This little article ties in with what I am going to post........next. It's Compounding, Not Buy-and-Hold Investing, That's Your Path to Great Wealth https://realmoney.thestreet.com/inv...th-15404935?puc=yahoo&cm_ven=YAHOO&yptr=yahoo (BOLD is my opinion OR what I consider important content) "When most people think of building great wealth in the stock market they picture Warren Buffett. Find a great stock, hold it for the very long-term, and the power of compound growth will make you rich. The math is inevitable and it sounds rather easy but the difficulty of finding a great stock to hold for decades is grossly underestimated. It is always simple in retrospect. We just look back and see how holding Apple (AAPL) , Microsoft (MSFT) , or Amazon (AMZN) for years was an easy way to produce great wealth. The much more difficult question is what are the equivalents in the decades ahead? There is nothing tougher in investing than finding the next Apple or Amazon. Even Buffet himself has said that only a handful of such opportunities occur in a lifetime. What we very seldom hear much about is the great risk of long-term buy-and-hold investing if you pick the wrong stocks. No one talks about the 'great' stock that they held for years before they figured out it simply wasn't anything special. The cost of doing this is tremendous. You may not suffer any actual loss but you will incur very high 'opportunity cost' which means that your account has not been compounding. Opportunity cost is what you pay when you pick a stock that is not going up. It is easy to overlook how compounding really works. Most people think it only applies to holding a single asset for the long term. That is one way to use this power and it works great if you pick the right asset. Another way is to focus on keeping your account close to highs rather than the assets that you hold. It doesn't really matter what you own at any particular time as long as you keep finding profitable trades and investments. The power of compounding is much more a function of money management than anything else. It certainly helps to pick the right investments but what is more important is that there is steady upward progress in your account. You could own a different stock every day and as long as your account is gaining ground you will benefit from compounding. One of the problems that traders and investors run into eventually is that it becomes increasingly difficult to keep your money fully invested in the most productive trades and investments. Someone like Warren Buffett has to stick with big core positions, otherwise he will never be able to put his cash to work. The biggest challenge you will find in harnessing the power of compounding is finding the right vehicles for your precious cash. I believe that you can find more ways to produce account growth if you use a shorter-term approach rather than roll the dice on holding a few big positions for years. To build great wealth focus on keeping your accounts near their highs. That is how you harness the power of compounding. There will be times when you have drawdowns and don't make much progress but if you avoid the highly unproductive work of recouping large losses you will have amazing results. Picking a great stock for the very long term is a fantastic way to get rich but it is extremely difficult and carries high risk. Account management that focuses on keeping your account close to highs requires hard work but it is less risky and can reap even better results if you are an astute stock picker and use disciplined account management. MY COMMENT I DO agree with the stuff above that is BOLD. I DO NOT agree with the......theory.........of short term trading to achieve account management. There is NO WAY.........anyone.......I do mean ANYONE.......can short term trade and keep an account at market highs. My opinion.......finding great stocks is difficult. It gets a little easier if you consider the portfolio as a whole. that gives more margin for error. It is also easier if you set REALISTIC GOALS..........like my goals: Average a total return of 10%, long term and try to beat the SP500 every year. NOW........the BIG QUESTION that is asked at times..........how do you find and analyze stocks to buy.....
How do you find and analyze stocks to buy..... HERE......for what it is worth is the process that I use. I have been doing this so long, and do so much reading that the process is NOT a long one for me. I am also decisive........but that does not mean foolish or impulsive. SO.......how do I pick a stock. STEP 1. The first step for me when my portfolio gets down to 9 or 10 stocks is to try to find additional companies that look like good candidates. I like to try to have.......ideally.......about 12 companies. I usually start putting together a very short list........2-4 names by going through the top 100 holdings of the SP500. I might go deeper into the SP500 if I need to .I look for companies that........I know.....and am familiar with....have iconic products.....etc, etc. I look for companies that have LONG TERM MOMENTUM and are GROWTH companies. That does not mean start up companies or new companies. ALL the companies I want to hold are HOUSEHOLD names. STEP 2. Here is where the process begins in term of evaluating a single company. I will look it up on Schwab and review ALL the performance data for the stock. I look at the opinions of analysts that I am able to get on Schwab. I will research anything I can find about the company on the internet. Articles, news, opinions of the company as a buy or sell. Their product list. Their management team. I will look for anything that gives me MORE insight into the actual business of the company. STEP 3. If a company clears steps one and two I go to the fundamentals.......the financials. I DO NOT look at financials like most people seem to. I DO NOT CARE about comparing this number to that number..........or some ratio of this to that. I DO NOT CARE about a bunch of mathematical or investing number BUSY WORK. What I look for in the financials is REAL WORLD BUSINESS DATA. I usually try to look at five years of financial reports. I look for things that stand out. Mainly CHANGES.........in the Balance Sheet....Cash Flow Statement......Income Statement. For example I might see that debt has gone way up in the most current year compared to the prior years. I will than research why this happened and is it something negative. Or lets say a company in the recent year has a drop in sales revenue......I will than research why this happened. I am NOT a number cruncher. I use the financials to look for potential issues. I also use them to look for GOOD CHANGES. STEP 4. After the above.......I use good old fashioned intuition and decide........yes or no. How long does this take.......anywhere from a few hours to a day. Once I identify a potential company......I usually know if I am going to add the stock within a day on average.
