Trading Stock/Investing

So, I opened an E-Trade account and I'm going to start trading stock on Monday. I have a few different companies in my sights.

I'm not trying to get advice really, but I'm curious as to what you all have invested in/how you're doing in the stock market.

I have some in AT&T and Whole Food Market. It has been down for a little bit, but I'm not worried. I'm looking into medical marijuana stocks. They are extremely cheap right now, and if more states commit to legalize medical marijuana, the stocks will soar. I will be putting 250-500 on 2-4 different medical marihuana stocks: MJNA, FITX, CBIS, and PHOT.

CardsIllinifan8 said:

I have some in AT&T and Whole Food Market. It has been down for a little bit, but I'm not worried. I'm looking into medical marijuana stocks. They are extremely cheap right now, and if more states commit to legalize medical marijuana, the stocks will soar. I will be putting 250-500 on 2-4 different medical marihuana stocks: MJNA, FITX, CBIS, and PHOT.

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Was looking at the same thing with marijuana.

CardsIllinifan8 said:

I have some in AT&T and Whole Food Market. It has been down for a little bit, but I'm not worried. I'm looking into medical marijuana stocks. They are extremely cheap right now, and if more states commit to legalize medical marijuana, the stocks will soar. I will be putting 250-500 on 2-4 different medical marihuana stocks: MJNA, FITX, CBIS, and PHOT.

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I'm currently long PHOT, TRTC, SPLI, FSPM, and ERBB. Used to be in FITX but im out. Be careful when a company sends out a fluff PR every couple days. FITX also has a lot of restricted shares becoming available starting end of this month, lots of other Canadian grow ops are working towards becoming public, and momentum is trending down. This has been a fun sector to invest/trade in, but be forewarned: lots of pumping and dumping going on. SEC is also looking for frauds: see PTOG

I'd suggest looking at SPLI and ERBB right now. SPLI has better revenue then MCIG and then compare the two's pps. ERBB is going to be placing their vending machines in CO in the next week or two which should push the price to .05+ Only invest with what you can afford to lose and use your head not your heart. @wolfofweedst and @invest420 are good follows on twitter and where I have got my best tips in the sector. Im up 120% ytd, spp 500 is down .5%. Others are up obscene amounts as well, but remember the party wont last forever. WA state will open up recreational use in June and the trend is strongly moving towards acceptance all over the country, so those are two positive, upcoming catalysts which is why I'm in that sector.

Keep in mind their are also plenty of other safer, more conservative investments out there.

I invest 90% of my portfolio in ETF's. VOO, VTI, VT, PTY, GLD (for 90%) of that. The other 10% of my ETF money I invest in a sector ETF (whichever sector seems to be right at the time).

The other 10% I invest in individual stocks of companies that I have some long term confidence in. Mostly dividend stocks that have not performed well the past year (CAT, DE, MMM, T, SI) vs. the market as a whole plus a few biotech/pharma stocks that have been big for me like GILD, PCYC (painful Friday for both - I am not adding to either position at these levels).

I always keep 10-20% in cash as both a rainy day fund and as an investment pool. If I want to buy Ford but am not in a hurry I wait for something silly to happen around the world. Say a Crimean invasion. Ford drops 3%, I buy it. What does Crimea have to do with Ford after all. That fund allowed me to be buying near the lows when most people were dumping stock. Never go all in.

You probably should not invest in individual stocks until you have a largish position in the market as a whole. Once you do. Diversify!! Have a list that you want to buy and when something happens to bring the market down, buy those stocks on sale. And most of all be willing to admit you're wrong if you buy something that behaves badly. If you are down 20% ask yourself if you'd buy it at this level. If not, sell it.

I don't have time or the knowledge and experience to know what I'm doing with individual stocks. I'm 63 and when I started saving for retirement (in my 30's) I read about mutual funds that index the market. Fidelity and Vanguard have funds with very low fees and target retirement dates that (theoretically) become more conservative as the projected retirement date nears. I put money in those funds and just ignore the ups and downs of the market. Over about 25 years now, it's been a good investment.

Unless you know what you are doing in the market, I would put some money in indexed mutual funds directed to retirement. If I was smarter I would have been a bit more agressive with some investments, but I know my limits and I'm not much of a gambler.

You can't go all in. That's where people mess up. Then people put all their eggs in one basket too.

I know I said I only have two straight stocks, but I have mutual funds through American Funds. Those aren't making too much money, but I get dividends and reinvest it right away.

