Investing = Waiting

"The waiting is the hardest part
Every day you get one more yard
You take it on faith, you take it to the heart
The waiting is the hardest part..."

-- Tom Petty, "The Waiting"

You've been a good Fool. You discovered an intriguing company (perhaps it was presented to you as an investment idea in The Motley Fool Select or The Motley Fool Stock Advisor) and you took your time studying and thinking about it before taking any action. You crunched some numbers, compared it with its competitors, evaluated its financial health, growth prospects, and valuation, and liked what you saw. Finally, you took some of your hard-earned dollars and plunked them into a handful of shares in the company. Let's call it Dodgeball Supply Co. (ticker: WHAPP).

Hours go by
You're suddenly stricken with self-doubt. You consider selling immediately.

Wait!

Have faith in yourself. If you did your due diligence, and studied the company well, then you should have had some solid reasons for buying the shares. Don't ignore the holding completely from now on, but don't obsess over it, either. Give the seedling time to grow. Perhaps develop some other interests!

Might I suggest modern board games and card games? There are scores of new ones released each year, many of them exceedingly fun. These are not like Monopoly -- they typically play in an hour or less, feature varying degrees of luck and skill, and keep everyone involved up to the end. Learn more by perusing the BoardGameGeek website, especially its many lists of good games. Check out myriad game reviews at Funagain.com, too, and explore the rich frequently asked questions on games in our discussion board community. (Some unintimidating favorites of mine so far: Bohnanza, Lost Cities, 6 Nimmt, Through the Desert, Blokus, and TransAmerica. Some great but more complex games: Puerto Rico, Princes of Florence, Union Pacific.)

(I'll offer some more suggested new hobbies throughout the rest of this piece.)

Days go by
Perhaps you, like T.S. Eliot's neurotic hero, J. Alfred Prufrock, measure out your life with coffee spoons. If so, then many coffee spoons come and go. (Perhaps it's more like a long line of empty Starbucks (Nasdaq: SBUX  ) cups.) One day, you read that a company insider, perhaps even the CEO, is selling some shares of Dodgeball Supply. Uh-oh! You panic. You clutch your heart. You grab your phone and prepare to call your broker.

Wait!

That's not a good reason to sell. Remember that there could be many reasons why the insider sold his shares. These days many corporate bigwigs receive much of their compensation in the form of stock (or stock options). When that's the case, they'll have to sell shares now and then in order to generate some cash. Insider sales are not necessarily a corporate death knell. Of course, if you see many insiders selling a big chunk of their shares, all around the same time, then that does look kinda bad. (Insider buying, meanwhile, is generally a green flag of some sort. Bigwigs will rarely buy shares if they think their company is about to burst into flames.)

Take your mind off investing a bit. Find a drive-in theater to begin frequenting. There are still a bunch left. Or buy and sell stuff at the massive eBay (Nasdaq: EBAY  ) marketplace -- you might be surprised at what you'll find there. (Some items I've noticed for sale: mink handkerchiefs, Indo-Persian chain mail helmets, nursing uniforms, rare ceramic dental floss dispensers, beachcomber metal detectors, teeth-bleaching kits, the 1850 census from Bexar County, Texas, compressed helium gas regulators, beard trimmers, socket wrenches, ravioli molds, and pretzel warmers.)

Weeks go by
Your shares in Dodgeball Supply increase in value by 10%! (Perhaps this is due to rumors that the Olympic Committee is considering adding dodgeball as a new Olympic event.) Your heart starts beating rapidly again. Should you sell? Should you buy more??

Wait!

Relax. Take a deep breath. Remember that it hasn't been too long since you studied up on the company, and not much has changed for it, except the new possibility of even faster growth. You had expected the stock to double for you in a number of years, so the fact that it has jumped up a bit shouldn't stress you out. Should you buy more shares? Probably not. Let's say that you invested 10% of your available funds in WHAPP. If so, then you probably don't want to buy even more, as you'll likely end up overweighted in one company.

Maybe it's time to pick up another new hobby. Consider taking flying lessons, perhaps. You can learn more on our General Aviation discussion board, and at the Federal Aviation Administration (which also offers an Acrobat-formatted document on how to start flying). If you'd rather save money than spend it, consider the secret sport of dumpster diving. Learn more on our Dumpster Diving discussion board and at these websites: The Dumpster Lady, Dumpster Diving: Treasure and Trash; Dumpster Diving tips from New Hampshire; and Dumpster Diving for Profit and Passion.

Months go by
Dodgeball Supply announces that its highly anticipated newest offering, the Z-2000 ball, featuring the latest in rubber technology, will debut a month later than expected. At fault is a late shipment of supplies, due to a fire at a supplier's plant. You break out in a sweat. You feel a stroke coming on. You rush to your computer, to get a quick stock quote. It's down half a point. You think maybe you should sell.

Wait!

Think about the issue at hand for a minute. Will this one-month delay really change the future of the company? Is it an insurmountable problem? Does it reflect serious problems at the company? No, no, and no. Some news stories should make you stop and rethink whether you want to keep holding a stock. But this isn't one of them. Patience, Fool. Time for a new diversion, perhaps?

Consider keeping tropical fish. As one fan explained to me, "There's something marvelous about creating an artificial environment, filling it with life, and then maintaining it and watching it develop. When well cared for, aquariums can be a great source of relaxation, entertainment, and education about ecology, biology, and the aquatic world in general." Learn more at Aquaria Central and The Beginner's Tropical Fish WebRing. (Allergic to fish? Try gardening! Get more information in our Gardening discussion board and at National Gardening.)

Years go by
If you've made it to a year and beyond, and you're still holding those shares in a company you still believe in, then congratulations!

Here are some final thoughts:

  • You do need to keep up with Dodgeball Supply and all your other holdings. But try to be proactive, rather than reactive. Read the quarterly earnings reports and follow each company's health and progress as revealed in financial statements. Pore over the annual reports. Read discussion board posts about the company and follow it in the news. (Google News can help you mightily with that.) The more you know, the fewer surprises you'll encounter.

  • Don't let other attractive companies turn your head, unless they're significantly more attractive than what you own. Trading frequently in and out of companies will generate commission fees and -- if you're lucky enough to make a profit -- taxable short-term capital gains.

  • Do consider selling -- for the right reasons. These include: (a) You find a much more compelling investment, (b) You need the money now, (c) You will need the money within a few years, (d) You no longer believe in the company's strength and growth prospects, (e) You realize you don't know enough about the company, (f) You think the holding is rather overvalued, and (g) The reasons you bought it are no longer valid.

  • Don't let investing take over your life. To do it well usually does take some time, but aim for a balanced life of work, profit, fun, family, friends, etc. Overdose on investing now and you might burn out before you develop a sustainable and profitable approach and routine.

  • Keep learning. Here's a big list of resources that might come in handy as you learn more about investing. And another list, covering some corners of Fooldom that might be of great interest or use. Consider bookmarking and revisiting these pages.

Fool on!

Selena Maranjian's goal in life is to make the incomprehensible comprehensible. (Or is it to make the comprehensible incomprehensible? Hmm...) For more about her, view her profile. You might also be interested in books she has written or co-written, such asThe Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.


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