WXYZ, Did you ever consider Netflix as potential for your portfolio? If yes, what are the reasons it didn't make the cut?
NETFLIX........they are in the top 50 of the SP500. I have NEVER considered them. No particular reason......they just have never caught my attention. I DID subscribe at the start of the pandemic and have been using them for the past 6 months. After using them for the past six months.........I am NOT overwhelmed. An adequate service.......but.......nothing special. As an investment.......I do not see myself considering them. Kind of a one trick pony........in terms of product....... and I have NOT been impressed by their content. I can also see them becoming irrelevant as content providers war with each other. At the moment I am NOT looking to add anything. I have 12 stock holdings........which I like........12 stocks is a sweet spot for me. ALSO.......dont have any stock market money available. I AM FULLY INVESTED........100% BUT......all the above is just........off the cuff.......I really dont know much about them. I know a lot of people do like the stock and have done well with it......so.....what do I know? TODAY........another good day for the markets. Plenty of GREEN for me. That makes up for the SP500 beating me today by .26%. Looks like TESLA finally hit a wall........at least for one day. I am sure there are lots and lots of nervous holders of the stock that are trying to figure out whether or not to take some profits.
LET ME CLEAR UP SOME CONFUSION.........for investors that have never seen or been involved in a stock split. I SEE this sort of statement all over the internet in financial articles: "Apple Inc. shares surged to a record high on Monday as investors raced to beat the eligibility deadline for the company’s upcoming stock split." OR "Monday at end of trading is a key deadline for full participation in Apple's four-for-one stock split." In one word........BALONEY.........I repeat.......BALONEY. Monday....today......is the "RECORD DATE". In a stock split this record date is just a MEANINGLESS bookkeeping function. It does NOT matter if you buy shares tomorrow.....Tuesday.....or Wednesday, or Thursday or Friday this week. YOU WILL STILL GET THE SPLIT SHARES. You DO NOT have to be a shareholder today....Monday. HERE......is how it works: https://www.investmenthouse.com/why-does-your-stock-split-calendar-not-list-the-record-date/ "..........the record date is meaningless. Here’s a definition of “record date”: The record date is a date, set by the issuing company, on which an individual must own shares to be eligible to receive a declared dividend or capital gains distribution. With regard to stock splits, the record date is used for accounting purposes only and has no significance to individual investors. Your shares will split as long as you bought them before the ex-date (also known as ex-dividend date). Again, the record date is meaningless. Don’t concern yourself with the terminology. It’s simply an “accounting thing” with the company. The split will take care of itself. There is nothing to ever worry about. In its very simplest form, assume a stock is trading around $100 and is to split 2-1. If you pay $100 for the stock AND you still hold it when it actually splits, (ie, when it starts trading at about $50 –assuming it hasn’t fallen in price dramatically), then you can be assured that you will receive the “extra” shares. However, if you pay $50 for the stock, then you know that the shares have already split. So, why even state a “shareholder of record” date? The “shareholder of record” date goes back to the time when most shares were held individually as paper certificates. On the record date, the company would actually send a certificate to the shareholder for the additional number of shares created by the split. Today, most of us hold shares in a brokerage account. The broker, then, is the owner of record. The additional split shares are distributed to our broker, who will transfer them to our account. The paperwork involved for shares bought or sold between the date of record and the payable date is usually handled between the company or its transfer agent and the broker" MY COMMENT The EX-Date is all that matters. For Apple that date is the OPEN on Monday, August 31, 2020. ANYONE that owns APPLE shares at the market close on Friday, August 28........WILL get the split shares. EVEN IF....you bought those shares one minute before the close on Friday, August 28. SAME with TESLA: "Tesla Inc. (TSLA) recently announced a 5-for-1 stock split. The split takes effect on August 31 for each shareholder of record on Aug. 21." The BOLD above is irrelevant. It is NOT the deadline to get the extra, split shares. If you buy the shares between the RECORD DATE........AUG 21.......and the market close........on AUG 28.........YOU WILL STILL GET THE SPLIT SHARES on Monday Aug 31. The current financial media is so STUPID and so young.......having NEVER experienced a stock split before.......they PARROT this sort of GARBAGE.
