Christmas Bonus Blues
December 4, 2000
[This Fribble originally appeared on January 4, 2000.]
What to do, what to do... a Christmas bonus burning a hole in my pocket, and so many stocks to choose from! I've been reading and reading, researching and studying, and now that the time has come to choose. I'm beset by the three greatest demons ever to tempt the Foolish: impatience, impatience, and impatience.
Impatience, because I want to be fully invested NOW, not tomorrow.
Impatience, because I want a well-balanced and fleshed out portfolio NOW, not tomorrow.
Impatience, because I want to own a good number of shares in each great company I've chosen NOW, not tomorrow (*sigh*).
As for the first, I had to wait till Monday to make my purchases, as I work for an investment firm and had to gain corporate approval prior to conducting any personal transactions (SEC rules). I'd been planning this for weeks, so one more weekend was good for me to review my choices (again!) and perhaps reorganize them. In the long run, this won't hurt a bit and MAY be exceedingly beneficial. I decided on Charles Schwab for a broker despite the high trade fees. After researching the online trading stats versus convenience and wealth of services available, and since I trade rarely (we Fools buy for the long term), the tradeoff between ease-of-use, availability, and costs made CS a winner for this fledgling investor.
As for the second, I only had so much money to invest (thanks, Uncle Sam), so I had to choose carefully how my funds were allocated among the great companies I've settled on for a long-term ride. So what is the point of this investment, anyway? Will I be looking at pulling this money before 2005? Actually, this is money for my avocation (horses), which I will sit on for at least 5 years in keeping with my long-term plan for expanding my equine interests. So, it is play money in the sense that it won't kill me if it loses value for a while (though that won't be pleasant, of course), and it's not money I'm counting on for anything like the mortgage or hay or truck/trailer payments. Therefore, I am willing to risk it a bit more than I would otherwise, investing it in volatile sectors.
As for the third, I want to own a ton of shares in these companies, but I can't afford much more than a microgram of each (even with a decent bonus) -- so what to do? Lump it all into one or two companies that are promising now, hoping for a big return? (I don't go to Vegas -- see why?) Spread it thin, buying a few shares here and a few shares there in a bunch of different companies? (What would a Fool say about tracking too many stocks at once when you're just starting out, hmm?)
Well, there was enough to buy a good round number of shares in each of a few companies that meet Foolish criteria and my own understanding of where things are headed. I'm taking on four of what I consider to be the best of both Rule Maker/Breaker portfolios (Cisco, Celera Genomics, Intel), plus Oracle for myself. And that's enough. Enough to ride herd on, enough to spread the risk wide enough to suit me (see above), and enough to give me a good foundation for next year when I start paying directly into my trading account (even a relatively small part of a raise will make that possible).
I'll add to my positions, and add those stocks I deem worthy over the next few months. Eventually I'll have perhaps 8 - 10 companies in my horsey portfolio, my company 401(k), and I'll be combining my private F into one additional portfolio I can ride herd on. These various ports will be spread across the risk spectrum (my private 401(k) will be somewhat "drippy" and less heavily tech); they'll be enough to keep me occupied quarterly, and best of all, they'll be working strictly for ME.
These changes will take some time, but on the same principle as an ounce of prevention being worth a pound of cure, an extra day's research may be worth a million dollars by the time I cash out (or by the time my kids do, once I cash in).
Away, you demons of impatience! I must remember I have TIME. Time to wait, time to plan, time to watch things grow.