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      09-01-2014, 01:00 AM   #2550
jasonn
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Quote:
Originally Posted by MrPrena View Post
I think you did okay for transferring your fund to discount brokerage. You will be way ahead, because brokerage account will charge $6-12 per trade. Other junk accounts will charge 1-2.5ish%.

Yes, you are correct on bull market. Right now it is easy money due to heavy increase in MS (QE activities). If we see discount rate goes up, I think dividend stock w/ low beta will be ones to watch.
Even McDonald Cheeseburger went up average of 50% from dollar menu. I think real estate and securities investment(s) should do better than McDonald Cheeseburger increase.

1. I trade as often as once a week? I trade as short as once a year. I usually keep 3-4 stock per holding. I do this for a living (and some other types of investments), and I just cannot miss. In terms of trade, I did about 90% gain ratio. It is not because I am good, but because of this long bull market. I do good during the bear market too, but I do not do as good when dP/dt is near zero.

2. If you know what you are doing, it is worth trading frequently. Even on a short technical trade, I think of it as buying a business. I study harder than buying a small sandwich shop. It is least little more transparent than owning a small business. It is also liquid relative to small business. Only downside from owning private equities or private small buisiness is , there is little to no income. (mainly cap gain, or short term gain).

3. If I am sure, I bet more $. I invested 100% of my available fund on few stocks I was 99.9999% sure. It was DDS, S, AMD in the past. It did all well.
However, I had to get a part time job and increase my etail to get my cash flow going.
It paid off great, but we were living like a bum. Imagine holding decent amount of $ on portfolio, and living like a bum for years. It was hard, but the capital gain was well worth it for me at least.
My advice is not to go too deep. Why bet the farm or ranch even if you are 99% sure.

Cap gain tax isn't too bad, but short term investment income tax sucks.

4. I usually do my own taxes, and it is easier electronically. It can download all the data from your brokerage house, and you can do the rest. If I do it manually, it will take 3 pages of Schedule D-1.

5. Currently, I only hold 3 stocks. I am going to buy some options for other stock I am looking at right now. If you diversify too much, it is actually worse for portfolio (if you search U of MI diversification studies, and I agree). Although I do this full time, but I just can't do full detail analysis on 20 stocks.

6. The capital isn't as important as change in % rate gain relative to change in time. I would rather have $2000 on my account and have an exponentially faster rate of growth than have $20,000,000 and a slow ass rate of gain.
However, having 20mil will be easier by diversifying into different vehicles of investments (such as some fixed incomes, securities, commercial real estate, etc) and less speculative/risk than having 2000 with anticipating huge gain to make money.

7. SBUX, GPRO, and CMG is stocks i do not have, and won't buy near future.
CMG has a good business line. I was eating CMG for lunch since 1997 (since it came to Denver first). I like CMG, because they are fast. That is it.
They are faster than any other quality fast foods. By looking at the PE, you are already paying for 5yr future growth on CMG.

SBUX..... I do like SBUX coffee, but I just don't like the rate of growth on same store sales.

GPRO- I think I WILL BE WRONG on this due to this being a cult stock with huge followers, but they only sell camera and its' accessories.
Thanks MrPrena for outlining your thoughts. Haha, I wasn't sure if you were serious about the 50% gain / McDonalds cheeseburger example until I read further and you mentioned getting a 90% gain. Wow, to be able to shrug off a 50% increase and make it look like a poor result is really something. For me, I'd be extremely pleased with a 10% gain in the stock market. Real estate wise, on my various holdings, I'm looking at between 8-25% annual return on my down payment after debt servicing, without considering the rise in property value. You are certainly in a completely different league. My best performer is half of what you consider to be a poor performance.

If I am distilling your post correctly, it is better to bet big on a few stocks that you are very confident in; once you know what you are doing of course and have thoroughly researched the companies.





Quote:
Originally Posted by Ben2k9 View Post
You are essentially buying high beta stocks (stocks with more octane than the overall market). This works until it doesn't, and when it doesn't these stocks pull back HARD

here's the formula for long term investment success: own a basket of high quality companies. At least 20. This is roughly the minimum for diversification. Don't trade them unless you have a thoroughly researched method for doing so.

You can save yourself the trouble of picking those companies by buying an ETF or fund. If it sounds like back to square 1, it is. Trading stocks successfully isn't easy. Use limited capital during your learning process to avoid costly mistakes. Learning process takes many years of consistent study and experience. MANY YEARS. There are no shortcuts. good luck!

Thank you Ben2k9 for your forewarnings. I have taken them to heart. I don't mind putting all of my designated stock funds in an ETF. I might reserve 5-10% to have some fun. Just wondering, how long do you think this bull market will last?

I am not sure how you ascertained that I was purchasing high beta stocks, but I will have to take another look at those companies. I was careful to purchase companies with, among other factors, low debt, low institutional ownership, increase in earnings each year for 5 years, and a low-ish P/E. Today is the first I have heard of the term "beta", which both you and MrPrena had mentioned, so I appreciate the introduction to a term representing a stock's volatility, a variable, I'm sure among many, that I had not considered previously.
Appreciate 0