Are thought to publishing a suggested portfolio for new money in the near future?
Also, how would you time the purchases in order to roll profits.
Carson Wade
VFC's Take: Appreciate the comment. I am going to be honest and say that I cannot in good conscience dedicate a post suggested how potential investors should allocate their new money. At VFC's Stock House I like to re-iterate the point that each and every investor (or potential investor) should rely on their own DD to figure out what the best investments for them may be.
The main reason that I say this is because everyone has their own tolerance for risk, their own stomach for 'buying the dips,' and their own personality profile for deciding which stocks they like. That's why I like the idea of investors sharing their DD, research, ideas and opinions; but the decision to buy is based solely on the decision of that investor who is buying.
For example, some investors like to buy and hold and some like to trade in and out to eventually have their full investment being played on house money; and each one's portfolio would be different based on their preferences.
Additionally, I'm a fan of personal responsibility and accountability - a quality that seems to be disappearing from the every day life in the American society.
I've said before that you should never have a stock in your portfolio - in my opinion - that you look at and you don't know why you bought it. If you look at one of your stocks and your number one reason for buying it was because someone else told you to, then most likely you have no idea when you should buy, sell or add more. That means that there is a whole lot of DD to be done to come up with an entry/exit strategy or that stock should be sold immediately because you've got no idea why it's sitting there.
Therefor, I think that I would be personally defeating my message if I posted VFC's suggestions for new money. I like sharing ideas, experiences and opinions in order to give others a starting point for their DD, not a finishing point.
On that note, I will pass on the new money question, but I will re-emphasize some of my own personal buying strategies for those that may be new to the blog:
First, in the following posts I've described pretty in-depth my opinions and strategies for entry and exit points:
When to Take Gains & Where to Start DD
VFC's Investing Lessons Learned
Exercise Patience
Here's a brief recap of what I cover in those articles, but I suggest they be read in order to get my full opinions on the subjects:
- I rarely (if ever) use the full amount of money that I have set aside for a particular stock on my first buy. I like to accumulate stocks while the are still flying below the radar (sometimes for years, as was the case with my buying CVM years ago), but if I do find one that is already 'noticed', then I will buy into that stock for at the most half of what I eventually want to put into it. This way, if news hits and the stock rises, then I'll at least be along for the ride. However, if the stock drops - then I still have money on the sidelines with which to average down.
- I never buy into a stock before conducting the DD and coming up with my own entry/exit strategy for that stock. I discuss my entry/exit strategies in the posts I've linked above, but I always decide whether the investment is a short/mid/long term investment and then I try to attach an exit strategy to those time frames. For instance, I sold some shares of CSUH at twenty five cents because part of my exit strategy was to sell some of the shares that I had purchased at .025 cents for a ten-bagger trade, regardless of the price action of the stock. Which brings me to my next point,
- Always realize some profits as the stock rises. No one can predict when the market is going to crash big or when planes will fly into buildings and send the global stock markets reeling. Also, it's necessary to reward yourself for your hard earned DD and sticking to your sell plans allows you to do just that. It also keeps you grounded so that you don't get too greedy and convince yourself that a stock is going to keep rising.
- Exercise patience. It is important to be realistic with your entry/exit strategies when you devise them, but it's even more important to stick with them. If you buy AGEN with a one or two year outlook, don't start getting antsy when the stock doesn't double in a month. This is especially true for stocks that have already enjoyed a good run; allow time for profit taking/consolidation.
- I, personally, like to try and trade in and out of a speculative stock in order to at least be on 'house money' by the time that big news hits. Breaking even is better than losing it all, but that is a strategy for those that may have the time to consistently keep their eyes on the market. I use a handful of 'trading shares', once I have a nice 'base' of shares to accomplish this, but keep in mind that this strategy is pretty stressful and has increased short term tax implications vice the long term 'buy the dips and hold' strategy, which I also employ on many stocks.
- Be confident in your DD. Your own DD should be what dictates when you buy and sell a stock; and the DD should be the basis for an entry and exit strategy. If your DD is sound, you'll have the intestinal fortitude to buy when others sell or sell when others are buying. Without the sound foundation of your own DD you entire investment could go south because you won't know how to react when the time arises to react.
Thanks for the comments, Carson, and sorry about not doing a 'where to put your new money' post, but I'd rather provide a starting point for other investors to do their own DD than lay out a plan for someone else who may not have the same risk/reward views that I do.
Volatility that may be nothing to me will give other investors ulcers - take all the ones who sold in fear out of CVM over the past week on the drop when others - like me - were buying the dip.
This is all just my own opinions based on my own experiences. Everyone should devise their own investment strategies and develop their own plans for entry/exit strategies based on their own investing comfort levels.
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