I agree with most of this, but expectations are a big consideration. When you start a business, you don't do it intending to make $1500, which would be a huge return on $10k in a year of stock market investing. $10k is plenty to get going with a business, though. This is the information age, after all. Selling unlocked iPhones on ebay is just one example. What most people consider a "moderate payout" on the business they started is many, many times more than what they could ever hope to achieve in the financial markets.

There's a good article by Paul Graham about the idea of effort and wealth. In his words, "There is a conservation law at work here: if you want to make a million dollars, you have to endure a million dollars' worth of pain ... You do tend to get a certain bulk discount if you buy the economy-size pain, but you can't evade the fundamental conservation law. If starting a startup were easy, everyone would do it."

But you don't need to have the intention of becoming a millionaire on $10k, even though it IS possible with an insane amount of time and effort (and a good dose of luck). My point was just that direct participation in capitalism can often pay better than lending your capital to others, particularly if you don't know where to lend (which stocks to buy). If you don't know stocks from socks, but you know a lot about collectible cars and the parts and work they need, then with some hard thinking there's probably a way to make some decent money with that $10k...

A terrific return on the $10k in a year in the stock market would be about $1500. Someone with good connections in collectible parts (or someone willing to get them) or who knows how to unlock iPhones could easily do much more than that without destroying their quality of life. One good parts deal could double that, it seems to me. One batch of iPhones sold on ebay should net at least 30% ROI -- way more than one should expect in the stock market, and you could do it multiple times in a single year.

Jim

Look at the transaction costs and fees. If you're going to buy & hold an index fund, then your decision method is to minimize fees. Take them all into consideration -- is there a fee to withdraw & cut a check? There's lots of hidden fees. Make an excel spreadsheet and list out all the fees. If you pay 1% in fees in a year, that's a big chunk of one's expected return (probably over 10% of the average annual return of an index fund).

I don't use Scottrade, so I'm not entirely sure what their fees are. I know that Fidelity lets you buy just about any mutual fund you could possibly want, but they charge you a $75 handling fee to do it for you, and another $75 fee when you sell. At that point, it's easier to just transfer the money directly to the fund family where you want to buy the funds and pay no fees.

The thing that you might want to investigate are "exchange traded funds" (ETFs). Vanguard has a bunch of them ("VIPERS") as do a few other firms (iShares being one notable example). You buy and sell shares of an ETF in precisely the same way you buy and sell shares of a stock, paying the same fees, and so forth. For example, if you wanted to get some exposure to emerging markets, you might buy shares of VWO.

This recent Wall Street Journal article talks about how Vanguard's fees are much cheaper, which is a big plus for them.

Sorry to bump this oldish thread, but I thought this was funny and shows just how fluid stocks really are.

Today's AIAA Launchpad has a summary of how a six year old article popped up and devestated United Airline's stock in one day. There are several articles out there like this one in the New York Times.

On the same day, it was the first trading day after Boeing's commercial machinists went on strike. That means no commercial planes in Washington State are being completed or sold. Their stock went up $1.02. Go figure.

It really helps to understand the stock market price as expectation of future earnings. Everyone knew there was a very good chance of the strike happening, so it was already factored into the price of the stock. It actually happening was a non event for the stock market. No one thought UAL was declaring bankruptcy, so you see it becoming factored into the stock price in a matter of minutes.

Now, if the strike drags on longer than anyone expects, you'll see boeing stock slide. For the vast majority of shares, those expectations are set by people who do nothing but think about boeing and airbus all day and most of the night.

If it drops below $50 I'm buying some.
My company just installed a system to help them form aluminum wing panels. Our process will extend the viability of aluminum wingskins for a couple of decades.
I don't think Boeing will falter- even if the stock does.

Just to be contrarian- remember that planes are a very cyclical industry and the cost of failure on the 787 is very high. Also the tanker contract is most likely lost even with the re-bid offer (just done by the Pentagon to appease politicans) and the Iraq war may be coming to a close sooner rather than later depending on who gets elected.

I don't know a whole lot about investing myself, but my financial advisor locked a good chunk of change away for me in a dividend fund and it's making quite a bit more money then other funds.
It's paying out approximately 14% annually. Which can be reinvested into the fund or cashed out automatically. I am cashing out and putting it towards my mortgage every month. After eight months our mortgage has gone from 20 years and ten months to 19 years and three months. Feels good!

Well, I've put off buying any stocks and now Boeing is floating around $40...

Luckily I didn't get around to investing my money right away (though my 401 K dropped round $50k). My company’s stock dropped to ¼ its value compared to last year and half my the people in my department just got laid off .

I did buy a few shares last week but I think I’ll hold off on investing in anything too risky right now since I may be on the street soon as well.