For those who take a vacation to Vegas everyday Via the Stock Market

[Devastation]

so you have $300k in 2 stocks? a braver man than I am

or did you say you have since changed policy?

experience is a expensive but effective teacher, I wish you the best!

2 stocks. nothing brave about it. why spread my money over more companies i know less about, and that don't have as strong financials as the two i have? doing any thing else to me is illogical and would definitely make me lose sleep

back in the day i followed the idea of diversification. that idea of buying companies that i knew relatively little about for the sake of "not putting my eggs in one basket" just about broke me and many others i knew

 

[bran987]

2 stocks. nothing brave about it. why spread my money over more companies i know less about, and that don't have as strong financials as the two i have? doing any thing else to me is illogical and would definitely make me lose sleep

back in the day i followed the idea of diversification. that idea of buying companies that i knew relatively little about for the sake of "not putting my eggs in one basket" just about broke me and many others i knew

It's good that you have a strategy you are comfortable with, and it sounds like you are very set on it. All I am saying is with only 2 stocks in a portfolio, you expose yourself to an enormous amount of firm specific risk a.k.a. unique risk, which is unnecessary. i.e. if a CEO leaves one of the companies your portfolio is affected adversely much more than a portfolio that only has to worry about non-firm specific risk a.k.a. systemic risk (risk factors which affect the whole economy)

What I was saying above is that around the 20-stock threshold, most of this risk is diversified away. Read the following website to learn more, and just keep it in mind for the future.

http://briefing.riskgrades.com/clients/briefing/edu_course.cgi?href=Module2-L9.html

which stocks are you in? I'm curious! if you like them so much they must be pretty good companies

 

[Synpax]

2 stocks. nothing brave about it. why spread my money over more companies i know less about, and that don't have as strong financials as the two i have? doing any thing else to me is illogical and would definitely make me lose sleep

Yeah, all those Enron employees thought the same way.

Still, I'd wager the beta on those stocks is pretty low, right?

 

[bran987]

Yeah, all those Enron employees thought the same way.

Still, I'd wager the beta on those stocks is pretty low, right?

sounds like they would be low with a re-insurer and payroll processor, not exactly ebay there.

unless another 9-11 happens

 

[Razorguns]

i'd liek to make a fund that specializes ONLY in oil companies.

bet you 10 bucks i'd secure shitloads of investors.

 

[Devastation]

Still, I'd wager the beta on those stocks is pretty low, right?

adp & rnr

adp's p/e is a bit high for my tastes, but rising interest rates over the next year and a half will fire up the returns. the main things i consider when buying a stock is

1) cash flow
2) debt (current and long term)
3) return on equity

any company i own better meet my criteria for those three requirements

of course i look over all their financials 10-q's & k's, how the company sits in their respective market, how management has performed in the past, etc, but those 3 elements will ensure the company's future survival

before i bought shit and didn't have a clue wtf was going on, i also came close to offing myself during that time. like i said, experience is the best teacher

i buy a company i think the market will value higher sometime in the next 18 mos. both of these companies meet my estimations

 

[Witold]

Warren Buffet is not a trader. And Berkshire Hathaway is not a trading firm as much as it is an acquisition and restructuring firm. Regardless, I don't see the fascination with Buffet; there's a ton of stocks that have done just as well - and many did a whole lot better - in the same timeframe.

Secondly, everyone determines the level of risk they want to take on and decides their trading strategy based on their risk appetite and acceptance. Higher risk = higher reward. Lower risk = lower reward. That's the bottom line. Different strokes for different folks.

As far as your risk minimizing strategy, it's nothing unique. There's tons of them out there. Everyone has their pet-strategy to minimize risk. (I have one, too) The thing to remember is that when you lower your risk, you also lower your potential return.

Alot of people look at diversification as a way to decrease risk. But too many people get caught up in buying too many random stocks and start loosing track of them. If you are a trader, I would venture to say that it's better to stick to 5-10 stocks max, and specialize in them, which is what most 'traders' do.

I used to swing and day-trade on the side when I went to school and a little after I graduated. There's 3 things you have to get right to make some money; what to buy, when to buy, and when to sell. I traded about 7-10 stocks over the period of ~2-3 years, and made money (repeatedly) on pretty much all the trades. My portfolio included such gems as WCOM, LU, ATT, Kmart, but that's where I made my biggest money.

I haven't traded in 2-3 years. I'm thinking of gettiing back into it. Anyone who is thinking about doing the same should paper trade for a while. A lot of people remember their good pics and forget their bad pics and think they'll make a bundle in the market. That's why you should write it all down, subtrack comissions, mark down sale prices, and see how good you really are before you have real money on the line. I think there's 'fantasy stockmarket' sites out there that will let you do that...

 

[Witold]

Similar to the 'board entrepreneurship challenge' we should do a stock market challenge with real money.

Terms could be as follows: $2000 investment capital (to qualify for most discount brokers), your choice of broker, your choice of using margin.

At the end of 4 months (short enough to keep interest, long enough to make things happen), we can see where each of us took that $2000, after comission.

Technically, we could do all this on one of those fantasy stockmarket sites, but then people would just put all their money in some shitty pennystock and keep their fingers crossed that it blows up. With real accounts, people won't do that, and if they do, then they deserve to win.

 

[georgie24]

i can use a vacation via stock market