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Learning to Invest / Investing Beginners


Subject:  Re: Should I wait a bit?? Date:  10/11/2018  4:40 PM
Author:  Arindam Number:  29171 of 29354


Nor should you be ashamed to say that you currently have no money in the equity casinos (--err, financial markets). In fact, that's a sensible, prudent approach given that 98% of the past decades's gains are a scam, fraud, and chimera driven by the Fed's free money and financial engineering. However, if you've got itchy fingers, hot pockets, and an urge to gamble, there are dozens of games you could ease yourself into, such as currencies or commodities, where fundamentals make genuine sense and their markets can be traded from either sides.

E.g., for some longs, check out what the Yen has been doing this past week, or coffee, or nat gas. For some shorts, an inverse of nearly any country fund would do nicely. Also, if you sitting on a pile a cash, consider putting some of it to work at the short of the yield-curve via T-bills.

So my advice to you would be this. You've got $50k to work with. Set aside $2k of it as your investing/trading account and immediately put the rest to work in cash equivalents. Consider the $2k your "tuition money" that will get consumed learning whatever game(s) you decide to try. Divide that pile into tenths and decide that all bets will be equally sized, scaled into 3-2-1. In other words, whether it's a stock, ETF, or mutual fund you buy (or sell short), your opening position will be $100. If the market confirms your entry was correct, you add to it. Else, you exit then or whenever prices roll over on you, which could be days, weeks, months, or years from now. Initially, your goal needs to be no more than being able to break even. Once you've developed a daily or weekly routine and you are fairly consistently profitable, scale up the project by deploying some of your cash.

Lastly, disabuse yourself of the notion that markets are ATM machines and that everyone gets to be a winner simply by participating. Investing is a less than zero-sum game in which less than 10% can show a profit over a full market cycle on an after-taxes, after-inflation, after-expenses basis, as Dalbar's 20-year studies document.

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