Stock market

Ok so i have 20K sitting in my bank account, and yesterday i talked with my uncle. Hes like, why don't you invest it in stock market. he have made some money at it (nothing very very big)

I know it can be very profitable and i want to learn how to play it well. I know you can play it only on the internet very easily. Each transaction cost 29.95$.

Anyone here is very good at this? know of any site that teach you to get good? any advice?

Thanks

Get a broker or talk to one. Discuss if with your uncle, if he has made a little bit of money apparently he knows something.

you need studies and even then...

Im studying business/economics atm and from what i've learnt it seems liek a good option. When i get a decent amount of winnings from poker im gunna invest some in the stockmarket also.

If i was you i'd get professionals to do it, also to make a decent amount of money in the long run you'll need bout 10 grand. But theres always a risk that you'll lose some money possibly all of it.

As for doing it yourself, thats insanely risky unless your really good, I would advise you not to do it yourself. Broker would be the best way to go.

ask thorladen :3

buy ETFs, and hold 'em for the long term. active management is a rip-off, most mutual funds underperform the indexes when you factor in fees. Unless you have inside information, work at the prop desk at goldman sachs or your name is james simon or steve cohen, then you are better off playing the broad market, keeping the risk relatively low and keeping the fees down rather than trying to beat the market.

On July 08 2006 16:29 Meatball wrote: Get a broker or talk to one. Discuss if with your uncle, if he has made a little bit of money apparently he knows something.

Trust me when I say DO NOT TALK TO A BROKER!

You'll pay sky high fees and you'll most likely get churned to death. 99% of brokers are salesman and not market experts.

Invest in a strip club.

my bro works with the stuff.. i would suggest u talking to an financial invester.. and they can tell you what your best options are.. u can discuss before doing anything.. they dont take that much off of u..

sounds like you got a buyin for 100/200. don't be a bitch with ur stock market. get some action on prima with that shit - you won't regret it.

On July 08 2006 18:01 TalentedTom wrote: Invest in a strip club.

hey good blog except rule #1 about being professional, you should spell it correctly

*respect*

My uncle also does this...... he buy cheap house, he sell it for more, he buy another house, and so on

I also thought of renting houses but i heard its a lot of trouble

oh no...29.95 is TERRIBLE

don't pay that much per transaction omfg

i work in finance/investment management. i'd be happy to talk to you about this more, but here's the site you want to get an account at:

www.mbtrading.com

they have fast, accurate data feeds and VERY nice programmable software, plus links to several good analytical packages to help you make good investments and backtest investment strategies against historical data. if you can talk to thorladen, definitely get his advice, and i'll help you as best i can as well.

your uncle is involved in real estate, which is often a VERY lucrative market if you play it aggressively and don't mind being cash poor for extended periods of time, but right now it's not so good in a slow economy with sweeping hindered growth.

i'll pm you my AIM/email

I've seen firsthand many people get burned so I'm gonna take some time to write a lengthy post about investing for the LP community. While I don't claim to a Warren Buffett, I have an inside perspective that I think will be valuable to anyone who wants to get started in investing.

I very strongly advise against active management for the average investor. Many of the so-called "expert" investors, much of their success can be attributed to luck. Also, if you are selecting a basket of a dozen or so stocks with your 20K, regardless of how well it is diversified, you are still taking on a significant amount of risk in trying to beat the market. The stock market has historically returned about 8% over the long term, buy a mix of spiders, QQQs and some foreign ETFs and be happy with the 8%.

There are many people who think they are financial gurus or have a gambling streak in them and try to pick select stocks to outperform the overall market. Many of them are disillusioned into thinking that it was their "skill" when their picks do well and poor luck when it goes poorly. It is similar to the psychology of fishes in poker. Just like in poker, there are people in investing with an edge that are +EV in their actions. Here is an overview of the players in the market and their poker equivalents in ( ).

