Originally Posted by frickfrock999
That's pretty interesting. +rep.
So if a stock is really cheap, like Microsoft and Sony right now, and you know they're going to sell a lot of of next-gen consoles in the coming months, it'd be wise to buy as much as you can right?
So instead of investing it all in one stock, you invest in 2 (MS + SONY) and you sell it next year so you can make the max profit. Diversifying like somebody said earlier.
Does that sound right?
Once a stock is really expensive like Google or Apple, has the big boom for profit pretty much gone? Can those stocks get as much growth as they did before when they were cheaper?
MS and SNE are both tech stocks. Both stocks will go down as the whole tech sector goes down. Diversification is dividing between sectors: technology, services, healthcare, utilities, consumer goods, conglomerates, basic materials, financial, and industrial goods. Diversification is like owning Microsoft, Proctor & Gamble, Verizon, Plum Creek Timber, and Goldman Sachs. Completely unrelated companies. The problem that most users will have on this website is that they are only familiar with tech stocks.
You also shouldn't buy Sony just because you think they will sell a lot of consoles. How much does that account of their overall business? What if consoles only accounted for 20% of their revenue, while they also have Sony Pictures, TVs, Cameras, Accessories, Blu-Ray, Cell phones, Music, and financial services. The console division may be increasing while most of the others are still falling. The stock will decline.
In terms of Apple's boom being over... the short answer answer is yes. There will never be a chance again to buy Apple at $100 post 2008 and flip it at $600 a few years later. When apple reached 650-700 it had a market cap of half a trillion dollars, the largest in the world. Their profits had soared so much that it's just not possible to continue 14% year over year growth because they're reaching market saturation due to their sheer size. It's easy to double your profits when you make $100,000. But it's just not possible to double your profits in a year when you make $43 billion. That being said, Apple can still release revolutionary products like a television, smart watch, or iRobot and target growing markets like China and Brazil to net a 30% gain plus dividends, and this is why people still like it as an investment.
Originally Posted by DuckieHo
The price today already factors in their next-gen console sales.... Anything that you read about them in the newspaper, you are already at least an hour behind the big firms.
Investing in both companies because of console sales is not great idea..... unless you assume both will "win" or you are doing it to hedge (off-set risk).
Investing in two companies in the same industry is not really divesifying. You want to investing in at least 27 companies across broad industries to account for industry risk.
It depends..... don't forgot the price of Google today is a result of a few stock splits. That is when one share gets converted into smaller shares. i.e. A $1000 share gets turned into 10 $100 shares.
I agree except with the point about investing in at least 27 companies. That would be okay if someone was A) a multi-millionaire and B) older (less risk).
People should still be diversified but you aren't going to beat the averages with 27 companies. You're practically running your own mutual fund. May as well give it to the bank. You simply do not
have the time to actually follow 27 companies with research. If someone is investing around $100k-250k they should own 10 diversified stocks. Anything under $25k you should own 5 diversified stocks.
At the end of the day everyone has their own opinion on what is wrong and what is right. You need to do the research and decide on your own what works best for you. Look at many different sources and even challenge the ones that look to be certain.
1 more thing:SkillzKillz makes no warranty, expressed or implied, as to the accuracy or completeness or fitness for a purpose (investment or otherwise), of the information provided in these posts. This information is not to be construed as personal financial advice. Readers are encouraged to consult their personal financial advisor before making any decisions to buy, sell or hold any securities mentioned herein.Edited by SkillzKillz - 10/21/13 at 9:40pm