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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:34 pm 
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Explain how you decide whether its advantageous to rent or buy a home.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:36 pm 
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thodoks wrote:
given2trade wrote:
The balance sheet is tremendously important. In the fall of 2008, I owned no companies with any debt.

Dumb question, but is there some sort of repository of firms' balance sheets? I can't just type "companies without debt" into google and expect to find anything meaningful. And there are so many companies out there I wouldn't know where to start.

I guess my question is if I held a similar investment strategy, where would I go to start analyzing balance sheets and income statements?


Yeah, I have this same problem. I have some risk capital that I'd be willing to dump in the right stocks, but everything I look at seems to have something wrong with it (lots of debt, shaky earnings, overly optimistic earnings outlooks, etc.). I think I like to look at myself as a value investor, but nothing seems to be a good value.

And how do you account for things like Pfizer deciding to market a drug that kills people? Luckily for their investors they only got a little fine, but what if they actually get in trouble for it?

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:40 pm 
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pnjguy wrote:
so where's a good place to buy/sell stock/bonds for a beginner.?


It depends on how small your account will be. Commissions will eat you alive if the account is too small. A good way to start investing (with a small amount of money) is http://www.sharebuilder.com/. If you have at least $5000, you can open up an online brokerage account with Scottrade or TD Ameritrade You cannot actively trade, however. $7 or $10 a trade will really hurt your returns. I've never used sharebuilder but they are reputable.

I use Interactive Brokers but its not user friendly and recommended for a beginner.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:45 pm 
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given2trade wrote:
pnjguy wrote:
so where's a good place to buy/sell stock/bonds for a beginner.?


It depends on how small your account will be. Commissions will eat you alive if the account is too small. A good way to start investing (with a small amount of money) is http://www.sharebuilder.com/. If you have at least $5000, you can open up an online brokerage account with Scottrade or TD Ameritrade You cannot actively trade, however. $7 or $10 a trade will really hurt your returns. I've never used sharebuilder but they are reputable.

I use Interactive Brokers but its not user friendly and recommended for a beginner.


Sharebuilder has $10 commissions, which is a little steep for small amounts. Plus I've seen their site go down during high volume times. It's really meant for buy-and-hold. Their automatic investment plan ($4 commission) is good if that's your plan.

I also have a Scottrade account, which has $7 commissions. It's a little cheaper, slicker, and more full-featured than Sharebuilder. If you're going to be making a few trades a week, I'd definitely go with Scottrade over Sharebuilder.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:48 pm 
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what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.


Do i rent, or try to buy a place? Save more? How should I allocate my funds with all this uncertainty in our financial structure. Invest abroad?

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:49 pm 
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aprilfifth wrote:
Explain how you decide whether its advantageous to rent or buy a home.


This question should have been asked 5 years ago.

There are many factors in deciding whether to rent or own, not all of them financial. I think we've gone through this in the econ thread but generally speaking:

No matter what the Real Estate agent/Uncle Sam tell you, buying a home is an investment and it is not always smarter than renting. Things that I would look at:

What is the "all in cost" of buying vs. renting? Include property taxes, maintenance, mortgage, etc. You should also include the opportunity cost of your down payment. How much could you be making on that in the S&P 500, for instance? The last few years the "cost" of renting was extremely low, 1-2% in most cases. People didn't care how much they rented their properties out for because they were certain the price would appreciate. A home is no different than a stock in that regard: You either get dividends (rental income) or appreciation (stock price goes up, house goes up in value). Now that homes are going down - not up - rental yields are slowly starting to return to normal levels. I would only consider buying if the place I want to live in is "costing me" 4-5% a year in rent. So far, I'm nowhere near this number.

There are other factors, like I said. If you are married, have kids, etc, you might want to fix your home up, not worry about being evicted, etc. But I do believe too many people place an absurd stigma on "owning" their own home. As we learned recently, most people did not "own" their own homes. The banks did. I have never owned my own place and thus far have not regretted it. The old fallacy that rent is "pissing money away" while owning "builds equity" is complete bullshit. One only has to look at the last few years to see that.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:56 pm 
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$úñ_DëV|L wrote:
thodoks wrote:
given2trade wrote:
The balance sheet is tremendously important. In the fall of 2008, I owned no companies with any debt.

Dumb question, but is there some sort of repository of firms' balance sheets? I can't just type "companies without debt" into google and expect to find anything meaningful. And there are so many companies out there I wouldn't know where to start.

I guess my question is if I held a similar investment strategy, where would I go to start analyzing balance sheets and income statements?


Yeah, I have this same problem. I have some risk capital that I'd be willing to dump in the right stocks, but everything I look at seems to have something wrong with it (lots of debt, shaky earnings, overly optimistic earnings outlooks, etc.). I think I like to look at myself as a value investor, but nothing seems to be a good value.

