Patience is the rarest commodity on Wall Street. That's why it's so well rewarded.

With all the volatility in the stock market, it's easy to understand why investors don't have much patience. They buy a stock and watch it slowly, very slowly, inch its way higher. Then one negative earnings report comes out or bad news hits the market, and all gains go away, disappearing in a matter of minutes. The feeling is like watching a balloon slowly inflate, then getting hit by a pin. POP! Gains become losses, and the world looks less fun.

Continue reading Comfort Zone Investing: The Power of Patience

Comfort Zone Investing: The Power of Patience originally appeared on BloggingStocks on Sat, 23 Oct 2010 10:30:00 EST. Please see our terms for use of feeds.

Maybe you already are. Good for you. Most investors aren't. They're still waiting for the big pay off. The problem is that most of them don't understand that there are several ways to be rich. Here are three ways to get yours.

For most people it takes a long time to gather enough wealth to feel comfortable, a great way to define rich. It takes years of saving, investing, and sacrificing for future rewards. It's not easily done, but if done correctly, it will pay off.

Continue reading Comfort Zone Investing: Why Aren't You Rich?

Comfort Zone Investing: Why Aren't You Rich? originally appeared on BloggingStocks on Sat, 09 Oct 2010 10:30:00 EST. Please see our terms for use of feeds.

Buy and Hold. It's an investment strategy that Warren Buffett believes in, practices, makes a fortune with. But is that an antiquated methodology given the huge swings in the stock market we've all witnessed over the last several years? And how can it apply to the technology sector when every day a new, disruptive software or chip is introduced, revolutionizing the industry?

I would argue that Buy and Hold works just as well as it ever has, only it's not necessarily the right strategy for all sectors. Even with that exception, it can still work for individual companies within a sector such as technology. It all depends on the CEO, the board, and the ability to re-invent the company.

Continue reading Comfort Zone Investing: Is Buy and Hold Dead?

Comfort Zone Investing: Is Buy and Hold Dead? originally appeared on BloggingStocks on Sat, 03 Apr 2010 10:30:00 EST. Please see our terms for use of feeds.

Continue reading Serious Money: Keep your eyes on UPS and FDX

Serious Money: Keep your eyes on UPS and FDX originally appeared on BloggingStocks on Wed, 13 May 2009 14:40:00 EST. Please see our terms for use of feeds.

One of the best things about blogging is the instant responses we receive. There are many times you have to be thick skinned when receiving criticism or just tolerant of the foolish people who are either rude or unknowing.

This brings me to Mr. noitall (small 'n' his choice) and the following commentary which followed my recent post $700 billion is real money!

"Well, maybe I was labeled a cynic about 2 years ago when I said the Fed is in a "check-mate" situation, where they will have to choose between saving the stock market, real estate market, or the dollar, but it most likely fail at all three. I don't think I am a cynic, just a realist, and it looks like I was right. Another thing I will say is massive greed, ignorance, arrogance and our willingness to believe in fantasies allowed this to happen. Maybe when a "cynic" questions some of the well known "facts", like the "buy & hold" theory, people should listen & give it some thought, before they believe the "historical data" they are given."

Mr. n and I often find common ground and he is telling the truth when he writes that two years ago he predicted the speculation and down market we are faced with today. While I must say that I find his view bleak, it has to be said also that people should be better prepared for poor markets and tough times.

While Mr n. is correct today and maybe tomorrow, his bearish outlook may not hold true next week or month or year. He does not mention the folly of straight-line analysis, but I am sure he would agree that good times do not necessarily follow good times and for the same reason bad times to not proceed in a linear fashion either.

Continue reading Reader rants, blogger listens - what's this world coming to?

Reader rants, blogger listens - what's this world coming to? originally appeared on BloggingStocks on Wed, 08 Oct 2008 14:10:00 EST. Please see our terms for use of feeds.

It's been said many times before but, given how few people pay attention, it's worth repeating every time that the market takes a nosedive. History has demonstrated amply that investors who try to jump in and out of the market to avoid big declines find themselves achieving horrendously bad results than those who simply buy and hold.

I know -- with the Dow looking like it could open down 500+ points tomorrow, it can be scary. And maybe you'll be able to save yourself more anguish by dumping everything. But maybe not. It's impossible to know and the track record of investors who make that bet during market meltdowns is not good at all.

Bottom line: If you're in a panic over the market's gyrations today, do not trade! Take a walk. Play with your kids. Read. Go to the gym. Whatever! But making investment decisions in a state of emotional instability is never a good idea.

