I have recently became curious on buying stock within the stock market. The thing is, I really have no clue what to do when it comes to buying stock or if it is even a good investment that I should pursue as a college student. I am trying to find a way to make some extra cash since I seem to be finding myself low on it very often.
Do any of you guys have stock or have recommendations on what stock a "beginner" should purchase?
Stock is a terrible way to make cash. The only thing less liquid is real estate.
For a beginner, read the "101" guides on CNN Money. They're not perfect, but they'll disabuse you of this thinking that an amateur newbie college student can make cash as a day trader.
Amen to that. In my MBA class there were several young 'day traders' who subsequently lost pretty much everything they had in the market when the market crashed. Unless you have lots of money to bet and burn and a whole lot of time to spend watching the market then day trading isn't for you.
I don't know that you would call what I used to do day trading so much as swing trading as I wasn't trading all day long everyday or even everyday for that matter but with stocks like citi for a while you knew it was gonna have 30-50 cent swings everyday, buy low sell high take the money and do it over the next day.
How is stock not liquid? The only way I can see stock not being liquid is if your stock is down and you don't want to sell for a loss...believe me I've experienced that lol. But that said if I need cash I can sell a stock and have the money in my bank account the same afternon, how is that not liquid?
In a sense that's even more liquid than silver or gold as with those you gotta shop around prices and margins, with stock you get what the stock price is that minute no shopping around.
The liquidity of stock depends on which stock you purchase. If you're trading a small company that has really low volume, then sure it may take a bit. If you're trading a large company (e.g. VZ, AAPL, GOOG, etc.), any of your trades (with a reasonable ask price) will be filled almost instantly.
There are many other investments a lot less liquid than stocks: CDs, IRAs, etc.
I keep almost all of my money in stock and consistantly make reasonable profit from it.
There is a huge difference between day trading and long term investing, where the former is significantly riskier.
To the originator's question, stock is a lot better once you have money to invest. If you buy any stock that isn't highly volatile, then you'll be looking to make somewhat small percent increases. You can always place some risky bets / do day-trading, but you will probably end up broke.
In my opinion, you're better off waiting until you have some more money to get serious about it. In the mean time, you can read some investing books and just try buying a few shares for education sake.
Day trading is not a way for you in your stage of life to make money. Unlless you are just uncanny talented, you WILL end up loosing your butt. I can not stress strongly enough that you avoid it like the plague at your age and stage of life.
That having been said, a couple things you need to really understand and take very seriously:
Stock is not about mathematics or economics. Trading stock is about psychology.
It is a full contact, no holds barred, kill or be killed blood sport. If you can not emotionally handle having your lunch eaten for you by someone else, forget the idea. I am pretty good at it, much better than average, and I still take a beating about 1 out of every 5 trades.
If you do not have at LEAST, at the absolute minimum, 10K dollars in hard cash that you can stand to lose without wanting to jump out of a window, then you are not in a position to start yet.
Go ahead and start an Etrade (or Scott trade, or whatever) account. Use it ONLY ONLY ONLY ONLY for research purposes. On the side, on paper, write down an IMAGINARY ten thousand dollars as your pretend initial capital to work with. Start practicing. Write down what you want to buy, what price you bought it at, track it, sell it, buy it. All on paper only. See how you do, where your weaknesses are. It will probably take awhile before you stop making bad decisions and begin to get the hang of it, but if you keep practicing in real time, you WILL eventually get there.
Start watching the financial programs religiously. Fox Business, MSNBC.
Diversity of knowledge and strategy is a great thing to have. Check out four or five different investment gurus with wildly different approaches. Michael Parness on one end, Dave Ramsey on the other, and listen closely to all of them. Find the approach that works for your personality and tolerance levels. (Michael Parness of TrendTrade approaches day trading like it's a blood sport, Dave Ramsey approaches it like an elderly Woman at a cross walk.)
Don't let set backs break your spirit, never ever invest more than you can emotionally and psychologically stand to lose, do your homework, and remember that the God of investing is NEWS.
good tip about practice trading before jumping in but the one thing that can't be accounted for is that it's a lot diff when it's really your money on the line vs a play money
I look back at the stupid crap I bought while in college - and I wish I spent (and made) my money a little better. At that point in your life - invest in yourself, pay down student loans, scrape and hustle while you have the energy to do so. Start a small business (or side hustle). Not only will this help bring a little spending cash - but it's also a valuable experience (pretty impressive to hear about a recent graduate who put himself though college on a business he helped build).
If you really want to invest (which I wouldn't recommend if your looking for short term gains) - go and read "The Intelligent Investor" by Ben Graham, then read it again. The point of the book is you don't try to 'time' the market - you will lose. You need to look for undervalued stocks that you can hold on to until the market price catches up to it's actual value.
good tip, i just grabbed that book off amazon for like $6 so nice price look forward to the read.
You can always try mutual funds. I am not in league with all of these great financial advisors, but for me, mutual funds have yielded a little bit of growth (albeit not mega-millions) in a 'safer' fashion for me in the past 4 years.