Conference nyoss1::market_investing

Brokers generally require you to set up an account with "xyz" minimum dollars
before placing an order to purchase stocks/bonds etc. The minimum varies, so
shop around between the discount brokers. The paper work for the account is a 
page or two form. Some brokers now charge extra to issue stock certificates, 
so check the fees for that in addition to normal brokerage fees. You might 
consider setting an account up for your grandson with you or your son/daughter 
as custodian and leave the stocks on account, but on small accounts ($$$$) there
may be annual account fees. 

    Thanks for the advice.
    
    Anne

    Anne:
    Suggest you examine the book "Buying Stocks Without a Broker," by
    Charles Carlson (McGraw Hill, 1991). About 900 corporations and
    closed-end funds offer DRP's (Dividend Reinvestment plans). Some
    of these allow you to buy the inital stocks directly from the
    company, sometimes at a discount (I believe Protor and Gamble
    is one example). Another book "common Stock DRP Report," by
    Suzanne Mitchell (S.A.M Designs, 1991 @ (903) 592-5465) contains
    a list of companies with such direct stock purchase plans)
    
    Going through a Broker not only requires opening an account but
    also paying a commission, the cheapset of which I have seen is $23.
    
    Note, I'm reciting info from my AAII Journal. I have no personal
    experience with DRP's.
    
    Good Luck
    John K
    

    Re: -1
    
    Recently Exxon also announced liberal rules for direct investments by
    small investors. There was a related article in the New York Times
    (Section D) yesterday (11-Mar-1992).

    
    For just few shares, the best thing to do is to save commission totally
    by buying directly from company offering stock to individual.
    
    I read from yesterday's USA TODAY business section that Exxon is
    starting offering stock directly with $250 limit to public investor.
    This should suit your need. First, Exxon is nice blue chip company,
    it pay dividend and allow to reinvestment into Exxon stock if you
    desire so. Exxon will be around another 30 yrs most likely after your
    grandchildren grown up. It will be a good education tool for young kid.
    
    In the newspaper, there's 1-800 number which I don't have it right now.
    If you can't find it, I'll post it here later.
    
    Hope this help,
    Michael..

    While buying a child a share of Disney or the Celtics might sound
    nice, it's going to create headaches at tax time every year and
    will be a hassle if he or she ever wants to sell.  Unless you want
    to lay out enough to buy a round lot (100 shares), I'd recommend
    that you buy shares in a open-end mutual fund.  While there's still
    some tax issues, there won't be stock splits, issues of warrents,
    takeovers and the other stuff which makes real stock exciting.
    Ultimate sale (and increased investement later on) will also be easier.
    
    		-John Bishop

There are only a dozen or so companies that allow you to buy stock directly
from them and have dividend reinvestment programs.  One of the investing
columns in the Boston Globe lists them periodically.

I disagree with John regarding tax hassles of investing directly in stocks.
I've bought and sold lots of stocks over many years.  Several have been
involved in buyouts and takeovers.  I've only found one such takeover to
be a tax hassle.  Most takeovers are either straight cash exchanges (which
are treated exactly the same as if you'd sold the stock on the market),
or stock swaps (which have no tax consequences until you sell the stock).

I've found taxes more complicated when dealing with mutual funds.
Since I've treated mutual funds as a more liquid investment than stocks
(after all, they give you those nice checks to make redemption easy),
I have to worry about which shares I've sold and what my basis is.
I reinvest mutual fund dividends and I don't reinvest stock dividends,
so that complicates things further when it comes time to sell.

If I am not mistaken Grandparents can also transfer funds to minors via a
UGMA/UTMA account (see note 52.*). A mutal fund would be an easy way to do this,
but the $$$ minimums might be to high.

Re: odd lots:

My father purchased a small of Exxon shares many years ago
and used the dividends to purchase additional shares.  For every
share he started with, he now has 16 shares!  I was absolutely amazed!

Gim

RE: Buying a company for thirty years holding

While not saying that EXXON will have this problem, I would like to
relate a story -

My uncle, in the Fifties, bought shares in a company that he was
sure would be around forever.  His comment to my aunt was that this
was a stock that would provide for them when they retired.  At the
time it was a true Blue Chip company, had good dividends, and looked
strong and solid.  After my uncle passed away, my aunt went to sell
it in the late Sixties and got about one penny for each dollar the
stock had cost.  The stock was Penn Central.  Between poor 
management and market factors, the company had gone bankrupt in
the years following the purchase.

Morale of the story: There is no stock that will grow forever.  Each
one must be watched and evaluated constantly.  Without watching,
you can and will lose.

Lee G.

    re .7
    
    I think we're talking about different things here.
    
    I agree that it's perfectly reasonable for an individual to invest
    in stocks, and that it's not as hard to sell them as it is to sell
    mutual funds.  But that's not what the question was about, I think.
    