I am looking for a pharmacy or biotech company to invest into, but I don't want the share price to be no more than $20 a share--what would be a good company to look into?

pizzaman said:

I don't have time or the knowledge and experience to know what I'm doing with individual stocks. I'm 63 and when I started saving for retirement (in my 30's) I read about mutual funds that index the market. Fidelity and Vanguard have funds with very low fees and target retirement dates that (theoretically) become more conservative as the projected retirement date nears. I put money in those funds and just ignore the ups and downs of the market. Over about 25 years now, it's been a good investment.



Unless you know what you are doing in the market, I would put some money in indexed mutual funds directed to retirement. If I was smarter I would have been a bit more agressive with some investments, but I know my limits and I'm not much of a gambler.

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Index funds are perfect for retirement.

Two quick thoughts.

Mutual funds are dangerous when bought toward year end. You often get socked with a tax liability for the newly invested money. So be careful with that. ETF's are safer to invest in than index mutual funds from that standpoint (later in the year). You do get hit with commissions on most ETF's though so if you are buying in small increments, you're probably better off with no load mutual funds even with the tax ramifications.

Two, I am not sure why someone looks at the absolute price of a stock when buying it. Why under $20? A company with a stock for $3 a share might still be wildly expensive. Another with a price of $450 a share might be very cheap. Is it because of commissions eating too much of your investment if you buy the more costly stock?

A $9 commission on a single share of a $450 stock is 2%. A $9 commission on 20 shares of a $22.50 stock is still 2%.

Yes, the commission is what's hurting me. I'm only 26, and I don't make a ton of money. So I don't have a lot of dispensable money.

I'm 20 and just starting out with $2000 to get my feet wet. I'll put more into after college or if I do well.

CardsIllinifan8 said:

Yes, the commission is what's hurting me. I'm only 26, and I don't make a ton of money. So I don't have a lot of dispensable money.

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Some brokers (i use td ameritrade) have commission free ETF's as long as you are holding them for 30+ days if you are looking to cut down costs.

OPK may be a good fit if you are looking at Pharma companies. I currently have no position, but it has quite a few drugs coming along and they have purchased a lot of companies recently. Also has high insider ownership. The chairman/CEO, Dr Phillip Frost, routinely buys shares on the open market. Dr Frost previously ran another drug company Ivax, then built it up and sold it. Now he seems to be doing the same with Opko Health. Currently trading in the middle of the 52 week values at 9.66. Lots of articles out there on OPK if you want to look into it more.

Here's a little horror story for young investors. I have a nephew who is 39 years old now. His best friend went all in during the dot com bubble. Phil had amassed over $900,000 in investments that grew exponentially from a modest start. He was going to get out when his investments reached one million. Well, they never got there and Phil lost almost everything hanging on hoping for a rebound. He was in his 20's, single and he took a chance. He's doing fine now but he still regrets not getting out when everyone told him to cash it in.

I invested in a financial advisor when I was 27. I'm still using him. At 60 I can retire comfortably when I want. Though I'm not even close to wanting to. I've used him for everything, my IRA's, 401K's, non-retirement porfolio, real estate etc. I did some investing on my own years ago. Now I take that money to Vegas.

Funny you guys should start this thread, now that I'm out of undergrad and in grad school I've been starting to save up an emergency fund and a retirement fund, and looking at taking a diversified position in ETFs like Dayton was talking about for the latter. Kind of interested in individual sectors/companies but I don't really want to mess around with that at all for now, just looking to build a solid base on something I probably won't be touching for 40 years or so.

As a side note for potential grad students (or anyone interested), I was hoping to start an IRA, but learned that income from fellowships apparently doesn't count as "earned" income and can't be used to pay into a tax-sheltered IRA (traditional or Roth). I can't really complain, since fellowships are far and away better than having to find a faculty member to hire you as a research assistant, but I guess since a fellowship doesn't technically have any stipulations as far as having to work to earn it, it doesn't come on a W-2 and can't be paid in to an IRA.

CardsIllinifan8 said:

Yes, the commission is what's hurting me. I'm only 26, and I don't make a ton of money. So I don't have a lot of dispensable money.

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Since I'm in this business I'll weigh in for a moment then butt out. Not having a lot of dispensable money means it's not a good idea to have an investment account at this time. Save your money. Pay off all your debts other than car and house. Once you have no other debts and a tidy amount of savings (think $5,000 - $10,000) then you can move on to investment accounts.

Investment accounts should be intended for long term wealth building so try setting up an IRA/Roth IRA to hold the funds. Then you don't have tax issues causing problems.