- Big successful hedge funds - SAC, Medallion, Moore Capital, etc. These funds have billions of dollars under management and have produced great results for many years. They employ an army of math geeks like bigballs, physics PhDs, etc. to create models that I couldn't even begin to understand. They guard their strategies so well that no one really knows how they do it, but it is pretty obvious by their consistently amazing results that they have a significant edge. (Phil Ivey, new school phenoms)

- Prop trading desks @ major wall street firms - These guys have access to so much more info than the average investor. There is no question that a bunch of insider trading goes on everywhere, but these guys have access to information that isn't considered "inside info" but still is not available to the average investor. By being on the front lines they are the first to hear things and can act before the general public. (Doyle Brunson, old school powerhouse)

- Mutual funds, investement boutiques, etc. - While I think most of these "qualitiative" guys are BS and underperform the market, there are some that consistently produce great results to the point where one must acknowledge their edge. Typical things that they do to get an edge will be to have finance whizzes scour the financial statements, send secret shoppers to the businesses to evaluate them, meet with the CEO/board to discuss business plans, etc. These are things that the average individual investor cannot do because of constraints on time and resources. (Naz, Rek, profitable, but not near the level of the guys above)

- Hotshot individual investor - They read the journal and yahoo finance and think that they have some secret formula when in fact they are getting the same info that the rest of the world already knows and what the big boys already knew few days ago. All the information available to them is public information and in fact these guys often will rely on biased information put out by third parties. They know what P/E and beta is, but they don't realize that everyone else knows that basic stuff too. I hear stories of how well so and so did in the market. Well, the truth is most people did well in the 80s and 90s. That is because the market as a whole did extremely well. You could've bought basic blue chips in the 80s and made a killing. They mistakenly attribute their good fortune to invest in a bull market as a sign of their investing prowess. (Standard marginal winning player at low limits, will make some money but will generally overestimate their skill. Knows the basics and that is enough to eek out a small amount of +EV, but only because of the mass presence of fishes...I admit that I am at this level in poker, although the difference is that I know that I am very mediocre in poker.)

- Average guy who knows nothing about investing - He'll let a broker handle his money where the broker will do everything in his power to maximize his commissions. Or he'll put money into the hot mutual fund that did well last year that will suck this year and pay a fat sales charge and hefty annual fees. After some bad investments and a ton of churning, they will curse investing forever and stick their fortune in savings accounts/CDs and possibly some treasuries. (Fish, donkey)


Let me add that there are some people out there that know nothing about investing that hook up with very good financial advisors/brokers/investment advisors and end up as a winner. These people are usually rich and/or very lucky. There are also people out there that did fairly well but still underperformed the overall market during the bull market years because they paid too much in fees/commissions.

If you get a referral from someone you trust about a financial advisor/broker/investment advisor, then go for it. Just keep in mind that most of them are glorified salesman and will look out for their own interests over yours. The only way for you to really know if they are looking out for you is to be knowledgeable yourself. If you are not an expert, and you don't want to gamble, and you don't have an advisor that you trust, then do not pick out stocks on your own. It is -EV and although you may get lucky, that is exactly what it is. Odds are against you outperforming the market and you are taking on a lot of unnecessary risk. Keep in mind that you are playing the stock market game against the likes of the investing equivalent of phil ivey. You may make 7% when the market makes 8%, that is still a loss of 1% compared to the overall market. People will often focus in on the absolute returns rather than relative to the overall market. They will be happy about their 7% gain when in fact they could've taken the safer route of an ETF or index fund and made more while taking less risk. Most people are not experts, do not want to gamble with their savings and do not have an advisor that they really trust. If you fall into that category buy ETFs or index funds with no loads and low fees. That way, you guarantee that your investing performance will track the overall performance of the market. You will never make a killing, but you won't be a fish either. To make my final poker analogy, it is someone like me who isn't that great at poker eeking out 4ptbb/100 at NL50/100 rather than trying to take on NL 2000. My bankroll will never be in jeopardy and I will consistently make a small profit. Know your limitations and play only when it is +EV.

great post

yes good post, i guess ill forget about stock market -_-

ill do simple efts or i still have in mind to buy a house and rent it to people.

