That is probably it. Thanks for the help. Will most likely come in here with more questions along the read.

Btw, Market Wizards is a good book so far.

A typical way to go broke with future contracts is to buy some on margin at a given price and then they go up, so you can buy more on margin. You eventually get over leveraged on borrowed money, and then something happens to make the contract crash. If the bid price drops the limit, then the commidity doesn't trade so you can't buy back the futures. If this happens several days in a row you are very broke.

I have a pretty general set of questions.

I have about 120k to invest, but I know very little about finance. I could educate myself, of course, although that does come with an opportunity cost. Basically, I could post about it in the stickied thread, and get one piece of advice - "The Vanguard STAR fund (VGSTX)", for example. I have no idea what it means but the poster sounds good. I could go get a financial advisor and would similarly have no real idea about the recommendation, or even whether the fees/cut there are appropriate. I know enough about myself that I don't just want to stick it in a moneymarket account and get my 1%, or stick it on highly variable commodities and ride the swings, but I don't know much about the middle ground.

What's the best way to get educated? Who should I be talking to? How do I know the advice I receive is good enough to bank my savingsroll on it? What are the biggest traps to avoid when in this position?

Thanks!

Vanguard Star is not real exciting but it's a pretty good choice for someone who doesn't really want to spend the time and effort to educate themselves. I mentioned two books in a post earlier today with home brew portfolio mixes that are as good as anything else. Here is a link to someone who writes a column for the Dallas Morning News:
http://assetbuilder.com/blogs/scott_...lios-rule.aspx

The basic idea is you keep investment costs as low as possible, divide your portfoilio evenly between 6 to 10 funds that are in different asset classes, and rebalance once a year. You stay invested no matter what, so you don't have to worry about market timing.

The biggest trap to avoid is turning your money over to someone who wants to turn your money into his money. I'm not talking only about outright scammers, there are a lot of financial planners who will reccomend mutual funds with high expenses because they get paid from the fund.

Thanks for all that, really helpful. Liked the link a lot, especially this bit:

I don't see how turning over less often leads to less capital gains:-

For arguments sake assume apples and pears both go up in value 100% linearly between 1/1/10 and 1/1/11, and ignoring fees.
-If I buy $5 apples on 1/1/10 and sell for $10 on 1/1/11 then I owe capital gains tax on the $5 increase in value.
-If instead I buy $5 apples then change up for pears on 1/7/10 when apples and pears are both selling for $7.50, then hold these pears until 1/1/11 and sell for $10, I still seem to owe CGT on $2.50+$2.50=$5

Am I missing something?

I failed to mention that if the turnover is represented as a cash payout to investors.

If you as the investor receive any of the profit in a turnover event, thats a capital gain you must pay tax on. If the fund holds onto all cash and never ships it your way you would not have to pay taxes.

In your example you would be paying a short term capital gains tax on your trades, which would be your regular tax bracket rate instead of the more favorable long term capital gains rate (15% for the majority of people)

The 'tax effiency' is about how much taxes are owed overall and reducing that tax payment.

Ok so is this it in a nutshell?:

If a share is turned over within a certain space of time, it is classed for tax purposes as a short-term capital gain, and conversely if a share is held long enough for this given time to elapse and then turned over, it is classed as a long-term capital gain? Hence, funds with higher turnover frequency have a higher tax expectation, because a higher proportion of capital gains expect to qualify for this higher tax class?

No problem. I should point out that the Asset Builder web site is a service. They will manage your money for a fairly low sliding fee. What I like is he maintains all the info on how to do it yourself, so you don't have to use the service unless you just don't want to do it yourself. All of his old DMN columns are on there and you can see the evolution of the "couch potato" portfolios. In case you didn't find these links yourself, here are the couch potato articles:
http://assetbuilder.com/blogs/tags/C...aspx?GroupID=6

And this one tells you how to construct it yourself at different mutual fund sites:
http://assetbuilder.com/blogs/scott_...platforms.aspx

I built the 6 way couch potato myself for my roth ira right at the beginning of 2008. I grit my teeth through the market decline of 2008 and have recovered very well as the market has rebounded.

Good luck with your decision. This is not the only way to invest obv. but it's a good way for an average guy to capture the market retun without a lot of worry.

Mers,

You might want to check out this thread on passive investing: http://archives1.twoplustwo.com/show...0&fpart=1&vc=1

Does anybody Know if the dollor is going to strengthen or pound weaken within like the next 3 months ish?

I know its unpredictable

(Sorry if posted wrong place)

I've been reading a lot about investing for a couple of months now and was looking to get my feet wet and make some small investments.

I would be interested to now which online brokers people in UK use? There is loads of information and feedback on US based brokers but little info for UK. My bank have a share dealing platform which would be easy to set up but its £15/trade? Is this too high or an average price per trade?

Similarly, does anybody know of the stock market equivalent of 2+2 where there is discussion on European markets as well as US markets?

Thank you

for the UK, open an account at HSBC and use their "InvestDirect" service, it charges no management fees only dealing fees. I think thats the one you may mean above anyway.

edit: their xecution process takes days though, so if you want to day trade or deal a lot, then go to Hargreeaves Lansdown.

I have a short question, what does a company actually have to "do" if it owns a stake in another company?

E.g. company A owns 25% of company B.

What are the responsibilites of company A if any? If company B made $100m in a year, is company A entitled to 25% of the profit? Is company A's ownership of company B generally under an understanding that they will help with funding or management etc instead of just part ownership?

say you knew a company was going to fall from a stock price of 50 to 40 in two days, but you had no margin/leverage available to you. say instead you only had 5000 to your name. what is a reasonable amount you could make with this info and how would you do it?

The only way you could make more then $1000 is through options.

couldn't even make that. if you shorted 5k worth, you'd have nothing left in terms of excess liquidity.

re: Greenwald and Apple

He doesn't mean "open" as in "open source." He's referring to Apple's decision to act as gatekeeper for apps that are allowed to be brought to the iPhone.

so if you did have an options account, just no margin, you would sell calls (i guess thats different from buying puts?) and in that case how much would be a plausible amount to make? obviously it would vary depending on the stock, but just a ball-park range two days away from the earnings report. is $5,000 to $50,000 a big overestimate??

ok so I know nothing about investing and I mean nothing but I want to get into it in one way or another, is there any sites you would suggest or articles I should read that explain everything to me? or anything else you would suggest to me?

You would be buying the put or call.

Volatility and open interest are the drivers for the profit potential. $50k is a huge over-estimate, something more reasonable on the higher end would be $2500-$5000 profit, but again the interest and volatility are the huge drivers.

You wouldn't want to be holding and exercising the option, but trading it.

Everything? heh, thats next to impossible under one roof.

Investing is different from trading, very different. Figure out which you actually mean first.

If you're investing? Start here at the bogleheads wiki.

Another site in general for investing and trading is Investopedia

Same here, I'm basically a complete noob but willing to study hard. I'm thinking of starting off by focussing on commodities. It's just easier for me to imagine how this branch works.

Plz point me in the right direction by posting some links to interesting articles, books, etc.

Also, I've read something about so-called demo accounts, where one can try it all out for free, like play money cash games. I searched and found a bunch of these. I'm just not sure which one to pick. Are they all more or less the same or are certain of these sites clearly better than others?

Thx

Can anyone help me on understanding if its possible to prepay rent on an apartment for say 6-12 months?

Why would you want to?