I'm considering investing heavily in the economic sector

[Balki]

Originally Posted by Jason

11.3% isn't much? Volatile market? What determines if its volatile?

if it goes down 10% the next week.

[Jason]

Wouldn't that just mean the stock is volatile? The "market" seems pretty steady these days, especially compared to late 08-early 09.

[Balki]

oh, yeah, the market has been fairly stable this year (i was indeed thinking volatile stock).

fuck, Corey Haim is dead. SELL SELL SELL!!!

[faulty car]

Originally Posted by ettsn

Unobtanium mining is a good bet, so long as they can solve the 'natives' problem.

Didn't we find some lithium deposits near our northern border recently?

[ettsn]

Was it under a great big tree?

[faulty car]

are there big trees along the continental divide?

This presentation is pretty cool too.

[ettsn]

I think I'm going to stop trying to be funny in this thread.

[Thuban]

I'm been saving a few hundred dollars a month and thinking about investing since I had about $10k in my bank account and now it's at $22k and I still haven't started. It just sitting there depreciating.

Last year when the DOW Jones got down to 7000k, I thought it was a good time to get in but I just didn't know how to get started. I've been trying to do some reading to get more educate about it but I just get overwhelmed. And I think the more I read the more confuse I get and I feel less confident. I read one article saying that I should invest in these types of funds. The next article I read saying there's a bubble in such and such coming, and the worst is yet to come, then the next article saying don't put too much worth to the advices of expert in magazine and on TV because most of them have their own motivation and if it's really worth anything they would be giving it for free on TV.

[ettsn]

Is this for capital gains in the near term, or as retirement? How old are you currently?

[Thuban]

I'm 27. Probably half and half, mostly I just want to put the money to some use and not have it sit there and lose value due to inflation.

[mc_hammer]

Originally Posted by Jason

11.3% isn't much? Volatile market? What determines if its volatile?

High unemployment rates. A housing market that still hasn't returned to it's 2001 salary/price ratio in many countries. Growing debt and a large deficit plus an imminent interest rate rise.

Originally Posted by Balki

if it goes down 10% the next week.

Exactly. The day to day rise is about 5% max. 5% daily changes mean nothing special even in a stable market. If it moves by 15% in one day that means that someone somewhere has got news of something.

[Jason]

Originally Posted by mc_hammer

High unemployment rates. A housing market that still hasn't returned to it's 2001 salary/price ratio in many countries. Growing debt and a large deficit plus an imminent interest rate rise.

Those aren't terms that describe volatility, imo. They do describe a relatively weak market though.

If employment numbers were jumping up and down. If housing numbers were jumping up and down. If debt and deficit were jumping up and down. If interest rates were going up and down.

Then I'd see that as volatile.

But, thats just semantics. I am admittedly ignorant on economics, and I'm sure you have a better understanding of this subject, so I'll trust what your description of volatile.

[ettsn]

Originally Posted by Thuban

I'm 27. Probably half and half, mostly I just want to put the money to some use and not have it sit there and lose value due to inflation.

First, I would open a Roth IRA. I use Fidelity, but there are plenty of good brokers. A Roth will grow tax-free (you will not have to pay taxes on the capital gains, so long as you use it for retirement). If you hurry, you can put the max amount in for 2009 still, as well as 2010. That would be $5000 each tax year, currently. For retirement from cash you already have, this is absolutely the best place (unless you aren't in the US, and then I'm not sure what your best options would be). That would soak up the first $10k, and be a damn good place to put it. As far as what funds, look for a targeted retirement fund such as Fidelity's Freedom Funds. At your age, you'll want something like the 2045 fund (target retirement date of 2045 or so). This will have aggressive investment portfolio now, and get less aggressive as you approach your retirement. It's like having a personal money manager, but without all the fees.

Second, open a trading account and put the rest in there. I would split your funds into bonds and stocks, but not directly. Buy a couple bond mutuals that are safe and sound, and then put the stock portion into an S&P500 index fund. You'll see more aggressive growth on the stock portfolio of course, but also almost no risk or loss on the bond part. How much in each? Totally up to you. Whatever you're comfortable with.

[mc_hammer]

Originally Posted by Jason

Those aren't terms that describe volatility, imo. They do describe a relatively weak market though.

If employment numbers were jumping up and down. If housing numbers were jumping up and down. If debt and deficit were jumping up and down. If interest rates were going up and down.

Then I'd see that as volatile.

But, thats just semantics. I am admittedly ignorant on economics, and I'm sure you have a better understanding of this subject, so I'll trust what your description of volatile.

Is nitroglycerine volatile before it goes off, or just after?

[Lordy]

Hey ettsn - nice sound strategies there...you really know your stuff! BTW what exactly is an IRA? I'm not too familiar with the American system. Is it sort of like the RSP system we have here? Here whatever you contribute into a registered fund (guaranteed or not) gets deducted from your taxable income for the year you put it in, and (hopefully) grows until retirement where you can withdraw it without penalty, (of course you pay tax on it at that point). I try to do it every year.

