Interested in buying stocks, can someone help? Beginner - I know NOTHING.

[mat420]

I think its the way its presented. I think I may like stock trading Airelon. All of my teachers sucked then becuase I've always hated school. The only good classes were the ones with laid back teachers that we took advantage of when I was younger. So what do you guys usuallu do if a stock is falling? Sell or keep with it? Idk what that means " are you sure u want to trade the stock or do u want to trade futures," I was just told to invest in NMX, buy ..shares is it called? and sit on them for years. Thanks so much, again, for all of your help everybody

[aquaswim47]

A bad company is a company that will have substantial difficulty bouncing back. Increasing cash outflows from operating activities is one sign. Another sign is when inventory increases at a high percentage to sales. Another sign might be when the cash ratio (cash to current liabilities) decreases or when the company's debt increases materially. Increased competition may also result in a decision to sell.

You sell when the fundamentals underlying an investment deteriorate (you cut your losses) or you wish to take profits.

What is a value stock?

A value stock is a stock that is cheap compared to its competitors, while having just as good financials or better. It might be a turnaround company, a good company, or a great company (best of breed). Often times, a value stock will have a very low PE ratio and/or a very low PEG ratio. JCP has had a PE ratio under 10.0 and and PEG ratio of under 0.75. That's incredible for a retail stock! It currently has a PE of 10.5 and a PEG of 0.77. That means the stock has a PE ratio that is less than its growth rate! I heard that it will increase its size over the next 4-5 years and has a cash ratio of over 90%.

I bought JCP at $74 and stuck with it even at $61 per share since its cash ratio increased. Also, I believed the sector would be minimally affected.

LEND would have qualified as a value stock under $6 per share (it's speculative), NSTK under $13.75 per share, CHTR at under $2.50 per share, GS at under $180, and JCP under $70.

GME on the other hand is a growth stock in which you're hoping will increase in value.

[derrekmay]

hello guys,
Have to say this is a verry nice post, good feedback on how beginners have to start and also a good question!

[mat420]

you've almost completely lost me...im 19 so all the "big words" confuse the hell out of me, as ignorant as it sounds. peg ratio? peg ratio? huh? so youd recommend buying JCP and sticking with it for the next 4, 5 years? what would u buy? $500? speculative? this whole paragraph im like, lost :\

thanks for all the help!

[Airelon]

PEG RATIO defined.

Speculation defined.

Hope these help. When it comes to trading, knowing all of the 'tools' to help you build your illustrative 'house of trading' will definitely help you out.

[Fredledingue]

19 is the perfect age to start.

[Airelon]

Originally Posted by Fredledingue

19 is the perfect age to start.

You know . . . I would have to agree.

God, if I knew at 25, what I know now? GOD would I be even more ahead of the game. The OP should be aware that the first few years will more than likely be losing years. But after that, it's all uphill. God I wish I had started at this when I was 19, and I am convinced I will teach my son the tools of the trade when he is young.

[Fredledingue]

It's agreat plus to learn early. Whether you earn or lose in the first year also depends greatly on the stock market move on this year.

I started in 1997 and did great the first year until i got hosed in the 1998 russian crisis, then 2 years later in the tech bubble. Had I started in 1998 in the midst of the russo-asian crash, I would have made my first teps in an hostile environement and would have been nuch nore cautious.
I thought I was a genius because I made over 100% unrealized gains on high tech stocks until the bubble burst and I didn't believe it was a bubble so I lost all my gains and much more.

If someone starts investing in a good year he will thing he's a champion or something and will be burnt hard in the first market correction.

You realy learn when you lose. It's when you lose that you try to understand why you lost, and start to learn deeper.
When you win, you thing you just picked the right stock out of good intuitive chart reading and fail to analyse the true reasons.