How to lose money in the stock market?

ok, i bought pfizer stocks like a week ago worth 500 bucks. im just 18 and i want to keep those stocks for like until im 40-50 and every month im thinking about buying some more. how could i lose money if i dont sell them any time soon? i just want the dividens. i always here people saying it's easy to lose money in the stock market, but that is only true if you are buying and selling right?
i invested like 1500 in mutual funds, and i thought to invest some money in a more risky investment, which i think stock is more risky than mutual funds. i have absolutely no idea what i am doing, but so far from dividens from my mutual funds i made a little bit more than 100 bucks, which is pretty cool since i didn't do anything and got 100 bucks. am i going to lose my 2000 dollars (and maybe more in the future) easily even though i'm not going to buy and sell, just collect dividens?

Yes, the value of individual stocks can go down, and in some cases, they can go to zero. If you're going to buy stocks then you need to keep an eye on them throughout the holding period.

As for the dividends, PFE is paying an excellent one at this time (4.2%). But this is not guarenteed. Take a look at

http://bigcharts.marketwatch.com/advchar...

and you'll see that PFE started paying a dividend in 1985 and has ranged from 1 to 4.2%.

The stock from a technical perspective looks OK now, but you need to keep a close watch and don't get caught in a 50% drop like from 2000 to 2007.
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Buy high

Sell low

Make up the difference on volume.

You can lose your money if Pfizer goes out of business or if the stock goes down in value. It's not wise to put all of your eggs in one basket. There are a lot of companies that no one ever thought could be bankrupt or drop in value that are no longer around. Although Pfizer appears to be a solid company, it could make a wrong step that could seriously jeopardize it's future. It's best to spread your investment money around so that you won't get hurt as much if a certain sector of the economy or a certain stock tanks.

Over a long period of time stocks have always gone up. Since you've got another 20 - 30 years before you cash out, the stock market looks like a pretty good bet. It's easier, though, not to try and pick stocks, and just buy mutual funds, which are baskets of stocks and much safer than individual stocks. I would just buy an "index fund" like Vanguard where they don't charge high management fees. Or, if you prefer dividends, look for a growth and income fund. Go to www.vanguard.com and check out their funds.

#1 biggest investing mistake;
Not fully understanding what you're buying.

#2 biggest investing mistake;
Asking investment advise from strangers whose qualifications or motives can't be verified.

Investing for the future is too important to make wild assumptions and investments without a clear plan, asset allocation and exit strategy.

READ.... READ.... READ.... Learn as much as you can about retirement investing and "asset allocation".........................

Take that 100 bucks from the next sum you want to invest and go and buy the Rich Dad, Poor Dad books by Robert Kyosaki. Buying Pfizer probably won't lose you money in the long run but have you looked in to what it'll cost you to take the money out. On sums that you are dealing with it could be about 30% of your profit.

We all need to diversify. Have sums available that are liquid and some that you can lock away. You are to be congratualted on starting a longterm savings plan so young but be sure that you are happy to reinvest the dividends otherwise you will erode your main source of capital growth.

By the way, there are no risky investments, there are just risky investors and it sounds like you are a very risky investor by buying stocks that you have no idea about. That is why I'd invest first in education so that when you make a load of money (as I hope you do) you have a prayer of holding on to it.

You need education, a plan to work and some really good advice. Go find the richest person you know and ask them for their advice. Then follow it no matter how boring it sounds.

And to answer your question about how you could lose money on Pfizer in the long run the answe is that you could argue that you probably won't but what if you HAD to sell soon, then you may lose money. Also it's not about absolute returns i.e. what you sell for minus what you paid. You need to calculate what that money could have done for you in another investment or even paying down debt. Inflation will also erode the value of your money by about 2-3% per year so you need to account for that in your calculations too. Complicated isn't it?

Good luck anyway you are eons ahead of most of your peers.

The reason you would want to own pfizer is to reinvest the dividends. All the growth models that you see with great returns are based on reinvest of dividends. As a stock price goes up and down with the market you will continously purchase more stock and in 50 years you could be very wealthy if the company is still in business.

The problem with a drug company is that they continously have to pour millions and millions of dollars into research and development to come up with new drugs. If pfizer's drug pipeline collapses say in ten years, then the stock would become worthless.

This is the reason to buy a mutual fund-because someone else is taking the time to do your research for you.

That said, however, Warren Buffet says that the only reason to diversify is because you don't know what you are doing.

You could take this as an opportunity to begin researching companies and finding a good place to put your money. Look at companies you know. Why did you buy pfizer, do you know anything about their company?

What companies do you know about? Can you see Target taking sales from Walmart? Do you see a lot of construction companies using Catepillar vehicles. Use your knowledge of the world around you to help begin your research.

Spend a little bit of free time using an investing web site that allows you to invest with fake money. Example: Investopedia.com
It follows the real market w/out the risk.

Good Luck

You probably won't lose all of it. Pfizer isn't likely to go bankrupt any time soon. On the other hand the price per share of the company's stock could decrease, which would result in you losing money (you needn't worry about this too much if you're only interested in dividend income, but you may need the cash to pay for something within the next 50 years...) Of course Pfizer stock can also go up...

Another thing to remember is that if Pfizer runs into trouble it can reduce its dividend. The payout you see isn't set in stone. It can also increase it...

In general investing in just one company (even a blue chip like Pfizer) is riskier than investing in a number of different companies or mutual funds.

Mutual Fund gives dividend once a year - if they do. Most of them don't. Whoever manages it don't even need to explain where those dividends the companies gave to the fund go.

I guess you're better off having your money with PFE than saving it in the bank. Pays dividend of about 4% right now. Ask your broker for the stock certificate and once you have it contact the company and inquire how you can join on the DRIP (i.e. dividend reinvestment program). Once you're in, you can keep on investing few more bucks (any amount will do) coming from your pocket besides reinvesting dividend.