Doublebase

Citibank, Merril lynch and other stocks that are really down right now? I'm young so I can afford to buy them now and sit on them for a few years. Or is it wiser to just stick with my mutual funds and let the experts do the buying and selling?

DOMS

I think that the financial-based companies will eventually go back up. But not before they continue to go down. Or, at the very least, languish near their bottoms. Even if it does go up, there's no real reason to believe that they'll rocket up. I offer Citigroup (C) as an example. I base that on the belief that the Fed will not raise the prime for a long time. Which is the bread and butter of a lot of companies in that sector.

The one nice thing about Citigroup is that the dividend seems to be decent. Which is what you should be looking for. Try to find a stock from a solid company whose dividend offers a good yield (high dividend payout, low stock price). Bear in mind that I'm no expert when it comes to dividends (I trade options), but this is what I've heard from Cramer and elsewhere.


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Doublebase

I hear yuh. My other question is have you found that day trading be more effective then just leaving your money in a high annual percent mutual fund?

DOMS

I don't day trade. Not because I don't want to, but because of the financial requirements. To day trade stocks, you need to have at least $50,000 in your account, and it's a minimum of $25,000 for day trading options.

I've been studying Coca-cola (KO) for a month now. Even after only a month, I'm starting to get a feel for where the stock will go each day.

That's the key to good day trading: getting to know one (or a few) stocks very well. And I'm not just talking about the company's fundamentals. I'm talking about getting a feel for the stock. It takes time. Additionally, you need to watch your stock like a hawk when you have a trade on.

That sounds crappy, but when you day trade, you'll find that a stock will generally make it's biggest moves before lunch. So you only have to work half a day or less.

Well, the above isn't exactly 100% accurate. The stock can move just before the closing bell. That's the professionals banking money off the less experienced traders. The good thing is that this last minute trading doesn't mean squat to a day trader. You're trying to make your money off the n00bs who trade in the AM hours and not the professionals who trade just before the bell. You'd get slaughtered trying to do that.

danzik17

I'm betting that financials will drop a little bit more, so I'm holding back. I will say that I have a GTC trade set on BAC (Bank of America) at a price of 36.5. That's the sweet spot where it hits a 7% yield, and they have already declared that they will not be dropping dividends.

Ron Paul 2008

Journal: Boom goes the dynamite

KentDog

Citibank and other big lending companies will always be around...

Doublebase

Point being?

JonnyStead

Hang on! Banks can go under - any big company can and there can be many causes. The rule of thumb should be that stocks and shares are a mid to long term investment (5 years +) their growth comes from the economic cycle.

This isnt advice though - I may work in the city of London for a finance firm, but that doesn't mean I have a crystal ball - NO ONE does - so you pays your money and you takes your chances

Most importantly though - NEVER invest money in shares that you cant afford to lose.

I'm 34 - when am I officially an old fart?

DaMayor

My broker is Kramer, and Kramer says....


When Kramer speaks, people listen.

DOMS

Cramer.

DaMayor

I couldn't help it. Woke up on the couch last night and Seinfeld was on T.V.. I figured you'd appreciate a little Michael Richards, since you and he are in the same "boat" lately.....or would that be Cubans?

KentDog

I'll be honest.. I don't have an intelligent response to this.

DOMS

The problem with taking an investor mentality, especially in such volatile industries as banking, right now, is that even if the stock goes up in the long-term, it's going to get spanked in the short-term.

The keys to investing are stability of the investment vehicle and ROC (return on capital), also know as ROI (return on investment). The math is simple, divide the earnings that you expect to get back, divided by the amount you used in the investment.

So, if you make $1 on an investment of $10, that'd be a 10% ROC. Citigroup is currently trading at $26.81 with an annual dividend of $1.28. That's a ROC of 0.048.

If Db put his money into Citigroup (C), and the stock went down (no matter what the dividend was), he couldn't take the money out (sell the stock) until it reached the level that he purchased it at, if he wants to bank the money that he received from the dividend, as profit.

So long as Citigroup makes all of its dividend payments, which there is no guarantee of, and he's okay with a long time frame (waiting for the stock to come back up), then fine.

Another complication is that amount of dividend that Citigroup pays out. Up until three payments ago, Citigroup paid out $0.54, but then it lowered to $0.32. What happens if his capital is tied up in Citigroup's stock and the dividend goes lower, or is stopped all together? His ROC goes down.

If after two payout, Citigroup stopped their dividend payout, the ROC would drop to 0.024. There are other ways to make more money.

A variable payout over a long-term investment isn't a desired thing. Even with interest rates being so low, he may find a year-long certificate of deposit (CD) with a higher, and more stable, ROC than 0.048. Even better, he may be able to find another financial vehicle. Possibly a tax sheltered one.

But I blather...

Doublebase

Then give me a lame one.

Mista

I like turtles.