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View Full Version : is it the right time to invest in stocks? (NASDAQ 1700+ points)


notibrian
09-06-2001, 12:18 PM
well, since my local interest rate is only 3+% and nasdaq has been below 2000 points for weeks and its now around 1700+ points ... if it keeps going down(maybe 1600+), do you think its the right time to purchase some stocks? (i know that it depends on the individual stock/company as well)

i know that some geeks here do invest in stacks, do you mind sharing some tips ... which company do you think is a "good target"?

as the only way i can buy US stocks is through internet, do you have any experience buying stocks through the internet and which company do you recommend? is etrade.com good?

thanks a lot for your advice :)

iliketosearch
09-06-2001, 12:27 PM
A good strategy is to wait untill you see stocks begging to improve. If you buy now, during a decline, you are speculating that we have reached the bottom. If you are wrong, which is highly likely since for all practical purposes it is impossible to time the market, you stand to lose a lot of money.

notibrian
09-06-2001, 12:50 PM
thanks a lot for your advice :)

yup yup i do realise that when the stock begins to improve it would be less risky ... but when you are certain that the stock begins to improve, i think nasdaq will be around 2000+ points ... no doubt will can still make money but fewer ... but of course due to lesser risk, i will be at a better off position :)

however, from my research of several companies like intel, microsoft, goto, etc the prices have been flactuating the last 6 months, which the market is not good. thus, if nasdaq keeps going down to 1600+ points i think its quite low (NOT BOTTOM) and might be able to make some extra bucks rather than waiting with the highly secure 3+% interest :)

SSacobie
09-06-2001, 05:29 PM
You specifically mentioned the NASDAQ, so I'm assuming that's the area you'd be interested in concentrating on. There are some amazing deals at this point, but since so much of it's technology, you're talking volatile and huge risk. The only stocks I see as even remotely safe bets would be any company heavily involved in video games (this is the biggest year ever), or any company whose name's Microsoft (which also will fit the former description). Chips, telecoms, PCs, Internet (with the possible exception of eBay), all that type of stuff still may have a ways to go before hitting bottom, or if they have hit bottom, they're unsure when recovery will be.

The problem with waiting for stocks to begin to improve is that they could be 1600 one week, then 1800 the next, then back down to 1600 the next. The market is so unpredictable, and you never know what people will take pessimistically.

Czar
09-07-2001, 04:10 AM
Hey notibrian,

As per the wise words above, trying to time the market in order to make your buys is a risky proposition, but as you rightly noted in theory, if the firm that you targeted was near its bottom, a purchase prior to any tangible signs of recovery would p[rovide the highest growth returns. This is simply one of the many trading variables that can be associated with high risk:high returns.

The thing is, until you have gained some real-world trading experience (and possibly acquired some solid trading software or befriended a broker who has a knack for timing), this should not factor into your investment decisions. Instead, a technique that can help you to benefit from the depressed market (if tech is in fact near a low, which is doubtful), is to employ dollar cost averaging.

In short, dollar cost averaging involves a person increasing their stock holding with buys made at regular intervals - and, most importantly, sticking to that pattern. An example of this would see an investor purchase 500 shares in company ABC on say the 15 of every month for three years. It's hard to explain this without a diagram, but this will reduce the effect of timing to decrease your risk, but at the possible expense of some upside.

To become more familiar with this and other techniques, your best bet is to have a chat with a financial advisor (many banks are starting to provide free access to an in-house advisor), and to read investment-related books and online articles.

As for which online broker is best for you, that decision comes down to what features you'd like and how much you're willing to fork out for each trade. Personally, I use TD Waterhouse, and have been more than happy with their service and features. Several of my friends use eTrade, though, and have similarly had no troubles. Schwab are also worth exploring, if only because they are America's biggest discount brokerage service.

There are several cross-comparison tables present on Your Broker (http://www.yourbroker.com.au/) that may be of assistance in helping you to select the best online broker for you.

Best of luck :)

notibrian
09-07-2001, 11:37 AM
thanks a lot guys for your advice and tips :) ... i will do more research ... but too bad we can't buy shares of other countries, thus i dont think any broker here in malaysia can provide good advice. thanks czar for the pointing out the 'dollar cost averaging' ... i think i am going to do something similar, but i will purchase according to my targeted points instead of time frame, in order to reduce the risk.

before i log-on the internet (5 minutes ago) nasdaq is below 1700 points ... well i think i will probably consider buying some shares around 1600 points ... actually i am going to invest only little money first to see how it goes and hopefully i can earn some extra money :) ... czar, TD Waterhouse is an australian company, are you allow to purchase american shares?

Czar
09-08-2001, 01:29 AM
TD Waterhouse is an australian company, are you allow to purchase american shares?
Yes.

The fees associated with purchasing shares in any foreign market are generally higher than buying companies listed on your domestic board, and the exchange rate will also become a factor you have to consider, but it certainly is possible for us internationals to purchase US shares through many online brokers (including TD Waterhouse).

If TD Waterhouse has yet to setup offices in Malaysia, then maybe eTrade will be the best option for you. If they have a regional site specifically for Malasians, check that one out rather than the standard .com gateway, and you may find more information about which package you need to subscribe to in order to buy American-based companies.

notibrian
09-10-2001, 03:14 AM
hi czar ... thanks a lot for your fast response :)

luckily, malaysia has an fixed exchange rate with US dollar, but too bad most companies do not accept malaysia, or any other countries' investors that they dont have a company in :(

eTrade looks great ... but the commissions of $32+/trade is too high :( ... i found a company datek.com, which commissions is only $9.99 ... do you heard of them before? and besides the comissions, exchange rates, transfer fees(transfer money back to my malaysian account) is there any hidden costs?

