Investing style (know thyself)
  • Thought it might be interesting to have a thread on investing style/personal psychology. Also, I need to get Sam off my back regarding stock pick suggestions ;)

    I have a confession to make. I am not an active investor.

    So far I have been really lucky with my active trades (there have only been two occasions when I have bought stocks for the sole purpose of selling them for a profit).

    A couple of years ago I was researching Japanese stocks when I read a post by an analyst explaining that Mitsubishi Financial Group was undervalued. That did seem to be the case so I bought a couple of hundred shares. Of course we then had the huge run up in the Japanese stock market, and I was lucky enough to sell about a week before the pullback.

    Then I read Sam's ideas about RenRen here, and decided it might be worth a gamble (I like playing poker for small stakes, so that is what I did here, bought 700 shares at $2.84). Again I was really lucky, and managed to sell 200 shares at $4, 200 at $4.20, and 150 at $4.50. I'm slightly in the black, and still have 150 RENN shares that I am considering keeping for now.

    The thing is, I know I was lucky with these two stocks. I did not find them myself, and my criteria for selling were basically random (felt like the right thing to do). Pure beginner's luck.

    More importantly, I didn't enjoy the ride. I don't like checking stock prices every day (which is what I have been doing with RENN) and I don't like the uncertainty that comes with active investing. I don't want to think about tax optimization and I don't want to have to consider trading costs. I made about $1000 on RENN (a 50% gain if I can sell the last 150 shares at the same peak) but that is only a third or a quarter of what we save every month, and it doesn't feel very significant. I could have made much more by investing more, but don't want to lose a 'real' amount of money :)

    I understand why some active trading might be useful for some investors, but it is not for me. As explained in The Millionaire Fastlane, I kind of believe the stock market is not a vehicle to make you rich, it's a vehicle that allows you to keep your money once you have it.

    My plan is to save 50%+ of our family's income and to try to expand that income as much as possible by growing our business, working hard at my day job, and starting new online ventures. Every month I will buy mostly indexes (a 70/30 split of VT and BND), along with some blue-chip dividend shares that I can basically buy and forget about. I think this will take us to where we want to be eventually. I would like to get into real estate as well, but the Japanese market is an outlier and I don't see any way of not losing money.

    It may not be the most efficient way of getting there, but it's a plan I enjoy and feel comfortable with.

    How about you? What's your investing style?
  • @Sendaiben - What are you planning on buying, or what are you buying nowadays and why? Would love to get an analysis.

    I've turned down my trading right now as I'm busy traveling, but always looking for interesting ideas.

    My style is aggressive growth with money I can afford to lose.
  • I'm always looking at the % losers for the day to see if a company is getting hammered with bad press. Monster Energy was a good example a few months back. Four people (reportedly) died after drinking Monster, which caused the stock to plummet within a couple of days. I got in and rode the wave up. Nothing changed with the company itself: the business model was still the same, supplies weren't disrupted, no immediate reduction in revenue, and no (immediate legal) costs were incurred. I've been using this strategy since the Dow neared 15k. So far, so good. I'm always up for new ideas. Thoughts?
  • Just to add to my previous post, most of the % losers are........well......simply that.......% losers. So it takes time to identify an opportunity. Don't get stuck with stocks that have very low volume. They are difficult to sell if there is a sudden change in price.
  • Hey FS
    I am going to stick to mainly index funds with a side dividend portfolio, some p2p lending, and the odd angel investing-style punt on a startup. Basically buy and hold forever...

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Login with Facebook Sign In with Twitter

In this Discussion