Well, if you invest in ETFs you are playing the stock market. You are minimizing fees and risk, that's all.

Stock Market? Screw that go Buffet style and try the Forex Markets.. Better and faster ROI.. Check into Buffy's Bline trading system.. if you would like to get pointed in the right direction send me a msg.. ill give up the links to get started... Stock market is for long long slow returns..

could you explain it OnTheMountain

tenbagger's post is very good, very accurate, but a bit pessimistic imo. two of the best points are the overall strong performance of the bull market of the 80s and 90s, and that you should invest in market tracking stocks and ETFs to earn returns in-line with a continuing bull market.

however, i contend with a few points. first, technical models that, for very active traders with very accurate data feeds, can produce good results, are not that difficult to understand. if you research stochastic oscillators, relative strength index, bollinger bands, and parabolic systems, then combining all four of these with fundamental analysis will usually lead you to rare, but very profitable, momentum plays in bull markets overvaluing good, but not great, stocks.

second, while it's correct that many "gurus" are just lucky, it's also true that many people do much more detailed, careful analysis than others, and make better stock picks because of it. he's right, everyone knows what P/E and beta are, but those are no statistics on which to choose a stock. one must look in detail at financial statements, and consider the market for the product or service created by the company. if there is a lot of demand to be met and/or the company makes a superior product to its competitors, it's likely to outperform the market in the future.

but the overall point remains 100% true: proceed into the stock market with caution. while i am more bullish than tenbagger on the idea of outperforming the market based on solid fundamental and analytical analysis, i definitely do not believe that most "systems" are good, or even based on solid reasoning. for instance, Bloomberg provides analysis of many technical systems made for momentum plays (when a price is rising or falling very quickly) in the credit derivatives market. these include stochastics, bollinger bands, rsi, etc. if you used just 1 of them over the past 5 years for ANY CDS spread, you'd have lost a lot in almost all cases. however, combinations of them show significantly lower losses when losing and generally nice returns when winning, which is more often. the point here is that you have to understand some simple poker analogues in order to invest correctly. first, if you don't have to take at least several hours to look over the information that is urging you to buy something, then you're probably entering into a coinflip on average. given that there are fees associated with trading and that your investment account should have fairly low risk, this is terrible. however, if you come up with your own sophisticated system for combining fundamental analysis with market comparisons, supply/demand considerations, and technical analysis, then you'll probably be able to find gems like starbucks in the mid 90s, blue chips in the 80s, MGM in the early 90s, etc. you just will very rarely come across a very attractive long-term stock investment, and in the meantime you should have a portfolio diversified in tracking stocks, big names, growing sectors, etc, and, as tenbagger said, be happy with the 8%.

also, learn to trade options. it's very easy to model the overpricing of options, because there is so much research on it, and you can see some nice yields by buying underpriced options and writing overpriced ones.

there are probably less than four people on this forum that should be doing anyting with derivatives let alone selling covered or naked options

On July 09 2006 13:13 Euphoria18 wrote: there are probably less than four people on this forum that should be doing anyting with derivatives let alone selling covered or naked options

lol no individual should ever be selling naked options ^^

Hi, I'm trying to get into some form of investing and I think I'm just going to start out putting some money into indexes. I'm as pessimistic as TenBagger about the market because I've heard stories and know that it's perfectly legal for companies to give kickbacks to brokers for selling thier stock (at least in many countries) and companies that do that are in a lot of trouble. Many companies also legally or illegally have influence on financial journalists writing articles probably as high up as the WSJ.

I don't really have any specific questions about trading but I guess I'm pretty clueless on the whole topic... can anyone recommend any books on how to trade? Are there any better investments where I could just invest amount around 20K at a time?

