How do I open a small stock trading account? - PeachParts Mercedes-Benz Forum

suginami · #1 11-08-2007, 02:45 PM

I am not in favor of those who trade stocks as a vehicle for "investing".

Those that buy stocks for a short term gain are gamblers, not investors.

Investing is a long-term proposition, and holding stocks or bonds for the long haul is essential for optimal returns.

Only buy stocks that you plan on holding for the forseeable future, and avoid the two major pitfalls that lead to poor returns in investors portfolios: rapid turnover and market timing.

Why don't you follow the example of Warren Buffet?

Warren Buffet is my hero and is without a doubt America’s most successful investment manager. The turnover in his portfolio is not only low, it is nearly non-existent. His philosophy is best explained in this 1996 Annual Report of Berkshire Hathaway: “Inactivity strikes us as intelligent behavior. Neither we nor most business managers would dream of feverishly trading highly-profitable subsidiaries because a small move in the Federal Reserve’s discount rate was predicated or because some wall street pundit had reversed his view on the market. Why, then, should we behave differently with our minority positions in wonderful businesses?” “…we keep most of our major holdings regardless of how they are priced relative to (current) intrinsic business value…a ‘til death do us part attitude… As investors, our reaction to money managers who trade stocks daily is much like our attitude toward space exploration. We applaud the endeavor but prefer to skip the ride. …Indeed ‘institutional investor’ is becoming one of those self-contradictions called an oxymoron, like ‘jumbo shrimp’, lady mud-wrestler’, and ‘inexpensive lawyer.’”

Skid Row Joe · #2 11-08-2007, 03:54 PM

Quote:

Originally Posted by suginami

I am not in favor of those who trade stocks as a vehicle for "investing".

Those that buy stocks for a short term gain are gamblers, not investors.

Investing is a long-term proposition, and holding stocks or bonds for the long haul is essential for optimal returns.

Only buy stocks that you plan on holding for the forseeable future, and avoid the two major pitfalls that lead to poor returns in investors portfolios: rapid turnover and market timing.

Why don't you follow the example of Warren Buffet?

Warren Buffet is my hero and is without a doubt America’s most successful investment manager. The turnover in his portfolio is not only low, it is nearly non-existent. His philosophy is best explained in this 1996 Annual Report of Berkshire Hathaway: “Inactivity strikes us as intelligent behavior. Neither we nor most business managers would dream of feverishly trading highly-profitable subsidiaries because a small move in the Federal Reserve’s discount rate was predicated or because some wall street pundit had reversed his view on the market. Why, then, should we behave differently with our minority positions in wonderful businesses?” “…we keep most of our major holdings regardless of how they are priced relative to (current) intrinsic business value…a ‘til death do us part attitude… As investors, our reaction to money managers who trade stocks daily is much like our attitude toward space exploration. We applaud the endeavor but prefer to skip the ride. …Indeed ‘institutional investor’ is becoming one of those self-contradictions called an oxymoron, like ‘jumbo shrimp’, lady mud-wrestler’, and ‘inexpensive lawyer.’”

People have zilch attention spans, is what I surmise, suginami. The masses are clueless on acheiving personal financial wealth.......

When I started buying shares of Berkshire-Hathaway stock, in the $1,000 a-share-range over two decades ago, I noticed how people involved in financial sales products, would instantly become very uncomfortable in comparing their products to my Berkshire holdings. Financial sales people (and their sheep) have nothing that can compare to Berkshire's 22%+ a year, compounded performance since 1965.

Berkshire-Hathaway is currently trading in the $135,000 a share range........

cjlipps · #3 11-08-2007, 07:15 PM

Don't do it, man! The only way I would advocate such an account is if I could take the specified amount of cash (in your case, $500) out of the client's pocket and burn it on my desk while he watched-and he didn't twitch. Stock accounts traded short-term are, as many have mentioned here, gambling. Get with an adviser you trust and set about building a long term, diversified, appropriate-for-you portfolio.