Stock investing by a small investor

Today I will be talking about my thoughts on earnings season. Like I have said before, I think emotional reactions in the market are not a good idea. Four times a year we get information about companies straight from the companies. This is a great time for me to evaluate each company I own and make sure they are still on a course I like. I spend some time read what they have to say, and take a look at the numbers. I do my research because at the end of the day we each must take responsibility for our own actions. My choice to invest is my decision alone. I take other peoples input, but the final decision is mine. After I have looked at all the companies I own I look into future investments. This is a fun time, new information that may present me my next investment. I like to look through lots of headlines and then look into any that are of particular interest.

Now, all of this is fun to me, what is not fun is watching the stock price. Lots of information comes out at this time, and there is always a reaction. I am always amazed at how much movement one headline can cause. Not all movement in a stock is bad. A stock price must fluctuate because that is how the system works. The market is working to find the correct price for a stock. The concept of supply and demand as we all know and love works to this end. But it is the sharp movements that I try to avoid. If a company I own is good and healthy, in the long run the stock price will find a stable home. So I sit back, do my research, and wait for things to calm down.

Well that is all for today, more next time, and to my readers Thank You.

Today is one of those days. Everything in the news seems to be bad so today is a good day to step back. All of the news must be weighed, but not dwelled on. Each bit of information has its place, and if it is going to have a serious impact on things it must be dealt with. However, like I said before today is a day to pull emotion out of the equation.

Acting on information is one thing, reacting on emotion is quite another. Today, I will see if any of the news directly affects any of my companies before I do anything. After I have looked at and dealt with specific news, I will look at the general news. If I feel I must do something with my investments I want it to be thought out. Most days I will decide to do nothing based on the headline news. So, my next step for the day is to see if any of my companies have anything important to say. I will evaluate the information from or about them, and again act accordingly. Finally, when all my current holdings are looked into I will shift gears and look for new investing ideas. That is what I do when I take a step back.

Well that is all for today, more next time, and to my readers Thank You.

Today I am going to add some more about why I look at the longer time frame for investing. When I look at the market I see the emotional reactions taking place. Short term ups and downs in my opinion are caused, at least partially, by people acting on emotion. Good news, or perceived good news sparks a positive response, market goes up. Bad news, or perceived bad news returns a negative response, market goes down. These thoughts are strictly about the human side of investing, I am not going to get into computer program investing at this time.

I have watched many times as a stock goes up one day and down the next. Now, as far as I know core operations of a company don’t change that fast. However, how a person perceives a company can change that fast. The problem is all companies, and all people are subject to this situation. All stocks can move erratically, and all people can act emotionally. That is the trading aspect of the market. The traders are looking for some catalyst for an up or down movement in the stock, and they are looking for it all the time. Like I said before, this is not a concept I feel I can work with successfully. For some it is what they do, it is just not for me.

So, like I have been pointing out, if I can’t do it successfully I am not going to. Now, looking past the short term ups and downs the fundamentals become the key. If a company is a good healthy company over the long term the stock will reflect this. Does the company have a good product? Is management making smart decisions for the business? Are they going to continue to have good products in the future? Simple concepts, but the core of any business, and some of the first questions I ask. This is why investing in what you know helps. It is easier to answer these questions if you understand what the company does.

As I have said over the last few articles, I am trying to present what my investing thoughts are. I believe in not over complicating the process, but investing does take some time and thought to do it successfully. I will always try to sum up ideas into simpler concepts, but I also believe in presenting all the details if possible.

Well that is all for today, more next time, and to my readers Thank You.

I am going to talk about my thoughts on a good stock for my portfolio. One of the first things I learned was to invest in things I know. This one came from Warren Buffet, and I have tried to stick to it. If I can’t understand what a company does, how can I know it is good at what it does. I look through lots of reports from companies, and they need to make some kind of sense, otherwise there is no point in looking at them. When I am doing research if I find one I like but don’t know, I know and understand long before I put money into it.

Most of my theories come from the great investors before me. People like Warren Buffet, Benjamin Graham and others, but we all add our own personal tweaks. So, my next key to my investing is diversification. I want to have a portfolio that can survive down times, and thrive in up times. A good example of bad things that can happen is the Enron fiasco. All ones money in that stock was not a good thing. Plus, I never would have put money in them in the first place. I never understood how they made money or what exactly they did. So having a few stocks of different natures is the operating model I maintain. I have large, medium, and small cap stocks in differing businesses. I have both value and growth stocks, but I don’t have too many. I found when my portfolio had too many it acted like a mutual fund or index fund. If I was going to do that why bother to do all the work, why not just get a fund. I keep mine between 5 and 10 stocks.

My last thought for today. Like I said before, I want stock in a company I believe has good long term returns. Between taxes and trading fees it was easy for me to lose more money than I made. So I buy stocks that over time will make me money, and I use the dips in stock price to add more to my portfolio. I have found that this is what I am good at. I can’t spot short trends very well, but I feel good about how well I understand long term business thoughts and trends.

Well that is all for today, more next time, and to my readers Thank You.

I mentioned buying opportunity yesterday, and as can be seen by the markets today some other people agreed. Also, I was talking about holding a stock forever. I really am not that crazy. I do know the reason to own a stock is to make money. So, one can’t afford to be in love with a stock. However, holding stock in a good company has always proven to be a better way of making money for me. As I have said before, this is the journey I have taken, and hopefully other people can find something useful in my experience.

Now, it is time to get back to another step in this process. Once the money is available to open a trading account it is a fairly simple process. You can do it online or, as I did, go to a local branch office. You fill out the forms, give them some money, and shortly your account is open and ready to go. Ok, it took three articles to get to this point, but it took me six months in real life. Hopefully somebody is finding this helpful. Next time I will start getting more in depth about my way of investing.

My thoughts on a day the markets are down. This is the kind of day that can make a stomach turn. However, if you are invested for the reasons I believe in, it is not so bad. I am an investor, not a gambler. When I buy a stock, it is because I believe in that company, and plan to be an owner for a long time. This means I will ride out the ups and downs looking to the future as the final destination, not the current price. On an up note these are the days that can present buying opportunities. Now, I know this was a little fast to talk about investing, but this is a journey that has some fun detours along the way.

If you read, “My Start” page you know where I left off. As I got closer to having enough money to start my account, I had to start deciding what to invest in. This is when I started building my philosophy on investing. Wanting to have ownership in a company, not trading in and out of stocks became my theme. When I finally decide to put money into a stock it is because I intend to hold it forever unless something comes along and breaks it. I keep an eye on all of my stocks to make sure they are what I still want, but I don’t change out lightly. I will continue with this next time.