On July 08 2006 23:10 TenBagger wrote: I've seen firsthand many people get burned so I'm gonna take some time to write a lengthy post about investing for the LP community. While I don't claim to a Warren Buffett, I have an inside perspective that I think will be valuable to anyone who wants to get started in investing. I very strongly advise against active management for the average investor. Many of the so-called "expert" investors, much of their success can be attributed to luck. Also, if you are selecting a basket of a dozen or so stocks with your 20K, regardless of how well it is diversified, you are still taking on a significant amount of risk in trying to beat the market. The stock market has historically returned about 8% over the long term, buy a mix of spiders, QQQs and some foreign ETFs and be happy with the 8%. There are many people who think they are financial gurus or have a gambling streak in them and try to pick select stocks to outperform the overall market. Many of them are disillusioned into thinking that it was their "skill" when their picks do well and poor luck when it goes poorly. It is similar to the psychology of fishes in poker. Just like in poker, there are people in investing with an edge that are +EV in their actions. Here is an overview of the players in the market and their poker equivalents in ( ). - Big successful hedge funds - SAC, Medallion, Moore Capital, etc. These funds have billions of dollars under management and have produced great results for many years. They employ an army of math geeks like bigballs, physics PhDs, etc. to create models that I couldn't even begin to understand. They guard their strategies so well that no one really knows how they do it, but it is pretty obvious by their consistently amazing results that they have a significant edge. (Phil Ivey, new school phenoms) - Prop trading desks @ major wall street firms - These guys have access to so much more info than the average investor. There is no question that a bunch of insider trading goes on everywhere, but these guys have access to information that isn't considered "inside info" but still is not available to the average investor. By being on the front lines they are the first to hear things and can act before the general public. (Doyle Brunson, old school powerhouse) - Mutual funds, investement boutiques, etc. - While I think most of these "qualitiative" guys are BS and underperform the market, there are some that consistently produce great results to the point where one must acknowledge their edge. Typical things that they do to get an edge will be to have finance whizzes scour the financial statements, send secret shoppers to the businesses to evaluate them, meet with the CEO/board to discuss business plans, etc. These are things that the average individual investor cannot do because of constraints on time and resources. (Naz, Rek, profitable, but not near the level of the guys above) - Hotshot individual investor - They read the journal and yahoo finance and think that they have some secret formula when in fact they are getting the same info that the rest of the world already knows and what the big boys already knew few days ago. All the information available to them is public information and in fact these guys often will rely on biased information put out by third parties. They know what P/E and beta is, but they don't realize that everyone else knows that basic stuff too. I hear stories of how well so and so did in the market. Well, the truth is most people did well in the 80s and 90s. That is because the market as a whole did extremely well. You could've bought basic blue chips in the 80s and made a killing. They mistakenly attribute their good fortune to invest in a bull market as a sign of their investing prowess. (Standard marginal winning player at low limits, will make some money but will generally overestimate their skill. Knows the basics and that is enough to eek out a small amount of +EV, but only because of the mass presence of fishes...I admit that I am at this level in poker, although the difference is that I know that I am very mediocre in poker.) - Average guy who knows nothing about investing - He'll let a broker handle his money where the broker will do everything in his power to maximize his commissions. Or he'll put money into the hot mutual fund that did well last year that will suck this year and pay a fat sales charge and hefty annual fees. After some bad investments and a ton of churning, they will curse investing forever and stick their fortune in savings accounts/CDs and possibly some treasuries. (Fish, donkey) Let me add that there are some people out there that know nothing about investing that hook up with very good financial advisors/brokers/investment advisors and end up as a winner. These people are usually rich and/or very lucky. There are also people out there that did fairly well but still underperformed the overall market during the bull market years because they paid too much in fees/commissions. If you get a referral from someone you trust about a financial advisor/broker/investment advisor, then go for it. Just keep in mind that most of them are glorified salesman and will look out for their own interests over yours. The only way for you to really know if they are looking out for you is to be knowledgeable yourself. If you are not an expert, and you don't want to gamble, and you don't have an advisor that you trust, then do not pick out stocks on your own. It is -EV and although you may get lucky, that is exactly what it is. Odds are against you outperforming the market and you are taking on a lot of unnecessary risk. Keep in mind that you are playing the stock market game against the likes of the investing equivalent of phil ivey. You may make 7% when the market makes 8%, that is still a loss of 1% compared to the overall market. People will often focus in on the absolute returns rather than relative to the overall market. They will be happy about their 7% gain when in fact they could've taken the safer route of an ETF or index fund and made more while taking less risk. Most people are not experts, do not want to gamble with their savings and do not have an advisor that they really trust. If you fall into that category buy ETFs or index funds with no loads and low fees. That way, you guarantee that your investing performance will track the overall performance of the market. You will never make a killing, but you won't be a fish either. To make my final poker analogy, it is someone like me who isn't that great at poker eeking out 4ptbb/100 at NL50/100 rather than trying to take on NL 2000. My bankroll will never be in jeopardy and I will consistently make a small profit. Know your limitations and play only when it is +EV.

