1. Your Questions About Is It Easy To Make Money In The
Stock Market
William asks…
How easy was it to make money in the stock market?
how many , what percentage of people made a lot of money??
how do you know?
how did they know how to invest in what/
was it really that hard?
why so?
Thanks for your answers!
Steve Winston answers:
You don't have to know everything about the market to make money. What you need is a
diversified portfolio which will make you money. People call it a gamble because they put all
their money in one stock, usually a risky one, and often times that one stock fails. If you have a
very diverse portfolio than if one stock goes down, you have others to balance it out. Many
people made money on the market, you have to trust your gut a bit, and do a bit of research on
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2. the company. For instance, right now it would be a good idea to invest in green energy
technology. Research the different companies a bit and put your money there, it will pay off in a
few years. I made money in the market, and it was not that hard. The key is to realize that a
10-12% gain is good, people looking for a lot more usually invest in the risky stocks thus loosing
tons of money.
James asks…
How easy is it to make money in the stock market?
How easy is it to make money in the stock market? Is it easy to profit large amounts of
money? I mean, all you have to do is notice the trends and buy low and sell high.
How easy is it to make money in the stock market? Is it easy to profit large amounts of
money? I mean, all you have to do is notice the trends and buy low and sell high. I have been
playing around with the simulator at www.vse.marketwatch.com and its very realistic, it has
dynamic prices and all the stock symbols and what not. So far i have been doing really good
and am up 583% of the 15,000 play money I started with last i checked.
Steve Winston answers:
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3. Market conditions since April or March of this year have been such that during this time it has
been very difficult to lose money. If you started investing during that time, many stocks that were
severely depressed have been shooting up, so getting returns like you describe is not out of the
question using almost any un-diversified strategy. I have seen individual stocks triple and
quadruple during this recent earnings season, and the market overall has risen something like
40% since the bottom of the downturn.
However, if you had started your investing before 2008, you return would likely have been very
negative during the recent downturn, and would only now be recovering.
As many have mentioned, over the long term, you can expect the general trend to make money,
but there are many dips and spikes in stock prices.
I would bet that you got 500% return on an overall portfolio in these conditions with a portfolio
that is not very diversified. Be careful, since lack of diversification will cause you problems
(meaning you could lose your money quickly) in other market conditions.
Ken asks…
Is it easy or difficult to make money in the stock market?
I recently decided to try the stock market. I invested money in various different companies.
Companies as safe as GE and Wal-Mart to as risky as General Motors. No matter the
diversification of the portfolio, I still lost money, not much though, say about $400.00 thus far. It
was a good month for most people, so why not me? I did basic research and to the best of my
ability. Is it easy to make money in the stock market? So far it has been rather difficult for
me. What are your opinions and experiences? Thanks in advance to all whom answer. Serious
answers only please.
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4. P.S. I currently use e-trade as my brokerage firm, if that makes any difference at all. Maybe
there is another company that will work better for me than etrade? Thanks again!
Steve Winston answers:
The absolute biggest misconception that everyday people have is that buying "good" companies
like Walmart is safe. Walmart being a good company does NOT mean that its stock is a good
investment - in other words, it's not just what you're buying, it's how much you're paying for it. In
fact, you can really say that it's entirely how much you're paying for it, since buying really terrible
companies is perfectly fine if you're getting a bargain price for it (not just "cheap", but so cheap
that even its cheapness isn't justified by its level of terrible-ness). Sorry about the second-grade
colloquialism.
What you need to be able to do to make stock-picking worth your while is to be able to identify
companies that are worth more than what the market is pricing it at. This is incredibly difficult
and is why fund managers get paid insane amounts of money to do an okay job and those who
do it very well get paid despicable amounts.
Honestly, what I would do is figure out how much of your money you're willing to put in the
market, and just dump it in something like the Vanguard S&P500 index fund, and maybe a few
others (international index fund, etc.). I specifically mention Vanguard due to the level of fees.
S&P500 index funds are ALL the same. Unless it's some shady company. If you ever come
across an idea you really like or have a truly compelling reason to put your money in a
company, you can always reallocate a little bit over. The answer it's what people like to hear but
it's probably the only honest one for somebody who isn't trying to spend their life researching
companies.
A word on technical analysis - NO. It's just not very smart - stocks are traded based on
fundamental value (all those up and down days you see are getting driven by news and events
affecting the company, not because some random indicator lit up). Quantitative methods do
work, just not the stuff you find on the internet (run of the mill candlesticks, oscillators, moving
averages, what have you). I'm talking the heavy duty stuff that requires knowledge of math and
the ability to identify market inefficiencies and the abililty to run large amounts of money very
quickly with [*this is key*] very low trading costs - the type of thing you don't want to try in your
personal account, especially not what the kind of percentages you're probably paying in fees.
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5. Mandy asks…
How difficult is it to make money in the stock market taking
today's economy into consideration?
