Monthly Archives: September 2011

Why It’s So Difficult To Make Money In The Stock Market

Written by in Investing
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An Unemployed College Graduate’s Irrelevant Opinion

This is a post written by Avishai Shuter, and up-and-coming zoologist who lives in his parents house while waiting to hear back from the Bronx Zoo.

About a two years ago, I decided I wanted to get some experience in the market. After doing some research, I created a TD Ameritrade online account (they were the first company that didn’t require a Social Security card for signup, and as a college student away from home, I didn’t have mine) and bought $1,000 worth of stocks. Two years later, my portfolio is worth about the same as a result of significant losses but equally significant gains. So what have I learned?

Why Casual Traders Get Hammered

The stock market wasn’t designed for college kids with $1,000 to wager, and as a result, isn’t especially friendly towards them. I started investing, as many people do (whether they admit it or not), fantasizing about stumbling onto a stock that would make me millions overnight. But, I quickly learned, it simply doesn’t work that way. In order to make real money in the stock market, you need to start off by investing a sizable amount.

Starting with $1,000 simply won’t do it. The expensive stocks of well-known companies don’t have swings as large as smaller, less reliable companies do. So I could have taken my money and bought two shares of apple, thereby risking about $600 in order to make about $30, in addition to the $9 a trade I was being charged (this was an actual scenario when I first started out). And even if it wouldn’t be the riskiest move in the world, it would have been a waste of time. In order to justify that type of investment and time, I would have needed to invest way more at the get go.

Unless you have the money to buy a few hundred or few thousand shares of Coke, or Apple, or Google, where strong returns are as close to a guarantee as you get in this business, it just isn’t worth it. So why do casual traders get hammered? Because they’re casual. They simply aren’t putting up the money needed to make back money they could potentially live off of.

The House Always Wins

You know why joe-shmoes don’t make millions in the stock market? Because they don’t put millions in. In a system which is essentially complicated gambling, many of the big players are also making the rules. And, same as in a casino, the house rarely loses. Casual traders simply aren’t privy to the information required to make decisions resulting in million dollar returns, nor the bankrolls required to take advantage of the information even if they had it.

So what’s the main thing I learned?

The main thing I took away from this learning experience is that in order to make a significant amount of money in the stock market with the stock of giant, dependable companies, you better have the money and the will to buy a few thousand shares.

Otherwise, I just can’t see the justification for buying those types of stocks. On Wall Street, it seems to me that casual equals increased risk or don’t even bother. But I’m by no means an expert. Happy investing.

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Should the USPS Become Its Own Business?

Written by in Business
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America is the home of capitalism. If someone can do the same job for a better price, they’re going to come out ahead. Why would anyone spend more for the same service?

For a capitalistic nation, we have some weird things going on. The United States Postal Service is the best example. This is a company that lost $3.1 billion in the third quarter alone, what reason is there to keep it around? If it were any other business, it would have gone under by now. And if the company goes too far into debt, we may end up seeing a taxpayer bailout in several years.

The good news is that the USPS does not get taxpayer funds, so it’s supposed to be a self-sustaining business. The only problem is that email became really popular, so instead of spending 44 cents on an letter, people are emailing each other for free.

So first of all, law prevents post office closures on purely economic grounds. Wait, so there’s a business that is losing money and it’s legally unable to close one of it’s stores? This one is mind-boggling for me.

The USPS has a monopoly on first-class mail. Only the post office is allowed to deliver first-class mail, so if you want to get a simple letter, you either need to send it first-class via the post office, or you can choose another service such as UPS or Fedex and pay a higher price for it.

Post office officials would love to run their business more like a business. They want to close the offices that don’t make money, they want to increase USPS stamp prices, and they want to cut Saturday delivery to save about $3 billion per year.

So why is there a monopoly on first-class mail and why does the government support it (even though it’s not exactly part of the government)?

The premise of the USPS is that everyone in America should have the same service: Regardless of whether a letter is delivered down the street or across the country, the price would be the same. Most of the 2,000 that are currently in the process of being closed are located in rural or subsurban areas where getting to another offic would be difficult for many people.