And how do you account for things like Pfizer deciding to market a drug that kills people? Luckily for their investors they only got a little fine, but what if they actually get in trouble for it?


I think a great place to start/learn about value investing is http://www.valueinvestorsclub.com You can read old writeups without being a member.

Re: RISK. Yah, if you own a pharmaceutical you have risks like you described. But there are plenty of industries where you don't have "tail risk" like you described. However, any stock can be a fraud. At any time you can wake up and have a stock down 50-75% due to fraud. The only way to combat this is by not owning one stock! A diversified portfolio should have 20-25 stocks in it. That being said, I don't recommend non professionals buying individual stocks. Would you have your friend who is a waiter perform open heart surgery on you? No. Likewise, people dedicate their entire lives to picking stocks. Why compete with them? It's so easy buying and selling stocks online...almost too easy. Tread very carefully investing in individual companies. (This isn't directed at you S_D, just editorially).

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 5:57 pm 
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$úñ_DëV|L wrote:
given2trade wrote:
pnjguy wrote:
so where's a good place to buy/sell stock/bonds for a beginner.?


It depends on how small your account will be. Commissions will eat you alive if the account is too small. A good way to start investing (with a small amount of money) is http://www.sharebuilder.com/. If you have at least $5000, you can open up an online brokerage account with Scottrade or TD Ameritrade You cannot actively trade, however. $7 or $10 a trade will really hurt your returns. I've never used sharebuilder but they are reputable.

I use Interactive Brokers but its not user friendly and recommended for a beginner.


Sharebuilder has $10 commissions, which is a little steep for small amounts. Plus I've seen their site go down during high volume times. It's really meant for buy-and-hold. Their automatic investment plan ($4 commission) is good if that's your plan.

I also have a Scottrade account, which has $7 commissions. It's a little cheaper, slicker, and more full-featured than Sharebuilder. If you're going to be making a few trades a week, I'd definitely go with Scottrade over Sharebuilder.


Yah, I'd agree with this. I have never used either and didn't know sharebuilder was that expensive. It wasn't always owned by ING.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:00 pm 
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pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.


Do i rent, or try to buy a place? Save more? How should I allocate my funds with all this uncertainty in our financial structure. Invest abroad?


You are way ahead of most people your age. You have no "net" debt as the car payment is backed by an asset (your car).

It's hard for me to tell you the best place to allocate your savings. What are your near term cash needs? How much do you save annually off of your salary? Do you have kids? Are you expecting kids? Married?

How long do you plan on living where you currently live? How much are you paying on rent? What would a condo/home cost that is similar?

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:05 pm 
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given2trade wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.


Do i rent, or try to buy a place? Save more? How should I allocate my funds with all this uncertainty in our financial structure. Invest abroad?


You are way ahead of most people your age. You have no "net" debt as the car payment is backed by an asset (your car).

It's hard for me to tell you the best place to allocate your savings. What are your near term cash needs? How much do you save annually off of your salary? Do you have kids? Are you expecting kids? Married?

How long do you plan on living where you currently live? How much are you paying on rent? What would a condo/home cost that is similar?


I'm going to need about $3,000 for additional schooling, but thats going to be spread out over an 18 month period and will boost my salary another 5k a year.

No kids(knock on wood), and don't expect to get married for at least another 4-5 years. I'm currently living rent-free.

So basically i don't have any obligations other than some additional schooling. I don't HAVE to do anything in the near future.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:11 pm 
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pnjguy wrote:
given2trade wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.


Do i rent, or try to buy a place? Save more? How should I allocate my funds with all this uncertainty in our financial structure. Invest abroad?


You are way ahead of most people your age. You have no "net" debt as the car payment is backed by an asset (your car).

It's hard for me to tell you the best place to allocate your savings. What are your near term cash needs? How much do you save annually off of your salary? Do you have kids? Are you expecting kids? Married?

How long do you plan on living where you currently live? How much are you paying on rent? What would a condo/home cost that is similar?


I'm going to need about $3,000 for additional schooling, but thats going to be spread out over an 18 month period and will boost my salary another 5k a year.

No kids(knock on wood), and don't expect to get married for at least another 4-5 years. I'm currently living rent-free.

So basically i don't have any obligations other than some additional schooling. I don't HAVE to do anything in the near future.


Well, I see little reason for you to go buy a home. Why give up the flexibility? You can keep on saving more living rent free. A financial advisor would probably tell you to start investing your savings and excess earnings I good way to get started would be to take a small amount (maybe $5000 or $10000) and buy an index fund. Going forward, every 3 or 6 months, you should add to that index fund with your earnings. In time, 20, 30, 40 years, by starting now - you will see real compounding, at least better than what you will get by it sitting in cash (the worst). To learn more about index funds, google it. It's a non sexy way of investing in the stock market with extremely low fees.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:12 pm 
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aprilfifth wrote:
Explain how you decide whether its advantageous to rent or buy a home.

