My Latest Hobby – Investing in the Stock Market
Some of you might know that I’ve picked up a pretty serious hobby over the last 6-9 months. I’ve become absolutely fascinated by the stock market. I’ve always been the type of person who can’t just beat a video game but has to dominate it and playing the stock market has always been something that I’ve just never had much success with until recently. I’ve actually made various plays in the stock market since 1999 and the middle of that crazy tech bubble. Maybe one day I’ll tell you about the most expensive mistake I ever made about Apple.
Anyway with some extra money in savings and some bonus money that I acquired last year I wanted to do something besides letting it sit in a savings account making minimal interest. Well I haven’t had a lot of luck with the market in my various plays over the years but then again I never really had a truly solid investing strategy. All that has changed over the past year. There was a time when I was a rookie inbound marketer. Through a voracious appetite for knowledge and lots of evenings of reading I was able to get to the top of the game. Why couldn’t I do the same with stock investing? An a new obsession for knowledge began.
By no means have I become an investment guru, yet, but I definitely have created some very clear thoughts about investing. I have been reading some incredible books recently that I’ll have to start sharing some of the book reviews in the near future. I’ve also renewed my deep devotion to sites like The Motley Fool and Seeking Alpha. I’ll toss out one additional site that I love to read daily, Stock Gumshoe. I never invest in Travis’ daily teased stocks, ok I did once and I’m still in the green on it, but I find his dissection and explanation of companies and industries fascination and insightful.
Kyle’s Stock Investment Ten Pillars
So let me toss out the Ten Pillars of my stock philosophy:
- Never invest in a stock that you wouldn’t want to hold forever. You own a part of the company so you should act like it. So maybe forever is too long but you have to be thinking long term. 5+ years minimum. Remember you NEVER want to pay short term capital gains.
- Look for companies that are creating disruptive innovation. More on this this in a later post.
- Don’t hold more stocks than you can keep up with. Seriously a dozen is about all anyone could hope to watch closely. The rest is what retirement mutual funds are for.
- Watch and find the right time to buy. I easily have three times as many stocks that I watch as I own.
- Don’t buy what you don’t know. If you don’t deeply know biotech then stay away.
- Learn from your mistakes. You know the rule… Fool me once, shame on you! Fool me twice, shame on me! As a true fool investor I’ve been taking this one to heart.
- Dividends are good. Especially in a market like the flat one we have been in for the last decade. If a stock has a dividend then it has much less risk and not going to belly up on you. Of course it also means that you aren’t in a super-fast growing company that will probably double in a year. It’s ok to take some risk but you will sleep much better knowing that your money won’t disappear overnight.
- It takes money to make money. A 10% gain is still a 10% gain but if you are talking about a $1,000 investment vs a $10,000 investment well it is significantly more money that you gained.
- If it sounds too good to be true then it probably is. Seriously don’t make that stupid mistake. Stay away from OTC and Pink Sheets.
- Investing is a marathon not a sprint. This isn’t a get rich quick game. If you try to play it that way then you will most likely lose it all. Remember rule #1. We want to hold this company basically forever.
So what do you think of my philosophy? The beauty of investing is everyone can do it differently. I’ve tried lots of different approaches and these rules feel right for me. It’s also been working pretty well over the last night months. As of this writing my portfolio is in the green.
I’ve also discovered that checking out the financial section of the web on a regular basis has helped me build a better understanding of the macro level of the world. This is especially true for the companies that I’m investing in and their industries. It’s probably pretty good knowledge for a CEO to have I think.
Are you guys interested in me writing more about investing and stocks? Would people find it interesting for me to talk about what I’m investing in and why? I guess it’s my blog so I can write about whatever I want but because this is a little bit different topic than I usually talk about I’m curious if you are as fascinated with it as I have become?