    The question was about a gift to a grandson--the gift of a small 
    amount of money in the form of a few ("2" was the number given in
    .0) shares of some stock.  I'm assuming the grandson is young and
    wouldn't quickly become an active trader, and that therefore the
    grandson's parents would most likely put the certificates away in
    a folder somewhere (and might lose it and forget it ever existed).
    
    I know that if some kind person were to give a child of mine one
    or two or even three shares of DEC I'd be both pleased at the
    thought and irked by the thoughlessness; if the same person gave
    an initial account in a mutual fund I'd be happier, but would
    still prefer cash.
    
    		-John Bishop

    
    
    	I called an 800 number last night to receive info on Fidelitys
    	"Investment Manager" program/fund/whatever.  
    
    	Is there a discussion herein that someone can point out?  If not,
    	any comments about it?
    
    

re: 99.12 

If you mean Asset Manager, I think that it is discussed elsewhere in this, or 
the earlier version of the conference.    

A dir/title of "ticker", "symbol", "name", and "list" turned up nothing.

My question is in regards to ticker symbols, the NYSE/AMEX/NASDAQ stock listings
published in newspapers and company names.  Knowing the name of a company (and
that they do in fact trade stocks on the market), how does one go about finding
out where to look (which exchange) and what to look for (the newspaper and
ticker symbol) with regard to that company's current stock price?  For example,
I know that "Digital Equipment Corporation" is listed in WSJ under the "NYSE" as
"DigitalEq" and a ticker symbol of "DEC".  How does one go about finding out
this information for J. Random Company?

Please forgive me if my terminology is not up to snuff.  That's why I posted
this in the "Novice needs help" note.  :-}

...Roger...

You can find the stock symbol for a company by looking in "Standard and
Poor's Stock Guide". They also give the exchange the stock is listed on.
You can order the guide from S&P or get it free if you have an account
with Waterhouse Securities.

Given the stock symbol you can hunt for it in the Wall Str. Journal tables.

The only place I seen info like "Digital Equipment Corporation is listed as
DigitalEq" is in company annual and quartly reports. Note that this abbreviation
can vary slightly from paper to paper.

The quickest way to get stock symbol and stock quote info is to call your
discount broker and ask them for the symbol and a quote for XYZ Corporation.

Mark

RE: .-1  Thanks, that sounds reasonable.  And you're right, the symbol used in
the newspapers does differ from paper to paper.  The WSJ has "DigitalEq" while
the Worcester Telegram has "Digital."  I think I've even seen "Digitl" in
another paper.  I guess the WSJ isn't so worried about advertisement space as
other papers so they can afford an extra 2 characters for the symbol.  :-)

...Roger...

    I realize that this is Basic Finance (a course that I never took) but 
    I have the simplest of questions.
    
    If a 90-day CD has an annual-percentage-yield of 3.55, and I put
    in $1000, how much do I have after 90 days?
    
    I'm sorry if this is not up to the level of this conference, but
    we all need to start somewhere...
    
    Bart

    Depending on the bank, you have:
    
    3.55/100 x $1000 x 90/360
    
          or
    
    3.55/100 x $1000 x 90/365
    
    Your stated rate of 3.55 is an ANNUAL rate.
    90 days is either one fourth of a year, or a little less

    Call the bank ... they will tell you what it will pay at the end of the
    term.

and, don't forget to subtract out the taxes!
if you have 10g to invest, buy a t-bill.
yeild, last i checked for 3 mos, was 5.4% or so and that's MASS tax free

    

	I'm looking for comments on the following:

	My wife would like to invest in a Fidelity Systematic
	Investment Plan called DESTINY . I'm
	having a bit of a problem with some of the charges
	and information in the booklet that my wife brought
	home.

	The plan requuires an initial fee  of ~1000. We then agree
	to invest $100 a month with the fund for the next 10 years.
        If you read the booklet closely they also state that you
	will be charged 75.00 a year for some type of sales
	charge. There are also penalties for pulling out
	early.

	I have a basic problem with spending $1750 to manage $12000
	and the penalties are not attrative.

	Any and all comments welcome!

    I'm not familiar with this Fidelity plan. But here are a few comments
    on what you already stated.
    
    1. I don't think the $1000 initial investment is any kind of charge. I
       think what they mean is that you must start off the account with a
       $1000 investment. There probably is no charge on that at all.
    
    2. I would be concerned about any plan that requires you to invest
       monthly for such a long period. Are you sure that Fidelity is saying
       you must continue the investments for 10 years, or that they will
       guarantee to allow you to continue it for 10 years ?  If the quality
       of the investment drops over time, you'd like to be able to switch
       out of it.
    
    
    Assuming that there are no loads for the continuing investments, you
    have to decide if a $75 annual fee is unwarranted. As you point out
    over 10ears @ $1200 per year, you will have something like 10*1200+1000
    invested. The cost sounds like $75 per annum. So on the first year you
    are paying Fido 7.5%, then next year less than half that and so on.
    Still its $750 out of a total of about $13,000 or almost 6%. I'd pass.
    
