Stock Market Investing; A Personal Method
We all have our own goals, as well as our own style of doing
things. This is no different when it comes to stock market investing.
I received the following article from a subscriber to the Unusual
Ways Newsletter, and thought it was interesting enough to include
here on the website. Note that this is not an endorsement of
the method; even the author says some of it is not applicable
now. But it's good to read accounts of personal experience once
in a while, rather than just theory.
One Method to Make Money in the Stock Market
In 2001, after 911, I finally, after 40 years, had the push
to open a brokerage account. I prefer Etrade, but there is Scottrade,
Ameritrade, etc. Etrade has a pleasing and easy portfolio for
me. You want to notice how much the commission fees are ($7.99
or $9.99), if there is a minimum balance requirement (or fee
account with so many trades per quarter), and you might check
out their present money market rates, if you want to leave some
cash in the account.
Bottom line, I started out with a few thousand dollars and
kept adding as it went well. Granted this was in 2001 when things
went up, and up for awhile. I was at a 35% profit in about 12
First I read about 25 investment books from the local library
and then the next library over (I did not have ordering capabilities
from other libraries online then). I liked a book that had several
stories by different authors and I also now like Jim Cramer from
Mad Money (and I watch his CNBC show and youtube videos especially
for his educational shows). This was how I started. I looked
- Does it have dividends, and how much are they? When will
you get the first one (x-dividend date)? This is really important
now, since you can get a good company dividend if you kept the
stock for awhile, and it's a better return than anywhere else
at these times.
- A low P/E ratio.
- Is there a lot of volume?
- The 52 week high, is the price now at a low or middle of
the numbers? I never bought at the high.
- I found the advanced charts and looked at the MACD chart.
It's always nice to look at this and see if the stock seems it
could head UP, or if it is doing a roller coaster ride line down.
- I googled anything I did not understand.
- Is it something I like? Do I like the product? Never buy
something you do not like, you will really really hate it if
it loses you money! Peter Lynch is well known for saying, "buy
what you know."
- Ask local company employees how they think their company
is doing. For instance every once in awhile I ask my Caterpillar
friends how business is.
- Listen at family parties. I once bought natural gas stock
because a lawyer inlaw mentioned how much it was going to be
in demand and sure enough, I ended up making about $3000 or $4000
on that "tip". I went to a skin doctor (Dr. Horton)
and then bought DHI, DR Horton's stock and made $3000. I had
a boyfriend named Jack and a Grandpa named Henry and I bought
Jack Henry stock (after studying it) and made money.
- Diversify; this is also key. I had an uncle that attempted
to buy a stock starting with each letter of the alphabet, yep,
he had Xerox and Apache!
- Never listen to tips from tip people or on the Internet.
Use your head. Take broker's advice with a grain of salt. I once
was sent Enron materials to buy from a large brokerage, I saw
it after the fiasco and thought, whewww!
A good rule is to know when you will sell. Instead of some
complicated thing, I set my sights at $1000 profit, thinking
that I would be paying taxes on about one third of a short gain
profit (meaning I had held the stock under one year). This is
also true with farming, as I was told by experienced grain dealers.
A wealthy farmer had this theory, he told his grain dealer at
what price he would make a nice profit, and to sell his corn
or soybeans at that price. He did not get greedy. Then he consistently
profited. Other farmers year after year watched the prices go
up, hoped for more, and then sold at a miserably low price at
the end of that period.
Since I'm not real good at math, I set up a spreadsheet showing
what I would have to get for a price to make my $1000. Some stocks
never made it and I eventually sold. Some stocks it went even
higher, you may be able to go with instinct. But mostly, I sold
right at $1,010 ($9.99 fee). I felt that anything less was not
worth the bookwork at the end of the year. Besides 911, what
got me really going buying and selling stocks? I bought Symantec
stock because I LOVED their fax software program winfax. One
day they split, I saw the price and did not understand, and I
called the online broker and said there is some mistake, he said
there is no mistake, you have an $8000 "unrealized"
gain (that means if I sold it, it would be "realized")!
I said Wow! He said, yes, if I were you I'd sell! I was hooked
ever since. And yes, I sold it.
Some stocks I just buy to support a cause, as in AVXT, it
works on an ovarian cancer vaccine. At one point it was $12,000
gain. I should have done research, it was just a blip. I should
have sold and just bought it again, as it went down to around
one cent a share later. Smile. But I feel good having it because
my Mom suffered 13 years with an ovarian cancer fight.
Afterthought, is it "instinct" or is it my angels
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