I'm a 21yr. old, soon to be college graduate, possibly on his way to grad school, and I want to have a hand at the stock market. I'm planning to start with a measly two grand or so in hopes of gaining some capital.
I just finished reading 'Real Money,' by Jim Cramer, where he outlines some of the basics of stock investing - Multiples, P/E ratio, dividends, yields, etc. I'm not sure if I've attained sufficient knowledge to jump into stocks, or whether I should do a bit more reading on the field.
Being a complete beginner, what resources would you recommend to help lay the basic foundation? And after I've obtained enough information, what are the initial steps do you suggest I take? What tools do you use? Suggestions of brokers? How's the market treated you? What kind of 'investor' are you - a trader or more long term?
I think it'd be interesting to hear the hacker's guide to investing, although often times the market is wildly irrational - a trait most of you hackers lack from what I've read here.
So, everything from suggested investment methods to tools you use to keep track of what's happening.
Thanks all.
- what advantage do you think you will have over others? Unless you have friends in high places and plan to do insider trading (which is very illegal), you will be one more amateur playing against the professionals in the banks and hedge funds. The pros work at least 12 hours a day and have years of experience. They are also better connected than you. So... what advantage do you think you have? If you can't answer this simple question, I advise you to choose a game where you have an advantage.
- if you think I am being too pessimistic and defeatist, do read Prof. Larry Harris' paper The Winners and Losers of the Zero-Sum Game: The Origins of Trading Profits, Price Efficiency and Market Liquidity at http://www-rcf.usc.edu/~lharris/ABSTRACT/Zerosum.htm
- be ready to lose your $2000 (like someone else mentioned before) and accept it as a "price" to pay to learn something about investing.
- brokers are crooks. All of them. They will "rape" you whenever they have a chance.
- don't invest in stocks, invest in yourself. If you are on HN, I assume you like to write code. Investing $2000 in an idea you might have will likely yield better dividends in the long term.
I am not trying to be pedantic or anything. I am only trying to put things in perspective. Everybody would like to make money in the stock market, but few manage to do it... and the ones who do manage to make money consistently over the years (and within the law) most likely have years and years of experience and hard work under their belts.