I started this page in 1997. Some of the links from here, some of the online tools may be out of date. The broad principles remain valid as of August 2015, when I gave the page a brush up.
Tired of being a cog in your brokerage company's machine? Want personal attention and personal service?
There's a relatively "new kid on the block". Well... sort of a "new kid".... with roots back to the days of Abraham Lincoln.
Why this plug for B. F. Edwards & Co? Who is writing it? (We will get to less partisan information about stock market investing in a moment!)
In 1991 I suddenly became responsible for overseeing the management of my investments. Someone who advised the former overseer of my investments was at that time with a big firm subsequently bought by a bank. He moved to a different firm, as the branch manager. During the 2007-ish re-ordering of the financial system the firm he worked for once again was swallowed by a bank. In about 2009 he moved to B.F. Edwards and Co... entrusted with opening a new branch.
My (then) near twenty years' worth of experience of excellent care from him and his associate convinced me that if they want to work for B. F. Edwards, then I wanted to be a client, in spite of some special hassles I had to endure to make the move.
I say "new firm". If you visit the B.F. Edwards website, you can learn more about the history and attitude to clients of this firm. There are strong connections to the old AG Edwards.
Back when I first wrote this, the BF Edwards network was new. Now they have a widespread presence. Even when the network was smaller I was saying: I will be opening an account from a distance... do you really need to be able to walk into your broker's office? I've had no trouble investing from afar for years.
At the time, I had accounts with five firms, in two countries. Without trying to remember everything, can think of three other firms where I've closed accounts. Perhaps I can say that I've "been there, seen and done that"? ... and at the end of the day, I wanted to go to B.F. Edwards... and, many years on, I can say (August 2015) I've had no regrets.
And so! On to other matters...
We'll come to "How to catch your rabbit..." in a moment. If you insist, you can just read on into that material now, skipping the next few paragraphs about "Donor Advised Funds", (DAFs)....
A DAF is....
Please visit my page about donor advised funds to learn more. It will open in a new tab or window, making it easy to get back to my thoughts on how to make the money in the first place later.
Of course, the first step to becoming an investor is to save up some money that you don't "need". Do not start investing with the money for your mortgage payment.
If you smoke, have a look a this analysis of the money you could use for investing which you are currently burning....Analysis of the cost of smoking, from QuitDay.org. (There's also ideas there for how to give up.)
If you have credit card debt... getting rid of that will help you more than mastering investing in the stock market. If you need training, or a car to get to work, etc, debt may be an unavoidable (for now) cost of doing business. If you are using debt to have a holiday or new toy sooner rather than later, enjoy your life, but you probably aren't a candidate for an investment club.
Investing in stocks is a whole lot of fun, but most silver linings have a cloud.
If you are actually investing, be sure to keep track of when you bought each of the shares you own, and what you paid for it. This sounds simple... and it would be... but companies do splits and spin offs.
Things acquire by going to a broker and saying "Buy me 100 shares" are fine. But you will also acquire things as a result of things you already own. Keeping track of them is where the hassles begin.
I was introduced to the ideas of "pools" by one of the best advisors I've had in my life, and given my age, someone who will probably hold the record for my longest serving advisor.
If I bought 100 shares of IBM in September 2008, I would have assigned it to a "pool" which I would have called ibm089. If there was a split, the new shares would be put in that pool. If there was a spin off, let's call it "ZZZ", my "ZZZ" shares would be accounted as being part of the ibm089 pool. We'll say that the spin off gave rise to one share of ZZZ for every 4 shares of IBM held. At the time of a spin off, you should go to the company website and fetch their advice about what to do about your cost basis. Let's say that the 100 shares cost $10000. And, before the spin off, a further 100 shares were distributed in a split. Now your ibm089 pool holds 200 shares, and they still cost $10000. (I rarely, in the tables of data "underneath" my reports worry about per share costs... they change, and you get rounding errors. Yes... the IBM started at $100/ share, and after the split had a cost of $50/ share. No, I hadn't "lost" anything... not even when the dividend was "halved". I simply went to having twice as many things, each worth half what it had been worth.)
Along comes the spin off. You have to go to the company website to find out what to do about your cost basis. You can't just make a choice. Let's say that in my fictional spin off of "ZZZ", we were advised to distribute our cost basis 60:40. Now pool ibm098 consists of 200 shares of IBM, cost $6000 and 50 shares of "ZZZ", cost $4000.
You often get a "cash in lieu" element to account for in your book-keeping, too.
It CAN be done... good luck to you, and stay on top of the book-keeping. It is a pain, but necessary. Unless you want long and tedious conversations with the IRS. I've only touched on highlights. Look for more advice on this important subject.
Since about 1999, I have used Personal Stock Monitor Gold from DTLink to help me with my personal investing. Sadly, I fear it is no longer available. Sorry!
PSM Does a good job of what I need, and a few bonuses came along with it. The features I use:
Effective spreadsheet-like presentation of the stocks I want to follow
Useful tabulation of things like gain /loss to date, total gain, etc
Easy download (free) of day's high, low, volume, etc data. The data is then stored in files for subsequent reference.
Graphs... very nice range of options.
Historical data (prices/ volume) can be fetched easily and for free.
There's almost an "accounting" program built in: You can use PSM to track your transactions.
You can download news for the stocks you want to follow.