So the cost of hemmoraging money needs to be weighed against the benefits of giving a service everyone. Another large factor is that the United States Post Office is the second largest civilian employer with a workforce of 583,000 behind only Wal-Mart, and 87% of the employees work full-time.

Making major changes to the post office has major ramifications for the post office as a company as well as for all the people it employs.

Readers, what should happen to the USPS? Should it be allowed to lose money at an alarming rate and continue to borrow money from the fed as it needs? Or should it become more privatized and let it fend for itself?

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How to Shop Smart for Home Insurance

Written by in Money
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In this economy it’s more important than ever to save as much money as possible including on your homeowners insurance. There are lots of ways to save money on insurance, but you want to make sure you are never giving up coverage that you may miss in the event of a claim. Here are some of the easiest ways to save on your home insurance premiums without losing valuable coverage.

1) Do your research. What are other homeowners paying for home insurance in your area? Get average rates from the Insurance Information Institute to see what homeowners are paying on average. This will give you a ballpark figure to work from.

2)Find the right agent. Work with an independent agent that can shop your policy with multiple insurance carriers and return comparative home insurance quotes. This will save you time and money since you won’t have to compare policies with multiple agents.

3)Ask for discounts. Insurance companies are offering tons of discounts for everything from security alarms to home-auto packages. Ask your agent to get you every discount you qualify for so that you know you aren’t missing any savings.

4)Set the right deductibles. Typically, the higher the home insurance deductible the lower your monthly premium. However, don’t get stuck with a deductible that’s too high because you may be in financial trouble in the event of a claim. Make sure your deductible is reasonable and talk to your agent about what is best for you.

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Are Coupons A Good Way to Save? Or Are They A False Economy?

Written by in Money
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The use of coupons has increased dramatically according to published research. Retailers are keen to attract customers and customers are keen to save money, which they can also do at moneysupermarket.com.

There are many coupon sites and social living discount sites that feature daily offers and it is all too easy to be seduced by these apparent bargains.

Everybody loves to get something extra and coupons and coupon codes seem to offer just that. In these tough economic times, consumers want to feel they are getting more for their money.

But are coupons and discount codes really such a good way to save money or are they a false economy? There are definitely many levels to this issue, but eBay has always been reliable to me and I love shopping and availing discounts using eBay Coupons.

Firstly, coupons work on a psychological basis and this is why they are effective. Retailers know that by offering a discount individuals are more likely to buy.

A certain number of people would purchase the item anyway, but new customers can be tempted by the idea of a discount. Coupons are so appealing that individuals will make a decision on a product simply on this basis.

Frequently, the coupon code has a certain time requirement, which makes people purchase within a set time frame. Sometimes, however, people regret making such an impulsive buy.

We all have items in the back of our closets that we purchased in moments like this and have never used since. The kitchen gadget that is too troublesome to assemble is a familiar example!

It is easy to forget that at whatever price it is, you are still spending money. Just because you have a coupon code, does not mean it is cost free.

You are still spending money and it is perhaps money that could be spent on something more useful or alternatively, used to pay off debts or put into savings.

Also, just because an item is discounted, does not mean it is good value. It may be that it was overpriced to begin with and the discount code actually reduces it to a reasonable price.

The social living sites offer discounts on a citywide basis, which means that there are many other people who will access each particular deal.

There are numerous stories of how this can cause problems. Retailers can run out of stock of an item and service industries such as restaurants and beauty salons cannot cope with the sudden demand.

It may be that to use your coupon you can only be seated at a restaurant at a certain time. If this is not convenient for you, then it will not feel like such a good deal.

Business owners will also try to increase your level of spending by creating additional purchasing options. So, for instance, coupons for meals will often exclude drinks, which then increases the amount spent.

Coupons can be a good way to save money providing you truly want the item on offer and that there are no hidden extras. Choose wisely and enjoy any genuine bargains you find!

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