Looks like the DOW is going to change out.........10%........of the index. Of course that will make any comparison to the old DOW going forward.......inaccurate and irrelevant. Major shakeup for the Dow Jones Industrial Average index: 3 new stocks join https://www.cnn.com/2020/08/24/investing/dow-jones-salesforce-amgen-honeywell/index.html (BOLD is my opinion Or what I consider important content) "The Dow Jones Industrial Average is getting a massive shakeup to balance out the disruption from Apple's stock split. Salesforce (CRM), Amgen (AMGN)and Honeywell International (HON) will join the Dow (INDU), replacing Exxon Mobil (XOM), Pfizer (PFE), and Raytheon (RTN), S&P Dow Jones Indicies said in a statement Monday. The changes to the 30-stock benchmark index are designed to offset Apple's (AAPL) 4-to-1 stock split, which goes into effect August 31. The split would have reduced the index's weighting of the tech sector. Adding Salesforce will help keep the appropriate balance. The new additions will also "help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy," according to S&P. The changes to the index will go into effect on August 31. They won't change the level of the Dow, because the S&P is changing the "Dow divisior" that is used to calculate the level of the index based on the performance of the component stocks. The Dow is designed to be a way to measure the strength or weakness of the entire US stock market, and Monday's changes hint at some broader shifts in the American economy. Being part of the Dow is a symbol of prestige, but it doesn't necessarily help or hurt a company's stock. Most ETFs and index funds trade the much broader S&P 500, among other indexes, rather than the 30 Dow stocks. Still, Monday's changes mark the removal of two companies with some of the most storied histories in the index, after it booted General Electric (GE) in 2018 following 110 consecutive years in the Dow. This is the first time since October 1928, when the Dow was expanded to 30 companies, that Exxon will not be a part of the index (back in 1928, Exxon was called Standard Oil of New Jersey). The move comes after several extremely challenging months for the oil and gas industry, caused by a price war and the fact that travel was stunted during the pandemic. Defense contractor Raytheon, through its United Technologies merger, has been in the Dow consistently since 1939. Pfizer was added to the Dow in April 2004 (it replaced Kodak, which had been on the index since 1930). Meanwhile, Honeywell is rejoining the index. Honeywell was in the Dow (formerly as Allied Chemical and Dye Corp. and then Allied-Signal) from December 1925 through February 2008. The conglomerate operates in businesses such as aerospace and performance materials, and is a leader in key emerging technologies such as quantum computing. Cloud computing and customer relationship management company Salesforce has likely been boosted by work-from-home policies during the pandemic. Salesforce, Amgen and Honeywell shares were all up around 4% in after-hours trading Monday. Exxon, Raytheon and Pfizer shares fell around 2%, 3% and 2%, respectively." MY COMMENT In my opinion.....they are making this change to try to remain RELEVANT. The DOW is BORING and OLD and STODGY. They want more of the modern tech in there moving forward. I really dont care what they do.......but........comparing the DOW before and the DOW after this change is a waste of time. They are NOT the same. I suspect that this change is being made to bring some EXCITEMENT to the DOW and get the index increasing at a faster pace by adding more young, modern.........and most importantly............booming companies that will have more upward price potential. The professionals and PARROTS in the financial media will tell you......BLAH, BLAH, BLAH, "Being part of the Dow is a symbol of prestige, but it doesn't necessarily help or hurt a company's stock." YEAH........right. JUST look at how each of the three stocks being kicked to the curb and the new up-and-comers are doing today. I LIKE IT.......since I own Honeywell. Now all the DOW Index Funds will have to buy HON. What I REALLY care about is the SPECIFIC companies and Funds that I own. THAT IS ALL.
If you really want to bang your head against the wall, go to the Yahoo Finance conversation thread of AAPL. Dear lord.
The number of people who present themselves as experts while clearly demonstrating they do not comprehend the subject matter is astonishing.
