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Getting started with the stock market

January 30, 2018

I deal with many people in varied circumstances. A small group are people that do not own any stocks in their own name. Some might own stocks in their 401k accounts but they do not really understand anything about it except that someone told them which choices to make. Here is a method to get started owning stocks in your own name.

I suggest opening an account at one of the major discount brokerage firms such as Fidelity, Schwab, TD Ameritrade, Vanguard or the many others that are now divisions of banks. Most have $10.00 or less brokerage fees for a single transaction.

A suggestion is to then purchase one share of Berkshire Hathaway B stock (Ticker BRK-B) which right now would cost around $230.00 including brokerage commission. This will establish a stock account, will not unduly empty your bank account and will qualify you as a stockholder to receive the BRK annual report each year. That report is pure financial literature which includes Warren Buffett’s letter to shareholders and is a must read for anyone interested in investing in any manner. You will even get a ticket to the BRK annual meeting in Omaha which is attended by 40,000 BRK stockholders.

Note that I am not providing investment advice and have no way to determine if this is a good or bad investment, but it is the company that Warren Buffett is Chairman of and he is frequently quoted and talked or written about almost daily. Also note that this stock does not pay a dividend.

An alternative to BRK-B could be exchange traded fund (“ETF”) shares such as SPY, DIA, QQQ or IWM (those are the ticker symbols for stocks that try to mimic what I consider the four major indexes – the S&P 500 Index, Dow Jones Industrial Average, NASDAQ 100 or the Russell 2000). You can find out more about them in my annual charts and chart explanations blogs posted earlier this month. Owning these shares will provide you with a basket of the stocks in those indexes, and also some dividends which would accumulate and can be added to any additional funds you decide to use to add shares to your account.

A further alternative is to buy some shares in a company whose products you own or use such as GM or Ford, Nike or Under Armour, or Apple, Starbucks, Madison Square Garden or Disney. Whatever you choose, I suggest your first investment, which would be for no more than $300.00 be in a company you can relate to or feel connected to.

This is a first step to getting started in investing. Once you are in, you can start to consider a more serious method of selecting stocks to implement a long term plan you have. This gets you in, and then you can follow through in a more thoughtful manner of investing.

Note that I am not recommending any of these stocks. I am suggesting familiar companies as a way to get you started in the “strange” stock market world.

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