Very interesting post. Props.

http://www.vanguard.com

Buy Vanguard 500 fund (matches s&p 500 index), set it for automatic reinvestment of dividends/capital gains and possibly set up automatic investment program where u deposit $$ weekly or monthly.

Fees are lowest here and there will be less temptation to purchase individual stocks.

For better diversification, try Global Equity Fund or add on one of the international funds. Finally, add on a REIT index fund if you have enough $$ to do it.

if thorladen reply's, i would be interested to know the details of what he did before he became a pro poker player

google. invest in google

On December 10 2006 18:08 chris201322 wrote: google. invest in google

it actually a very good idea, if i had the money to invest i would invest in google all my money without any doubt, google is getting huge

that what ive been planing to do 1 year ago :D

get a scottrade account. then invest in china

On December 10 2006 18:27 Logiabs~ wrote: Show nested quote + On December 10 2006 18:08 chris201322 wrote: google. invest in google it actually a very good idea, if i had the money to invest i would invest in google all my money without any doubt, google is getting huge that what ive been planing to do 1 year ago :D

zomg, because nobody else in this world is able to see that!, zomg!.

Also lets lets mmm... lets invest in alternate power sources, petrol is finite zomfg! brilliant im a stock wiz!

I don't remember who said this but: "The stock market experts should be making millions and not simply sell their advice"

On July 08 2006 16:10 Floofy wrote: Ok so i have 20K sitting in my bank account, and yesterday i talked with my uncle. Hes like, why don't you invest it in stock market. he have made some money at it (nothing very very big) I know it can be very profitable and i want to learn how to play it well. I know you can play it only on the internet very easily. Each transaction cost 29.95$. Anyone here is very good at this? know of any site that teach you to get good? any advice? Thanks

use the turtle trading concept... doesnt make sense at the beginning but this is the most effective style of trading i've used so far...

http://turtletrader.com/

and you have to learn on the way.. there are trials and tribulations.. just like poker...

I'm only saying:

India, china, brazil (even though it might be a tiny bit late, they found some oil there a while ago and I don't know what happened later).

Oil, Uranium, some other metal (preferably comapnies without long-term sell-deals, the prices has gone up a fair bit and even though the oil has been quiet for a while they won't go down unless something amazing happends to technology so it's nice with companies that can get new contracts)



/Dusty, wannabee stock-shark (edit: everything I've tried so far has worked really good, but "everything" could be translated to "just on thing" so so far I'm a one hit wonder at best, however, take a look at the energy-market at least)

stop posting i have have no idea how the market works plz : <

zomg invest in t3h internets!!!111

buy a house, is safer. like you said, you can sell it for more or rent it and minimize risks.

