In this clip from Industry Focus: Energy, Motley Fool analysts Taylor Muckerman and Sean O'Reilly share two pieces of advice for new investors. Find out why it's so important to understand what you're invested in, and why it might behoove you to make a watch list of companies you're looking into.
A full transcript follows the video.
This podcast was recorded on Feb. 9, 2017.
Gaby Lapera: The way that I've closed all the other shows is I've asked each person for a little bit of investing advice for beginners. Sean, if you want to go first? I know you've already given one, but if you have any other nuggets of knowledge -- I hate the word "nugget." I can't believe I just said that.
Taylor Muckerman: What did he already say? I missed it.
Lapera: He said make a bear case.
Sean O'Reilly: Oh, make a bear case; invert the thesis. I'm going to say invest in what you know. It's not going to be a Buffett-y type of thing. I just know that the first stock I ever bought, this thing went up a bunch and it was awesome, was United States Gypsum Corporation, and I bought it because my dad was finishing our basement when I was 15, and I couldn't help but notice that all the drywall he was buying was USG sheetrock gypsum. You can find it at Home Depot. It's one of those products --
Muckerman: Observant little son of a gun.
O'Reilly: Thank you. It's one of those products where you go to Home Depot or Lowe's, two major competitors, and they both sell only one brand of drywall, and it is USG sheetrock. So that was a nice little invest-in-what-you-know. I had faith and confidence, it went down after I bought it but I held on, and then the housing bubble happened and it turned out well. [laughs]
Muckerman: Perfect. Mine, I have two. Read fool.com. Great free content there.
O'Reilly: Oh my gosh.
Muckerman: Maybe even subscribe to a service or two.
O'Reilly: Facepalm.
Lapera: It's not like they pay us to say stuff like this.
Muckerman: But also, create a watch list for yourself so you can keep track of stocks.
O'Reilly: That's a good one. Can you create the watch list on fool.com, Taylor?
Muckerman: I believe you can. I haven't, I use Google Finance, so, not quite as much of a --
O'Reilly: He means yes.
Muckerman: Not quite as much of a home-oriented as I might have just let on to be, but yeah, create a watch list. Generally, what I'll do is, I'll add a stock where you can simulate buying one share. That way if the stock drops a lot, I can buy another share to see how it might rebound, or see if it continues to drop, so you can dollar-cost your average of your watch list, just to see how the stock is performing over time. So maybe you don't add it to your watch list at the high and then be like, "Oh, this stock crashed; I need to buy it!" Maybe it was just a little overvalued, and now it's fairly valued. Or maybe if you add it to your watch list at the bottom and it skyrockets, you're like, "It's way overpriced, look at the watch list, I missed out," you might not have missed out; maybe the market is just finally catching up to it. So don't just add it and leave it. You can dollar-cost average, just like you showed in your regular portfolio, I believe, into your watch list.
