Ralph,
By the way... welcome (belatedly) to the thread... and thanks for your posts.
I do have a different view on this style of investing. Maybe it's just me, but as an investor in individual stocks, I take a few things for granted. One is a good understanding of what my level of risk is, relative to the stocks I'm investing in, and the type of funds I'm investing. The money I use for individual stocks isn't cash I'll need any time soon (i.e. 5-20 years nominal), and as such I'm willing to experience a great amount of volatility. Paper losses, while undeniably ugly when viewed daily, don't cause me to lose sleep.
A second given is that unexpected/bad things happen to even the best companies. Yes, if you want to look at the Dow, it's taken a hit, but I'd venture a guess that the overall market is substantially lower now on the whole than those 30 stocks. This has been a large cap/blue chip bull market, and the second tier just hasn't done as well, or weathered the downturn as gracefully. That isn't to say that will always be the case... I'm not a proponent of 1 point equals a trend, and I can fully comprehend (and expect) the future to be different than the past. As such, by looking at companies with growing earnings (CCR, SEIC, STD) that have gotten beaten up, am I to blame JD for market hysteria?
We all have to form our own opinions on whether or not to invest, and I'd just as soon not have JD give in to market psychology and tell me STD is bad when it's growing like it is, and has such a great future story. The same can be said for ESF, or HKT, or a lot of other stocks. In my view, it comes down to what you believe or not. Not "believe in" as in what JD tells us necessarily, but "beleive in" as in what you've decided as a result of your own deliberations. I could have set a stop loss for STD, but I'd then have to pay capital gains taxes, and pick a re-entry point. I'd most likely hesitate and fail to get back in, making myself madder (and poorer) in the process than if I'd left it alone.
You typed something very telling..."On a practical level, it's about locking in gains and minimizing losses. JD has not minimized losses nor has he locked in gains." Ralph, this is a mantra... one of an investor with a very short timeline. I really think you ought to evaluate whether this was the type of investing you were looking for. To me, the term "fully invested" means investing the money that is a prudent portion of your overall portfolio, not every last penny. I'm really sorry to say that the last few sentences of your last message sound just like someone who bought into the current "investing is for the masses" hype the media has been shovelling the last few years, got a flyer in the mail, and figured that anybody could do this stuff...
Reality is that even the best investors can lose money on stocks, but the inexperienced ones usually lose a heck of a lot more before they get the hang of it. There is no magic formula... nobody can perfectly predict the future, and sooner or later you figure out how to filter all the forms of advice and data to make your own decisions.
DWB |
