Seeking the wisdom of investors.

[KrazyHorse]

Limited liability. Look it up.

[Kuciwalker]

No, not with borrowed money.

Say I invest $100 with my own money, and the stocks go down far enough that I actually lose money - more than the $100 I started with.

http://en.wikipedia.org/wiki/Limited_liability_corporation

edit: beaten to it

[Bugs ****ing Bunny]

So the worst that could happen then is you go down to zero with the money you invested and you never would owe any money beyond what you had put in.

That's correct where limited company investment is concerned. Just stay clear of unlimited liability ventures, such as becoming a Lloyds "name".

[DanS]

My mom suggests Personal Finance for Dummies in addition to Investing for Dummies. Apparently, they do have robust sections for index funds and index ETFs.

[MrFun]

Thank you Solomwi, DanS, Bugs, and Kuci for your posts.

[Japher]

The best source for information of the financial stability of a company is 10-K filings by the company that can be found at the EDGAR database. Value oriented? Look at the companies Goodwill and past performance as well as other owners.

I follow my stocks daily, but I trade on a monthly and yearly schedule. I also follow a good amount of stocks that I don't own to learn market and industry trends as well as to determine entry points.

My checking account is linked to my Schwab account, however nothing is "Automatic". Meaning they need my permission to do any transfers. If you invest $100 and the stock goes to $0 you end with 0$, there isn't a charge for losing, though you can claim the loss against your income tax. Likewise, if you "win" then there will be capital gains tax which will be based on how long you held the stock before selling (33% for short, 15% for long).

[MrFun]

Yes, but can such 10-K filings be false or fraudalent? Thank you for your pointers, Japher.

[Solomwi]

Yes, but can such 10-K filings be false or fraudalent? Thank you for your pointers, Japher.

Absolutely they can (see, e.g., HealthSouth under Scrushy). Any filing can be fraudulent. Most won't be, because credibility is pretty important when one wants to attract investors, but caveat emptor.

You're welcome. Now go admit how wrong you are in the other thread.

[MrFun]

You're welcome. Now go admit how wrong you are in the other thread.

I don't know which other thread you're talking about.

[Japher]

Your 10-K is going to give you as much of the truth as you will be able to get without being guilty of insider trading.

[MrFun]

I'm not talking about needing to know everything as an insider trader, Japher. I was just saying if companies have gotten away with lying or distorting facts/data that they already release to the public.

[DanS]

I would say that if you are investing with a limited bankroll, it rarely makes sense to invest in individual companies. As such, I wouldn't look at 10-Ks and the like, unless you're interested and curious about the financial situation of a company.

Personally, I look at my investments every day. But I could get by with glancing at them once every half year or so. By all means, it makes me no richer to look at them every day.

[Japher]

All companies do that. The trick is learning when they are doing that. IMO, it's in the 10-K and in market trends. Why can Northwest have 3 mid-west hubs and none of the other airlines can? Well, they can't and we know it. Yet, when NW bought/merged with Delta that's what they got, yet they said their will be no hub closures... until now apparently. Note, for investor workforce reductions and consolidations are generally good things for the stock price (maybe not the value).

If you want to invest I would suggest you invest in value. IMO, this is what is meant by invest in what you know. If you invest in companies that value the same things you do you will be better able to spot the ones that are bringing more value at less cost. The other piece of the puzzle is knowing what value brings what cost. Should a company with $100M market cap have earnings equal to x times their shares? That's industry specific, and definitely something you should know.

[Dauphin]

That's correct where limited company investment is concerned. Just stay clear of unlimited liability ventures, such as becoming a Lloyds "name".

I thought Buffet took over that industry from a liability point of view about three years ago. If not, I may need to revisit some erroneous accounts.

[MrFun]

All companies do that. The trick is learning when they are doing that. IMO, it's in the 10-K and in market trends. Why can Northwest have 3 mid-west hubs and none of the other airlines can? Well, they can't and we know it. Yet, when NW bought/merged with Delta that's what they got, yet they said their will be no hub closures... until now apparently. Note, for investor workforce reductions and consolidations are generally good things for the stock price (maybe not the value).

If you want to invest I would suggest you invest in value. IMO, this is what is meant by invest in what you know. If you invest in companies that value the same things you do you will be better able to spot the ones that are bringing more value at less cost. The other piece of the puzzle is knowing what value brings what cost. Should a company with $100M market cap have earnings equal to x times their shares? That's industry specific, and definitely something you should know.

Sounds like good info - thanks.