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Thread: Stock Trading

  1. #31
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    Re: Stock Trading

    Quote Originally Posted by LATechBanjo View Post
    I do all my non-retirement investing through TDAmeritrade. Just got into options trading very recently and wish I would have discovered it sooner.

    CChandler, I second the motion to start a forum about this.

    If I run into something that might help everyone get better dealing with this stuff, I'll toss it out there.

  2. #32
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    Re: Stock Trading

    Quote Originally Posted by LATechBanjo View Post
    Simply put, the price is still the same regardless of shares. Assume a $1 Dividend on a stock worth 100 dollars. That means that (over a year) you would get $1 for each share you own.

    If you have 1000 dollars invested, you would be able to afford 10 shares and at the end of the year you got $10 in dividends. That's a 1% dividend yield.

    Lets say that last week this stock dropped down to $50. Your 1000 dollars now can afford 20 shares. If the company doesn't cut the dividend and pays out at 1$ per share, you would have $20 after the end of the year. Now a 2% dividend yield. In essence, your money just went a lot farther.

    This principle makes dividend stocks rebound earlier than other stocks when the market tanks. And it makes opening positions in parts on the way down (dollar-cost-averaging, in a way) a much better way to do a dividend stock.

    For homework, take a look at the dividend yield today and last month for BMY (Bristol Meyers). It has seen enhanced stability compared to the rest of the market and the div. yeild has jumped over a percent since July.
    That really wasnt my question, I was talking about the difference between buying 1 day before ex div and buying on ex div. Thanks for this input, though, because it does make sense. However, I would caution that if a dividend paying stock loses half of its value and it is not all smoke and mirrors, there has obviously been a major hit to their projected cash flow (ie dividend will need to be cut at some point). Look at all of the bank stocks for example.

    I would also expect a dividend paying stock to do better in a downturn for a few reasons: 1) usually more established 2) dont have all of their money pouring into new ventures and growth prospects, which will obviously get hurt in downturns. That is why a lot of older folks like dividend paying stocks, money coming in and usually less risky. So, they are also usually capped to the upside, so you dont get to ride as high when times are good. So.....they are probably pretty good investments for the rest of my lifetime as our economy will suck for another 5 decades (only sort of kidding).

  3. #33
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    Re: Stock Trading

    Quote Originally Posted by dhussdawg View Post
    That really wasnt my question, I was talking about the difference between buying 1 day before ex div and buying on ex div. Thanks for this input, though, because it does make sense. However, I would caution that if a dividend paying stock loses half of its value and it is not all smoke and mirrors, there has obviously been a major hit to their projected cash flow (ie dividend will need to be cut at some point). Look at all of the bank stocks for example.

    I would also expect a dividend paying stock to do better in a downturn for a few reasons: 1) usually more established 2) dont have all of their money pouring into new ventures and growth prospects, which will obviously get hurt in downturns. That is why a lot of older folks like dividend paying stocks, money coming in and usually less risky. So, they are also usually capped to the upside, so you dont get to ride as high when times are good. So.....they are probably pretty good investments for the rest of my lifetime as our economy will suck for another 5 decades (only sort of kidding).
    Oohh, ok. If you own the stock at closing bell on the day before the ex-date, you are entitled to the dividend being issued that next day. If you purchase the stock the day after, you will wait a until the next dividend payout (probably around 3 months) before receiving the first dividend. If your time horizon is longer, it doesn't matter a whole lot. But you are still missing out on 1 month of dividend reinvestment.

    Numbers were for illustrative purposes only. Yeah, if I lost half value in a stock, I may reconsider owning that sucker.

  4. #34
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    Re: Stock Trading

    Here's what happened to Dupont/DD between April 2008 and March 2009...it fell from about 52 and finally found support around 17. Probably had nothing to do with internals, dividends etc. for the most part.


    http://finance.yahoo.com/echarts?s=d...e=off;source=;


    CAT went from the mid 80s to the mid 20s in the same time period and recently was up to 115.

    http://finance.yahoo.com/echarts?s=c...e=off;source=;

    Both are very strong companies. Externals probably drove most of their price changes down plus the slow down = some layoffs.

    If you loaded up on both in early '09 and sold this summer you'd be in pretty good shape.


    Btw, the dividend is not paid right after the Ex-Date, but 1 month later. Cat's last Ex-Date was 7/18 and it's pay date was 8/20.