Ok so say I have money sitting in mutual funds. The fee to get the money in them was pretty substantial. I know very little about investing. Should I get out of the mutual funds and look to invest in hedge funds. Also, isn't the minimum amount required to invest in a hedge fund like half a million or something rediculous or am I completely off?

i won't be re-investing my money into anything other than poker for a while, my return on investment is way too high for me to consider diversifying unless my roll exceeds 200k or something and i don't want to move up any higher

On December 10 2006 18:08 chris201322 wrote: google. invest in google

Google is a great company and their profits are growing exponentially. They have a bright future because they dominate the online advertising market which is also growing exponentially. But everyone already knows this. And as a result, the stock of google has already been pushed up very high.

Just to put things in perspective, let's take a look at, P/E, also known as price to earnings ratio. If I own a store that makes 100K in profit a year and I sell it to you for 500K, then the P/E would be 5. It would take you 5 years to make back your investment and that is assuming that profits stay level. The historical average P/E for US equities is somewhere around 15. Google has a P/E ratio of over 60. To put things VERY simply, that means that people are fairly certain that Google will increase their profits x4 and this expectation is already built in to the price of Google's stock. So over the long run, even if google doubles their earnings, that would most likely lead to a drop in the stock price because it will fall short of expectations that are already built in to the current price.

The average person will say invest in google, not because they fully understand the valuations and because they think the stock will outperform, but rather because they think it is a good company. I'll compare this to someone starting out in poker, looking down at AJo in the BB and choosing to go allin, even though there has been a raise, a reraise and a rereraise push allin before him. This is an extreme example but it illustrates the point that while AJ is a very good hand, the circumstances may render that hand worthless. The person with an edge in poker will be able to determine what these circumstances are while the fish will evaluate the strength of AQ in a vacuum. Likewise, google is a GREAT company, but for anyone to invest in it and have it be +EV, they will need to evaluate the many other variables. If you are not evaluating all these other variables and circumstances, well then you are basically the investing equivalent of a fish that will push AJo in the situation I highlighted above.

5.5 million shares of Google are traded on an average day. Thousands if not tens of thousands of "players" are making their bets on google and deciding to buy or sell based upon their reasoning and analysis. As I mentioned in my previous old post, many of these "players" are very sophisticated investors making their decisions based on a lot more information and better information than what is available to any one of us. If you are buying google purely based on the fact that "it's the hot stock" and "I think internet search will grow exponentially", you are operating with less information and are at a disadvantage.

This is not to say that I think google is a bad investment. It may be a great investment, but I just don't know. The fact is that I am certain that I have less information at my disposal to make this determination than the majority of the players that are trading the 5.5 million shares per day. I think if I put time and effort into it, I may work myself into a position where it is a slightly +EV proposition,neutral or slighly -EV. I'll be ahead of the investing donks, but I'll be way behind the hedge funds and prop desks. However, if I make this investment without any additional research or information, this is definitely a losing play over the long run. And just like in poker, don't be results oriented.

The collective wisdom of many people who have traded 5.5 million shares have determined that $485 is currently the fair price for a single share of google. Ask yourself if you have any reason to believe that your assessment has an edge against the collective wisdom of all these people. Do these people not know my secret that google is awesome?

1) get a job at a company
2) buy stock in that company
3) manipulate that stock
4) sell stock
5) profit!
6) flee the country for insider trading

good post tenbagger, as usual.

@ meatcity, the minimum amount to invest in a hedge fund is more like $5M. you may be able to get in through a fund of hedge funds for less, but i'm not sure. about your mutual funds, you'll probably be taxed on the amount you withdraw, and there will probably be a withdrawal fee too. if your funds are managed well, just keep them and invest some of the rest of your money in an account you manage personally. if your fund managers suck and they're losing money, just withdraw and sustain the penalties. you can make a lot more out of that money through poker or personal trading. learn to trade stocks and to understand things like tenbagger's post above. if you're a clever investor and you make well-informed decisions, you can definitely find a good edge.

i'm going to write a tutorial on stock investment soon for you kids. be on the lookout for it!