In closing, make sure you have all of your other ducks in order before getting into anything that puts your money at risk.

Also, if you work for a company that offers a 401k with a company match, make sure you are taking advagtage of it. You can't beat free money. I'm always amazed at how many employees are leaving this on the table.

We just started a money market account for our 1 y.o. son. Is this the best way to save money for him when he gets older? We put 1200 in to start and each of us puts $25 a paycheck. I get four checks a month and my wife gets two. What type of potential earnings should be expected at this rate?

Also, my wife worked 8 years for University of IL Springfield and has a pension with them that she isn't still investing in. I expect there is no growth when you do something like this without continuing to invest. She told me it isn't possible to keep investing, is this right? Should we take that money out and invest it in something different? She's been at her current job for 3 years, and has now been putting into a deferred comp option, her pension(she's a state worker and who knows how this will turnout), and we are trying to do a savings account on top of our checkings. Should we consolidate all of these investments, and try something with a higher return?

Any advice is well appreciated.

zoggle101 said:

We just started a money market account for our 1 y.o. son. Is this the best way to save money for him when he gets older? We put 1200 in to start and each of us puts $25 a paycheck. I get four checks a month and my wife gets two. What type of potential earnings should be expected at this rate?

Also, my wife worked 8 years for University of IL Springfield and has a pension with them that she isn't still investing in. I expect there is no growth when you do something like this without continuing to invest. She told me it isn't possible to keep investing, is this right? Should we take that money out and invest it in something different? She's been at her current job for 3 years, and has now been putting into a deferred comp option, her pension(she's a state worker and who knows how this will turnout), and we are trying to do a savings account on top of our checkings. Should we consolidate all of these investments, and try something with a higher return?

Any advice is well appreciated.

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529 plan for college savings is a fabulous idea. Lots of different investment options available. Check it out.

zoggle101 said:

We just started a money market account for our 1 y.o. son. Is this the best way to save money for him when he gets older? We put 1200 in to start and each of us puts $25 a paycheck. I get four checks a month and my wife gets two. What type of potential earnings should be expected at this rate?

Also, my wife worked 8 years for University of IL Springfield and has a pension with them that she isn't still investing in. I expect there is no growth when you do something like this without continuing to invest. She told me it isn't possible to keep investing, is this right? Should we take that money out and invest it in something different? She's been at her current job for 3 years, and has now been putting into a deferred comp option, her pension(she's a state worker and who knows how this will turnout), and we are trying to do a savings account on top of our checkings. Should we consolidate all of these investments, and try something with a higher return?

Any advice is well appreciated.

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zoggle - a money market account is a lot like a checking account with some key differences.

(1) You usually are limited in how many transactions you can make per month to something like 5 or 6.
(2) Sometimes you have to make transactions (withdrawals) in large amounts like $250 minimum.
(3) There is an animal called a money market mutual fund which is not FDIC insured in contrast to a regular money market fund which usually is.

They generally draw very little in the way of interest, have almost zero risk and very little upside. Usually they lose money vs. inflation over long periods of time.

Money market funds are perfect for an emergency fund from which you may need to remove money in a pinch. I keep one-half year's salary in a money market fund as an emergency fund.

To save for a kid as young as yours you can probably afford to take significantly more risk. If the money is earmarked for his higher education you can open a 529 account. They let your money grow tax free as long as you remove the money for college expenses. If not though you pay a big penalty. If you can put $150 a month away for him on top of the $1200 you could expect to save about $70K in a 529 that draws 8% by the time he goes to High School. In a taxable account that grows at the same rate you'd have only $57K if you are in the 25% bracket. So it can make a big difference. One nice thing about 529's is that you still own the money so the kid cannot go buy a corvette when he turns 18. You get to dole it out. Plus you can change the beneficiary to another kid or even your wife if she goes back to school for some reason. Most 529's have a variety of investment options. The Ohio one is highly rated (you don't have to invest in your own state) and let's you invest in an age appropriate account where they manage everything for you using Vanguard's low expense funds.

As for the pension question, you have to be careful. I have heard that it is usually best to create a rollover IRA for when you leave a company and take a pension with you. You really have to be careful though because if it is done wrong you can incur penalties that can be huge. Under no circumstances can you accept a check and put it in your checking account and then write a check to the IRA company. You cannot do this even for 5 minutes! Fidelity or Schwab or similar company have people that know exactly how to do this and can walk you through the steps if she chooses to move the pension. Pension plans often have limited investment options and high expenses. You'd be wise to get advice from a professional and not someone like me that answers your questions on line. We moved my wife's pension to a Rollover IRA when she left her job a long time ago. I've always had a self-directed pension that follows me wherever I go so I don't have a ton of personal experience with this part of the question.