  5. #35
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    Re: Stock Trading

    Quote Originally Posted by JuBru View Post
    I know a lot of you do a lot of investing, trading, etc. I'm curious as to who you do it through and what has your experience been with them.
    Here are a few suggestions if you're just starting to explore "stock trading". Trading, to me, is not investing. A lot of trading is done with hopes of never actually owning the stock- through Options. The S&P futures, and commodities are also heavily traded by day traders. So is Forex but don't even waste your time with currency trading. Are there profitable day traders? Yes, but it is a job that takes a lot of time, experience and risk capital -(200,000-300,000). Plus the retail day trader is competiting against hedge funds that have serious computational power $$$

    Swing trading (usually 2-30 day plays) takes advantage of the up and down trends in the markets. Swing trading like day trading relies heavily on technical analysis which is essentially trying to time the market. My experience with techinical indicators is there are a few good indicators to consider such as exponential moving averages, volume and stochastics, but there are serious limitations to techinical indicators. There is no holy grail of an indicator. So don't buy into the hype. There are tons junk courses and programs that cost thousands of dollars teaching technicals and trading. While a few of them might be worthwhile, most are total waste of money.


    Now investing- IMO one of the keys to successful investing is capital preservation/risk mitigation. Options are great tool to mitigate risk while preserving capital but options by themselves can be dangerous. Everytime there is fairly long steady uptrend in the market, you start seeing all the hype of income producing option strategies -naked puts and calls, vertical spreads, calendar spreads, diagonal spreads, iron condors......The strategies are good during trending or sideways markets, but when the market starts to tank or becomes volatile, they get wiped out.

    Options are good way to hedge risk especially during down trends such as selling covered calls. Selling puts are great way to acquire stock at certain prices as long the stock is a good buy at that price. There are also combinations of puts and calls ratios that are essentially synthetic stock postions that are hedges against the rise in volatility (increase in Vega) and dramatic price swings. I will list a few books that will be helpful in learning options.

    Another key is size positioning/money management and diversification. Do not allocate more than a certain defined percentage to one position. Have a plan or structure when you buy a stock-what is the good buy point, when do I take profits or sell. Diversifiy your stocks into different sectors and have a good mix of dividend yielders. As someone mention before DRIP's are excellent especially in a IRA.


    Another key is having a rational view of market sentiment. I have a bit of a contrarian/value view of the market. When the market is tanking like the end of 2008 and everyone is fearful that presented an excellent oppurtunity to load up on profitable, growing companies. Now opportunities like that don't come around too often but certain sectors might be down like the financials presently especially Bank of America (thanks Warren for the dough).
    Dollar-cost averaging as someone mention is a good long-term strategy.

    Also, research. Look at the company's fundamentals, the sector the company operates in, the seasonality of the business and the future growth prospects because the equity market is foward thinking in it's valuation

    One more thing don't listen to some of the talking heads about what to buy especially metals. Metals are strictly hedge against risk. You just might wake up one morning and realize that the price of silver just dropped 30%.

    Some books:

    Reminiscences of a Stock Operator- Lefevre (Still reading-someone mentioned it on BBB)
    The Single Best Investment - Miller
    High Probability Trading - Link
    Trade your Way to Financial Freedom- Van Tharp
    The little book of trading- Covel
    Trading for a Living - Elder
    Options as a strategic investment- McMillian
    Generate Thousand in Cash - Elias
    Options Trading: the hidden reality - Cottle

  6. #36
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    Re: Stock Trading

    Steve Forbes does a 3 part 27 min. interview with value investor Bruce Greenwald, a Prof. of Finance at Columbia Univ. and Director of Research for First Eagle Funds.

    Greenwald carried on Benjamin Graham's value investing classes at Columbia. Graham taught Warren Buffett, etc. In the interview, Greenwald discusses investing, markets, China, Japan, Europe, intellectual capital, etc.

    http://www.youtube.com/watch?v=xOn4V...eature=related

  7. #37
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    Re: Stock Trading

    If you go to this site and scroll down to the last 20 minute clip/movie on the page, these guys are with Lightspeed and focus on the technicals, contrary to Greenwald who is mostly a fundamental guy.

