The Best Investment Advice You Will Never Get

Back in 2004, as Google’s IPO was approaching, investment advisors from major financial institutions were circling Google Headquarters to be the first to offer their investment schemes to hundreds of young employees who would soon become millionaires.  Google hired well known financial professionals to give workshops to their employees to educate them before allowing the vulture’s access.  These financial professionals, such as John Bogle (Vanguard), Burton Malkiel, and Bill Sharpe gave surprising advice.  "Don’t try to beat the market." Invest in mutual fund indexes.  

There’s an article in San Fran Magazine that reports on this story and about the exorbitant fees that managed mutual funds charge which could cost you 50% of what you would have made in a 36-year period.  The best investment advice is to put your money in a low-fee index fund, thereby maximizing your return.  The article is about two years old but definitely worth the read.

The best investment advice you’ll never get

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Immersed In the Stock Market

For the past week or so since I mentioned that I was thinking about getting into trading stocks again, I’ve been immersed in the subject.  Initially it will take a little focus off of forex until I can balance the two.  I realize I have a lot to learn about the stock market with its multiple exchanges, multiple industries and thousands of securities.  

Right now might not be the best time to go long on any stocks considering the hit the market has taken but I also figure that it may be the best time to learn.  I’ve heard too many times how people have successfully traded during the "good times" when the market is flying high (e.g. dot com) only to see them lose it all when the markets turn sour.  

Like I said, there’s a lot to learn but I’m going to concentrate on reading and getting organized.   I subscribed to the Kirk Report’s members only site because I’ve followed Kirk for years now and have always respected him.  For only $50, there’s a lot of information that he provides that can benefit me.  I’ve always been interested in his methodology and how he uses fundamental, technical analysis, and stock screening of off the beaten path stocks.  

Although I’m getting more interested in the stock market, I will continue trading Forex.  Becoming a successful forex trader will remain my primary objective.  We’ll see how all of this goes.  It’s hard enough finding enough time in the day to write on this blog.  

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Trading Forex and Trading Stocks

I’ve been trading forex for about 2 1/2 years now.  I’ve had some breaks in between but overall, it’s been a pretty steady run.  While I’ve been trading forex, I haven’t strayed outside of this market other than investing in mutual funds or index funds.  Last night I started thinking about getting more involved in other markets, specifically the stock market since I have previous experience.  I’ve traded stocks in the past turning a small profit but I never got immersed in it.  

Today I searched around for a stock market demo account but unlike forex, you’re not going to find any of your major stock brokers that offer them; at least I don’t know of any that do.  I stumbled over a bunch of "fantasy" stock market websites, some free, some that cost a fee to join individual contests.  Marketwatch has good stock coverage and offer a virtual stock exchange but I liked WallStreetSurvivor much better.  Wall Street Survivor offers prizes and though they’re not easy winning since there are thousands of contestants, I liked that the website was a dedicated stock market fantasy game and free.  They currently have a $50,000 contest that runs from January 1st until sometime in April, daily prizes, and weekly prizes.  I’m pretty excited to get into the initial preparation phase of possibly trading in the stock market.  When I traded stocks in the past, I didn’t use technical analysis, position sizing, or much of anything I use now so it will be interested to see how I can transition from trading forex.  I’m certainly not taking the focus off of forex trading, just trying to expand my horizons….

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No Cost Trading

I haven't traded individual stocks in over two years.  At one point I was concentrating a majority of my efforts in learning to trade the stock market.  I may be interested in getting back into the stock market in addition to trading forex but the question is, is this a bad time to do so? Considering the bull market we've had going for years now, I'd be a bit hesitant to start now.  Contradicting my last sentence, according to secular market trends (a long-term trend lasting anywhere from 5 to 25 years) we've been in a bear market since the year 2000.   Previous bear markets lasted 16 years (1966-1981), 5 years (1937-1941), 4 years (1929-1932), and 20 years (1901-1920).  Bull markets lasted 18 years (1982-1999), 24 years (1942-1965), 4 years (1933-1936), and 8 years (1921-1928).  Timing is difficult and when everyone is screaming, "we've reached the top" a lot of times this just isn't the case. 

For instance, I bought a house back in 2003 when the financial news outlets were warning home buyers that the prices couldn't go much higher.  I sold the house over 3 years later with a decent profit.  I didn't care what they were saying about the housing market because all I cared about was that the timing for me at that given moment was ideal.  I had the down payment, interest rates were low, and I was at the stage in my life where people typically buy homes (family, tax purposes, etc.) So my deciding to get back into the stock market will be for reasons of my own and not necessarily of the so-called experts.  Like I said earlier, I may be hesitant but we'll see.

The whole point of this post was to mention a stock broker that offers $0 trades.  From what I've read, a lot of the larger brokers may be moving towards this business model in the future and will try making money on other services.  The broker is Zecco.  In addition to their $0 trades, they also have no minimum balance required.  They were also mentioned in a column yesterday on USA Today.  Some of you may already have heard about Zecco but since I've been out of the stock market game for a while, I found it very appealing.  The next question would be where to find a low cost charting provider.  There's tons of free market data information on the web though as long as I'm not trading stock intraday but I'll continue to look further into this also.   

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