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BetterKnown
10
#1 Wed Dec 27
Right now I am in law school and needless to say "short on capital," but I love this site because it is giving me experience with trading and exposing me to new techniques (like shorting) that I otherwise would have had to learn about the hard way (i.e. by losing money!). What I am wondering is if there is any discussion going on this site about smaller dollar amount investment strategies. I don't know what the expectation or etiquette is here, but if it is proper to ask for such advice, does anyone have any suggestions for how to invest 5 or 10k right now with hopes of being aggressive and making a bullish profit in the next year or two. I'm in my second year of law school and I would like to see this little bit I have now be a good cushion for when I graduate and start making some real money. Plus I'd like to use the $ I have no as a real-world learning/building experience for when I actually have an income of 6 figures after graduation and can afford to move this kind of money around a more regular basis.

If my questions go against site etiquette, then just ignore them, and happy investing!
houa0001
10
#2 Thu Dec 28
Those 5 or 10k can definitely be put to good use. Depending on your level of risk tolerance, you can definitely explore options (basic call/put) or moderately to highly volatile stocks. IMO if you are comfortable with trading options, you should definitely go for it as you would have a lot more leverage.

IMO I don't think it's a good idea to share tips as on specific stocks to buy or short.
simon
Administrator
#3 Tue Jan 2
Hello,

BetterKnown, your questions are definitely relevant, and far from being against site etiquitte. There is discussion about all sorts of ways to invest here, and I'm glad you brought up a specific situation that perhaps we can help to address. I'm sure there are many investors like you who would like to find answers to the same questions, and we want to find a better way of bringing you together. Please let us know if you have any suggestions in particular, and in the meantime keep the discussion flowing!

Simon
Bullpoo Team
pennystockman
10
#4 Tue Jan 2
My friend, houa0001 is right about investing in options, that is what I would suggest too. It's a shame that we aren't able to trade options here yet. It's actually more addictive than regular stock trading, and there is more potential to make more. What's better is that it is rather cheap over buying stocks.

Options are split into calls and puts. They are no more than just assumptions on how high or low their prices will reach. A popular stock here is RIMM, so if you go to yahoo finance (http://finance.yahoo.com/q/op?s=RIMM), you'll be able to find a list of options expiring by Jan. 20. Say you try out RUPAH.X, which is $0.50 an option, exercisable at $140. If you buy say 100 options, it would cost you $50. RIMM's price is now $127.78, and if before Jan. 20 their prices go above $140, you will make money in either two ways. Your options that were once $0.50 will most likely jump to, say $1 (depending on how much higher the price is to $140) - that's 100%, and you'd make $50.

Otherwise, once your options expire, you can still buy RIMM for $140, and make the difference from whatever the market price is. Say it ends at $142, and you buy it for $140, you make $2.

The down side is that you can lose it all if it expires out of the money, or in other words doesn't surpass the $140 mark. If you think their prices will continue to drop, you can buy a put (the opposite of call).

Alternatively, you can look for penny stocks, or relatively cheaper stocks that are a few dollars. Of course, you'd have to really understand these stocks and their potential. A favorite that I've always looked at was Nortel (NT). And as I said they would, their stocks are recovering nicely.
fruits
10
#5 Tue Jan 2
If you're a beginner, I suggest taking some more time learning and practicing the fundamentals of investing before you delve into options trading. While options may be effective, it's not only risky but potentially dangerous for your future investment life if you "skip" the earlier lessons learned from regular investing. Options trading isn't for beginners, and investing aggressively is a surefire way to quickly lose just as much (or more) money as you could have gained. If you are looking just to learn using the money you have, then by all means go for it. However, if you can't afford to lose this money, or if you're looking to build on it to lay a foundation for your future financial goals, I would err on the side of caution. Ask yourself if you can stomach the risk. Sure, we all want to make a quick buck... if only Mr. Market would understand.
rgulli
10
#6 Wed Jan 3
Until you are more experienced stay away from options trading. You need to dedicate more time watching your positions and you can very quickly lose all of your investment. Options trading is like manic depression when you double your money in a matter or days you are so high, but when you lose all of your investment, man are you low. I assume that you are maxing out your Roth Ira given that soon you will no longer be able to invest in one due to income caps. I would invest that money in mutual funds within a roth or about five diferent stock in different sectors.
Good luck
reuben
10
#7 Fri Jan 12
One thing you have to consider is the account size requirements of brokerage firms. Perhaps some Etrading sites have lower requirements, otherwise it may be difficult (or too expensive in fees) to establish an acct with only $10K.

The suggestion of a setting up and using a Roth is best.

Further, a "solid" consistent high yielding REIT or real estate mutual might help you build a base inside a Roth.

A Firm like Schwab will let you create a self-directed Roth with $10K or $5K..

The great thing about the Roth is that once you meet the criteria, extractions are tax-free. You can use it to make your trading (as well as investment) gains and take those out tax free. Take care tho'
reuben
10
#8 Fri Jan 12
Hey. Go over those calculations again.
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