George asks…
Short term stocks to invest in? Stocks for long term?
Right now a lot of stocks are at an all time low, Is there particular stocks that i can watch and invest in make money in a short period of time. Like Ford, they went down to 1.90 then they came out and said they dont think they need the bail out money and there stock went up +120%.
New administration is coming into office and they have talked a lot about alternative energy funds, this makes me think for the next couple of year energey and renewable energy industry like: nuclear, cheasePeak and other companies will do good. So my second question is what are good long term industries/stocks to invest in? (symbols of the companies if you know any particular ones)
The Expert answers:
Long term – Strong financial companies such as Bank of America (BAC) or Goldman Sachs (GS)
Short term – General Motors (GM), E*Trade Financial @ $1 – 1.15 strike(ETFC)
A note on GM, you could very well lose your entire investment if they do not get a bailout. Also the bailout won’t make their stock price go as high as many people think it will, my guess is in the $7-9 range but not instantly.
Laura asks…
Do you think we should regulate the trading of stocks much more than we do?
Think about this. The stock marekt consists of a lot of people who get rich from buying and selling stocks. And these people get rich because they are some of the smartest in the country, and have gotten really good at reading the market.
Now I ask you, what value do these people add to society??? I don’t see it. It seems to me that all they’re doing is a form of legalized gambling.
Now what if we were to take all of these highly intelligent people and ask them to come up with cheap alternative energy, or something of that nature? Sounds like a good idea no?
And speaking of energy. Did you know that the reason why the price of oil is where it is today is mostly due to speculation. Current market fundamentals do not actually support $96/barrel oil. Supplies are actually decent right now. Yes, of course the price would still be high, but not $96/barrel. (I work for an oil company)
What do you think?
From me to you: I agree that the stock market itself does have value. My issue is with how shares are traded without creating any new wealth. Seems like a zero sum game to me.
Yes, I think I could teach a class on what makes up the price of oil. I just don’t think the speculation part is necessary.
Samuel D: Obviously not, but surely there is something highly intelligent people can contribute to society.
The Expert answers:
It takes money to “play” the stock market, and without money, businesses wouldn’t prosper. Businesses need the stock market and investors. If investors make money by picking and choosing the right companies, what’s wrong with that?
Some investors manage money for others so they can earn enough to retire. Again, that’s fine, too. But just because they’re good at investing doesn’t mean they can invent anything. That’s a whole other class of people. I say do what you do best (that’s legal) and you’re contributing to society.
As far as the price of oil…there are many factors that determine its price, not just supplies. Look around the oil company you work for and see how many different divisions it has: exploration, development, marketing, etc. All these divisions have a role in the final price of oil.
William asks…
Investing in the stock market help?
I am 17 years old, I already have college payed for. Instead of wasting my money I’d like to invest it. What stocks should I invest in, I was thinking healthcare or possibly alternative energy companies. Ideas?
The Expert answers:
Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot’s Guide to Investing and Investing for Dummies. You can probably find them in your local library. Before doing anything, make sure you have enough in savings in case things go south for at least 6 months.
You need to learn also some important concepts in investing, such as dollar-cost averaging and compound interest – two of your best friends to make money for the future.
Also you need to think of what you are investing for exactly. Different people have different goals. Is it for more income? For retirement? For tuition? Plus how long do you want to invest? How much risk are you willing to assume?
If you want to get into the market but don’t know what stock to pick, consider an index fund. Instead of throwing all your eggs into one basket (one company), index funds can invest you in dozens, hundreds, or thousands of companies all at once and so there is less risk. This protects you if any one company or industry runs into trouble. For bonds, the returns are much less, but more solid.
If you like Health Care, look into a Health Care mutual fund.
You first need to pick a company to invest through. Some of the best are Vanguard, T. Rowe Price, Fidelity, and Schwab. Avoid the big banks like the plague. Don’t let them rip you off with loads (sales charges) and fees. Check how much the company charges you as an expense ratio. A good one might charge you 0.2-0.8 %. If they charge more than 1% than go somewhere else. And if they charge any kind of 12b-1 fee, hold on to your wallet and RUN.
For more information, try looking at
https://personal.vanguard.com/us/funds/vanguard/all?sort=name&sortorder=asc
and play with it, comparing funds with more or less risk.
Do some reading online such as
http://www.vanguard.com/us/insights
for some important investment truths.
Steven asks…
Other than ethanol, did Bush propose anything specific on alternative fuels? Will oils drop & alternates rise
tomorrow? I only read the AP synopsis and it wasn’t clear what he was proposing, just jawboning against Middle East oil and something about ethanol in 6 years. I’m already using ethanol, so I don’t know what the hold-up is with that. Anyway, did anybody see any indication fuel cell or solar energy stocks will get a pop tomorrow, or any other winners or losers in the stock market?
The Expert answers:
No oil prices won’t drop and the oil companies will continue making huge profits. Bush has interests in oil companies thats why the prices began climbing, the day he came into office. Katrina was a legit excuse for raising prices so oil companies won’t let go of this excuse.
Sandra asks…
Why should a stock and or bond investor include alternative investments in their portfolio?
A. Real Estate Benefits
B. Energy Benefits
C. Gold Benefits
D. Other Commodities Benefots
The Expert answers:
Alt. Investments is another asset class. It’s relevant for purposes of diversification. Theoretically, it’s correlation differs from stocks/bonds and moves in an opposite direction (i.e. When stocks drop or go sideways, alt. Investments should not drop or go sideways also).
Commodities and Real Estate are arguably their own asset classes but often are alt. Investments.
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