Markets are taking a breather today.......somewhat. You have to come up for air once in a while. BUT......HON, GOOGL, MSFT and AMZN are keeping me just SLIGHTLY positive........so far. Seems like a very DULL and DEAD day in the markets. I saw LOTS of general, negative articles yesterday.....talking about taking profits, a pull back, etc, etc, etc. So......no surprise what we are seeing today. Investors........in general.......need to totally ignore the financial media and ESPECIALLY the financial opinion media. (Is there a difference any more?) The post above that starts out........."LET ME CLEAR UP SOME CONFUSION".......illustrates this. How a stock split works.........and the Record Date and the Ex Date........is as basic as you get. YET.......either the financial media has absolutely NO understanding of how it works........OR WORSE.........they are INTENTIONALLY putting out misinformation to try to fear monger people into reading what they produce. The quotes in the post above show a TOTAL lack of understanding...........and.........those quotes come from articles on MAJOR financial sites. SHAME, SHAME, SHAME. INVESTORS BEWARE........
I'm a new 39 year old investor and just opened my first portfolio two weeks ago. Currently, I am taking the long term approach. One day I would like to move into swing trading and then day trading, but not with any of my long term investing capital. For my long term portfolio, until I better understand investing, I am using it like a savings account. I had my money in savings, but it does nothing for me but sit there. I haven't put a large amount in at all, just a small portion of my savings just to start with, and then about $100 a week from my current income gets invested. To choose where to invest, I asked myself "What does America NEED?" This lead me to renewable and alternative energies. It is probably one of the only industries that we NEED. As each quarter passes, we NEED them more and more. No market can be successful if it doesn't have an environment to exist in. I began checking earnings statements, projections, long term growth expectations of American renewable and alternative energy companies and the industry in a whole. When the opportunity presents itself I prefer companies that are in my state. because I feel when investing in companies within my state, I am getting an extra investment from their success. Renewable energy, particularly hydrogen, is expected to grow by 50% by 2024. There is strong competition in this industry and each company has it's advantages and disadvantages. I believe there will be mergers and acquisitions coming within the next 10 years, or at least a space where some can coexist. I intend to keep investing in the industry as a whole and hoping to catch the company that has a long term breakout as the industry expands. As a newbie, I'm not sure if this a good strategy or not. Any advice?
We need no more fake news. If there was a service that AUTHENTICALLY checked mainstream media I would have moved ALL MY INVESTMENTS CAPITAL into that one company
Hello WXYZ, are we taking our profits from AAPL or letting it ride? Trying to see what you're thinking. Thanks, and continued success.
Honestly, I think there is a larger market for news to rile people up and find people to blame than there is a market for rational and evenhanded news that just reports the events as they happened. People want others' opinions interjected into the news, regurgitated into bite-sized bits that use small words for the lowest common denominator to understand. Why else would cable news still be in business? To tell you the truth, if one could create a straightforward and unbiased logarithm, I am willing to bet that for news aggregating and presenting, machine learning and AI could do a fantastic job one day. Having said that, nothing, absolutely nothing will ever replace dedicated and serious journalists for digging up the news and putting the pieces together.
I'll give you my take on DG. It's one of the stocks I own. I hope to be long on DG just picked it up 3 weeks ago. Quality management team, leading retail expansion, reports quarter on the 27th. I think they are building in the right spots, I drive by two on my ride home from work, and they are always busy. I think they found a nice nitch market. The main reason I bought DG was Quality Management. Happy Investing!
Bigmalx, Do you own DG? Are you looking to own? Why do you own or looking? Curious on your take. Happy Investing!
I'm letting my AAPL ride as of now. I went into the purchase open to sell or hold. I could take a profit, but don't mind holding more AAPL at this moment. Happy Investing!
Thanks for your response. Yes I do own and was just checking for a reason to get out. At first when I got into stocks really heavy back in March. I thought it would be a good investment, but it seem to have not really kicked off like my others. It seem to be just dragging along. I was just trying to get some conformation before I decided to pull the trigger. Thanks again.
Bigmaix........I have never looked at or considered Clorox, Dollar General, or Ring. All I know about them is by being a customer. I used to shop at Dollar General, I liked the store. They have done well to capture the small and medium size towns as part of their market niche. So has Tractor Supply. I also own Ring products.........and .....they work great. Clorox has been a company that I have known since childhood for their products. A solid long time, big cap, dividend company. That is the extent of my knowledge. KING BONG.......welcome and congratulations to becoming an investor. Your participation in this thread is always welcome. As to APPLE.......I continue to hold my margin shares......for now. I will post when or if I make a change. I am STILL in this as a short term trade and I do not plan to hold any of the margin shares. As usual......I do have shares of Apple that are part of my Portfolio Model and have been for years......those shares are NOT part of this short term trade. Today......a nice green day. I am getting SPOILED. ALSO......a nice beat of the SP500 by .24%. Seemed like a difficult day for the markets today. I was somewhat out of touch. BUT......in the end a nice solid day.
