FundRobot » Equity Funds » Investing in a big name stock?

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Old   #1 (permalink)
 
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Default investing in a big name stock

Ive recently been looking into the stock market and have been interested in buying.
I am looking into buying a stock with one big named company like google, apple etc.
If I put lets say 5,000 into google and let it sit over the years, is this a good decision, will I profit off this and how much (estimates).
Google is a strong company that has been rising over the years I have read, so opinions, tips?
-Stock market newbie

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Old   #2 (permalink)
 
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Default investing in a big name stock

Yes, if it goes up you will profit, if it goes down you will not. My opinion on whatever you stock you buy is to not buy all at once.
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Old   #3 (permalink)
 
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Default investing in a big name stock

You will definitely get a lot of different opinions, but one classic strategy that has proven itself throughout history is to buy good quality stocks and hold on to them for the long term (10 years or longer). By "good quality" I mean companies that have a strong competitive advantage (such as many big well known companies like you speak of) that will probably still be around for generations to come.

It is possible to make more money faster by seeking out lower quality stocks selling at cheaper prices, or by betting on shorter term price movements in the stock market. This is where professional traders, hedge funds, private equity investors, etc. tend to like to invest. Obviously doing this successfully takes a lot of time, research, and a very good understanding of how the market work.

Estimating how much profit you might make on any stock over the long term is a bit complicated and takes some research, however as a guideline you can look at how broad stock market indexes have performed through history. For example, the DOW Jones Industrial Average is a collection of 30 giant well known companies. While some companies have done well, and others have ultimately failed and been replaced, the index as a whole has earned about 10% on average over long time periods (20 years or more). This isn't a huge return, but it is certainly enough to become a millionaire and retire comfortably if you can save a modest amount of money for 3 or 4 decades.

I like your idea - pick a good quality stock and hold onto it. You will most likely be rewarded given enough time. Just remember that even the best fund managers often pick stocks that end up going bad, so make sure you split up your money and own at least a few different good companies.
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Old   #4 (permalink)
 
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Default investing in a big name stock

No, this is not a good decision.
No one can tell you for sure if you will profit or not, so we can't give you any estimates.
You never know what will happen Bidu (the Chinese version of Google) might breakout and take over Google in a few years. (Probably not, but you never know.) Just a few years ago Blackberry dominated phones - Apple no longer has Steve Jobs who know if someone else will take over the phone market.

It's never a good idea to plop all your money on one stock.
A better choice would be to diversify your investment. And don't buy both Google and Apple (both technology stocks.) Consider stocks from different sectors.

If you are looking to "set it and forget it" you might consider an Exchange Traded Fund (ETF) like the S&P 500 (SPY) to diversify your investment with just one purchase. You might also look for a fund that pays dividends and have them reinvested. The compounding returns over time should add up nicely.
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Old   #5 (permalink)
 
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Default investing in a big name stock

No that is the worst plan ever. Seriously dude its a flawed dangerous plan and you are likely to only lose.

The first thing you need to do is look at the performance of companies, get a feel for which ones are the "safer" gambles. then do research.

Now you should have half a dozen identified with shares on the low side, with a possible increase so you SPREAD the money across these shares. As soon as they rise a few points you dump them again.

Eventually you will get actually very good at it, and can safely wait months as the money rides on them, but to begin its grab the profit as soon as its there. You will still lose more often than you win to begin with.
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