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MaHittaMaHitta
LSU Fan
Uptown Dallas
Member since May 2014
2303 posts

New to stock market, advice on my purchases, advice in general
I'm new to this, so if I sound stupid please bear with me; I am here for legit advice.

I've never had extra money sitting around until now, and I downloaded the Robinhood app to play around on the market. I'm not ready to spend a lot of money so I'm just having fun with this, but I do have a couple questions. I notice the app has a tax document page. Will I need to pay taxes at the end of the year? So far I lost $10 on Snapchat and lost $7 on US Concrete before cashing out. I don't think this should have any effect on my tax bracket if I'm losing money, right?

Also, yesterday I did get a tip from a friend that Delcath Systems (DCTH) was on the rise and was cheap, so I bought 205 shares at $0.25 a share. Doing very well so far, but I noticed in another thread that this happens to Pharmaceutical companies right before a conference, and that it is likely to drop after. Is this true? If so, should I cash out right before the conference?

Edit: I'm now watching the DCTH plummet every second. Is this conference going on? lol
Edit #2: It is going back up. I'm assuming I shouldn't pay as much attention and get nervous from small drops throughout the day since the market is sporadic.
This post was edited on 6/21 at 9:13 am


lilsnappa
CLT
Member since Mar 2006
1309 posts

re: New to stock market, advice on my purchases, advice in general
quote:

I did get a tip from a friend


This is sure fire way to lose every penny you are "investing".

Sounds more like you should be taking that money to the casino...you have a better chance of a return there than you do day trading.


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50
Bestbank Tiger
Tulane Fan
The Landmass
Member since Jan 2005
41142 posts

re: New to stock market, advice on my purchases, advice in general
quote:

Also, yesterday I did get a tip from a friend that Delcath Systems (DCTH) was on the rise and was cheap, so I bought 205 shares at $0.25 a share. Doing very well so far, but I noticed in another thread that this happens to Pharmaceutical companies right before a conference, and that it is likely to drop after. Is this true? If so, should I cash out right before the conference?


Never invest in stocks to make a quick buck. You should buy those for the medium and long term.


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30
Korkstand
LSU Fan
Plaquemine, LA
Member since Nov 2003
15115 posts

re: New to stock market, advice on my purchases, advice in general
quote:

Will I need to pay taxes at the end of the year? So far I lost $10 on Snapchat and lost $7 on US Concrete before cashing out. I don't think this should have any effect on my tax bracket if I'm losing money, right?
You will need to pay taxes on any dividends you receive, or if you make any money selling stocks during the year. I am not an accountant, but yeah I believe if you're in the red on the year you shouldn't owe any taxes. Robinhood will provide the docs you need, and if you need help come tax time, it should be easy to find someone to help. For now, I wouldn't worry much about taxes considering how little money you're talking about.
quote:

yesterday I did get a tip from a friend
This board won't like this, and honestly you'd be better off putting it all on black. Hammer the words "due diligence" into your head, and handle the DD yourself.
quote:

I noticed in another thread that this happens to Pharmaceutical companies right before a conference, and that it is likely to drop after. Is this true? If so, should I cash out right before the conference?
You need to decide whether you want to gamble or invest, because right now you're gambling hard. I know it can be fun, especially since you're using spare cash, but if you really want advice from this board you will need to be alright with making more "boring" decisions.

quote:

Edit: I'm now watching the DCTH plummet every second. Is this conference going on? lol
Edit #2: It is going back up. I'm assuming I shouldn't pay as much attention and get nervous from small drops throughout the day since the market is sporadic.
You can pay as much attention as you want, as long as you have the ability to control your emotions. The reason you are nervous is because you are not at all confident in your "investment". You don't know what they sell, how or if they make money, what they're working on, why the R&D is so expensive, whether or not they're on the verge of something big, whether a bigger company is considering a buyout or other deal, etc. You know basically nothing except what their stock is currently trading at.

R&D pharmas are probably the worst type of stock to get started with. They are basically impossible to value IMO, there are far too many unknowns. Would you buy a car if you had no idea what it was worth? Then don't do that with stocks.


