tired of seeing my stock portfolio sometimes decreasing a few thousand dollars in one day. I am always looking for new stock investments. Which large corporate stocks are still available that have always made a profit and still have profit growth, have a low PE ratio, pay a dividend that will not be cut, have little or no debt on their balance sheet, and will be safe in this bad economy that we are facing. Provide the ticker symbols of these stocks and the reasons why the stock of these companies should be purchased.
mikey answers:
You’re looking for a lot of things that others are looking for, however, there is very little out there that meets your requests. Of anything, I would suggest companies like Johnson & Johnson (JNJ), Altria (MO), Walmart (WMT) and Procter & Gamble (PG). I would avoid the pharmaceuticals despite their high yields and relative stability as there is question regarding the drug policy of Obama, who will likely push generics. Therefore, you are stuck looking for companies in the consumer staples arena for the most part, and then very select companies outside that arena that will do well in either a strong or weak economy. However, for the long-term, I would definitely encourage people to invest in commodity-related industries (such as oil, metals, fertilizer, etc.), as they have fallen off a cliff because of our deflationary environment. However, with the substantial monetary stimulus that the government has been injecting into the financial sector, our country will emerge from this in a much weaker financial state than the likes of China (using a fiscal stimulus versus a monetary stimulus) or Japan (has a strong budget surplus, just lent the IMF $100 billion). Therefore, I expect inflation to take a toll on the economy going forward, which may prolong this recession, as it will likely begin its rampage once the economy begins to recover, and will likely exceed the levels we saw earlier this year (oil at $140+). In regards to timing, I can’t help but continue to be bearish on the broader markets. The markets broke my previous expectations of S&P 500 to the 800 level, and I have revised my expectations to S&P 500 to the 575 level. I have done so as the market just broke a long-term support line (from the 2002 market bottom) today, and broke a bearish descending triangle pattern yesterday, which was confirmed today by a failed retest of the previous support line. Therefore, if you do enter any of these companies, do so only with the long-term in mind, and create a dollar-cost averaging strategy to build your position and strictly adhere to it. At some point, there will be a recovery in the markets, but there is little fundamental or technical reason to consider entering the market aggressively now. Just my opinion, I hope it helps.
Best of luck!
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