Help me build a $50,000 portfolio

In case your portfolio had been burnt in stock market at that time due to under diversification than you might take a look inside this article :
There is a body of empirical evidence that indicates that a diversified portfolio of securities, for example 20 randomly selected stocks, holds much less risk (measured by the standard deviation of returns) than an individual security. This follows because:

* The standard deviation of returns from a single stock in a portfolio is much larger than the standard deviation of the entire portfolio.
* The standard deviation of returns on a portfolio declines as the number of stocks in the portfolio rises towards 20.

An important result of holding a diversified portfolio is that:

* A diversified portfolio follows the market very closely, while an individual stock or a portfolio of stocks from a single industry may not closely follow the overall market.
http://www.frbsf.org/education/activities/drecon/1999/9907.html

You would probably hold both traditional growth and value stocks and do hold some American depositary receipts, or ADRs.
Portfolio should aim for low portfolio turnover and takes a long-term view -- typically three to five years or even more. You will probably beat the market with caution and trouble free as result
The pillars of a thoughtful strategy would be:
P...portfolio management
O...opportunities
S...sense
T...time frame
Anyways, it's not that easy to run any portfolio, make some practice and good luck!
Believe you will get a lot of valuable comments from other members here whether about the specific stock picks or experience.

How interested are you about putting in the time to do research and really make the portfolio grow. If you're not, then put the $50,000 in a basket of index funds and/or ETFs that give you exposure to the equity, fixed income, and commodities while also being internationally diversified.

I would tell you that cash is king now and don't be so trigger happy until there is some direction in the market. don't try to guess the bottom

I have discovered, after cashing in reinvested shares of MFs in my IRA that I am doing better then their yearly returns.

POST is the rule of thumb but how? I am ten years out from retirement and want enough "monthly income" to keep me happy. First rule: Check what your "projected" monthly income from SS will be. Two: using current monthly bills estimate what it could be at retierment.
Three:Decide what you will need to cover bills, food and lodging.

Now look for closed end bond funds with "monthly payouts" and individual stocks that pay ta least 6% dividends. Make sure they all have a clean track record. As you slowly accumulate these stocks, I currently have six different holdings and adding, reinvest all dividends.

Finally back to options. I never purchased a stock, outside of a couple closed end bond funds, that did not have options attached to them. I play Covered Calls and it pays out big time. Example: I hold one financial that pays a one dollar dividend per share per year 100x$1=$100.
I have sold 2 CC and purchased them back this year
100ccx$2=$200 =$300 for the year.

What is better? A stock with no options that pays you $100 or a stock with options that pays you a total of $300 for the year?

find someone to invest your money, but not in mutual funds unless you dont want to be rich

financially speaking selling a call on a stock which you are long has 0 NPV. Also if you look at institutional players who make directional bets in derivatives (as opposed to trading volitility) the only ones that make money long term are the ones who buy far OTM calls. Point being is not a value adding strategy

do your home work dont expext good picks on what some one else recomends

I totally agree with Gene. Don't listen to market hysteria or the latest hot pick from an analyst learn the trade for yourself. I don't believe in diversification as this is an actuarial approach in which you are expecting to lose money and by diversifying your stocks you can minimize the probability of loss. You should have a capital preservation mindset were you enter a trade to make money not lose it. lets look at an example: you accumulate 20 stocks in your diversified portfolio and at the end of the year 8 stock are positive and 12 negative yet your overall return is 12 percent, which is not a bad return. In scenario two you conduct extensive research and find 4 stock which you unequivocally believe will go up. At the end of the year you have a 30 percent return. Warren Buffet once said "diversification is a protection against ignorance. It makes very little sense for those that know what they are doing". With your $50000 i would not trade just yet, i would learn the trade first (read books, paper trade etc) and when the market starts to turn positive you will be in a far better position then most retail traders. Three points that you should remember. (1) learn the trade and develop a system that agrees with personality. (2) Make you own decisions based on your own research and don't listen to market hype. (3) Learn from your mistakes and don't repeat them.

Good Luck

Let's do it, I like the idea of putting $50,000 dollars in the market... maybe because it's a nice number or maybe just because if your trying to make some serious money in the market that's a nice start..

So let's begin with what I think you need to do... I have thought about starting a stock club where I would make a website that people could go to and see what I recommend to buy - but it seems too boring... (and I never seem to find enough time to work on it)

Now to be clear my goal might be bigger then others but it's not unrealistic - My vision is to take that $50,000 dollars and turn it into a million dollars in the market. It's more then possible.

Stock guys down on wall street could probably do this all day and night... I have a friend who's portfolio I am currently advising which started with $150,000 -I told him to buy TTWO at 15.74 and we sold at a little above $24 a share... making a little over $78,000 - we moved on to other stocks like BIDU and the portfolio is well over $250,000 well onto his way to a million. (he is also suppose to buy me a car (2009 550i BMW) when we hit the quarter mark, which we have -As an incentive for me to take him to the million mark. I'm sure we will go a little over that.)