MaHittaMaHitta
LSU Fan
Uptown Dallas
Member since May 2014
2303 posts

re: New to stock market, advice on my purchases, advice in general
Thanks Korkstand. That was all great advice. As far as more "boring" stocks to start out with, what is one you would suggest I take a look at? Also, I do see your point with not taking advice from friends, but with my current ignorance in the stock market, a little help is probably what I need to start. I literally know nothing.


southernelite
McNeese State Fan
Dallas
Member since Sep 2009
49816 posts

re: New to stock market, advice on my purchases, advice in general
You'll burn out quick if you're trying to flip pharma stocks. I'd look into getting shares of some well known companies you believe in and just let it ride. Alphabet, Amazon, etc.


Personally right now I'm holding TPL, which is an obscure land trust sitting on a lot of land in the Permian Basin. It's produced nice returns for me.

I'm also sitting on VFH, Vanguard Financial Sector ETF. Hasn't been kind to me for the last couple months, but I should be able to able squeeze 6-8% out of it before I unload.


dlmast87
Ohio State Fan
Amishville
Member since Dec 2007
1701 posts

re: New to stock market, advice on my purchases, advice in general
Maybe start by looking at the products you have around your house. What do you buy on a consistent basis or what companies do you like?

That's the best place to start in my opinion....companies that you're comfortable with. Don't just take a shot in the dark and hope.....unless you want to gamble vs invest.


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10
Crapshoot
LSU Fan
Member since Jun 2017
6 posts

re: New to stock market, advice on my purchases, advice in general
DCTH is getting pumped because it will get delisted from NASDAQ if the stock cannot stay above $1, take your profits and run. A lot of the stock market is overvalued currently but there are some nice dividends in oil stocks and retail such as Target.
This post was edited on 6/21 at 10:30 am


MaHittaMaHitta
LSU Fan
Uptown Dallas
Member since May 2014
2303 posts

re: New to stock market, advice on my purchases, advice in general
I would absolutely love to buy into Amazon, but I definitely can't afford to buy one stock at $995. I'm looking to invest less than $100 just to get my feet wet. I do like the idea of buying into stocks that I personally use.


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MaHittaMaHitta
LSU Fan
Uptown Dallas
Member since May 2014
2303 posts

re: New to stock market, advice on my purchases, advice in general
quote:

DCTH is getting pumped because it will get delisted from NASDAQ if the stock cannot stay above $1

Can you dumb this down for me, please? What exactly does that mean?


Korkstand
LSU Fan
Plaquemine, LA
Member since Nov 2003
15115 posts

re: New to stock market, advice on my purchases, advice in general
quote:

As far as more "boring" stocks to start out with, what is one you would suggest I take a look at?
I'm not going to suggest any specific stocks, instead I will ask you what industries you are familiar with. What do you know about? Or, what type of business do you think would be easiest for you to understand? I would suggest using a screener like finviz, limit the results by a sector/industry you like, set the market cap to mid/large or higher, then pick a handful of stocks to learn more about. Check the stock performance, read the news, look up the financial statements/reports. Understand how the company works, where it's been, and where it's going. Then decide whether to buy.

I am no pro, far from it, but I do know that if you want long-term success, you're going to have to understand how the companies you invest in actually make money. So, in the case of DCTH, if you don't know how they plan to stop losing millions of dollars per year, I would suggest not buying it until you do.
quote:

with my current ignorance in the stock market, a little help is probably what I need to start. I literally know nothing.
If you really know nothing, then learn this first:

1. A stock is only worth what someone else is willing to pay for it. Shares are just like any other finite resource, supply and demand rule.

2. Each company has its own number of shares outstanding, which is just the number of pieces it is split into. In the case of AAPL, there are 5.2billion shares, each currently worth $145.50, which when multiplied give it a market capitalization of $756billion. This is the total value of the company, according to the market.

3. Everyone values a company differently, but in the end what you're buying is a share of the company's future cash flows. If a company earns $1million per year, and there are a million shares outstanding, the earnings per share (EPS) are $1. How much are you willing to pay/invest in order to earn an (expected) $1 per year? $10? $15? $20? If it's trading at $15 per share, that gives it a P/E ratio (price/earnings) of 15. There's no "ideal" P/E, but it's usually in the range of 10-20 or so for established companies, and it's kind of a crude estimation of how "expensive" the stock is relative to its earnings. I wouldn't put too much stock (heh) in this ratio, but if it's too far outside of this range (high OR low), that usually indicates an issue that you need to look into.