Thank you for all the information Dayton, and appreciate you taking time out of your day to offer guidance and advice. I'm going to dig into some of the stuff you mentioned a little further.

70K might pay for a year of college by the time he hits high school, but anything is better than nothing.

I might have to talk to the wife about the whole private school education she wants to give our child. I'd rather put the 6-8 thousand we'd save by sending him to a solid public school around here into investments like the 529 you mentioned instead. A lot more money for him if he decides to become a doctor, engineer, etc... that will take 6-8 years of college to complete. I don't know how she'll respond to that because she's already decided its going to be an expense in our budget similar to the 7k we spent on child care last year.

zoggle101 said:

Thank you for all the information Dayton, and appreciate you taking time out of your day to offer guidance and advice. I'm going to dig into some of the stuff you mentioned a little further.

70K might pay for a year of college by the time he hits high school, but anything is better than nothing.

I might have to talk to the wife about the whole private school education she wants to give our child. I'd rather put the 6-8 thousand we'd save by sending him to a solid public school around here into investments like the 529 you mentioned instead. A lot more money for him if he decides to become a doctor, engineer, etc... that will take 6-8 years of college to complete. I don't know how she'll respond to that because she's already decided its going to be an expense in our budget similar to the 7k we spent on child care last year.

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Sounds wise if you have access to a good public school.

Talked to the wife about the 529, and the money market account.

Of course she knew already what was going to happen with this. She started the money market account with the idea that we would let it grow over the next year into 3K with our additional contributions to it over that time. When it hits 3k than we are going to put it into an IRA.

I talked to her about the savings we would have instead of the private school idea to invest more into a 529 plan. She didn't like the idea of the 529 because "what if he doesn't go to college(acted like I shot myself in the head, she laughed)". I responded with "we're not wasting money on a private school education if you feel that way". She agreed, but let me know she plans on moving us to Rochester, IL before he enrolls in Kindergarten because her best friend from work lives out there with a child a couple months young who will be our sons best friends. I guess she believes that will happen when you have no idea if these kids will like each other in 10-15 years. Women???

I told her we don't want him buying a corvette at 18 with all the money we are going to try to save/investe for him which couldn't happen with the 529 plan. She still responded with the idea that he might not go to college which if you knew her isn't even an option for this kid, but wants the money to be free for him to do as he pleases. I think we'll still start a 529 plan, but the wife said that in the IRA you can install an optioin for part of it to be for school.

zoggle101 said:

Talked to the wife about the 529, and the money market account.

Of course she knew already what was going to happen with this. She started the money market account with the idea that we would let it grow over the next year into 3K with our additional contributions to it over that time. When it hits 3k than we are going to put it into an IRA.

I talked to her about the savings we would have instead of the private school idea to invest more into a 529 plan. She didn't like the idea of the 529 because "what if he doesn't go to college(acted like I shot myself in the head, she laughed)". I responded with "we're not wasting money on a private school education if you feel that way". She agreed, but let me know she plans on moving us to Rochester, IL before he enrolls in Kindergarten because her best friend from work lives out there with a child a couple months young who will be our sons best friends. I guess she believes that will happen when you have no idea if these kids will like each other in 10-15 years. Women???

I told her we don't want him buying a corvette at 18 with all the money we are going to try to save/investe for him which couldn't happen with the 529 plan. She still responded with the idea that he might not go to college which if you knew her isn't even an option for this kid, but wants the money to be free for him to do as he pleases. I think we'll still start a 529 plan, but the wife said that in the IRA you can install an optioin for part of it to be for school.

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Keep in mind you cannot have an IRA in your kid's name. It would have to be in your name or your wife's name. While he might be able to withdraw it for college, he could not for any other reason (just like the 529). Ultimately that would be your money, not his, and you could not withdraw it before you're a geezer without a penalty.

Personally I think everyone should save for their retirement before saving for their kid's education, so an IRA isn't a bad idea from that standpoint. That's especially true if it's tax deductible. If your wife has a pension, that may not be feasible but she can still have a traditional IRA (non-deductible). I think an IRA is for a completely different purpose than a 529 though.

Time to go back in front of the firing squad with this new information. Thanks again Dayton.