Phase One Done -> Onward to Phase Two

7/20/2008 05:39:00 PM / Posted by Soullfire / comments (0)

Another boring tedious weekend has produced a revised smaller list of possible stock investments from both the long and short side.

Now that my list has been shortened, it's much more manageable. I've calculated estimated price targets as well as investment durations. Now all that's left is to lock in on one of the stocks on the list, and pull the trigger to buy.

This will be a true test of my analysis since I will be entering long positions in this Bear market. Even though there has been quite a bit of selling, the golden rule is "There is always a Bull market somewhere". =)

Now that the tedious part is over, I can move on to more interesting things like reviewing my current positions and making adjustments if necessary.

Time for a confession. I've been watching my short term positions closely, but not so much my long term positions. Admittedly, I moved the bulk of my funds into safer investments that don't need much tending, but I still need be more aware of my remaining positions.

The biggest mistake many people make is to enter an investment and just forget about it without keeping track of it's performance. Instead of "buy and hold" strategy, we can call this "buy and forget". As time goes on, some investments may not be performing as well so you need to be aware to make adjustments if needed. Your investments are the key to your financial freedom so it deserves your attention.

Taxes Done...Onward To Phase One

7/06/2008 05:15:00 PM / Posted by Soullfire / comments (0)

This 4th of July weekend was a fitting time for me to move forward with my investment planning. Celebrating our political freedom and combining it with my pursuit of financial freedom. =)

Right now I'm in the process of searching for and finding good investment candidates. This is easily the most tedious and time consuming part of the process, but very important and necessary for overall success. After all, you're not going to have much success if you start out from the gate with bad investment choices.

What makes this tedious? If I were to ask you to pick a few stocks that had good upside potential and low downside risk, what would you say? Well, if you're like most of my coworkers, you would say the name of whatever stocks you heard in the news or other people taking about, or what you're currently investing in without being able to explain much detail into their answer. And these are the folks that think they know something about stocks. The rest would just say "I don't know and leave it at that.

Those who limit their investment only to stocks they've heard about also limit their opportunities by a big margin. There are thousands and thousands of stocks out there- some going up, some going down and some not doing much at all.

Looking for good stocks in a field that large can easily be an overwhelming task. To narrow down the field, some will stick to looking at stocks in a certain sector like energy of financial stocks. I myself prefer to use scanning software when I've set up certain search criteria of what I'm looking for in a stock. The scan is run against all stocks in the market and usually spits out 200 - 500 stocks- a much more manageable amount of stocks to examine.

I narrow down the field further after looking over what came up in the scan to usually under 50 stocks. I take those 50 and put them in my "stockpicks" file for later use. As time goes on that "stockpicks" file gets bigger and bigger. It's from my stockpicks list when I get my final investment selections from. Currently, there are about 1500 stocks in the list.

I subscribe to the "timing philosophy" of stock picking where I believe that not only is it important to pick a good stock, but you need to purchase it at the right time. Even great stocks have down periods and you want to avoid buying stocks that have already made a big move up and are headed back down in consolidation. So from my stockpicks file, I cull the list of all the stocks that are in the ball park of good times to buy or short. This is the current stage that I was able to complete this weekend. I've been able to narrow down the list of current candidates to about 190.

Now I've got to look at the remaining stocks more closely with regards to their fundamentals and technical indicators. When I'm finished, I think I will have it narrowed down to 15 - 25 final candidates.

Tedious? Yes. Time consuming? Absolutely. Brain drain? Sure. But when all is done, I'll have a list of stocks I can readily invest in that come from me, rather than a dubious tip or recommendation from a so-called media financial guru or well intentioned but misinformed acquaintances. It also helps me find good stocks that few people have heard of since they aren't yet in the media spotlight.