Obviously there is lots more, but this should get you started.


rocket31
Toledo Fan
Member since Jan 2008
33478 posts

re: New to stock market, advice on my purchases, advice in general
The stock market is a heavily manipulated game controlled by bots and hedge funds. I'm not saying you can't win consistently but I'm telling you the odds are stacked against you

I've moved nearly all my stock cash into crypto


Korkstand
LSU Fan
Plaquemine, LA
Member since Nov 2003
15115 posts

re: New to stock market, advice on my purchases, advice in general
quote:

quote:

DCTH is getting pumped because it will get delisted from NASDAQ if the stock cannot stay above $1
Can you dumb this down for me, please? What exactly does that mean?
I don't know if the logic is correct and this is the reason it is getting pumped up, but NASDAQ can drop it if it doesn't meet their requirements. One requirement is if the share price is below $1 for more than 30 days, the delisting process can begin. After that, they have 6 months or so to "comply", and that time may be almost up by now.

So, if NASDAQ drops DCTH, it can still be traded "over the counter", but it's just less accessible and will likely plummet in value as a result.


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Crapshoot
LSU Fan
Member since Jun 2017
6 posts

re: New to stock market, advice on my purchases, advice in general
Just did a quick search on DCTH, there is a 95% chance they will be bankrupt in the next 2 years, which means the stock could be worthless well before then. Check the 5 year chart on their stock to see how many investors have gotten destoyed by this company. Delisting from a major exchange can cause liquidity problems meaning there might not be a buyer when you are ready to sell your stock.


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10
foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
38227 posts
 Online 

re: New to stock market, advice on my purchases, advice in general
I studied for a Ph.D. in Finance and worked several years with a Registered Investment Advisor firm.

The standard (and IMHO good advice) is that simply holding a portfolio of index funds is the way to go. Most major brokerages have their own Target Retirement funds that are perfectly fine for most people. They're usually low cost (meaning the expense ratio is low) and you can generally just buy and forget for decades. One big advantage of buying and holding for long periods like this is that you aren't paying nearly so much to trade. Markets will rise and crash over time - ignore this and just keep squirreling away money each year.

Now, there are sometimes exceptions. For example, if there's a company you know really really well that most others really aren't following. The problem is that most non-professionals have no idea how little they know and are really just guessing. And even then the chance that you actually do know something is quite small.

You can extend this logic to non-stock investment opportunities, like real estate or a local business. You have a better chance of have an information edge, but on the flip side it costs much more to buy/sell.

Personally I keep my money in those index funds. Maybe once every 4-5 years (yes, that infrequently) I'll spot something that is worth a gamble and even then don't risk more than 10% of my porfolio on it. I've done quite well with those situations but that's after spending hours looking through current and historical financial statements, learning about the industry, etc. instead of relying on what the CEO said on CNN to promote his company.


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40
MaHittaMaHitta
LSU Fan
Uptown Dallas
Member since May 2014
2303 posts

re: New to stock market, advice on my purchases, advice in general
Thanks everyone. I really do appreciate the advice!


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Fat Bastard
Boston College Fan
Paradise
Member since Mar 2009
33221 posts

re: New to stock market, advice on my purchases, advice in general
read sticky thread


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20
Tyga Woods
Army Fan
Urf
Member since Sep 2016
3727 posts
 Online 

re: New to stock market, advice on my purchases, advice in general
Are you trying to day trade or are you investing for the long term? You have to make this decision before moving forward


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Waffle House
Virginia Fan
NYC
Member since Aug 2008
3606 posts

re: New to stock market, advice on my purchases, advice in general
You should probably hire a tax attorney.


Korkstand
LSU Fan
Plaquemine, LA
Member since Nov 2003
15115 posts

re: New to stock market, advice on my purchases, advice in general
quote:

You should probably hire a tax attorney.
Might be jumping the gun here since OP's total investment can only buy about 10 minutes of a tax attorney's time.


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