gtrudeau88's approach to investing

Here's the approach I'm using and the mistakes I know I've made

diversification amongst industries and sizes (10-20 individual positions)

I have a mix of energy (kmi, enb, formerly mpc, dcp, glp), medical (abbv,abt,lly, formerly nvax, otic, and others), mining (formerly ego), booze (stz), tech (msft, formerly intc, aten, dbx), etfs (faln, formerly sdiv), other funds (gof, vv), reit (formerly o), telecommunications (cssep, formerly t), and other (formerly codi, peix).
Of my 48k or so to play with I try not to let any position get over 4k unless it is doing really well.

rules for buying

I research the company on 3 platforms (TD ameritrade, wsj, and investorsobserver) as well as looking for recent news articles on google. I use all 3 for each position. The big things I look for are the fundamentals rating on investorsobserver (I'll call this io for short) as well as what io and wsj indicate are the 12 month low, average, and high price targets. If the average is above the current price I'll consider it. If even the low is above the current then I'll strongly consider it as I make profit if even the low gets met.

I'll also buy where I think an industry is heading. I made a profit on Novavax because they announced great results from the UK trial of their vaccine (fyi my wife and I are getting paid for participating in their phase 3 US trial!). I own oil/gas because I think as covid gets dealt with via vaccines, people will travel more, things open up, and that's good for the oil/gas sector.

I look for positions paying good dividends (> 3%) but I'm not exclusive to dividend bearing stocks.

If a company is unproved (i.e. chicken soup for the soul), I buy preferred stock (cssep) so I have some protection should the company go bankrupt.

If a stock doing good has a decent spike downward, I'll consider adding to my position.

rules for selling

If my position drops 7% below buy price I'm out of it. I cut my losses. If a given position drops 7% in a single day when the market overall has been good then I'm out too. I sell at least 33% of my position if gains cross the 20% to 25% threshold to lock my gains. I keep the remainder in the position for a little while in case there is still some upward movement left.

Mistakes I made

A boatload of mistakes unfortunately. I bought OTIC, PEIX, and others based only on investorsobservers indicating very high stock targets (even the low values) versus the then share price. I had too many small cap positions and didn't appreciate the volatility that comes with those type positions.

Another mistake was to assume prices for a stock would go up when nice earning reports came out. I bought ACI after a great earnings report and after an initial spike I watched the stop drop like a meteor.

I recently implemented a change in my buying. I used to buy say $2500-$3K up front in a position. Now I buy $500 to $1k at a time and build over a few days to the $2500 to $4k threshold. This allows me to see where the initial decision leads before going all in. If I had done this in the beginning my gain for the month would be 3 or 4% instead of only 2%.

 

Thanks WXYZ. I think fundamentals is what ultimately wins out and has the greatest likelihood of success. I don't want to spend hours in front of my laptop watching stock screens; I have too much to do every day. I don't mind gambling a tiny bit of $ on something spiking today but let's get real. You can play the daily spikes and maybe win big (i.e. some gamestop trades) but odds are you'll lose a lot of those.

I think of my investing and trading as a PT job. I truly don't know how much time I put into it but let's say 2 hrs day for 20 days in January so 40 hrs total. I earned roughly $23-24 hour which ain't nothing to write home about but I'll take it. If I wanted to be a swing or short term trader I would have to spend a boatload more time than I have or want to maybe strike gold. Somehow I don't think striking gold is likely and I don't work for minimum wage.