This is part of a series of profiles highlighting women investors in the Fool community. Find out what makes the fairer sex better at picking stocks at fool.com/girl.
A former Motley Fool intern and current community leader for the Motley Fool Million Dollar Portfolio service, Shiri Dori-Hacohen (TMFShirKi on the boards) knows more about stocks at 27 than most of us learn our whole lives. After growing up in Israel and attending university there, she became a software engineer. After two years in San Diego, she and her husband, Gonen, just moved to western Massachusetts, where she will pursue a Ph.D. in computer science. Read on to learn more about Shiri, including which stocks she's buying right now.
How did you first become aware of investing?
I first learned about investing at 16, through a book I picked up at an airport, Smart Couples Finish Rich by David Bach. I had just entered my first relationship and was working my first teenage jobs, and I was intrigued and fascinated by the book. Bach's no-nonsense approach to aligning your life values with your money appealed to me very much.
My parents had always been money savvy, in the sense of not spending what you don't have, getting the best deals on consumer goods, and so on. For investments, they did very well by putting any extra money they had into real estate.
I didn't know this when I started investing, but my father's mother is actually a great stock investor with a very impressive portfolio of over 50 years' worth of investing. So I learned some from her, but she's very strong on intuition, so it's hard to pick up tips. I think I inherited her mettle for long-term stock investing, though, which apparently skipped a generation!
What was your first stock investment?
The first individual stock I bought was Elbit Systems (Nasdaq: ESLT ) back in late 2006. It's an Israeli defense company with lots of software development, so I felt comfortable with it. I had just moved to Jerusalem, and a friend at work told me that his banker was quite good with stock picks. I went to meet the banker, and he gave me two stocks; I only bought the one I was familiar with, but both did quite well. Elbit rose a lot before the 2008 crash but was almost never below the value I bought it at, which is lucky, since at that time I wouldn't have known how to hold.
How would you describe your investment approach?
My investment strategy is to allocate my money in such a way that I won't have to worry about it, ever. That doesn't mean I don't monitor my portfolio -- I do -- but I always make sure I have enough cash to hold me over if something goes wrong and have some money in bonds as well. That way, whatever is in the stock market is there for the long haul -- five years or more -- and I never lose sleep if it goes up and down like crazy (which it inevitably does).
I'm always drawn to stocks with good tales behind them. I like small caps for the risk/reward ratio, and I diversify enough so that one stock crashing will not hurt me, but one stock succeeding will pull me up. My husband and I also love consistent dividend payers since (a) they have to make real hard cash to pony up the dividend, and (b) they put cash in our hands. That type of passive income is something I'm working toward so that eventually I will not have to work for my income. That's also why we love selling options -- we get money for selling "insurance" to other people, many times at no effective cost to ourselves.
Sector-wise, I love following tech stocks, since that's my area of professional expertise and I can contribute to the community from my own specialized knowledge. I don't own many tech stocks, though, because I know my personal biases will tend to color my investment choices much more than in other sectors.
Finally, it's always important for me to make sure the companies I own are aligned ethically with my own values. For example, I declined to invest in Microsoft. As a software developer believing strongly in free software, I didn't have to think twice.
What has been your biggest investment success?
In terms of in-the-green gains, my best stock by far has been IPG Photonics: It has gone up nearly seven times the price I originally paid for it. But Dave Meier and the others at MDP deserve full credit for recommending this stock and many others I've bought along the years, so I don't feel it's entirely my own success to claim.
In terms of ownership pride and taking advantage of opportunities, my top success by far is Berkshire Hathaway (NYSE: BRK-B ) . I'd always admired Warren Buffett, but the cost of a single B-share would have been way too big a portion of my portfolio to tolerate. Then, in March 2009, when everyone was full of doom and gloom, opportunity knocked. Berkshire had published the first negative quarter in many years, and the stock had dropped considerably. Gonen has a gift for putting in limit orders, and we caught the stock at pretty much the lowest point possible. Two days later, it was already 20% higher.
How about your biggest investment failure?
