Stock picks

[Hammer]

I am sitting in some cash after taking some profits in my IRA and am looking for some equity investment thoughts. Please include why you are or would go long.

[Hornsby]

1.01 Chicken Stock

[DJBeasties]

What is the formula for picking great stocks?

[Don Quixote]

What is the formula for picking great stocks?

If there were such a formula, the discoverer wouldn't be selling it for $99.95 or $499.95 a year. Even the best get it wrong sometimes, including the Great Investment God Warren Buffett. The only one who never showed a loss was Bernie Madoff, and look how that turned out.

I'm certainly no expert; the improvement in my overall portfolio since I started investing again 15 months ago has largely been driven by the overall market.

Here are a few tips, though--

1. Never commit a huge percentage of your investment funds to one stock. Diversify.
2. A variation on an old Peter Lynch rule--never buy a stock whose product you don't understand. In my case, this covers a lot of "high tech".
3. Take calculated risks, but never more than the far limit of your comfort zone. You want to make money AND sleep well at night.
4. There's something to be said for "boring" companies that just keep on chugging. The key with these stocks is to...
5. ...reinvest your dividends.
6. Don't be afraid to take short-term profits, even if they're taxed at a higher rate than long-term gains. Obviously, this doesn't apply in Hammer's case, since his cash is in his IRA.
7. Don't be afraid to not sell, since long-term gains get more favorable federal tax treatment.
8. Remember that cash isn't earning diddly right now. This isn't the 1980s, for sure.
9. Leave a small percentage for pure speculation.
10. Establish sell points, both high and low, for most if not all of your stocks. However, you don't necessarily have to sell ALL of a position at that point. I like the idea of selling half and setting new numbers, high and low.
11. There's no shame and sometimes a lot of honor and profit in saying, "I don't know", and leaving your decisions to a professional or team of professionals. Not stockbrokers, but mutual fund managers.
12. If you're scared of underperforming the market, buy index funds. Which index is the question--large-capitalization, mid-cap, small-cap, value, growth, etc.
13. Unless you're really insecure, use online brokerages to keep costs down. This is especially true if you're a trader as opposed to an investor.

[DJBeasties]

If there were such a formula, the discoverer wouldn't be selling it for $99.95 or $499.95 a year. Even the best get it wrong sometimes, including the Great Investment God Warren Buffett. The only one who never showed a loss was Bernie Madoff, and look how that turned out.

I'm certainly no expert; the improvement in my overall portfolio since I started investing again 15 months ago has largely been driven by the overall market.

Here are a few tips, though--

1. Never commit a huge percentage of your investment funds to one stock. Diversify.
2. A variation on an old Peter Lynch rule--never buy a stock whose product you don't understand. In my case, this covers a lot of "high tech".
3. Take calculated risks, but never more than the far limit of your comfort zone. You want to make money AND sleep well at night.
4. There's something to be said for "boring" companies that just keep on chugging. The key with these stocks is to...
5. ...reinvest your dividends.
6. Don't be afraid to take short-term profits, even if they're taxed at a higher rate than long-term gains. Obviously, this doesn't apply in Hammer's case, since his cash is in his IRA.
7. Don't be afraid to not sell, since long-term gains get more favorable federal tax treatment.
8. Remember that cash isn't earning diddly right now. This isn't the 1980s, for sure.
9. Leave a small percentage for pure speculation.
10. Establish sell points, both high and low, for most if not all of your stocks. However, you don't necessarily have to sell ALL of a position at that point. I like the idea of selling half and setting new numbers, high and low.
11. There's no shame and sometimes a lot of honor and profit in saying, "I don't know", and leaving your decisions to a professional or team of professionals. Not stockbrokers, but mutual fund managers.
12. If you're scared of underperforming the market, buy index funds. Which index is the question--large-capitalization, mid-cap, small-cap, value, growth, etc.
13. Unless you're really insecure, use online brokerages to keep costs down. This is especially true if you're a trader as opposed to an investor.

awesome! Thank you DQ.

[Fresno Bob]

I've been in and out of OREX twice now in the last three weeks, took the profits today and bought Nokia and Goodyear

[revo]

I've been in and out of OREX twice now in the last three weeks, took the profits today and bought Nokia and Goodyear

Ummm, that stock was $11 on 1/31 and then opened at $2.30 on 2/2 -- then today went to $4. I'm not sure that's a good recommendation!

[Fresno Bob]

I bought it at 4 in Dec, sold at 9 the end of Jan, bought it back on Feb 2nd at 2.40, and sold it today at over 4, what's not to like!

[onejayhawk]

What is the formula for picking great stocks?

1) Build time machine
2) Go forward 20 years and buy WSJ
3) ...

Since this is in an IRA, have you considered doing covered calls? It requires a self managed account, but you should get one of those anyway, and put all your investments in it. It can be labor intensive, but that part should appeal to your fantasy instincts. It is also a very conservative strategy, suitable for an IRA.

Here is a primer. http://www.optionseducation.org/stra...vered_call.jsp

J

[Mithrandir]

How do you guys handle your transactions? I assume online. Who/what service do you use/recommend?

Thanks.

[revo]

What is the formula for picking great stocks?

I'd recommend to anyone reading "The Little Book That Beats the Market." Very straight-forward strategy of using stock price & return on investment to come up with some solid picks. If you combine that in conjunction with future earnings estimates and accelerating sales growth, you should be able to find some winners.

[Grinch]

I'd recommend to anyone reading "The Little Book That Beats the Market." Very straight-forward strategy of using stock price & return on investment to come up with some solid picks. If you combine that in conjunction with future earnings estimates and accelerating sales growth, you should be able to find some winners.

or you can buy a dartboard......



only kidding, Ed knows a bit about this...

[Hammer]

Check out the 1 yr on silver ETF (ticker SLV). Talk about a winner. Up another $1.35 today.

[revo]

Check out the 1 yr on silver ETF (ticker SLV). Talk about a winner. Up another $1.35 today.

you can thank me for recommending it to you when it was $25.....

[Hammer]

you can thank me for recommending it to you when it was $25.....

$26 but lets not quibble shall we?