Shares

pollyanna24

I'm a complete novice and have no clue, but I would like to buy some shares, but have no idea how to do about it.

I know which shares I want, but is it just as simple as going online and buying them or do I need to open accounts? How long does it all take?

enthusiasticsaver

Why do you want to buy shares rather than invest in a fund as most people do when starting out in investing? Buying individual company shares is very risky.

markwilkinson

If you really do want to buy individual shares then the easiest and cheapest way to do that is through XO

http://www.x-o.co.uk

Cheap flat rate to trade.

Sam_J12

If you are interested in buying individual shares then I would highly recommend doing a bit of reading beforehand. I would recommend these two books:

The Essays Of Warren Buffett: Lessons For Corporate America, by Warren Buffett.
One Up On Wall Street, by Peter Lynch

The other option would be to purchase shares in a fund that invests in companies for you (for a fee). I'm sure lots of people in the thread will give you examples for these.

Spurs_2015

Just a very novice question here but I have seen comments on this (and other forums) from people who say they invested in single shares and for whatever reason lost almost the whole lot when the market tanked, I may be missing something but would setting a stop loss not prevent this? I realise that it's a skill in itself where you set it as you are looking to hold them long term and you don't want it kicking in at the first sight of a downturn but in my mind losing 15/20% of your money is a lot easier than 80% or even 100%.

I have read a few bits online about stop losses and it seems to divide opinion some are dead against them and never use them and others use them in almost every trade.

Scarpacci

Spurs_2015 wrote: »

Just a very novice question here but I have seen comments on this (and other forums) from people who say they invested in single shares and for whatever reason lost almost the whole lot when the market tanked, I may be missing something but would setting a stop loss not prevent this? I realise that it's a skill in itself where you set it as you are looking to hold them long term and you don't want it kicking in at the first sight of a downturn but in my mind losing 15/20% of your money is a lot easier than 80% or even 100%.

I have read a few bits online about stop losses and it seems to divide opinion some are dead against them and never use them and others use them in almost every trade.

A stop loss would probably work for that, although there's always a question of whether there would be a buyer if the share price starts falling to actually sell your shares at your predetermined price. A lot of people complain when their stop loss nets them less than they thought.

Those mechanic solutions also won't necessarily prevent the sort of irrational or risky behavior that people, especially those who invest in only one stock, are likely to exhibit - such as continually doubling down, or perhaps selling at a loss and then buying it again if it somehow goes up again, etc.

Linton

Spurs_2015 wrote: »

Just a very novice question here but I have seen comments on this (and other forums) from people who say they invested in single shares and for whatever reason lost almost the whole lot when the market tanked, I may be missing something but would setting a stop loss not prevent this? I realise that it's a skill in itself where you set it as you are looking to hold them long term and you don't want it kicking in at the first sight of a downturn but in my mind losing 15/20% of your money is a lot easier than 80% or even 100%.

I have read a few bits online about stop losses and it seems to divide opinion some are dead against them and never use them and others use them in almost every trade.

Its easy to stop loss. Its difficult to set a stop loss that both protects you against share price collapses but isnt triggered by the normal fluctuations of the market, losing you subsequent gains. When the stop loss has forced a sell what do you do then? Perhaps invest in something else which also drops. Perhaps look around for a good cheap buy and find the best one is the share you have just sold.

bigfreddiel

Spurs_2015 wrote: »

Just a very novice question here but I have seen comments on this (and other forums) from people who say they invested in single shares and for whatever reason lost almost the whole lot when the market tanked, I may be missing something but would setting a stop loss not prevent this? I realise that it's a skill in itself where you set it as you are looking to hold them long term and you don't want it kicking in at the first sight of a downturn but in my mind losing 15/20% of your money is a lot easier than 80% or even 100%.

I have read a few bits online about stop losses and it seems to divide opinion some are dead against them and never use them and others use them in almost every trade.

Setting a stop loss could be good, could be bad depending on what you buy and how volatile it is. If you blindly decided to set the stop loss at say 10%, and your stock briefly touches 11% and recovers you have sold and lost out.

Also say your stock had moved up 10%, do you move your stop loss figure up by 10% otherwise you could lose the 10% gain.

It's not as simple as you may at first think.

