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First Year

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By yttire
August 13, 2004

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It is my first year! In fact, I have balloons today!

I have loved the Fool and the many boards- different boards become my favorite from time to time. At the start it was "HG Philosophy" in Hidden Gems. Then "Budgeting". Then "The Fab 15" stock investor board. Then it became the Foolish Collective. Then it became the BMW board. Now it is currently "Ask the HeadHunter". In all of them I find warm, receptive, intelligent people who share their best ideas in a genuine effort to help others. I can't say I have found that anywhere else on the planet such a collection of people. If you haven't tried surfing some of these boards- try it out.

I have to say- I have really enjoyed the Hidden Gem service, and learned a ton about stocks. I also realize how much there is to know and how far away I am from knowing it all. I think I am down about 12%- which isn't bad, isn't great.

The two most important things I have learned about stocks over this past year are:

1) Future earnings matter completely. Projected revenue and cost growth rates determine these earnings. If you don't have a grasp of the future earning potential, you have no idea what the stock is worth.

2) Diversify your assets- let no one stock take up a huge part of your portfolio

I hope that these lessons will help me from taking substantial losses in the future- either in stocks, mutual funds, or any other future priced commodity like stocks. It should allow me to avoid things like the tech bubble (I am humble enough to admit I may get swept away in idiocy given the right conditions, but hope not to)

I have to say that Chinwisker- a regular poster over on the index funds board, has really contributed to my balanced education. One of his many points are: If you are actually saving for a required goal, is it worthwhile to take on extra risk for a potential market beating return when what you really need is to match the market?

And on long reflection on this question, I have to answer: "nope"

Which means that some of your assets should be in safer asset classes than individual stocks. But for the rest of your assets, go for it, invest with glee, follow me and Foulweather with the massive upfront investments.

I have been working so much I haven't really had time to study my stocks closely in a while. My life is discombobulated, if that is a word- massive hours at work- sister had twins this week -new baby arriving for me in a few weeks- job search - family members and acquaintances dying (2 in the past week). SHEESH! Please give me a respite I wouldn't believe what is happening is real- but it is. It is nice to have people to turn to who listen and give moral support and give ideas. It is like having a second conscious to turn to.


For a while I was too addicted to stocks- watching their every move. Waiting for pennies off to get a discount- to buy it and then find it months later trading for dollars lower.

I became obsessed with the pop on Hidden Gems, convinced that someone on their game was making millions while I sat on the sidelines like a sucker. Originally I thought of making slightly better than market returns the first year- but the pops and then stocks like MIDD soaring made me cringe. The pops were more than what I was hoping to make in an entire year- and the soaring made me feel like a sucker for not jumping on board. Failure either way- buy it and it drops, don't buy it and it soars. Over time I came to realize that with a diversity of positions (in both stocks, and into prices in a single stock) it didn't matter as much. Also over time I came to realize I was out of money to invest, it was all invested, so it was water under the bridge, and now I was watching my existing stocks and had to make choices about when to sell them instead of when to buy them. Not much activity in the last few months because of that.

I dreamed of making 20-30% returns a year on my investment dollars in the future. I got great grades in school- hell- I can learn this investing thing and conquer the market. Well- I have learned a lot about investing (6 books and a lot of online reading) and am convinced it takes more knowledge than I have at the moment, but I am slowly getting there. I do hope to beat the market- but don't expect to necessarily anytime soon.

To all you people out there who have contributed to my life over the past year with your ideas and intelligent discussion: Thanks!


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