According to the last Taking Stock post, only 4 units out of a total portfolio of nearly 42 units is kept aside for trading - and I wonder whether it is worth my time to actively explore short to medium term trading. Since almost all of my portfolio are in tax deferred accounts, I can take a very long term view of them - so I wonder whether it would be best for me to focus only on asset-allocation type of investing and buy-and-forget type of investing. Let go of trend-trading.
Although I am am sure that I can be successful doing trend trading, it perhaps needs more time on a more consistent basis than I have to spare.
I am going to look for more long term targets from now on. I need to get those 4 units working for me. The task now is to identify four good stocks as targets for these 4 units at one unit each. I currently have two dividend plays (INTC, VZ) and one combined play (DEO) stocks. It would make sense to look for some growth plays next.
On a related note, I need to clearly articulate my exit strategies in face of market upheaval. Which accounts do I continue to stay invested in an weather the storm? Which accounts I use to strategically exit with intention to re-enter at friendlier times? In such cases, what will be my exit and entry points? I will tackle these in a subsequent post.
Showing posts with label Buy and Forget. Show all posts
Showing posts with label Buy and Forget. Show all posts
Wednesday, December 5, 2012
Tuesday, November 20, 2012
Market Knows Best
Following my earlier discussion of INTC, I am reminded of my previous folly of thinking that I can outwit the market. I would see a stock with great fundamentals, that is going down, and would attempt to go against the market. I would win some time but would lose more often.
I finally hit rock bottom while trying to catch a falling knife with amazing fundamentals (low PE, good dividends, great growth prospects). I was so sure in my evaluation of the company that I continued to buy as the stock kept going down. By the time I reached my risk tolerance and got out, I had lost big - BIG. That was the end of my investing based on fundamentals. Since then I got into either do a buy-and-forget or when you trade, trade based solely on price and price history - no other factor - otherwise known as Trend Trading.
Using only price to make trading decisions is not as arbitrary as it sounds. The Efficient Market Hypothesis does state that all the information available to the market is already baked into the price - so there is no sustained advantage to be gained from looking at any other factor. Plus, in today's hyper-information age, the Market as a whole surely has much more information than a single investor, however gifted.
So, buy-and-forget for long term investing; only price based trend trading for short and medium term trading. This seems to be working for now.
Picasso, Guernica
I finally hit rock bottom while trying to catch a falling knife with amazing fundamentals (low PE, good dividends, great growth prospects). I was so sure in my evaluation of the company that I continued to buy as the stock kept going down. By the time I reached my risk tolerance and got out, I had lost big - BIG. That was the end of my investing based on fundamentals. Since then I got into either do a buy-and-forget or when you trade, trade based solely on price and price history - no other factor - otherwise known as Trend Trading.
Using only price to make trading decisions is not as arbitrary as it sounds. The Efficient Market Hypothesis does state that all the information available to the market is already baked into the price - so there is no sustained advantage to be gained from looking at any other factor. Plus, in today's hyper-information age, the Market as a whole surely has much more information than a single investor, however gifted.
So, buy-and-forget for long term investing; only price based trend trading for short and medium term trading. This seems to be working for now.
Picasso, Guernica
INTC
Intel is dropping like a rock - down 3% today. I have 1 unit invested in INTC as a buy-and-forget. As it is a buy-and-forget, and I don't see a long term problem with INTC, plus the fact that the dividend yield is strong (4.5%); I am not worried.
However, it does feel like we might soon have a great entry point for INTC. There seems to be a strong support around $18-$20 - so if it bounces off of that level then I will consider it as a trend trading target.
This is how its looking right now - a 2 year chart to clearly show the support around $20:
Hokusai, The Great Wave off Kanagawa
However, it does feel like we might soon have a great entry point for INTC. There seems to be a strong support around $18-$20 - so if it bounces off of that level then I will consider it as a trend trading target.
This is how its looking right now - a 2 year chart to clearly show the support around $20:
Hokusai, The Great Wave off Kanagawa
Sunday, November 18, 2012
Investment Strategies: Buy and Forget
This is the simplest of Investment Strategies that I use - buy something good and forget about it for a long time. Let the market do its magic. Ideally, one would want to buy a growth stock and hold for the growth to materialize. However, it is difficult to pick a good growth stock that will maintain its momentum. So, I am have been a little conservative with my stock selection for Buy and Forget - I have gone for high dividend picks that are market leaders in their industry.
Current I have the following Buy and Forget selections:
- Durer: a 2050 Target Date Retirement Fund
- Klimt: a Fixed Rate Bond Fund, the account is Current
- Bruegel: DEO
- Turner: INTC
- Renoir: VZ
A total of 7 Units.
It is good to have a part of the portfolio in a position where I don't have to stress over how to manage them. I am looking to transfer over more of my unused cash towards Buy and Forget opportunities - perhaps a more growth oriented choice next time.
Van Gogh, The Potato Eaters
Van Gogh, The Potato Eaters
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