Hi, I just turned 18 and I'm thinking about entering the stock market. I've done a lot of reading
on how the market works and I've got a pretty good grasp of the system. But I'd like to know
first-hand from someone who is already in the market...is it easy at all?
Steve Winston answers:
I am actually the same age as you. I got started this summer and bought a diversified portfolio
full of undervalued stocks. I must say that it is not a easy as I thought. I was one of those kids
who was thinking to make a side income. Instead now I realized that the market needs time to
balance out even if you make smart investments.
Whenever someone posts a question like this I like to give them background info about the
stock market and how it works so here is the how I explain it to them: Joe's Tires produces
hundreds of tire out of his small shop in Texas. Recently he has been getting too many orders
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6. to fill and doesn't have the money to hire staff and raw material. He believes that if he can get
money from investors he can hire the staff and get the materials he needs to fill all his orders
and even go national selling tires. His company goes public and he sits on the executive level of
the company. Now, once the company starts turning in a profit, he decides when and how much
of a divided his shareholders get.
I would head on over to your local Scottrade and tell them you are interested in investing. The
minimum you need to open an account with them is $500 and they are very helpful with training.
They actually want you to do well, because when you do well you place more trades and each
trade makes them $7.
Or you could start by "paper trading" so when you enter the real market you at least have some
experience. Note: when paper trading be as realistically as you would in the actual market.
Maria asks…
Is it easy to loose money in the stock market?
I am new to investing, and I want to make sure I have this right. When I buy stock and the
stock price drops, I will not loose money unless I sell, right? If I just wait for the stock to rise
again, I will be fine. I know that the key is to buy low and sell high, so as long as I don’t sell
lower then I buy, all is great, no matter what the market does? Also, I have read that buying
diversified stock is the best way to go, what are the main categories that I should buy from?
(Tech, retail, etc...)
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7. Steve Winston answers:
Yes, you can lose money.
You need to learn the difference between unrealized and realized gains and losses. Look that
up.
Whenever you purchase a stock, it will always go down after you buy it. You have to learn to
accept that. I know someone will say that is is not always true. Perhaps, but for over 95% of
your stock purchaes, it is true. You must assume that before you buy.
The only way you make money, is to wait until it goes up, then sell.
If you sell before a year is up, and make money on it, you have a higher tax rate to pay. Short
Term Capital Gains Tax.
If you sell after a year is up, and make money on it, you get the lower, long term capital gains
tax rates.
If your stock goes way up, and you don't sell it, that is an unrealized gain, and there are no
taxes on the gains, unless you sell the stock. Selling the stock is what makes them realized
gains, and is a tax event.
If your stock goes way down, and you don't sell it, you have not realized the loss, and cannot
deduct the loss on your taxes. This is why people sell their down stocks in December, for a tax
deduction.
For example, say bought 100,000 shares of XYZ stock at $0.01 per share, for $1,000.00. The
stock might drop shortly after that, to $.009 per share, a $100.00 unrealized loss.
But say it goes up to $99.99 per share, and the stock is now worth $10,000,000.00, a unrealized
profit of $9,999,900.00, plus it now pays a dividend of $12 per share per year, or $1,000.00 per
month.
You don't have to pay any Federal Income Tax on that stock, but if you sell it, you have an
almost 10 million gain, which combined with federal and state taxes, could easily be
$4,000,000.00.
If you were to keep the stock, and take out a loan of say $5,000,000.00 on it, and put most if it
in the bank and use the interest and dividends to pay off the loan, there are no taxes, because
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8. that is a loan, not profit.
Consider a large corporate shareholder such as Bill Gates. His company stock goes way up,
and he can make or lose billions every day, in unrealized gains and/or losses. He does not have
to pay taxes on it, unless he sells it.
Mark asks…
Would you say stock market and drug business are the easiest
ways to make money?
how do people get into this and do they enjoy what they do?
why so in your opinion??
is it the same way in the UK too?
which area are you?
Thanks for your answers!
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9. Steve Winston answers:
Not at the moment,,
George asks…
How do investors make money in the stock market?
So, I asked a question like this just a few min ago, but I don't think I quite worded it right to get
the kind of answer I want.
So, I want to know how people make money in the stock market. What I know: I know that if
you buy stock, then the value of it goes down, youve lost money, and if the value of it goes
up, youve gained money? yes? correct me if that's wrong. Thats easy enough to know, but I
guess what I'm wondering is, say I buy 10 shares of stock for $10 a share, thats $100 I've
invested. So lets say I hold onto that stock for 5 years, then I decide to sell it, at $15 a share,
meaning, I've made $50. Am I correct there? So is that it? You hope that the company(ies)
you've invested in have gone up in value? Do you make any money in that 5 years along the
way? If so, why/how, how much and how often?
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10. Steve Winston answers:
As you become more knowledgeable about investing, you will learn that you can also make
money when stocks go down in value(shorting) and also about trading options. I like options,
but do your homework before you get involved with them.
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