Just to amuse any fellow dinosaurs: Before 1999 for at least 5 years, as I remember it, I used Stocktracker, from Compuserve. It gave me with daily monitoring of my portfolio, and accumulated history files. Anyone else remember those "old days"? :-)
Well! there's a dated comment! My sympathies if you live in one of the remaining unserved areas, but you did choose to live there, didn't you. I bet you have a better view than I do!
With a fast connection to the internet, you can do a lot of useful research online
I pay for access to Valueline's research material. I find it reliable and helpful.
you can get a lot of what is in that from google.com/finance and finance.yahoo.com
I like the ideas feeds and discussions at Seeking Alpha. (You have to register, I've never regretted doing so.)
I fetch a price chart... maybe several... it is amazing how different things look when you change the time scale.
I look at a variety of things, in particular the P/E and dividend yield of the stock.
I fetch reports of analyst opinions, looking not only at the status quo, but what analysts were saying 1, 2 and 3 months ago, and when/ who up- or down- graded a stock.
Both sources also provide company profiles and options prices.... and other useful things for the student of the market.
(Options trading is a "rocket science" branch of investing. Even if you don't trade options, if you learn about them, and look at the prices offered for puts and calls at different strike prices, over different time horizons, you may learn things about what "the market" is thinking about a stock.
Caveat Emptor!! I have sometimes found bad data on one or both of the Google and Yahoo sites. For example, I was researching the history of dividends paid by a company. One of the sites said three dividends were paid in 2009, when in fact four were. I've also seen incorrect information on the current dividend rate for a company. This is not just Yahoo or Google making mistakes. "The system" just can't cope with some of the weird and wonderful ways companies pay and report dividends.
The earnings figures may have been wrong in some cases... or I may have mis-read what was being presented. When someone says that the P/E at company XYZ is, say, 20.... is that the trailing earnings? Projected earnings? Etc, etc. Be careful. Do your homework. Don't rely just on a Google or Yahoo report!
Apologies! The next hint was "faulty" for a while, but I "fixed" it, March, 2012, and it worked again... until about June. What I describe still "works", but since Firefox introduced the pre-populated "new tab" "feature", you've had to use "right-click/ elect to open in new tab" to invoke the "fetch chart" dialog. Sigh. But... at the moment (7/12)... that works!
If you are using Firefox, create a new bookmark. It can be anything. Just bookmark this page, as that's the easiest thing you can do immediately. Save the bookmark in the "Bookmarks Toolbar" folder. Right click on the bookmark, click "Properties". Rename the bookmark "2 Year Chart", paste the following in as the "location"......
I used to have similar bookmarks for the Analyst Opinions page, or Options, etc. Haven't used for a while (at 8/15). May or may not still work.
It's not inexpensive, but the information provided by Valueline is another source which I still (8/15) consult when I'm trying to decide what to do in the market. In the distant past, you might have been able to access an ink-on-paper version of this excellent resource at your local library. Does ink on paper still exist? Again, in the past, if you subscribed, they would send you a CD monthly. Maybe available if you have poor internet service?
Most people today access the same reports online.
=== STRANGER AND STRANGER SAID ALICE....
If you want some "fun", and you have mastered the basics, and you are willing to be VERY careful about what you do... think about options trading. WARNING: IT CAN GET VERY EXPENSIVE IF YOU MAKE CERTAIN MISTAKES.... for example, if you sell an uncovered call, and the stock breaks down.
The "fun" of options is just trying to keep "your head straight". It's along the lines of rubbing your stomach while patting yourself on the head.
There are two simple types of options: Puts and Calls. You can be the buyer or the seller of either. So you can be in four "places". And sometimes you combine things, e.g. buy some puts at 50 and at the same time sell some puts for $55.
If I buy a call, then the person who has sold it has promised that he or she (you never actually meet the seller... the market finds your opposite number for you, just as when you buy or sell shares) will sell a certain number of shares top me at a certain price... up to a certain date. Note the word "buy". I give the seller money. Today, 12 September 2007, for instance, I can buy a December 07 call for WMT @45 for $1.60. Walmart is currently trading at $42.90. I would do this if I thought Walmart's price was going to rise above $45 before December 21, 2007, when the December 07 options expire. Let's say that by then Walmart is trading at $50. The seller of the call still has to sell the shares to me at $45! However, there's no such thing as a sure thing. If the price of Walmart stays below $45 until December 21, then the call seller will heave a sigh of relief, and keep the $1.60 per share that I paid to have the option of telling him/ her that he/ she must sell me the Walmart @ $45.... but in these circumstances I'd be mad to exercise my option... if I want the Walmart shares, I'd buy them in the open market for less. (Often with options trading, by the way, it never comes to the shares actually changing hands. If you own valuable options, you can sell them before the expiry date, and make your money that way.)
A put is similar... except the buyer of the put has bought the right to say to the seller: "Today I am exercising my option to 'put' these shares to you, i.e. to make you buy them from me at the price we agree back when the put changed hands."
All rather mind bending and fun. Even if you don't ever buy or sell options, the prices at which options are changing hands can help you determine what "the market" thinks about a share's future prospects. (Yahoo also provides you with options prices. The calls and puts for, say, December, are on a separate page from those for, say, January.)
The internet 'ought' to be able to provide you with information on the prices equities trade at... and it can. Finding exactly what you need can be a pain. If the Google and Yahoo pages cited above are not what you want, then here is a page with other places to try. They all offer some price or earnings, etc, data, and most offer other resources, e.g. access to reports or news items about companies.==
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