Danielle

I’ve worked for a financial services company for the last 6 months. While I don’t pretend to know much about investing or finances, I have learned leaps and bounds from where I was in January.

And you’re 150% right about not trying to time the market. At a company presentation for Q1 end, they talked about how those who missed the best x amount of days in the last year actually earned significantly less than those who invested in the long haul. I will try to find the numbers for you if you want to throw them at your friend.

(Sidenote: I just came across your blog from Ryan Healy & Employee Evolution. My goal tonight is to come up with my budget — which my mother has been yelling at me about for about 5 years…)

Bryan

“I think it’s going way up.”

I think it should be empathized that this is a ridiculous statement to make if you know nothing about a company besides what it does.

Remember kiddies: stock price means little in-and-of itself.

I do invest in individual stocks, but thankfully my schooling has given me the training to read balance sheets, understand and interpret NI43-101s and NI51-101s, and to make cash flow projections. Plus, I hate golf, and I prefer to play sports rather than watch them, so what else do I have to talk about around the water cooler if not stocks?

Two good pieces of advice from a coworker who has been through it all (including tossing two different sets of keys to houses to the bank when the economy tanked):

“It takes money to learn anything, be it sky diving, golf or investing. If you lose a little at first, hopefully you learned something.”

and

“There are two schools of though on investing in your particular field of knowledge. One is do it, as it is what you know best, and the other is don’t, as if there is a downturn you will likely be out of work and broke. Keep this in mind.”

Dan

0.5.% interest? One half of one percent interest? What bank is this?

A Tentative Personal Finance Blog

Any major brick and mortar bank is going to give you a low percentage rate for your savings or checking account.

As for your friend, keep educating him. Tell him about an investment that you can get a 50% return right away without doing anything except participating…. oooohhh the magical investment…. 401(k) and company matches.

If he won’t listen, beat him senseless.

CT

Isn’t your assumption that Netflix is overpriced just you trying to time the market? If you really beleive that market timing is irrelevant, you wouldn’t care if you bought Netflix after a 125% run or a 125% selloff.

Investing is mostly about choosing the right asset allocation, but timing is somewhat important. There is such a thing as bad market timing, such as an investor that always sells during a panic. On the other side of things, there are also good times to buy as stock. In the Netflix example, if you were considering buying Netflix after the 20% gain, you might say to yourself “I’ll wait and see if the Amazon deal goes through. If it doesn’t the stock will probably drop and I can buy it for cheaper”. You don’t need to make any predictions about the Amazon deal to follow this strategy, but NOT buying because of market conditions is still timing the market.

Christine

I have fallen in love with your blog ever since I first discovered it a couple of months ago; I’ve been reading it religously ever since.

As a young woman and recent college grad with ridicoulous student loans and credit card debt, I vowed to make being financially healthy my #1 goal. This blog is helping me acheive this goal. I only wish more woman would take control of their finances too.

THANKS. GRACIAS. ARIGATO!

Andy

401k’s are only as good as the match and vesting terms. If you want to invest and look away, invest in the indexes not mutual funds.

I would be curious to see Ramit on covestor.com and how his portfolio changes over time…

ChristianPF

When I think about market timing, I think about how it is just about the opposite of anything Warren Buffet would do. He just buys when he sees a good deal and holds on to it for decades. It’s low stress and high reward.

Jonathan

Other than the fact that they use the internet and dvds, I don’t really see how Netflix is a “tech” stock.

Grodge

This chap needs a primer on PERSONAL FINANCE before he even thinks about investing in individual stocks. Life insurance, emergency fund, 401(k), IRA, paying off debt are all things that come way before buying Netflix stock.

Just the pre-tax status of a 401(k), with or without a match, is reason enough to max it out. If he can’t understand that simple concept, then forget talking to him. Any advice you give him will be either ignored, or worse, misinterpreted and you may eventually be blamed for his financial bungling.

http://kalamazoopost.blogspot.com/2007/05/retire-in-9-simple-steps.html