Curious Investments Prospective
I named the last post “Retrospective (Part 1)” but I realized that this next post is more a look forward than a look back. And, so, Part 2 is actually a Prospective. More on the topic at hand, where are we going to go now? After two years playing with small amounts of money and experimenting with different stock picking strategies, it’s time to get serious. The money in my brokerage account is going to become part of a larger personal finance plan and it’s going to hurt more to lose 20-25% in 6 months as I have in the first half of this year (in Portfolio A). Before you lose faith in me (and to console myself), do remember that I was up over 50% in Portfolio A through the last 5 months of 2007.
Anyways, it’s become clear to me that an active trading strategy is not for me. Even in the last year, it’s been difficult to separate my investing persuasion from what should have been a short-term, technical strategy leading me to creating investment theses for what should have been short term positions put into Portfolio A. Perfect examples include my botched trades for Humana, Google, and Apple. All three could have been huge winners. Instead, Humana tanked and lost nearly 30% of its value. Google is trading at barely 5% above my purchase price (down from a 25% gain). And, I’ve sat in Apple for nearly twice the amount of time I expected to (though thankfully still with a 20% gain). In addition, after years of trying, I have yet to find a magic formula for timing the market on my sells. All this points to at least some disenfranchisement in my ability to be a good short term trader for long periods of time.
In the coming months (and maybe even years), you’re going to see a more refined investment strategy take hold. In theory, my new strategy will be focused on long term investments (1 year +) and, hopefully, include a true cash position for use when markets someday go bullish again (some quasi-trading). This core-satellite approach is somewhat reminiscent of a fellow blogger whom I admire, David Gordon of The Deipnosophist. Though, I can’t say that I will be as growth and tech focused as he is. Of course, I am determined to be more disciplined in my selling technique – implementing both valuation based and return based sell targets for all new positions (to be described further in later posts) and, in turn, become more fundamental in my approach to investing than I have been in the past. Basically, I’m committing myself to refining the strategy employed by Portfolio B over the course of these last few years as opposed to that of Portfolio A.
On this blog, readers can expect an increasing focus on general ideas in investing and personal finance as opposed to strict stock-speak. I also believe that my transparent portfolio of investments will become a more practical and beneficial example of real investing decisions. And, as I’m finally moving out of academia, I hope to replace time that I used to spend studying and doing problem sets with time reading more books which will mean more book reviews and more timely market commentary. Here’s to a new era with The Curious Investor!
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