

9 Things You Should Do Instead of Buying Stocks - ankeshk
http://www.fool.com/investing/high-growth/2008/10/23/9-things-you-should-do-instead-of-buying-stocks.aspx
Advice by a cartoonist (Scott Adams) on 9 steps to take to generate and protect wealth.  Very timely.
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run4yourlives
_Fund your 401(k) to the maximum._ _Fund your IRA to the maximum._

How is this not buying stocks? Is he suggesting putting all this money in a
savings account paying 3% interest?

~~~
ibsulon
Adams argues that the individual should not be buying _individual_ stocks.

I tend to disagree for individuals willing to keep up with their stocks, and
can read 10-Qs and other investment material. if you're doing the "buy and
ignore" thing, however, it doesn't make much sense.

I've been guilty of not being as active as I should be, relying on meta
information far too often. However, the vast majority of my investment is
outside individual stocks and in indexes.

~~~
run4yourlives
Sorry, but let me get this straight. There are people out there that buy
stocks before contributing to their 401k's? Aren't 401's tax deferable? Aren't
normal capital gains taxable?

This is about as dumb as putting money into your savings account before paying
off your cc debt.

Math. I suppose it's not everyone's strong point.

~~~
nostrademons
401ks often get a company match as well, which is a wonderful thing.

~~~
comatose_kid
And you can trade individual stocks in your 401k.

~~~
njharman
I can't.

~~~
comatose_kid
I should have qualified that - your company's 401k partner needs to support
it. We use fidelity where I work, and you can sign up for a self directed
brokerage link account. This is a relatively new option for us.

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13ren
The market has got everything on special - whatever you do, DON'T BUY!

...unless you want to end up like Warren Buffett - who loves downturns because
that's when he can stock up on his favourites, at discount prices. He hates
booms, because everything is overpriced, and there's nothing to buy. He folded
his first partnership because of that.

Of course, the advice for the stocks is the same now as always: don't buy
unless you understand what you're buying (although, you might buy a little, as
an educational experience). If you can't place a rough value on it (so you
know if it's overpriced or underpriced) and are confident it has an enduring
competitive edge (so it will compound, buy an index instead. (Scott recommends
index funds in:

 _8\. Take whatever money is left over and invest 70% in a stock index fund
and 30% in a bond fund through any discount broker, and never touch it until
retirement._

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comatose_kid
I disagree with the disdain for stock picking. If you have a longer term
outlook (5 years or more), you will kick yourself if you don't buy now. I'd
stage my buys (since I can't call a bottom) in individual high quality stocks.

~~~
gcv
Or you'll kick yourself when your picks tank.

Feel free to buy individual stocks, but only with money you can afford to
throw away. Picking stocks is gambling, pure and simple. Fun as it is, you
should not expect to retire and live comfortably from your winnings. Study
after study has shown, quite rigorously, that there exists no method at all
for picking winning stocks. Feel free to read A Random Walk Down Wall Street
for a more detailed analysis.

~~~
comatose_kid
I've read that book, and a bunch of others. There is a method for picking
winning stocks. Buy low, wait, sell higher. If you are disciplined, it is not
gambling, unless you believe in the efficient market theory. Looking at how
certain stocks are valued today, I don't see how anyone could believe that.

Of course, a stock that is valued below book could still drop further. And
that is why you stage your buys, and must be ready to hold for the longer
term.

Right now, we have a bunch of stocks with historic lows. I stand by my
assertion that now is a great time to pick stocks if you meet the above
provisions.

As with all things, there is no reward without risk - but you can manage your
risk in various ways (staging buys is just one).

~~~
lacker
"Buy low and wait until you can sell high" is not a method for picking winning
stocks. If you buy a stock, then wait until its increase has exceeded
inflation, you may find yourself waiting forever.

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alecco
A lame blog entry on a very old blog post by Scott Adams. Where's the HN-
worthy angle?

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markessien
Yes, do this if you have a steady job and you plan to live comfortable when
you retire.

This is a path to comfort, not a path to wealth. So it's not for everyone.

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13ren
um investing in a better server? goog cache:
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growth%2F2008%2F10%2F23%2F9-things-you-should-do-instead-of-buying-
stocks.aspx&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-
US:official&client=firefox-a)