If the market's volatility is messing with your mind, I would strongly urge you to pick up a copy Your Money & Your Brain for some strategies on how to manage your emotions. So go pick up a copy, turn off your computer, shut off CNBC, stuff the Wall Street Journal in the trash, and chill out.

What to do when the market is tanking originally appeared on BloggingStocks on Mon, 21 Jan 2008 18:02:00 EST. Please see our terms for use of feeds.

A lot people look to religion or spirituality when things appear to be in chaos. But when the financial markets are looking out of control, investors should look up Vanguard Group founder John Bogle for reassurance.

BusinessWeek did just that, and Bogle was his same-old self: Investors should stay the course, ignore the volatility, but make sure that they have an adequate percentage of their portfolio in bonds. Of course, that right ratio depends on your time horizon and the size of your portfolio.

Bogle explains more intelligently than I can here why investors shouldn't do anything. As I said in my Volatile Market: Just ignore it, don't try to time it, individual investors (and the experts too) have a terrible record of timing the market. It's why the average investor's return is so much lower than the market's average return: We have a tendency to jump in and out at precisely the wrong times. What's the solution? Buy and hold!

I love Bogle's use of Shakespeare to describe the current market turmoil: "A tale told by an idiot -- full of sound and fury, signifying nothing."

Sound and fury: Bogle on the current state of the market originally appeared on BloggingStocks on Sun, 19 Aug 2007 15:10:00 EST. Please see our terms for use of feeds.

Investors make mistakes every day. If they didn't we'd all be as rich as Warren Buffett and we're not.

Here's a list of six such mistakes:

• Follow hot tips. As a blogger on AOL's BloggingStocks, I know that some of the most popular posts are the ones that repeat what Jim Cramer said on his TV show five minutes before the post appears on the blog. The reason these posts are so popular is because lots of people are Cramer Ditto Heads (CDHs). He tells them what to do and they do it. While some use Cramer as a starting point for further research, many are too willing to be led and are not inclined to do their own research.
• Don't know how to research fundamentals. One of the reasons people don't do their own research is because they don't know how. Specifically, one kind of research many people don't know how to do is understanding how a company -- whose stock someone wants to buy -- fits within its industry. Many people would not know how to begin answering fundamental questions such as: Is the industry profitable? Why? How is that profitability likely to evolve? What is the company's market share? If it's a leader, can it sustain that leadership? If it's behind can it catch up? What kind of cash flow does the business generate? How much cash flow is it likely to sustain in the future? Does the market recognize these future cash flows in its price?
• Don't know how to analyze technicals. Many times fundamentals have nothing to do with how a stock performs. For example, in December 2003, Martha Stewart Omnimedia Inc. (NYSE: MSO) stock started going up from $9 when its Home & Garden Television (HGTV) show was taken off the air to $36 in February 2005 when Martha Stewart got out of jail. During that time the company saw its revenues shrink 20% a year and its losses skyrocket. The reason the stock went up is a mystery. But I thought people who were loyal Martha Stewart Ditto Heads (MSDHs) bought MSO as a show of support. Many investors do not know how to analyze money flows that would provide clues to what is driving a stock up or down. This can cause them to buy when they should be selling, or sell when they should be buying.

Continue reading Six biggest investor mistakes

Six biggest investor mistakes originally appeared on BloggingStocks on Fri, 11 May 2007 18:39:00 EST. Please see our terms for use of feeds.

Continue reading Coca-Cola: no one ever went broke, holding Coke

Coca-Cola: no one ever went broke, holding Coke originally appeared on BloggingStocks on Sun, 04 Feb 2007 19:46:00 EST. Please see our terms for use of feeds.

Warren Buffett or James Cramer, who do we have more faith in? Is that a serious question? Probably not. I have been told that Cramer's TV show has 17 million viewers. I wonder how many people would tune in to hear what Warren Buffett has to say. Indeed, Mr. Buffett might make for very boring television. We have even noticed here at BloggingStocks that when Cramer's name appears in the headline, the stories seem to be more popular. And while Buffett's name certainly attracts attention, it does not seem he is as popular.

Comparing the two noteworthy investment gurus reminds me of the saying: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Cramer throws out dozens of picks and pans every week. Tracking all his commentary has turned into a web sporting event of sorts. When he changes his mind, I can only guess that those hanging on his every word get dizzy. I suppose that with Cramer, followers might get to eat on some days and on some they don't. I do know he has made some good calls. He has also made some unfortunate ones.

Continue reading Buffett or Cramer -- oh please!

Buffett or Cramer -- oh please! originally appeared on BloggingStocks on Tue, 30 Jan 2007 16:35:00 EST. Please see our terms for use of feeds.