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View Full Version : anyone know the theory of compounding???



GenkiSudo
11/22/2003 9:49pm,
does anyone use the theory of compounding on stocks and commodities, what stocks have u used it on???

gojuJKDdude
11/23/2003 12:18pm,
Do u mean future and present value, mixed stream and variable annuity compounding? One general disadvantage about stocks is they do not compound like interest bearing securities. The way to make money with stocks is through capital appreciation and dividends. Unless you mean compounding stocks by using DRIP methods...

GenkiSudo
11/23/2003 12:35pm,
nope currently came across an article on morning star on compounding stocks,

http://news.morningstar.com/news/Ms/Funds101/991104f101.html


i was wondering if anyone ever tried this and what stock they use it on??

no not talking about futures or anything speculative (to a certain degree)

GS

gojuJKDdude
11/23/2003 3:04pm,
first of all I didnt mean futures as a speculative derivative term but as a corporate finance term. All "future value" means is a simple equation to calculate how much a sum of money will be worth at some point in the future at a given interest rate (which is basically what your article was talking about.) You cant use this method on individual stocks b/c stocks dont earn interest!! As the article says you can invest in a mutual fund which does have the ability to compound.

Jenfucius
11/23/2003 3:38pm,
that's when you're a staunch free-market capitalist and you bang a hot russian chick. in the parlance of the former soviet union it's called "com-pounding".

GenkiSudo
11/23/2003 11:08pm,
gojuJKDdude


how bout dividend earning stocks??

those can be used to compound, right,

anyways, i'm still new at all this stock stuff,

i do not like the idea of a mutual fund, I would rather use a vanguard index fund, none the less.

non the less, what do u invest in I have cared to take to the likings of bank stocks.

GS

udo
11/23/2003 11:33pm,
I just rob banks.

GenkiSudo
11/25/2003 12:29am,
if compounding interest does not work on comon stocks, why is warren bufett the richest man in the world???

gojuJKDdude
11/25/2003 7:05pm,
I come on this website to talk about MA not stocks (unfortunately I do alot of that in real life LOL) one way to "compound" (but not in the true sense of the term) is through DRIP investing, reinvesting dividends into the stocks you own. A great site for beginners is the motley fool, fool.com, see what they have to say about DRIPing.

gojuJKDdude
11/25/2003 7:10pm,
Oh and by the way, Buffett dosen't even invest in common stocks!! Through his company Berkshire Hathaway he buys large percentages or entire companies. For example he owns 20% of Coke and all of GEICO. IT's not like he sits on Ameritrade and buys a couple of shares like we do.

Nid
11/25/2003 7:39pm,
I have a DRIP for a couple stocks and a Real Estate Investment trust; the latter being my best performer (in terms of dividends. The NAV doesn't do much). Being that it reinvests dividends you'd want large established entities which actually pay them.

You can buy some stock direct through this. It handles some of mine.

http://www.equiserve.com/


I would rather use a vanguard index fund

I got one of those too, actually. It's yet to break even from the beatings of the past few years. But I got in low this year, so...it'll even out over time. In fact it still is kinda low, relative to where it has been.

But hey, gotta think long term unless you're, literally, a gambler or a guru. I got so goddamn burned when online trading come out.... :o :o

GenkiSudo
11/26/2003 3:04am,
I will check that out but i believe u can buy drips directly from the company.

looking into GE, walmart