I am thinking about buying stocks, what stocks should I invest in and why?

[Ray]

Would it be good to invest in stocks like Walmart, Facebook, Verizon and Disney? I need some insight. Thank You!

[Frank]

No. You don't know enough about investing to buy individual stocks.

You're competing against professional investors, and your loss is their gain.

The way to beat the market is to pick stocks that do better than than people are expecting. Picking stockst that will do well is NOT enough. You must pick stocks that will do better than all of those professional investors are expecting them to do. Verizon is a good example. Its price to earnings (P/E) ratio is 44. That's very high. For its current earnings, people are paying a very high price for the stock. Why? Becaues they expect earnings to go up for the company. A P/E ratio of 44 says that people are expecting the earnings to go up a lot. The company will have to meet those expectations, otherwise the stock price will fall.

That's what we call expectations already being priced into a stock. The price of Verizon includes some very big expectations for growth. For the stock price to go up even more, the company will need to do even better than those expectations.

You can't pick stocks better than the pros. Buy an ETF based on a broad index, such as QQQ. Or buy a mutual fund where the pros pick the stocks for you. In a mutual fund, the fees for those pros can eat up part of your gains. If you think it is possible to pick winners better than the market, invest in a mutual fund. The fees will be more than offset by the increased return from expect stock picks. If you think some people will get luckier and some people will be less lucky but nobody can reliably predict the future better than the other professionals (the "market"), then buy an ETF based on an index. Since nobody can beat the market reliably, don't waste your money on fees for someone who tries. Take your pick based on your belief in how the market works.

Certainly don't start picking your own stocks. You will never beat the pros reliably. You might get lucky, or you might get unlucky, but if you want to win or lose based on luck, go to a casino.

[Christian]

I like to follow Warren Buffet. Invest in companies that are trading low but have good sales. Walmart, Disney and Verizon may have reached their potential. Facebook is already way over-priced. 40 times its sales.

[Derek]

The question should be:

I am thinking about buying stocks,

What books should I read and why?

What type of investor in I am and why?

Why would I invest in stocks market and not something else, like funds, forex, futures, private equity, etc?


TREAT INVESTING AS A SERIOUS PROFESSION, AND IT WILL REWARD YOU HANDSOMELY