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David... saw the article on AOL this morning and have been reading some posts on The Motley Fool site. Kudos to you and best of luck!!! I opened a Roth IRA and SEPP with Edward Jones and then moved it to Morgan Stanley... I let them invest money for me and needless to say, I have lost thousands and thousands. I took those accounts away and put them online to invest in myself.. although I've done better than the ED or MSDW (in other words, I haven't lost as much :-), I still lose. I've bought the green light/red light software, various publications, etc. I watch the market everyday and wake up to Bloomberg faithfully every morning at 4AM.... I just can't seem to get a handle on investing. I think my problem is I don't have a lot of time to spend researching... and as they say in equestrian circles.... green on green, makes black and blue! I sell real estate and have made very good decisions for myself in that market... but I'm good at my job too! I would love to be able to quit and trade the market everyday. I know you are a long term investor, not a day trader.. can you recommend some good sites to go to actually learn about investing, terminology, how to short trade (scares me to death), how to get a pulse for the market on a daily basis. I bought google this year and could have made quite a lot of money trading it everyday, but can't quite get when it's going to go up or down. I'm tired of buying high and selling low. Sorry for the long post.. can't wait until you start a fund of your own or an investment newsletter, etc.. please keep me on your email.. I will definitely sign up!!! skierdena@aol.com
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Hi skierdena,

I'm glad you've found your way to the board, I'll try to answer your questions.

To start off, stop watching the market hour by hour every day. That is not how you get a hold of investing. Stop day-trading and following Wall Street, and start looking for some great companies. Day trading takes way too much time, you spend a ton of money on commissions, and you become more greedy, rather than having the feeling of seeing your stocks go up over the long-term. So, from now on, don't wake up at 4 AM to follow Bloomberg. Get your rest, and spend the time you can researching the companies you know and love. Become an investor, not a trader.

I would love to be able to quit and trade the market everyday.

This is not at all what I'd recommend. I never have traded or followed the market day by day for a while. I really don't care if Hansen goes up .5% or 3% today. All I care about is that my estimates for the company five years out are on target. Again, more than half of the time day traders lose money because of commissions. When investing for the long run you save time from having to always look at a screen and waiting for a stock to go down 5 cents. I have to say it one more time, investors 9 times out of 10 will have more satisfactory results than traders will.

know you are a long term investor, not a day trader.. can you recommend some good sites to go to actually learn about investing, terminology, how to short trade (scares me to death), how to get a pulse for the market on a daily basis.

Where you are right now can answer most of those questions. I made an archive of articles written by the Fool on valuation, sorting, and market terms and jargon: http://boards.fool.com/Message.asp?mid=23895880

http://www.investopedia.com/ has a whole lot of information on investing as well. I put together an archive of some of their articles and tutorials: http://boards.fool.com/Message.asp?mid=23937377

You might find some information on my web site, http://www.pencils2.com/, useful as well. I also recommend that you read some of the classic investing books, or simply follow the reading list Tom Gardner has put together:

One Up on Wall Street, by Peter Lynch
Buffett: The Making of an American Capitalist, by Roger Lowenstein
Value Investing With the Masters, by Kirk Kazanjian
The Davis Dynasty, by John Rothchild
Valuegrowth Investing, by Glen Arnold

Junior High

The 5 Keys to Value Investing, by J. Dennis Jean-Jacques
Beating the Street, by Peter Lynch
Investment Fables, by Aswath Damodaran
The Vest Pocket Guide to Value Investing, by C. Thomas Howard
Common Stocks and Uncommon Profits, by Philip Fisher

High School

Made in America, by Sam Walton
Forbes' Greatest Investing Stories, by Richard Phalon
John Neff on Investing, by John Neff
The Intelligent Investor, by Benjamin Graham
The Money Masters, by John Train

University

Stocks for the Long Run, by Jeremy Siegel
Quality of Earnings, by Thornton Oglove
Investing in Small-Cap Stocks, by Christopher Graja and Elizabeth Ungar
The Book of Investing Wisdom, by Peter Krass
You Can Be a Stock Market Genius, by Joel Greenblatt

Grad School

Break Up!, by Campbell, Koch & Sadtler
Investment Gurus, by Peter Tanous
Value Investing: A Balanced Approach, by Martin Whitman
Value Investing: From Graham to Buffett and Beyond, by Bruce Greenwald
The Road to Serfdom, by F.A. Hayek

Fellow Fool Tom Engle (TMF1000) also put together a great archive of Foolish articles: http://boards.fool.com/Message.asp?mid=18819933

I can't help you with how to tell if the market is going to go up or down, simply because I'm not interested in that technique of investing (Or trading). I am trying to do all I can to get you away from trading in the market, but if that is the road you want to take that is your decision. But if you want advice for how to time the market, I am not your man.

