31–40 of 74 posts
I believe wholeheartedly in Mark Cuban's advice here:
"The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a sucker’s game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash."
Emphasis mine.
Full article: http://blogmaverick.com/2008/10/04/how-to-get-rich/
The thing about investing in individual companies is that you're not betting on whether that company will grow or not. You're betting on whether the company will grow more than investment professionals expect it to. I have, consistently (over 10 years) invested in individual companies and beat the market, but I found that it just wasn't worth the time. So now I put my money in index funds. By the way: the biggest pre…
I'd say the advantage the individual investor has over the investment professional, is that the professional has a time-frame of 1-3 years. So a lot of a stock's price reflects how the company is expected to grow/pay out over that period.
If you are willing to take a longer term view, asking what's this company going to be doing in 10-20 years, and how is it priced relative to that, then I think you've got a much better chance to beat the market (see Buffet for example)
I invest in 75% index funds, because of Random Walk Down Wall Street and all the related writing on the subject, and 25% individual stocks, largely for entertainment value. It's like WoW but much more time efficient. Approximately 50% of my liquid net worth is Chipotle. I bought back in 2006/2007 and just held. My other individual picks include Bank of America (yeah, ouch), Microsoft, and Nintendo. Chipotle more than…
http://assetbuilder.com/blogs/scott_burns/archive/1991/10/01...
My approach is closest to technical analysis, swing trading, and the CANSLIM method: http://en.wikipedia.org/wiki/CANSLIM
Having said that, here's some tips if you're going to try and pick stocks anyhow:
0) Don't listen to any tips you see on the internet, including these. If they're actually any good (and not just part of a pump n' dump scam), they'll already have been taken by everyone else. (Honestly you're probably better off shorting anything you see recommended in a public forum.)
1) Pick investments that are likely to go up and down at different times. If you want to invest in an oil company, also invest in an airline; they often go up and down opposite each other. (Note: Again, any obvious tip like this has been exploited to the point that it's no longer helpful. See para 1, above.)
2) Your career is also an investment. Don't, for the love of god, invest in the company you work for. In fact, don't invest in any company that is likely to go under around the time you get fired. Work for Amazon? Invest in Barnes & Noble. Or anyone else you can think of that might do well if Amazon does poorly, and visa versa. And make sure to toss some money at foreign investments; if your country does poorly, maybe some other country will do well.
3) Spread investments out as broadly as possibly. Don't be stupid and say "hey, the whole market can't go down at once!". It can! But it's less likely than a single stock going down, and this is a numbers game. There's never ever a sure thing, but if you can just be a tiny bit smarter than everyone else, it'll pay off in the very long term. (The easiest way to spread investments out is an index. See para 1, above.)
4) And don't just spread your investments across an industry, or a stock market. Try and split investments across multiple asset classes. Stocks, bonds, commodities, foreign stocks, etc. (Via multiple indexes. See para 1, above.)
5) Fees will kill you. Anything with active management is more expensive than its worth. Yes, all active management, no matter how good their track record. At a micro level, past performance is no predictor of future results, and at a macro level past performance is actually negatively correlated. A very common pattern is to do better and better until you do so badly that it wipes out every gain you've ever made (e.g., the entire hedge fund sector when the financial crisis hit). (In other words, see para 1, above.)
6) On a similar note, don't be too active in managing your investments yourself. Reacting to every little dip and spike will waste your time and attention, rack up huge fees, and guarantee bad results. Once you've figured out your strategy (hopefully involving index funds), figure out how much you can save per paycheck, and just do that, with as much automation as possible. Maybe your strategy is "save 20% of every paycheck, with 2/3 going into an S&P 500 index, 1/6 into foreign stocks, and 1/6 in commodities". That may be a terrible strategy, but it doesn't matter if you can just stick to it, and (this is important) don't check to see if it's working for at least a decade.
7) Individual investors persistently WAY underperform benchmarks, because of timing issues. They will hear some hype about a stock, or an asset class, or the idea of investing, and they'll enter the market at or near the peak. Then when things go pear shaped they'll panic and exit, locking in their losses. It's routine for "the market" to have a higher return than the average investor gets; often much higher. Unless you want to lose all your money, don't follow the herd. Your best bet is to just leave your investmens alone (in an index fund) and don't even look at them. If you can't bring yourself to do that, then be as contrarian as possible. If everyone is talking about how awesome gold ETFs are, or the growth potential of tech stocks, get OUT. On the other hand, if a sector crashes, buy!
8) Finally, one more bonus tip: Go for passively managed index funds. (But if you really want to pick stocks, go for ones with low volatility.)
Earlier quoted context omitted.
The question with AAPL is really do you think smartphones and tablets, as product segments unto themselves, have reached market saturation? I think we'll still see massive increases in the sheer number of smartphones and tablets sold, and I think AAPL will manage to retain a significant (not necessarily a majority) market share.
You also have to consider if you think apple could continue to keep their margins in an established tablet market, and a smartphone market approaching 'good enough' like that of PCs today, and whether consumers will continue to accept a 'walled garden' as tablets become primary computing devices. E: I'd like to clarify I'm including stuff like no USB ports in walled garden.
I think people have accepted the walled garden model and they like it.
In a perverse way, their success is partly because of the PC era itself. The lowered expectations people have of computational devices from windows makes. Having something that "Just works" such a blessing, for such a ridiculous portion of all consumers, that their "walled garden" translates into "sanctuary" for most human beings.
IF in the future mature market, other tablets have also reached a stage where "it just works", then its an even playing field.
At that point,the walled garden will be just another field to walk between.
Edited for clarity
Earlier quoted context omitted.
Definitely true for single companies (ie don't hold only your employer's stock...), or for short term. For a retirement fund, I still think tech gives the best 50 year returns, as a sector.
> I still think tech gives the best 50 year returns, as a sector. Why's that?
Take a mature industry - what are the sources of potential upside?
Growth, more customers, perhaps from new geographies/product categories
Efficiency improvements and thence profitability
Occasionally new product innovation.
Being a mature industry though, the chance of a break out innovation, that changes the face of the industry, is low. So your growth path for the industry tends to be tied to GDP growth in the end.
With tech though, you can have a revolutionary product, which doesn't do it by redistributing power, but by increasing the share of the pie for everyone.
And while doing this, tech still keeps the possibility of growth through diversification/geographical expansion AND efficiency improvements which will be discovered over time.
Sorry I am a bit tired, so I may not have made the most educational of responses.