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 months.

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 for:

- 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 guiding me?



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