Are you buying a home as an investment, or as a place to put down roots and start a life?

IMO, part of the reason we're in this mess is because somehow a home became an investment rather than a long-term durable good.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:14 pm 
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given2trade wrote:
Well, I see little reason for you to go buy a home. Why give up the flexibility?

THIS

Worse comes to worse and he loses his job, he's basically limited himself to only those jobs in his area. Renter's have the ability to not limit the scope of a job search. This is no small thing.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:14 pm 
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Rental prices were artifically depressed in previous years? Yikes. The small 3 bedroom I'm in is ~$2400/month. Apparently I will soon be in the market for a cardboard box.


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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:17 pm 
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simple schoolboy wrote:
Rental prices were artifically depressed in previous years? Yikes. The small 3 bedroom I'm in is ~$2400/month. Apparently I will soon be in the market for a cardboard box.


haha. It depends on where you live. In NYC rental prices did not go down. In most bubble areas, like Florida and Southern California, rental prices were severely depressed vs. the cost of owning.

It's always a vs. question. Rental prices need to be looked at in context to the price of ownership. If I'm paying $50,000 a year in rent most would say "you're pissing money away!" but if I'm paying $50,000 in rent for a home that cost $5,000,000, well, the guy who owns that house is the one pissing the money away. He is getting a 1% yield on his money and still has to pay property taxes and maintenance (so is actually getting a negative yield).

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:30 pm 
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I have no extra income so I have no questions to ask in this thread, but it's a good read nonetheless.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:31 pm 
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given2trade wrote:
pnjguy wrote:
given2trade wrote:
pnjguy wrote:
what would you do financially in this situation?

I am 26 years old, and make about $50,000 a year.
I have close to $30,000 in savings.
Value of my 401k is about $3,000.
Only debt i have is a montly $400 car payment.


Do i rent, or try to buy a place? Save more? How should I allocate my funds with all this uncertainty in our financial structure. Invest abroad?


You are way ahead of most people your age. You have no "net" debt as the car payment is backed by an asset (your car).

It's hard for me to tell you the best place to allocate your savings. What are your near term cash needs? How much do you save annually off of your salary? Do you have kids? Are you expecting kids? Married?

How long do you plan on living where you currently live? How much are you paying on rent? What would a condo/home cost that is similar?


I'm going to need about $3,000 for additional schooling, but thats going to be spread out over an 18 month period and will boost my salary another 5k a year.

No kids(knock on wood), and don't expect to get married for at least another 4-5 years. I'm currently living rent-free.

So basically i don't have any obligations other than some additional schooling. I don't HAVE to do anything in the near future.


Well, I see little reason for you to go buy a home. Why give up the flexibility? You can keep on saving more living rent free. A financial advisor would probably tell you to start investing your savings and excess earnings I good way to get started would be to take a small amount (maybe $5000 or $10000) and buy an index fund. Going forward, every 3 or 6 months, you should add to that index fund with your earnings. In time, 20, 30, 40 years, by starting now - you will see real compounding, at least better than what you will get by it sitting in cash (the worst). To learn more about index funds, google it. It's a non sexy way of investing in the stock market with extremely low fees.


It seems index funds are a giant blob of money that moves slow, but safe and the costs are minimal. Whats the advantage over a long-term CD, and compounding that way? I'm assuming index funds yield higher returns. And i have a 401k which is being matched, so the earnings in 30-40 years isn't really something i'm looking for.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:39 pm 
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Orpheus wrote:
I have no extra income so I have no questions to ask in this thread, but it's a good read nonetheless.


Financial questions are just as important (if not more so) for people with debt (not saying you have any). Should I spend money on this? Am I living in an apartment that costs too much? Is it smart to be paying 29.7% credit card interest so I can go to a Pearl Jam concert? I'm no Suze Orman but she does decent work and more people should listen to her/read her stuff even if I can't stand her.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:41 pm 
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Well, I've finally gotten a bit more smart with my money. Had a lot of trouble with CC debt but made an arrangement with them and am steadily paying it down. I also have a retirement account and 401k with my job, so even though I only put a combined $50 in both every month (I work part time) I guess I have some savings.

I'm planning to try and completely pay off my CC debt, hopefully before the end of next year.

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 Post subject: Re: The Stock Market/Personal Finance Thread
PostPosted: Tue Nov 10, 2009 6:43 pm 
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what if my problem is my own irrational exuberance?

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