I’ve kind of turned into a day trader. It’s a guilty pleasure. I’m not really day trading by definition but instead am breaking one of the key rules for successful investing: I’m watching my stock investments on a daily basis. I’m only doing this only because I’ve been making money again and that’s been exciting. I lost my ass in the dot-com fallout and up until somewhere in 2004, my portfolio was littered with ho-hum investments.
My parents did a cool little trick for me when I was young (and I will do the same as our child grows). I was paid a small commission for the A’s and B’s that I earned on my report card. My parents also matched and exponentially upped my earned commission and secretly put that money aside for me. Later they invested my Good Grade Earnings on my behalf in blue chips stocks.
When I “grew up”, I began watching my dollar as a taxed employee, consumer and investor. I realized that I would need money for things like a wife, retirement and eBay auctions. So I adopted a few very simple investment rules for myself: 1) Invest in companies that sell goods and/or services that you like. 2) Keep your portfolio managable (10-15 companies). 3) Don’t watch over your portfolio like a mother hen and 4) P/E is no longer what you once refered to as your “favorite class” in elementary school.
#1 is #1 because it’s the most important to me. I sold the likes of AOL and Pfizer and bought stock in companies that I like. Here’s mention of my 4th brightest shining star from the Motley Fool:
“Over the past year, you could have doubled your money in stocks as varied as Valero and Apple (Nasdaq: AAPL). What do a refiner and a consumer electronics company have in common? Not much, aside from exceptionally strong growth and a broad recognition of that growth from the market at large.”
Since growing up I’ve deposited our own earned money into our portfolio. If we receive cash as a gift, I invest it. Elise has been my lucky investment charm too. She hasn’t let on that she’s as interested in investing as I am, but she gave me three suggestions that have yielded gains over 27% in 2005.
I don’t know why I just wrote all of that. The fart jokes will resume momentarily.