Youch. Without a doubt, that was Allied Irish Banks -- we lost over 90% of our investment on that stock, especially since as it was free falling, we kept adding money in hopes of averaging down. It was the right idea for many other stocks but not this one. Talk about catching a falling knife. The realization slowly sank in that the stock would never go back to where it was. Still, it wasn't a complete loss -- as the stock neared bottom, we used it as a learning zone for options. We managed to recoup part of our loss while learning in a very low-risk manner.
In our upcoming book, Warren Buffett Invests Like a Girl, we make the case that women are better suited temperamentally to be great investors -- they are generally more patient, take less risk, stay calmer in turbulent markets, do more research, and hold for the long term. Do you think you invest like a girl?
I certainly hold some of those traits: I trade less often than the average investor by far, hold for the longest term possible (forever), and I managed to stay completely calm (actually, I was quite excited) in the 2008 crash. I love the head games the market plays with you, and I rarely have trouble riding those out, although I haven't yet been in a true bull market, so we'll see. My research mostly consists of reading up on what the MDP team and The Motley Fool community has to say about my stocks, which still takes a lot of time.
As for risks or self-confidence, I'm not so sure. I take plenty of (calculated) risks in the stock portion of my portfolio, but that's definitely mitigated by the low-risk portion. And I can get cocky at times, bragging about my up stocks in the so-called "cocktail party" style; I love sharing my successes, partly in hopes they inspire others to invest. Still, I try to remain humble and realistic about my odds of success in the future. If I can consistently beat the market, that means I'm doing something right.
What advice would you give other women interested in getting started with investing?
First of all, think about what you want in life -- for you, for your family -- and hold that in your mind the whole time as your goal. Then figure out what you need to do financially to achieve those goals. Don't ever let your financial actions be in conflict with your core values. If you do that, you cannot really go wrong.
The other half of the equation is education. Look for trustworthy sources of information, and validate everything from separate sources. Once you find someone you trust, whether a person or organization, ask them anything you want to know. Even if they don't know, they might be able to tell you who does. The ability to ask for direction is something that men often struggle with but women don't quite as much. That is a huge skill and a gift that I've always had. Coupled with the Israeli culture of inquisitiveness, it's allowed me to ask questions without ever worrying about how I'll be perceived by others. I've learned a lot through my questions.
Finally, what stocks are you buying (or watching) now?
I've recently added to my existing position in Retail Opportunity Investments Corp. (Nasdaq: ROIC ) . It is doing a great job of making the most of a down real estate market by gobbling up commercial real estate at clearance prices. I love word games, so the ticker -- a play on Return on Invested Capital -- is an added bonus.
Also, I sold put options on Exelexis (Nasdaq: EXEL ) , another stock I've owned for a while. Basically, I'm obligating myself to buy shares of Exelexis if it drops below $6 by June, and I'm being paid for this obligation. This company is trying to make the world a better place by easing the pain for cancer patients. It is developing a revolutionary drug that is currently in phase 2 trials to test their efficiency and success. So for me, this is a win-win, since we'd be happy to buy the stock at $6, and if it doesn't drop, we'll still get paid.
I bought shares in Lumber Liquidators (NYSE: LL ) , at what I believe is a great price. These discount stores are giving customers a great deal on hardwood floors and getting very good ones for themselves at the same time.
I've been watching Yahoo! now for a while but haven't yet decided about it. Everyone knows Yahoo!, but not everyone knows that it has very successful properties in Asia. The global diversification is a huge plus for me, since I am not solely U.S.-focused
I've also been reading up on shorting stocks, which I've never done before, but am curious to learn more about and to see if I can try my hand at it.
I'm also on the lookout for investments outside of the stock market; it's important to me to be open to investment opportunities everywhere. With real estate prices so low, that might be an avenue to explore. It's also a very exciting time to be in the tech sector, with changes happening so quickly and new companies coming on the scene seemingly overnight. I'm keeping my eyes and ears peeled and just see what I can find. It's amazing to me, the opportunities that abound if you know where to look.
Want to learn more about how to invest like a girl? Warren Buffett Invests Like a Girl is available tomorrow, June 21. Order your copy now!
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