I must have a net worth of one million dollars by the time I'm forty. Sounds like a plan to me. Retirement, living the good life. My plan would be to go to school full?time, quit the job, and move into the country. (Not necessarily in that order) The Ad's I see have to be working for someone. The internet and stock trading were meant for each other. More and more people are getting on the band wagon so get on early. "But these hot High?tech stocks and you can't miss," followed by, "The next five winning I.P.O.'s free, just log onto www...." Sure there is some risk involved but people are making a ton of money and I want my share. Show me where to buy. I have some cash put aside I can risk it, I'm young. I can go online find a couple reputable communities, put out the feelers and take the plunge. The help will be free, I'll just give them my email address and they can send me junk mail. It's not hard to delete it. I will have to do some research to find someone to purchase stocks through that does not charge too much. In addition, I'll need a source for researching which stocks to buy. One or two emergent stocks, buy and sell at the right time and I'm on my way to early retirement. The operation I buy the stocks from will need to have a low price for trades and a low starting balance. It must be quick and easy to trade stocks and I will need quick confirmation to know how much money I've made.
Not through the web but in a magazine article I found a rating of six online trading companies they are Scottrade, E?Trade, Suretrade, Smith Barney, Charles Schwab and DLJ Direct. The two most important things to me are the cost of a trade and the amount and quality of access to research. Scottrade has the lowest trade price of $5.95 and Smith Barney with the highest at $24.95. The research is especially good with Smith Barney and Charles Schwab slightly below in quality is Suretrade. Another thing I learned is that most of these companies require a minimum balance to start, E?Trade wants $1000 while Smith Barney starts with $2000. While Suretrade requires no minimum and Scottrade requires only $200. With about two hours of visiting each site I go with Suretrade. They charge only $7.95 per trade with no minimum starting balance and great research capabilities. I sent them a check the next day for $200. I also joined over the internet which made it all much easier to begin. With your first trade the funds for the transaction must have cleared. After the first trade then you are able to make trades and then send them a check. This makes life much easier and if something of a good buy comes up you can act on it easily.
Now I can look for the online communities so that I can speak with others and learn about the stock market, what to do and what not to. First I come up with a web page or group called the Motley Fool. This may sound like an unusual name but it is actually old english (Shakespeare). It refers to the court jester who was the only one who could tell the king the truth without getting his head chopped off. This "Motley Fool" speaks the truth and calls it 'foolish' (good) while the ways of the world are "wise" (not good) Their philosophy is to buy good quality, large solid companies and hold those stocks for five to thirty years or a lifetime. They are very conservative but have made some incredible purchases. In 1992 the group purchased $5,500 worth of A.O.L. which is now worth over $100,000. Not bad for a eight year span. On this web site you can go to chat sites and speak with others about a stock that you might be interested in. Each stock that is worth more than $5 a share has its own page for logging notes, comments retreiving information.
I went to one for a chinese company that I thought might get a big boost when and if they enter the world trade organization. The stock was trading for two dollars a share so there was no page for it. Then I went and looked at some of the companies that I use myself. The Motley Fool says that you should buy companies that you know, use and respect. So I looked at what I use and came up with five stocks related to that idea. I came up with my own list of Disney(media), Cisco (Internet), Compaq(Computers), Procter and Gamble (diapers) ATT (Telecommunications). These are all leaders in their fields and are good solid companies. I then went to the site and looked to see what they said were good solid companies worthly of investment. They had different catagories for example: Rule Maker (Large, solid leading companies), Rule Breaker (Soon to be large, solid leading companies). The rule breaker companies tended to be up and coming companies like Dell computers, Sierra software and others. The rule maker includes Microsoft, Cisco and Catapillar. Out of both of these list I had a couple of matches. Disney, Cisco and ATT. For these three companies I found their discussion pages. At first it was somewhat strange to listen to these conversations. Most of the discussion was above my understanding. Some people were saying that Disney was just in a slump and it was time to buy more of it. Cisco had many benefactors stating that where other companies stock value had recently fallen their stock had continued to rise. The pages for ATT also were discussing temporary stock devaluations but that the future looked bright just to hang on and wade the storm out. I was learning that some of these larger companies had lost as much as 50% off their yearly high value in recent months. It sounded like a good time to buy. So I did, I purchased 10 shares of Disney at $28 and 10 shares of ATT at $24. I went back to the web community and posted to them what I had done. Some of the comments I got back were both positive and negative.
