Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 11
krishnarama listed holdings and wrote:

ARMHY
CMGI
QCOM
JDSU
BRCM
NTAP
ARBA
SEBL
ITWO
RBAK

So every month I am adding same ten stocks (four or five shares in some of those companys. Sometimes I even buy one share based on the stock price). My commision charges are like three dollars for each purchase.

My concern is Am I doing the right thing by Buying the shares in those companys for long time.


First off great slew of companies to own. Second off I haven't had time to keep up with this thread so I hope I'm not being redundant here. Third, the longer I'm in the market the more my impression of the markets change. So this is just from my personal experience, using my personal talents, and the amount of time I choose to spend on it. And all these things vary amongst individuals and therefore this advice is not applicable to all.

I would say that blindly buying these 10 stocks each month will work if (1) you don't look at the price and are truly holding for 5 years or more, and (2) you follow each companies fundamentals closely. At least on a quarter to quarter basis because technological advantage can dissipate much quicker than consumer brand advantage and must therefore be more closely monitored by the shareholder. Here are some quick and dirty metrics which I posted and used RNWK as an example:

http://boards.fool.com/Message.asp?id=1380180001007000&sort=postdate

This should allow you to systematically track these companies from Q to Q to make sure your companies are not getting sick or in need of further review.

But this said, I have become more and more convinced, given the increasing volatility of the market, that just putting money into "high flying" tech stocks at any old time is not the best way to invest your money. I stand firm that the tech field and LTBH is the way to go. But it is becoming more and more apparent that as predictable as taxes and death so is the fact that tech stocks will go up and tech stocks will crash, and that this cycle will happen more than one time per year and it just makes more sense to buy your list of stocks nearer to the crash points than the up points.

Knowing exactly when this will occur, or what the bottom will be - well, that is difficult. But knowing that this cycle will occur is a certainty. So I suggest patience in some of your buys. Continue to buy these stocks, but possibly have a bias towards investing money during stock market crashes or into individual stocks following a crash for no real fundamental reason. As I look at my portfolio which has consolidated completely into BRCM, CREE, GMST, NTAP, and RNWK, the two things that stand out are the G&K elements of each of the holdings (+the Godzilla elements towards RNWK and GMST) + the excellent entry points I made into these stocks. I haven't always bought in at great points (e.g. I bought some GMST at $104 and CREE at $182 - tidbits of $, but still bad entry points) but all my initial entry points were at or near the bottom of market "corrections". Until I thought about it yesterday I wasn't even aware of this, but yes, market timing for initial purchase played a large role in when I bought and which of my target companies I bought. SO VALUATION AND MARKET TECHNICALS ARE NOT IRRELEVANT

This doesn't mean trading these stocks. It just suggests using some patience and some discretion in which stocks you buy when. My wife is still a bit upset with me because she gave me her 401K money in February. Had she just held out to early May - well, you can see the value of a little patience and playing this cycle of volatility.

So to conclude: (1) the stocks you hold are great companies; but (2) they are not no maintenance holdings, you must monitor them and they are not necessarily fit for blindly tossing money into them, keep good track of their businesses; (3) take advantage of market volatility and have a bias for investing in those stocks which are at better relative valuations or during market corrections; for example not more than 3 weeks ago RBAK was in the 50s, today is is in the 110s, tomorrow it'll probably be back in the 70s. Even if it doesn't get there you have 9 other great holdings which will be just as volatile. be patient; and (4) continue the LTBH philosophy. If the companies fundamentals remain sound just leave it. Ignore price for everything except for finding better relative entry points for your stocks.

As I become more and more sophisticated in the market I stick to the fundamental long-term-buy-hold philosophy but I also pepper it with skills learned from traders and observation such as the intense volatility and a new found respect for the power of patience for each incremental dollar I invest.

Tinker

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.