On December 11 2006 10:47 meatcity wrote: Ok so say I have money sitting in mutual funds. The fee to get the money in them was pretty substantial. I know very little about investing. Should I get out of the mutual funds and look to invest in hedge funds. Also, isn't the minimum amount required to invest in a hedge fund like half a million or something rediculous or am I completely off?

"The fee to get the money in them was pretty substantial."

That was your first and biggest mistake. Let me briefly go over the pricing structure of mutual funds.

There is something called a load also known as a sales charge. This is money that goes straight into the broker's pocket. Typical sales charge would be 5%. That means if you invest 10K, then really you are investing only 9500 and your broker will take 500. It may have been unaviodable in the past, when the industry was less efficient and there was less competition. But there is absolutely no reason why anyone should pay a load/sales charge to purchase a mutual fund. No fund or broker is worth this fee, especially when there are many other funds that are equal that do not charge a load.

Second thing to consider is the annual operating expense. This includes the management fee, 12b1 fees, and other miscellaneous fees. For example if the fund's annual operating expense was 1% and you had 10K in the fund, they will deduct 100 from you balance every year. This expense is the main reason why I advocate passive management (ETFs and index funds).

ETFs and index funds have extremely low operating expenses, usually less than .5%. This is because there is very little work involved in running the fund. They don't need to hire a bunch of suits to pick stocks, because the fund will automatically buy the stocks in a certain index. For example, if u buy a QQQ, you buy the stocks in the Nasdaq 100. When the Nasdaq added google to the Nasdaq 100, the QQQ automatically bought shares in google. There was no manager that needed to make that decision, it just followed whatever the Nasdaq decided for their Nasdaq 100 index.

Actively traded funds on the other hand have people that try to outperform the indexes. For example, if you buy a regular technology mutual fund, it will most likely be benchmarked to the Nasdaq 100. A manager is selectively picking stocks and putting together a portfolio that he or she feels will outperform the Nasdaq 100. It is no easy task to beat the index, but it becomes that much harder when you account for the operating expense fees.

The expense ratio of the QQQ is .20%. Compare that to the AllianceBernstein Global tech Fund. It has an expense ratio of 1.66%. That means that they need to outperform the Nasdaq 100 by 1.46% every year just to break even. It is my opinion that the most managers of mutual funds do not have enough of an edge against the market as a whole to justify their fees.

Finally, regarding hedge funds. Hedge funds are limited by law to accredited investors. Basically, an accredited investor is a corporate entity such as a bank or investment company or a wealthy individual. Also, most hedge funds have very steep minimum investment requirements, often over 500K. You can get around this by investing in a fund of funds or a similar vehicle which basically resells smaller chunks of hedge fund investments to smaller investors. However, consider that you will now pay two layers of fees, one by the original hedge fund and a second fee by the fund of funds. Also, hedge funds have astronomical fees, 2 and 20 is the standard rate. That means 2% annual fee and 20% of any investment gain. Very successful hedge funds like SAC charge something really ridiculous like 5 and 50. I wouldn't mind paying those kinda fees to have someone like steven cohen or james simons managing my money because those guys have proven that they are worth it year after year. But then again, those guys wouldn't even take our money, even if we had millions. I would not pay anything close to that to someone unproven and I certainly wouldn't pay another layer of fees to someone that is just repackaging it for me.

Basically, forget about hedge funds unless you have millions to invest. Then you can start to consider them. These hedge fund investment vehicles for small investors are a huge ripoff.

@meatcity

lookup what the mutual fund's morningstar ranking is, what the expense ratio is, and see if there are any fees that you will have to pay if you sold the fund. and please don't ever pay a load again.

your posts are worth their length in gold. i'd again just like to reaffirm that anybody reading on this site should listen to everything tenbagger has to say.

first let me say thanks alot for the info thus far. also do you know of any good resources to learn about trading stocks and such?

Thank you Tenbagger for such a well written series of posts.

If I can add anything worth of value...

It would be to do your due diligence before throwing your money around in some new investment oppurtunity. Always always always INVEST in your education about that new investment venue before investing in the venue itself.