I bought google this year and could have made quite a lot of money trading it everyday, but can't quite get when it's going to go up or down. I'm tired of buying high and selling low.

Google is a good example of how long-term results beat out short-term results. Let's say you bought some Google on its IPO day at $90 and sold the same day for $95. A quick short-term gain. Then you fast forward just a couple years further and the stock is trading above $400. That measly $5 gain you made in a day could have turned into a 450% gain in a couple of years. You buy a quality company at a price you are comfortable with and in many cases you will be satisfied with the results.

Let me know if you have any more questions, I'm glad you're here! And if I do start some type of a newsletter I will definitely let you know. ;)

Best,

David K (pencils2)
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David - How's it feel to be a TMF Celebrity at age 13? =) Enjoy yourself as it seems that people really like to hear from "the boy buffett". ;-)

Best Regards,

Jeff
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Hi SkierDena,

Your article (and Sunshine's --- Hi Sunshine) prompted me to post my own story. Perhaps you might learn something from it.

I came from humble circumstances, and of course, selected a career which I love, but which pays very little (can you spell "The Arts"). So I always knew I would be on my own as far as retirement, etc., were concerned. So, in my 20's, I started buying Sun Microsystems stock. I do have quite a bit of knowledge about computers, having intially started out in that field (I went to MIT for a while) but at that time was completely ignorant of the stock market, or anything having to do with finance. I had no idea what a P/E ratio was and I had heard about the idea of diversifying, but frankly, it didn't sit well with me then (and actually, it still doesn't).

However, I knew that Sun had a wonderful product, fantastic management and it was obvious to me that this was a winning combination. So I saved up money by skipping lunch, that sort of thing, and at the end of the month, would buy whatever shares of SUNW that I could. I did this every month for years and years. Sometimes brokers would call me, and tell me it was time to sell. When I spoke to them, it was obvious they were clueless about Sun's market, (they would compare them to outfits like Gateway and Dell, which are fine companys, I am sure, but were aiming at a completely different market). So I would just buy more.

This probably sounds strange, but I never even checked the stock price. I was having a lot of fun working at my career, and really didn't have the time or the interest to spend a lot of time following the market. Well, any time :-)

However, I always felt a little guilty about my lack of knowledge, and around 1999, someone gave me a copy of "A Random Walk Down Wall Street". So I read it. There was a lot in that book that I didn't agree with, but there was a very interesting story about one of the first financial bubbles, the Tulip Bulb Craze in Holland. The similarlities between this story and the dot com bubble were pretty obvious, but I wasn't that worried, because Sun (I thought) was still selling to Universities, Scientific Research outfits, Government offices, and the like. Months after that (we are now in early 2000), I opened my copy of the latest annual report, and the first thing I saw was that Sun was mostly selling to dot com's! The character of the company had completely changed. Well, I was horrified. I ran to the phone, and sold every share I had accumulated over 20+ years. Of course, the broker tried to talk me out of it, and wanted to sell me some Cisco, which I was never interested in. But I insisted. Long story made short, I think I missed the peak of the stock by a couple of weeks, which was fine with me.

I don't want to say how much I made, but I will say that it was enough that, with some care, I could have retired if I had wanted to, which is not so bad for someone who turned 40 that same year.

Since then, I have spent some time and learned quite a bit more. I bought some junk bonds with some of my Sun profits, and watched them a bit more carefully, but not much. I know that sounds awful, but I did very well with them, although I wouldn't be buying them right now. After that, I parked my money in short term treasuries. More recently, I have been buying stocks again, and while I still don't check the market much, and still don't diversify, I pay enough attention that I managed to acquire more of the companies I like during the recent market troubles.

If I had to do it all again, I probably wouldn't change much. I am sure I could have made even more money if I had paid more attention, but I was (and still am) having a ball living my life. I picked Sun because of their product, marketing and innovation, but also because it was small enough that I was sure it would have room to grow plenty. By contrast, IBM, which is a great company, it seemed to me, just didn't have the same potential for growth, since it was already so big. I do think that understanding the companies you invest in is the single most important thing in investing. If you have a clear and deep understanding of where you are putting your money, the chances are excellent that, given time, you will be very richly rewarded. That's partly why (with apologies to David) I am not that enthusiastic about diversifying. I didn't have the time to learn as much as I needed to know about other companies, and for me, ignorance equated to risk. The other reason people diversify is to minimize the volatility of their holdings. Well, I handle that by not looking at my holdings that often. I am sure they bounce up and down, but in this case, ignorance is bliss, I guess :-)

Sorry for the length of this... I don't post very often, preferring to read the many other more knowledgeable and wiser folks that populate Fooldom, so I guess I am making up for it here.