Good luck fj

grey_gym_sock

Spurs_2015 wrote: »

Just a very novice question here but I have seen comments on this (and other forums) from people who say they invested in single shares and for whatever reason lost almost the whole lot when the market tanked, I may be missing something but would setting a stop loss not prevent this? I realise that it's a skill in itself where you set it as you are looking to hold them long term and you don't want it kicking in at the first sight of a downturn but in my mind losing 15/20% of your money is a lot easier than 80% or even 100%.

well, if the markets tank, an individual share will probably tank, too - some shares are volatile, and tend to tank by more than the market as a whole; others are less volatile, and tend to move less than the market - but a share won't become worthless just because the market tanks. there have to be problems at the specific company for it to become worthless.

but, getting to the point, stop losses don't actually limit your losses to 20%, because

1) a share price can "gap", i.e. fall a long distance without touching the price you set the stop loss at. so perhaps you bought at 100p, and set a stop loss at 80p, and the price is currently 82p; then some bad news is released by the company, and the price falls immediately to 65p; your stop loss is triggered, and you sell for 65p, not 80p.

or the share may be suspended (which is usually a bad sign), so you can't trade, and when it comes back the price is much lower.

or it may be suspended and never come back, because the company has gone bust.

basically, you can never eliminate the possibility of a 100% loss with an individual share.

2) but setting that aside ... suppose you can sell out at your stop loss, e.g. 80p (after buying at 100p). so what you you do now? the only way to be sure you won't lose any more money is to stay in cash forever - which rather misses the point of investing in shares: shares are just a gamble in the short-term, and make more sense in the longer term.

you could buy a different share, and again set a 20% stop loss. and if that's triggered, you're down to 64p (from your original 100p - so that's a 36% loss overall, so far).

you could wait for the original share to rise again, or to fall even further, and then you could buy it back. but whatever you do, you've already lost 20% of your original money, and if you buy back, setting a 20% stop loss again, you can lose 20% of what's left, which is a 36% loss overall - just the same as if you buy a different share instead.

and of course, after losing 36% on your first 2 individual shares, you can lose 20% of what's left on the third share (which takes you to a 48.8% loss overall - because what you have left after three 20% losses is 0.8 x 0.8 x 0.8 = 0.512). and so on, with no overall limit on your losses.

so stop losses don't really help with limiting your overall maximum loss.

with collective investments, you might assume that a diversified investment in shares will fall by about 50% at worst. so in order to limit losses to about 20%, you might choose to put 40% of your capital in shares, and the other 60% in cash/bonds.

with individual shares, the only way to make individual losses less bad is just to buy a really large number of individual shares, so you don't care too much about a huge percentage loss on any 1 share. and if you're not comfortable psychologically with huge percentage losses on individual shares, just stick to collective investments.

RisingDamp

I have the opposite problem (and cannot find a way to post on the Forum for some reason!). I'm dealing with my mother's estate, which includes some shares, and want pointers on how to sell them. I don't really want to transfer them (the estate has to be split) but just realise their value without spending too much on the process. I did speak to Equiniti but the stuff they've sent doesn't really seem to make much sense to me Now I know why sharedealing has never appealed to me If there is anyone out there who can give me an idiot's guide (and I have tried various searches on the site) I'd be really grateful.


PS Sorry again for hijacking this thread but I simply cannot find the button for starting a new thread - and have already wasted 30 minutes trying to do that. Didn't used to have this problem on the old site.

Ifts

RisingDamp wrote: »

I'm dealing with my mother's estate, which includes some shares, and want pointers on how to sell them.

Not sure if these shares are held in certificate form or a share dealing account (nominee acc)? but:

You could use someone like X-O.co.uk share dealing services (£5.95 per trade) for a cheap method of selling the shares.

Open a Share Dealing account with X-O.co.uk (free to open and no annual account charges) then transfer your share certificates in to your account and sell them for £5.95 per share holding.

How do I transfer in stock that I hold in the form of certificates?

http://www.x-o.co.uk/how_to_use.htm#5

What markets can I deal in?

http://www.x-o.co.uk/how_to_use.htm#11

PS Sorry again for hijacking this thread but I simply cannot find the button for starting a new thread - and have already wasted 30 minutes trying to do that. Didn't used to have this problem on the old site.

The start a 'New Thread' button is pretty much in the same place as it is on the old site - only difference is it's now pink instead of blue.

If you want to continue viewing the new site in the old set up you can do this by going to> User CP (on top menu bar) > then on the left hand menu under 'Forum Version Manager' select 'Manage Version' where you will be able to choose from the latest version of the website or the old version > then press 'Save Changes', then whenever you login it will display in the old format.