For you, you can get me a Brand New 2009 Nissan Maxima fully loaded Silver/with Black leather interior, when we hit the quarter mark. -(I just think if the person your getting advise from has no incentive for you to do well then how can you trust the advice)

So I do the car thing because it's fun, and I'm a car fanatic...

Right now I don't have him holding anything, we where shorting some bank stocks but right now it's just too risky and I think I have found a much bigger fish.

Now the time frame on this would probably be a year... so in one year my goal is to make you a million dollars in the market...

So let's start with what I recommend.. This market is Crazy and very tricky... Now me myself I Like to trade often.. sometimes I hold for awhile but I guess my style would best be described as a day-trader. So when I say sell, we sell... When I say buy, we buy...

Now anyone reading this can jump on in, I think I will start a stock club and start posting my picks for anyone who wants to jump in. The 50/50 club -Starting with $50,000 and turning it into a million.

-I also disagree with picking stocks by yourself, for one, if you could have warren buffet on your stock team I'm sure you would go with him instead of picking stocks all by your self. Two heads are always better then one, but only if the second head knows what he's doing.

I'm looking at the tech market and I think it will be the sector to move the market forward as we get pass the slow down. -but it's not all I will be looking at.

Right now I like Wamu - WM - the banking sector has got hit really hard and could slowly make a come back.

but it's tricky - it's not a buy yet. I like Baidu.com - Bidu -
it's the Google of china...

I also like Blockbuster - BBI and Midway - MWY - these two stocks have a real chance of out performing but it's all about the right time to buy... There is a time to short them and then a time to buy.

I also like China Life Insurance Co LFC as I have started shorting the stock.

But again these picks mean nothing unless you know when to buy and when to sell...

Hi,

What most people have said is true thus far, that you do not want to take picks from other people. If you do take them, make sure it's because you have followed up on their advice with your own research and decided that the company meets your personal criteria.

i have a few rules of thumb I follow when I'm looking for a good long-term pick that will grow. They are as follows, and what I call a "skimming" value look that sets a flag for me to investigate deeper into the company.

1. Must have at least 10% inside ownership

2. Must have UNDER 10% institutional ownership

3. Preferable that a market cap of under $2B exists so they have tons of room to grow in market declines (like now). See my post on OMG (the stock lol) where I go a little further into this

4. P/E ratio of under 15. Also compare to industry average - I generally like a company with about 70% or less of the average P/E in their sector

5. ROE of over 15% - you know they are doing well

6. Debt/Equity of less than .5, and also interest coverage of at least 10 (This means that their cash flow can cover the interest on all payable debts at least 10 times over per fiscal year)

7. Product or service that, using common sense, will last and not become a fad like so many internet companies and things like Croc shoes etc.

You can find a good outline of US traded companies on Yahoo! Finance (Which I find gives a much deeper look than Google), and the really in-depth financial stuff is on a site called Smartmoney.com, which has all of the deep earnings ratios and industry comparisons and debt levels etc.

Oh, and one more very very important thing. Try to invest in companies that pay out dividends, shares of the profit. At least 2 or 3%. If you own these you can call your broker and have them reinvest the dividends and a lot of companies offer what is called a DRIP program (Look that up on investopedia if you like) which makes dividend reinvestment even more appealing.

Hope you find this helpful. Happy Trading all! Heads up, too - FSLR on the technical side will probably have another nice upswing for 8 - 10% in the next 2-3 weeks. I've been swinging it with my quick trading cash the last month or so and have been averaging like $30.00 + a share for three moves now. Very easy money.

Cheers!

Coreadrin.

You ought to spend your time researching but for now just index because trying to out pick professionals will only end in losses

The easy money for at least the next year is all going to be in short sales. The risk of this is that the potential gain from a stock short sold is the present value of the stock, whereas the potential liability is unlimited unless you are investing indirectly through an ETF type arrangement.

Going long on stocks in this market is hazardous because the train wreck has only started. The next 3-4 years at least are likely to be a bit thin on profits.

If you get in when there is a real market bottom, you may get amazing returns in the long run...if you get excellent advice on stocks that have dropped far below objective value. Knowing that the market has hit the real bottom is not always easy.

I could not fault an amateur for sticking with money market and focusing on asset preservation, although if the US goes in to hyperinflation nothing is safe.

Take MTG, past was a 60 dollar stock will climb back by mid 2009. SYNM a buy, nations only co. to use fat &Grease from Tyson to produce the cleanest fuel for diesel and jet fuel. Trucking co. will like this. First production 2010.BUY...BUY...BUY...

Have you heard of the DXD, hah I jest

But in reality it might be time to go long