Hope that you find something of value in what I've written, and best of luck to you both.

Scott

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Scott,

quality post! You sort of echo what David & I have alluded to: buy a company you are comfortable with, and let it be. When you see something you dont like, well, its time to reconsider why you own it.

I bought CROX (crocs) because its a socially responsible company and makes comfy shoes (plus the continually increased guidance didnt hurt either). I bought wholefoods (WFMI) for much of the same reasons (socially responsible, decent product with a captive audience, and great earnings growth). Same reason I bought LUV (southwest airlines) - far and away the BEST airline possible, their workers love working for them, and guess what- it shows! .... and so on and so forth...


IMHO, If you are going to park your money somewhere hoping for market-beating returns and are somewhat adverse to risk, I see no reason why you would NOT go into a DRIP. (hey, it gives you a giddy feeling whenever you are in the grocery store buying sara lee products or whenever you see a viagra commercial knowing you are part owner of that company!)...

.... one more tip on pinching pennies- get a credit card that rewards you in some way! I have a citicard that I get 5% back on gas, groceries, & pharmacies, & 1% back on everything else (and they are running a promotion for 5% back at restaurants & hotels until september). I just got my card in November and have already parked almost $150 into my savings because of it! ... just remember to pay in full every month!


-Pat
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Hi Jeff,

How's it feel to be a TMF Celebrity at age 13? =)

Hmmm... I don't think I'm quite a celebrity yet. ;) I think the term "Boy Buffett" might be a bit premature as well, I mean I've only been into stocks for a year now! I will tell you though that my web site got a lot of traffic yesterday because of the article, and I spent a couple hours replying to e-mails. It's been a real interesting experience.

Another fun bit of news is that I got an e-mail from the publisher of "Today's Teen," wondering if I'd be interesting in writing for it. For those who haven't heard of it, the web site is here: http://www.todaysteenonline.com/

I just need to make sure I still have time to be here at the Fool!

Best,

David K
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David.... thank you so much for the absolutely phenomenal advice. I watch Bloomberg everyday, but certainly don't trade everyday. I have actually bought many companies and held onto them for a number of years and sold for a profit, intl ($14.90-$28,00 / askj $2.50-28.00+, jpm, nok, mot) lots of stocks once I took my portfolio away from financial advisors. I sold everything this year and have a lot of cash to invest (well, it's a lot to me). I recently bought peix for $22.00 and repurchased 200 shares of google at $350.00 several months ago. I am 57 years old, going on 35 (very active) and would like to retire soon without selling all my real estate investments. I believe in dividend stocks and reinvestment, but at my age, how long would it take for these stocks to pay off? and.. I manage my own SEPP & Roth IRA so I want to make good choices. I also manage my fiance's Roth IRA. He has a 401-K that is mainly invested in Newmont stock (as he is a Newmont employee) and wants my suggestions on what to buy when he sells his Newmont stock. I am refusing to give him advice (although I bought him askj at $3.00 & sold it somewhere around $30.00). I will read the books you suggested and look forward to reading articles and posts from you to others. You are going to go very far in this life David.. I, as I know others are, am hoping we can learn much from you along the way. Has trump offered you a job yet? ;-) Dena
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PS I re-read your reply to my initial post and all I can say is WOW!
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>>>>>>>
Your article (and Sunshine's --- Hi Sunshine) prompted me to post my own story. Perhaps you might learn something from it.>>>>>>


Hi to you too!

I really liked reading your post. Trust me I wished I had known this much at 20. I would be a lot more in line to retire...but sometimes life had you lemons, grapes, etc... and then you must make a Daiquiri. :-)

Here I am now at 40 working hard to beat inflation. :-)

Sunshine
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"Has trump offered you a job yet? ;-) "


didnt you hear? Atlantic City just negotiated with the casinos... apparently, Trump made pencils an offer he couldnt refuse!


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Interesting list of books to follow, I like how that is listed by grade levels. I checked the Base library and not one of them is in the dewey decimal here. In fact, I couldn't find one book here on investing. Lots of Tom Clancy and Dean Koontz novels though!!

Looks like Mr. Buffet and Lynch are going to be a few dollars richer this week. I'll be one the web tonight looking to order a few of them.!!

Glad you had this post, saved me having to ask you again for the list...

Respectfully,

Gary Michalosky (sandpockets)
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