I love the stock market, it is fully 33% of my FIRE plan, but the way I do stocks is a far cry from how I started out playing stocks.
One of the great advantages of reading through other people’s blogs is that you can get advice from all my ‘mistakes’. It’s as if we have been financial friends since the year 2000.
Here are some of the questionable things I used to do that I no longer believe are good ideas;
I would buy stocks in batches that were too small. Spending $9.99 (old school price) to buy $50.00 worth of a stock is bad planning. I made Ameritrade (just Ameritrade, no TD yet) a bunch of money for years before I became more patient about my investing.
I would buy stocks based on the wrong metrics. Meaning, I liked owning quantity over quality so I would often go for a cheaper stock all things being equal because I could buy more shares of it???
Next, I would chase RETURNS. That way lies Madness.
I would buy stocks after reading their Obvious Puff Piece after the price had done its predictable jump.
I would sell stocks after they made a decent profit to raise cash to buy ‘new to me’ stocks. Like when I sold my APPLE at $90 and my AMZN at $73. Hey I made money, but what if I would have kept them. (looks off into the distance mournfully).
I called the Ameritrade hotline twice a day to listen to my stock prices and record them by hand on a legal pad. Trust me, I know there was probably a better way to do this, but I think I liked it. It made me feel like a Big Shot.
Furthermore, I also bought speculative stocks, no dividends, just ones I thought would rise, some did, some didn’t.
THEN I started learning more about FIRE, wealth preservation, the beauty of dividends, and the wisdom that comes with growing older.
I stopped thinking I was Gordon Gecko.
So 10 years after I started, I began the following GOOD stock buying habits;
Buy a nice diverse batch of quality companies that pay DIVIDENDS consistently.
I shoot for an average 3.5% dividend rate for the portfolio.
I line my nest with different sectors and parts of the world.
Reinvest my dividends but not Automatically, I let the cash pile up into $300-500 piles then I buy more of a specific stock. Stocks that I already hold that I want to accumulate.
I don’t get suckered in by REITs and their Big Returns (well no too much anyway).
I buy companies that my wife uses because she does not like to shop and the brick and mortar economy is going to die.
Sold all the companies that are too EVIL for me to feel good about making money with them. (sorry Monsanto).
I sleep well because my Portfolio love is not based on the up and down value of the stocks overall. My Portfolio is based on the underlying $ it produces through Dividends.
Bonds and Cash are for countering the worry of perfectly normal stock market corrections.
Anyway, my point is Timing is everything, and nothing.
For the record and for bragging rights. I wanted to find a screen shot of my activity during 2008 & 2009 but I merged my accounts and could not produce proof from that far back. BUT,
I lost money in 2008 like everybody else. However, I DUMPED a sizable reserve back into the markets March 6th, 2009, I missed the TRUE BOTTOM by 3 Days. Suck It Gordon!
Both of my current Stock Portfolios are available for your Voyeuristic Pleasure.
I was interviewed about my Investing strategies with TurningPointMoney in their ‘DYI Investors Interview‘ segment.