    The whole site contains several worthwhile movies/documentaries to sit and watch, but the Lightspeed guys really get into some of the "nuts and bolts" of technical trading if you're just starting to get interested in the market. Btw, Lightspeed doesn't think they will be affected by some of the legal problems Penson Worldwide is dealing with right now:

    http://www.tradingapples.com/must-se...ng-movies.html

  8. #38
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    Re: Stock Trading

    Sharebuilder is great if you want to dollar cost average- and the fees for trades are comparable to the others. I have been with a couple of different ones, but Sharebuilder does what I want it to for stocks. If you want mutual funds though, they have a limited list- that is not who I would go with for funds unless you want exchange traded ones.

  9. #39
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    Re: Stock Trading

    Great posts everyone!

    I need to look into Sharebuilder, thanks to those who have shared that.

    Options? Tried that a few times thru my dinosaur broker and lost a little money. Wasn't my broker's fault, just bad luck. Not comfortable with that.

    I am more into divie-payers and long term investing. Have liquidated all but one mutual fund, still hold Vanguard 500 Index Fund. Made a ton of $$$ on Fidelity Magellan, got lucky and timed that one right. Did okay on American Capital Pace, which morphed into some other name following a merger. Did fine on all my others. But, I finally, truly did DD on mutuals and the fees are ridiculous. Decided to be my own frickin' mutual fund, which is why I hold about 30 equities thru two different brokers, and one stand-alone DRIP.

    At this point, asset preservation is as important as growth.

  10. #40
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    Re: Stock Trading

    By the way, picked up "Reminiscences of a Stock Trader" on your recommendation longdawgview, and it is great! Tons of little trading nuggets of wisdom, and it's also a pretty interesting read, especially regarding his "vacations".

  11. #41
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    Re: Stock Trading

    Quote Originally Posted by LATechBanjo View Post
    By the way, picked up "Reminiscences of a Stock Trader" on your recommendation longdawgview, and it is great! Tons of little trading nuggets of wisdom, and it's also a pretty interesting read, especially regarding his "vacations".
    Lol, it is a good read; not only for someone that is interested in the equities market but for anyone that likes a good read.

  12. #42
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    Re: Stock Trading

    I use Wells Fargo, with one of our own BB&B members and TECH grad as my broker (the last 18 years or so). I've been very pleased as he has done a great job! I do not day trade.

  13. #43
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    Re: Stock Trading

    Quote Originally Posted by dhussdawg View Post
    I am confused, why does it matter when you buy it? If you want a dividend paying stock, you want one. However, after the dividend pays out, it should be reflected in the stock price (in theory). Does that not happen or something? I just dont understand the difference between buying a stock the day before ex div date at $33 and if the dividend is $1, you get $1 back. Then, if you were to just wait until ex div date and it would be worth $32. Is there some sort of market anomally here?
    Hey DH, I stumbled on a better example of what stock prices "might" do on the ex-date....This is Enerplus Corp. (ERF), a Canadian oil stock....look at the last two candles on this chart:

    http://finance.yahoo.com/echarts?s=E...urce=undefined


    Note that this stock pays a 7.61% dividend monthly:

    http://www.dividend.com/dividend-sto...s-corporation/


    ....and here's the 1st post of an interesting thread about questions one may need to have with regard to taxes, etc.:

    http://messages.finance.yahoo.com/St...27&tof=1&frt=2

  14. #44
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    Re: Stock Trading

    Quote Originally Posted by TYLERTECHSAS View Post
    I use Wells Fargo, with one of our own BB&B members and TECH grad as my broker (the last 18 years or so). I've been very pleased as he has done a great job! I do not day trade.
    My regular broker's firm, was bought out by Wells Fargo about 3 yrs ago. I stayed with them but was NEVER happy with WF. Finally, after losing a bunch of old customers, my broker left WF and is now in FSC. I followed them to FSC. I am not altogether thrilled with FSC either, but beats the pants off WF. It has been more than 8 months since I closed all my WF accounts and moved to FSC. Yet, I am still getting bills from WF saying, because my account balances are under a certain amount, they are charging a fee. I tried...and my broker tried too...several times to explain, those accounts are CLOSED! I even have a certified letter from WF, dated about 6 months ago, confirming all accounts CLOSED and all assets moved.

    Whew! talk about morons!

    WF's fees are ridiculously high!

    But, if you're happy with 'em, then by all means....

  15. #45
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    Re: Stock Trading

    I take it the mkt. wasn't impressed with the telepromter in chief speech last night! DOW down 285 sheesh!

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