With the first purchase completed I wanted to move into investigating what others were doing. What motivated the average investor and what are their aspirations. I found a sight called "Investorama," a name that initial caused me to pass over looking at it. There were some pearls to be found mired in the stupid name. The first was by a chatline host named Katherine she talked about what motivated her to live below her means. My family ? my husband and 2 great sons ages 12 & 9! We did a life style change about 4 years ago and I quit my job making about $30k to be home with my kids. We homeschool (educational reasons) and have really been able to see our kids personalities unfold and enjoy them. We found that after all expenses were paid from my check ? my work clothes (very casual), lunches out, babysitter, "guilt spending' on the kids (for not being home), car maintance, different tax bracket, meals out/take out, etc., we only netted anout $6k a year! We used to say I couldn't afford to quit working, but as we found, it's an excuse to not change our spending habits. I'm sure if more people would take a "truly honest" look at expenses, there would be room for major changes. Such as ? I can't afford to pay the $80 electric bill, but I can afford to eat out at least 2?3 times a week every month, or buy coffee every morning, etc. (average amount spent each week $30 per person). If we have to "give it up" or make concessions of any kind we whine " but, I deserve to splurge a little bit, I shouldn't have to give up that....." We moved to a smaller house, lowered our debt and have had a ball! We spend most of our time as a family and my husband & I try to get the kids in bed by 8:30?9, so we have time together daily. We basically just have to plan vacations, weekend trips, purchases big ticket items, etc. Believe me, money is tight, but when my kids are grown and we can retire early, it will be worth any financial concessions we make now. It's funny how many people don't realize how much their kids would give up, if the parents were willing to give up some "material things". We live in an area that has drawn a higher ratio of "wealthy" people(you know the type ? BIG HOUSE, EXPENSIVE CARS, BIG CHARGE CARD DEBTS), they have turned it into a "keep up with the Jones?type community. I had 22 teenagers working for me and 99% said they wished their parents "wouldn't give them everything and forget to notice that they are going to be gone soon and that they need their parent's attention." Most of the neighborhood kids, have said many a time, "I wish my parents would spend time with me instead of always working. When they are home they are always too tired to do anything with me." Every time I hear this from kids, this is what motivates me. No wonder our kids have self esteem issues now a days! We raise them up to "Worship the Almighty Money God" as their #1 value. That's the way the majority of us were raised ? I need more money to live better, so I can have a better life. But nobody told us when we got to "there", we would still say the same thing ? "if only I had more money......". Last October my wife and I had our sixth child and she has taken off the last eight months to stay home a raise this baby, this has been longer that any of the five previous children have received. This is what both of us have wanted and it has been hard to cut back and live frugally but we have done it. We can get by with less and do more as a family it just takes patients, trust and humility.
Another part of this site was probably at the reverse of the spectrum, the day traders. The topic of the day was the fact that 90% of all day traders loose money. If people could time the market we would all be millionaires. Since we can't the day trader has to take some chances. One posting to the billboard said that although the 90% might be a fact he did have a few friends that had made allot of money quickly trading stocks. A day trader usually buys a large quantity of a highly volatile stock hoping that it makes a small move in the positive direction. The trader then makes allot of money on small fractions of movement. In and out quickly is the name of the game. The problem with this type of investing is that it isn't investing, it's gambling. The real investor is more of a farmer that an investor. They put in their seed money for a long season and wait for returns to come to them. These returns may take 10 years to a lifetime to reap. That is the major difference.
Day trading is not for me. I had neither the time, money or lack of intelligence it required. My type of investing needed to be something I didn't have to check on for months at a time. I don't want investing to become another full or part?time job. I'll just put in money on a regular basis and watch it grow without a lot of supervision. To find more information I went back to the Motley fool the bedrock of stability. They were talking about
The communities were in some ways what I thought they would be. Full of ads for get rich quick schemes and the next big stock, learn what it is for only $29.95 a month. What I hadn't thought about were those frugal people who are the ones who really support the market and give it the stability it has. Even with terrific drops (the fodder of the media) and big jumps (fodder again) it is the average investor that stays firm and holds on that provides stability in times of instability. The market goes up much slower than it goes down but it has always recovered and gone up. The sane investors are out there on their own or in investor groups. They tend not to make the news while in the long run they fund their retirements, childrenhomes. The long term investor is what makes American business grow, remain competitive and thrive. This investor creates jobs and fuels the economy for their children's conservation. These are the people who I would like to spend more time with and to continue to learn from.
http://www.fool.com/
The best site I found for good credible information. They tended to be transparent about how they came up with their ideas, their mistakes and plans for the future. They have plenty of links to other sites and free help in many areas. They provide free daily email of hot topics, daily market information, ideas and trends. They do not focus on short term gains but rather long term financial independence.
http://www.itccommunications.net/usa_s10.htm
This site list company web pages for those companies on the American Stock Exchange. It is a good site for easy collection of company data, information and ratings.
http://ils.unc.edu/~burnj/assignment3.html
This site is more an advertisement for stock related newsletters. More time is spent touting the low cost and reliability of the newsletters than any online discussion or articles.
http://money.eguide2000.com/
The money guide is a site not specifically dealing with stocks but generally with guiding the reader to more fully understand their finances. Overall the site is easy to navigate, understand but lacks good source information for its articles.
http://www.stockwire.com/Stockwire/Internet%20Stock%20News/990812talkcity.htm
Stockwire is a site specifically for the purchaser of internet stock. They provide up to the minute information on new and seasoned Internet stocks and companies. The site is very specific but does provide links to sites like National Internet radio.
http://www.tickerprofiles.com/index.shtml
Listed as an investors guide to little known companies. To be admitted to the site you must signup and give personal information. After doing so I got stuck trying to figure out where to go. Moving in the site was difficult and confusing.