Anyway, to the thread starter...if you want to play with stocks and are willing to be creative, you can try spreading your money around in a bunch of different stocks rather than dumping it all in one. Try to find one company in each sector (not too sure how many sectors there are) which will diversify your portfolio, and reduce risk. The less volatile the stock, the better. If you'd like to generate cashflow at the same time, then sell one month call options, (with a higher strike price), on those stocks every month. When those options expire in the following month, you do it all over again, and again, and again...in time, (if you don't get exercized), you can actually reduce the cost base of your stocks to zero. If you do get exercized and have to give up the stock, you still make money cause you're selling at a higher price - plus you get to keep the premium you charged for the option. This is commonly referred to as the "stock rental business".

I have an account with optionsxpress.com that I practise with and do this all the time.

[mc_hammer]

http://news.bbc.co.uk/1/hi/business/8561319.stm

The US government recorded a budget deficit of $221bn (£147.6bn) in February - the largest monthly deficit in its history.

The total deficit since the beginning of the fiscal year in October now stands at $651.6bn, the figures from the US treasury show.

That puts it on track to beat last year's record annual budget deficit of $1.4tn.

Treasury Secretary Timothy Geithner called the deficit "unsustainable".

However, he maintained that running the deficit was helping the US continue its recovery from the recession in the short-term.

Like the UK, the US is suffering from a fall in tax receipts due to tough economic conditions, while relying on increased spending to drive the recovery.

But analysts called the figures "frightening".

Earlier this year, the Congressional Budget Office (CBO) said it expected the budget deficit to fall this year as the recovery takes hold.

[Thuban]

Thanks for the advices ettsn. Do you know when the deadline is for 2009 contribution?

Lord S, from what you describe of the RSP it sounds just the traditional IRA down here. With Roth IRA, you don't get a tax deduction when you put it in, but you don't have to pay tax when you take it out.

[ettsn]

Deadline is April 15 (tax day). Get on it, son!

Lordy: IRA is Individual Retirement Account, and sounds pretty much exactly like what you describe. We also have the Roth option, which is funded with after-tax cash, but grows tax free and is dispersed at retirement penalty and tax free. Great option, but limited to $5000 per year, or up to max of what you've earned if under $5k.

[Lordy]

I see...your Roth IRA sounds just like our TFSA (tax-free savings account). Except you guys get a cooler name.

So the deadline for your IRAs is April 15th? That's wicked...ours for RSP is the last day of February (or first business day of March if Feb 28 falls on a weekend). That's so unfair cause many employers don't issue statement of earnings (T4s) until the final week of February...leaving you a whole three hours to roughly calculate your taxes and make a decision about how much you want to contribute.

[ettsn]

Yeah, you have to finalize your previous year's IRA (both conventional and Roth) before you file taxes, so it shares the April 15 deadline.

[Sad, little man]

Interesting interview about Citi with someone who seems to know what he's doing:

http://manualofideas.com/blog/2010/02/post_16.html

I have to say... When a company as large as Citigroup has a market cap of 114bn, BofA is at 170bn, and JP Morgan is right there at 171bn, someone is looking undervalued.

With the lock on the government selling its stake of Citi expiring today, they're free to pull the trigger any time, and then you're back to a completely independent, giant bank, ready to return to making massive amounts of money like giant banks do.

And let's face it, the government will never let Citi go down the tubes again after pouring everything they already have into it.

"I will not over-expose myself to one company... I will not over-expose myself to one company."

[mc_hammer]

Originally Posted by Sad, little man

With the lock on the government selling its stake of Citi expiring today,

Well there's one good reason to wait.

[Sad, little man]

Not really. The prevailing thought is that any affect the sale of the government's share of Citi has will be more than outweighed by the desire for stock in a then independent Citigroup. The stock may take a hit in the short term, but it's hard to say how long (if at all) the price will stay low. But, it's a good bet that in the long term once the government has its hand out of things, the stock will rise higher than it is now. This will be both because the government will not have such a heavy hand over Citi anymore, and it is also a huge vote of confidence to be able to say "Ok, we don't need to prop you up anymore."

[mc_hammer]

Better to buy when it takes that hit than before though. If you know a hit's coming, why stand there and take it?

[Sad, little man]

Because trying to catch a market at the bottom is extremely difficult. For all we know, the government could announce they're selling their stake and 5mins later the stock could begin taking off. All the while I would be sitting on the sidelines waiting for the big drop. A reasonable investment strategy is to buy now with the belief that things will be a far cry from where they are now in a year. It might take a drop, but it may also skyrocket. Those types of movements are irrational, short lived, and unpredictable. The idea is just to buy when it's generally a good value and hang on through the ups and downs. Eventually, if it was a good call fundamentally, you will be on top.