How/Where should I invest $1K in 2007???

Have opened an account with Scottrade. Already have a Target Retirement 2045 Roth with Vanguard. Looking to play around with $1K. New to stock trading. Any suggestions for the upcoming year?

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On Tue, 16 Jan 2007 10:52:54 -0600, snipped-for-privacy@gmail.com

It is relatively expensive to actively trade with $1,000. Assuming that commissions are 9.99 per trade, just buying and selling a stock costs 2% of the amount. I would buy only one stock or one mutual fund and would not try to "diversify" that $1,000. When you save another $1,000, you can buy something else.
i
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snipped-for-privacy@gmail.com wrote:

You've said both "invest" and "trading", and the two are not the same thing at all.
If you really mean investing, buy DIA or SPY or QQQQ and leave it alone. Or do lots of research and pick just one stock that you like and buy it and leave it alone. Buying an exchange traded index fund (DIA, SPY, QQQQ, etc) gives you diversification. Buying just one stock gives you volatility, which can be good or bad depending on which way it goes for you.
If you want to trade (gamble), pick a highly volatile stock that goes up and down several percent per day for no apparent reason (like maybe China Life Insurance, NYSE:LFC) and try to predict (guess) the ups and downs. IMO, if you are not overly compulsive there is nothing wrong with gambling, just be honest with yourself about what you are doing, stay away from buying on margin, and try to learn some lessons along the way. Even if you guess right, you will find that $7 per transaction eats up a lot of your winnings on a $1000 stake, but that's not a bad lesson to learn. Good luck!
Best regards, Bob
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Put it in a low cost "index fund" of your choice and ... .... .... ....
Forget about it for the next 40 years.
The folks who " play around " tend to be a lot worse off after a few decades than the folks who buy, hold, and forget about it.
.
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snipped-for-privacy@gmail.com wrote:

I'm going to assume this is what Kramer calls "mad money". That's money that's left over after you've paid all your bills and set aside money for retirement. If not, I highly suggest you put this money to use elsewhere. That being said...
I've been eyeing Motorola (MOT) lately. They've just gone through a 3 month slide down 30%. Whether they've hit rock bottom is anybody's guess. But I think that Motorola is a solid company and firmly believe that they'll recover from this. This could be a good opportunity to buy some Motorola stock on the cheap.
I don't think this would be a stock to "play around" with, though. I would look at this more as a buy-and-hold stock. Motorola isn't going to double your money overnight. Chances are very slim it will double your money this year. But I think it's a good buy for the long haul.
Speaking of Kramer, I think he just badmouthed Motorola. Even more reason to buy it. :-)
--Bill
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wrote:

Bill, I hope that if we are not allowed to discuss individual stocks, we'd be corrected by our esteemed moderators, but I want to thank you for your suggestion. It seems to be a low leverage and not too expensively priced stock. I will definitely research more into it.
Thank you.
i
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The problem with a company that just shed 30% of its value is that it is just as likely (if not more likely) to drop another 30% than it is to crawl back out of that hole.
-john-
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That, as such, does not scare me too much if it is going to make good money in the long run.
i
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John A. Weeks III wrote:

John makes an excellent point below. Tech stocks are *volatile*. You can have a company that looks like it is a great company, winning business model, great products. And its name happens to be Dell, and it has been a dog the last 3 years.
For gambling I would rather gamble on an index (eg Nasdaq). Or buy a long-term buy and hold type company (ef Pfizer, although they have had some very disappointing news of late).

Excellent point.
Let me tell you about me and Nortel. It had dropped from $120 to $25, so I thought (growth industry, right?), that it was 'cheap'.
Adjusted for a 1 for 10 recapitalisation, it is now about $2. Fastest $5000 I ever threw away. As I keep telling my portfolio manager, I keep it in the account to remind me every time I am tempted to gamble.
(if it was in a taxable account, then one can sell the shares, and turn the loss into an asset. A good discipline at the end of each tax year, I find).
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Motorola seems a good investment not just because its price fell 30 percent but because its fundamentals look good. Its valuation looks pretty attractive -P/E of 11.56, less than 1/2 the average P/E of its industry; P/B of 2.54, again substantially lower than the industry's average-, which combined with an above-average 5-year earnings growth rate, looks like it is trading below its intrinsic value (see the ratios here: http://stocks.us.reuters.com/stocks/ratios.asp?symbol=MOT&WTmodLOC=L2-LeftNav-16-Ratios )
To justify the current price, you just need an average earnings growth rate of 1 percent during the next 10-yr period (you may check this here: http://www.zroundtable.com/ZRT_files/Finance/scripts/calc_stock_earnings.htm )
That's well below the historical average of 6.2 percent for the stock market as a whole, and of course much lower than MOT's 5-yr EPS growth rate of 27.71 percent.
In conclusion, this does not look the case of many tech industries which were trading above its intrinsic value even after the huge price declines in the early 2000s (Lucent and Nortel, for instance).
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I like Intel myself, as a tech pick. The margins are incredible on uP (microprocessors), and I don't see AMD doing much damage (being one-sixth the size) once the corporate market starts spending. Also EMC (hard drives) is good. My reasoning: computer systems go obsolete every 5-10 years (basically the hard drive fails, and then most people are too lazy to change harddrives; they rather upgrade). So we are due to replace all those dotcom PCs in the next few years.
MOT is riskier IMO since they are one of many players in the cell phone business, which is FASHION DRIVEN. The RAZR was a step backwards technically, but it had a "cool" look. Bad investment idea that--trading on cool. Think GAP.
RL
Jose Bailen wrote:

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This is an excellent insight on what's contributed to MOT being ho hum for so long--it remains a heavily engineering dominated company in a market space that requires a lot more right brain folks than it has on the payroll (or would be willing to listen to anyway).
But MOT does a lot more than subscriber handsets though, so a full analysis shouldn't ignore that.
-- Todd H. http://toddh.net /
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raylopez99 wrote:

I agree that Intel has more monopolistic power and thus more earning power than Motorola. However, this is probably fully reflected in its price. When you look at Intel's and Motorola valuation ratios, Motorola looks cheaper in my opinion. Given Intel's current P/E of 24.53, Intel needs an average earnings growth rate above 11 percent to justify its current price, while Motorola just needs a 1 percent growth (remember: over the long term, the historical average growth rate of EPS was 6.2 percent).
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