Curious Investments Retrospective
It’s been nearly two years since I started the great adventure that is The Curious Investor. Along with my first foray into learning about stocks and investing, I started my Curious Investments portfolios as a way to try to make some money on my new endeavors and also to test the various strategies I was learning and sharing along the way. These started with Portfolio A, a technically driven strategy that was meant to be slightly more actively traded than normal, and Portfolio B, a more fundamentally driven strategy which looked for both growth at a reasonable price and value.
As I mentioned in my previous post, these two strategies are going to be closing down at the end of the month and Portfolio A will become a record of my “real life” stock investments. But, before I talk about what that means, I thought it’d be nice to share some of the things I’ve learned after running these two experimental strategies for two years.
Things I’ve Learned
- Sell for profit. Doesn’t matter how much or how little. Unfortunately for me, in my quest to attempt to extract every ounce of profit from a rising trend, my technical strategy often struggled. It’s easy to use indicators to pick a stock, but it’s dangerous to use them to sell. I used to scoff at people who used price targets and sold well before the end of a rally, but I now see just how important profit taking is. Because, often times, without a hard target, you’re not taking any profits at all.
- Be rational. There are many ways to make money in stocks. That’s why there are thousands of books written on how to pick the best ones to buy. In the end, the cards are stacked in your favor (markets tend to go up), so picking stocks is just a matter of applying some sound judgment. Both my technical strategy and fundamental strategy have had various levels of success over the last two years. As expected, the technical strategy has been much more volatile (and is currently down overall). While the results showed that I was more proficient managing a long term portfolio of fundamentally chosen stocks, a closer examination will show that the win percentage on my technically driven stocks might actually have been higher. Often times, I victimized myself by holding too long and not heeding my own advice on selling for profit (see rule number 1).
- Be disciplined. Whatever strategy you choose, choose the one that works for you and stick to it. Bouncing around buying stocks because they fit other people’s models of “good” stocks is a recipe for disaster. Understand what your doing and, as long as your making money, be happy. Trying to mix technical and fundamental strategies was quite difficult and I doubt I’ll do it again. It’s just hard to try to mesh the short term view of a technicalist with the long term views of a fundamentalist. And, no, there’s no such thing as “fusion” investing. See my post on trading vs. investing for more of an explanation on that.
Yup, just three very big things that I learned about over the last two years. I mean, in addition to the many posts on various investment topics and strategies that I’ve shared as well. But, I really do believe that in the end, stock picking a pretty easy thing to do as long as you follow a few simple tenets. Be rational, be disciplined, and sell for profit.
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