OC
09-10-2001, 08:44 AM
I've never used them, but another one is AmeriTrade.com

ref
09-10-2001, 09:57 AM
TD Waterhouse is an australian company, are you allow to purchase american shares?
TD means Toronto Dominion. The last time I checked Toronto was a city in Canada.
http://www.td.com/profile.html

Btw if you did not do the minimum research to figure out were your broker is coming from you are on the market to be slaughtered.

notibrian
09-10-2001, 12:15 PM
Thanks a lot guys for your replies.

OC : AmeriTrade.com is the cheapest around :) ... but too bad they are for american only :(

ref : yup yup i agree with you ... i prefer companies(holding/parent) from USA and has been doing ebrokerage business for sometime ... i think thos companies are more reliable and will be able to process the transaction faster :) but as for TD Waterhouse, i realised that it doesn't allow malaysian to join, thus i didnt do much research on the co.

by the way, from my research an international investors will incur the following costs when investing through the internet:

1. comission (internet)
2. interest (some co. do not pay interest for the money in your account, thus it would be your opportunity cost)
3. exchange rate (if your currency depreciates, you will have to pay more)
4. wire transfer fees (to or from your account)

lastly, about the tax ... do we(international investors) have to pay any tax when we transfer our money into our accounts and when we withdraw from the account? what is the tax rate?

Czar
09-11-2001, 04:15 AM
lastly, about the tax ... do we(international investors) have to pay any tax when we transfer our money into our accounts and when we withdraw from the account? what is the tax rate?
I'm not sure exactly how things work in Malaysia, but generally taxes are charged on dividends paid to you (at your normal income tax rate). This can be avoided in some countries where the company in which you have invested has already paid tax on the revenue/profit represented by that dividend. In Australia, this is referred to as franking, and when a dividend is 'fully franked', you pay no tax whatsoever on that income.

The second most significant tax involved in trading/investing comes into effect when selling stock in a company. If you gain money on the sale (ie say you bought the shares @ $4 and sold them six months later @ $5), then the difference between the purchase value and sale value may be subject to capital gains tax.

Since I'm not an accountant or financial advisor, and am unfamiliar with the intricacies of your country's taxation system, I can't say any more, except to suggest that you attend a few local "introduction to investing in the stockmarket"-type seminars or chat with a financial advisor to clear things up.

Best of luck :)

notibrian
09-11-2001, 02:15 PM
actually i am an accounting graduate hehehe :) ... i know quite clearly about the income tax here in Malaysia, but are we subjected to American Tax as well (the W-8 BEN form that we have to fill in), which i have no idea of? (sorry i didn't state this clearly in my last post :rolleyes: )

when i was studying in australia(Melbourne), i was told that all the money transfer into an australian bank account will be taxed, but as i was an international student i was exempted from the tax. are we subject to any tax when we transfer our money into our accounts in US? and as you stated, is the capital gain tax refer to US or Australia?

for example our net capital gain before tax (US or local) is $5, is the capital gain $5 taxable under US Incone Tax Act, whats the rate? the tax rate is very important, because it will pull down your gain significantly if the tax rate is high.

This would be my last question ... and once again thanks for all the helps fella geeks especially Czar :)

SSacobie
09-11-2001, 03:35 PM
Due to the terrorist attack, you'll probably want to avoid the market for at least a week or two. There is going to be a lot of panic selling.

steb
09-11-2001, 04:26 PM
if everyone is selling, doesnt that make it a prime time to invest? (i.e if everyone sells, demand is down, so price goes down?) - when the market gets back to its normal level after everything has settled, they will go back up?

I dont do stocks / shares, so I am probably very wrong ;))

SSacobie
09-11-2001, 07:40 PM
Investing after the market gets back to normal is a good idea. But based on the problems across the world with pretty much every market going down 5-10% and hitting multi-year lows in a matter of hours, I'd avoid it for the time being, no matter how safe the stock is. Only three stocks were positive on the London FTSE, and I'd be surprised if there's much positive whenever the US market reopens.

notibrian
09-12-2001, 03:49 AM
SSacobie is correct its definitely not the time to invest when US market opens up in another few days time or even weeks ... as many asian markets are closed (Malaysia, Taiwan, ...) and the ones that open drop around 5-10% as well :( ... so if you invest at this moment, you will suffer a high short term loss ... but since it will take me weeks to open up an account with datek.com, which located in New York, hopefully by that time things will get better.

actually the terrorist attack will more or less affect the economy of US in the short and long term and not to say the stock market ... so if you really want to invest in US stock market, i think the short term gain(which i was planing to do) will be unlikely except that "something" reflect a boost or improve in the economy after this terrorist attack incedent is settled(the people responsible is found and punished).

by the way, anyone here has any experience with datek.com? or do you know non-resident is subjected to capital gain tax(from my last post)?

JakeJeck
09-13-2001, 11:13 AM
Take a basic accounting class.
Learn to read Balance Statements, Income Statements, Cash Flow Statements.
Those tell you exactly where a company is getting money from, how much its getting, where it's spending the money and how soon it's going to be broke. Once you learn the ins and outs of these statements you can tell the difference between a well off company and one thats in big trouble.

There's alot more to it than "did they earn a profit"?