September 22nd, 2002, 07:48 PM
Ken Rapoza followed the herd to online investing two years ago when the bulls were running.
He set up a $5,000 cash account with an online broker and started clicking. Each month, he bought more stock in two companies that he considered hot: California-based electric utility Calpine, and telecommunications powerhouse WorldCom.
You can guess the rest. Calpine stock is off about 90 percent from two years ago. WorldCom filed for bankruptcy in July. That $5,000? Rapoza's latest cash account balance was $1.27, and his stock portfolio was worth a whopping $229.51.
I don't know why, but I'm finding it difficult to feel sorry for stupid
greedy people who bought shaky stocks two years ago and lost
all their money. There were plenty of warning signs. Old timers
were shaking their heads and saying, "it can't keep going up forever",
but there was a panic of greed, where people were afraid
that someone else was getting rich.
Their attitude was "Only chumps work for their money, the smart ones
'put their money to work for them'"
No, I think the chumps give their money to Kenneth Lay, Bernie Ebbers
or John Rigas to build their beachside mansions.
I came in to the world with nothing. I still have most of it.
September 25th, 2002, 07:39 PM
I think it's best summed up as 'Never put all your eggs in one basket.'. To invest ALL of your money into those few ventures was silly, especially since they were high risk. He needs to take what money he has left and go buy Investing for Dummies.
"When I get a little money I buy books; and if any is left I buy food and clothes." - Erasmus
"There is no programming language, no matter how structured, that will prevent programmers from writing bad programs." - L. Flon
"Mischief my ass, you are an unethical moron." - chsh
Blog of X
September 25th, 2002, 08:01 PM
I'd have to agree with you both. I think the "get rich quick and easy" mentality is eroding some people's brain processes.
I am all in favor of making money, don't get me wrong, I just don't think there is a quick and easy way to do it. If there were, we'd all be rich.
September 26th, 2002, 01:03 AM
I agree with everyone so far in this thread...there aren't any quick and easy ways to make money fast. Not only do you have to invest the $$, you also have to invest time and energy in moving your money in an area that you know is stable and room for growth.
Telcos and energy companies are two areas to avoid for the near future...see Worldcom, Global Crossing, Enron.
Last place I worked at, a guy lost $25 in 3 months in his 401k because no one informed him that certain market segments weren't performig well as 6 months prior. And he blames the 401K company for losing his money because they didn't tell him that he was losing money in the first place. That is stupidity...
\"No matter where you go,
there you are.\"
September 26th, 2002, 01:23 AM
A lot of the losses people are sustaining in the markets are due to the fact that people are short term investors. It is my experience that when investing in the market it is best to lump your money into a couple of different categories...high risk, moderate risk and low risk. The money that you put into high risk stocks is money that you can gamble and afford to lose. These are companies that are recent IPO and practically anything dot com. If the gamble pans out you make money and if not you don't lose any more than you expected. I believe that the moderate stocks are the companies that have been around for 10 to 20 years that have seen steady growth. These are companies like Oracle, Dell and Cisco. Occasionally there is a Worldcom that screws up, but it is the exception. They have periods of upswing and periods of downswing, but if you hang on long enough you will make some money in the long run. Then there are the low risk companies like IBM that don't grow really fast but they hang on and consistenly make a profit. If you diversify between the categories you can do ok.
As has been said, the problem is that there are too many people jumping into high and moderate risk areas to try to make fast money without some stability under them. These people are the ones that we are reading about and seeing on the news complaining that they lost their money.
September 26th, 2002, 01:34 AM
I just noticed a typo in my previous post...that should be $25k in 3 months, not $25.
The financial company I work for is keeping a closer eye on the amount of trades an individual makes within a given period of time...due to AML legislation requirements. The level of volatility in short term trading has far-reaching impacts that affect a lot of different people.
Hey...I'm no different than anyone else, I want to make my money work for me too. But I also know that economic cycles are a fact. Knowing when to invest - for the long term - makes the best financial sense.
\"No matter where you go,
there you are.\"
September 26th, 2002, 01:57 AM
Dear old dad gave me 2 simple rules to follow for investing....never invest more than you can afford to lose, and always invest for the LONG TERM because going for the quick buck will get you burnt.
It isn't paranoia when you KNOW they're out to get you...