    3. Fidelity has wonderful funds to invest in with an ordinary account,
       allowing you to move the funds around as you see fit. Most are load
    free, although some good choices do have 3% loads for new money
    (though they don't charge a load on divident reinvestments; most others
    do). In addition their funds network allows you to buy other companies
    funds in your Fidelity account at essentially no special cost to you.
    
    Unless this plan utilizes investment vehicles that have some kind of
    superb returns unmatched elsewhere, it doesn't sound like something you
    need. IF you were sold this by an agent, because you have to rely on
    someone else for investment advice then you might have a reason to
    continue with this plan. But from this conference you should be able to
    find lots of advice related to how to go about making initial
    investments.  A small amount of homework on your part and a few
    conversations with trusted investor friends ought to allow you to make
    choices of 2 funds which are no-load and will meet your investment
    objectives. 
    
    3. If you really want to "lock" money up for 10 years, look at the
    Twentieth Century fund which has that requirement. Its track record
    over the last 10 years is something like 20% per annum.Sorry, I can't 
    recall the name at the moment. 
    
    Hope this helps,
    Jerry
    
    
    

    Re: .22 locking funds in the 20th cent fund
    
    That's Twentieth Century Gifttrust(sp?).  However you can't invest
    in it directly.  You can only give an investment as a gift to
    someone else.  (I can't recall if spouses are ruled out.)  Although
    it has a splended long-term record, it has tanked very recently.
    

    re: .23
    
    I believe it's only for UGMA accounts.
    
    Mike

    RE .21
    
    The Destiny Funds have a load of about ~12%.
    

    re: .25
    
    OUCH!!!

    If my total investment value remains the same after the distribution,
    why on the earth am I paying so much taxes on the re-invested
    distribution?
    
    For example:- I invested $2000 in (later half of) 1995.  At the end of
    the year, the fund made total distribution of $400.  If the account
    value after the re-investment is $2100, I am paying taxes the on $400
    even though I have only made $100 in real gains.
    
    Something is wrong with this picture.  Can somebody explain what am I
    missing?
    
    - Vikas

    
.    For example:- I invested $2000 in (later half of) 1995.  At the end of
.    the year, the fund made total distribution of $400.  If the account
.    value after the re-investment is $2100, I am paying taxes the on $400
.    even though I have only made $100 in real gains.
 
    I think the total picture would be
    
    Starting Value  			 = $2000
    Taxable Distribution Re-Inveested	 = +$400  (Taxable in 95)
    Change in Share Price		 = -$300  (Capital Gain/Loss not
    						    taxed until sale of shares)   
    Value at end of year		 = $2100  (2000 + 400 - 300)
    
    Greg
    
    

Re: .27

	It's the same reason I (and many others) sell our losing stocks at
	the year end.  To offset the realized gains made during the year.
	Otherwise I would of paid taxes on gains I had since re-invested
	in other stocks and have unrealized losses .... :-(

	Of course given my luck it turns out I should of held onto some
	of my losers as a couple of my losers recovered (such as ATC
	which is now about 3 times what I sold it at at end of 1995)....

	This is why it's also good when looking at mutual funds, to read
	the prospectus on the historical turnover rate of the funds assets.
	The higher the turnover rate, the more likely your tax consequences
	every year in that fund will be higher than if you invested in a fund
	with a very low turnover rate (such as index funds)...

What actually happens when mutual funds do a distribution is that the share value
drops by the amount that is distributed.  Shareholders receive the distribution 
as additional shares.  So, you have more shares, but they are each worth less,
and the total value of your holdings is the same immediately after as before the
distribution.

There is some kind of requirement that mutual funds must distribute capital gains
(realized capital gains I would assume) each year, which they usually do at the
end of the year. This is what happened to you.  So embellishing a previously 
used example:
 
							   
				   	# shares    $/share		balance
				    	--------    -------     	-------
Total before distribution 	      	 100          $20       	$2000
$400 Taxable Distribution      	+($400/16)=25 shrs -($400/20)=$16/sh    $2000
					--------   --------            ------
Total after distribution	         125 shrs    $16/shr	        $2000				        
  
You have to pay taxes on the distribution, even though you don't sell any mutual
fund shares.  This isn't a happy thing, but it's real.  That's why investment 
advisors recommend that you check when a fund does it's distribution before 
plunking down a wad of money...if the distribution is soon, you might be better
off waiting until after the distribution to avoid the tax liability for that year.

By the way, you said you invested $2000 during the year, and at the end of the 
year, after distribution it was worth $2100.  The additional $100 was probably 
due to share appreciation during the year, BEFORE the distribution date.  So 
you'd have to refigure my example, only with the starting value on distribution
date at $2100 instead of $2000 (and therefore the ending value also at $2100).

	20th Century Gifttrust is NOT only for UGMA.  An account however
	MUST be gifted to someone other than yourself or your spouse.
	
Dave