My Investment Philosophy and Visa 30 comments
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Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information on this website.
With those words, I have been starting virtually every one of my entries on this blog. I do this because they are accurate words. These words describe my own professional expertise - which is not in investment management or analysis, and yet do not reflect my own personal experience with investing or writing about stocks on this blog.
Recently I wrote about my short-term holding of Visa (V) stock. It began with my entry on Visa which can be found here, that was subsequently picked up and packaged by Seeking Alpha, and can be found here. I initiated my amateur 'coverage' of Visa with a "Buy" rating.
Unfortunately, just two weeks later, my Visa shares demonstrated weakness....along with the rest of the market....and hit my 8% loss limit. I sold the shares. I discussed this on my blog here, and it was also picked up by Seeking Alpha here.
With my own sale of shares for my idiosyncratic technical reasons, I did not feel it would be ethical to maintain my "Buy" rating on this stock, and reduced it to a "Hold".
Unfortunately, my own approach to investing is neither famous nor well-understood in the world of Seeking Alpha. I do believe that my regular readers understand my approach. I do not even know whether my particular investment strategy will even be successful or profitable over the long haul. I do not know whether it will be more profitable than simply buying an index fund.
I do know that it makes good sense to me.
I shall not be buying stocks because they are fad stocks.
I shall continue to listen to my portfolio by 'sitting on my hands' on sales of stocks on losses and looking to add to my equity exposure when my stocks hit appreciation targets.
I shall limit my losses when they hit sale points that I have established at the time of purchase.
In one comment on Seeking Alpha I was accused of using my 'calculator' instead of my brain or intuition in making a sale decision. I regret to inform that writer and any other commenter that I shall continue to use my calculator to make sale decisions. That is the heart of my approach.
There is no doubt that I shall miss many of the great moves of the stock market. But I shall not be in love with any of my investments to the point that I shall over-ride my own thought processes and strategy with infatuation.
In 1942, before becoming President, it has been reported that Harry S. Truman, as noted in The Soda Springs Sun had said:
Favorite rejoinder of Senator Harry S. Truman, when a member of his war contracts investigating committee objects to his strenuous pace: 'If you don't like the heat, get out of the kitchen.'
I am not prepared to get out of the kitchen. I can take the heat.
Time will tell whether my approach will be any better than a random selection of stocks.
I am glad that some of you have chosen to come along with me on this journey. I shall continue to try to make rational decisions that are not based on any affection for any stocks or dislike of any investment. Instead, my decisions will be based on a systematic identification of potential investments, a clear management of each purchase, and a thoughtful response to the movements of my own portfolio in determining my next action in response to the market.
Thank you for coming along with me.
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This article has 30 comments:
They must be deaf and dumb mutes..
Boring as hell...Useless as hell...Who is this turd ?
TERRY TKSK53
@#%^%&**()&^^&...
Visa is a "can't lose" company if you're willing to ride it out. The company has no risk from defaults because they don't extend credit. The banks take the risk. All Visa does is act as the "toll collector". Most people pay bills or make purchases with their debit/credit cards. It took me almost six years to burn through a box of 200 checks because of my Visa debit card. I made a car payment online today using my Visa debit card. On almost all online purchases I use my Visa credit card for extra protection. Plastic has replaced cash in so many aspects of our lives. That's why I say that there should be good common sense exceptions to the 8% rule. In the case of Visa, you're gonna be kicking yourself in another year for getting out so soon. Right now is a good time to get back in. During a slow economy we need to put our money somewhere. Energy stocks are a good bet when the company is government subsidized. But for something with a real value that can stand on its own it doesn't get any better than Visa.
if you ever buy ma, you will get instant heart attack due to its swing.
and that swing gives amazing trading opportunities. sitting in home with 100k in cash you can play ma and make 2k everyday. of course if you buy and it goes less, then wait it out for a couple of days and ma will always bounce back.
same with visa. market loves aapl and v like nothing else. so in v also you can go long/short like ma and make a killing.
note that for long position, both of these are huge buy and hold. 5%, 8%, 10% cut loss kind of thing is just not going to help you in long term at all.
check my blog matrader.blogspot.com if you want to play ma.
you want to know how much i spent on my visa and mastercard this weekend just for essential purchases. see the list.
sams club - 120 dollars
brake pad change - 240
groceries in safeway/kroger - 82
gas - 74
note all the above were basic purchases. and i did not pay even a single dime in cash. i alternated between my visa debit and mastercard credit.
cash is dead, plastics are not.
Remember Mastercard.
www.derekchew.com/2008.../
Good luck on your blog.
I own v, tex, bgc. vdsi, c; loosing like hell entire June and not knowing what to do... If the respected community has particular opinion about any of these stocks (not about myself, can admit I am a dumb idiot, though made some money 06-07) please express.
I am on the same boat as you, I am holding v and c and did not do well in June for holding the stock. Now it depends on how much you purchase you Visa. My average cause for V is at 84.50 and in June, there are many days you can sell a cover call striking $85 for 0.80 to 1.00. This gave me a win-win situation, by selling the call, it actually reduce the cost per share, and should the call be exercisied then I would sold my stock with a marginal profit. Just my 2 cents.
boys trying to have a pissing contest.
Robert stay your course; modify your investment rules as you progress. As for the current market, my account is at 70% cash and growing. The economy will further degrade, and if Israel attacks Iran this summer the markets will slide much lower because of $225 oil and uncertainty.
Who cares about the name calling posts...just skip those and move on to the more serious ones...and I certainly don't have time to list my investment rules or my successes, but I can tell you without a doubt that if I had followed that rule this year, I wouldn't be up 22% while the market tanks.
I could not have said it better. I understand that many people follow strageties to the letter, but there should be room for exceptions when all research points to continued growth. We are in the middle of the strangest market I can remember and things are upside-down in terms of rationality, but if we stick with the data to guide our decisions, we have less risk of selling a good stock because of emotion, or because we didn't factor in exceptions to our particular trading strategy. That applies to any good stock. Just my opinion..
He sold the stock so rated it as "Hold" !!!
So when are you going to use the "Sold" rating...Amateur
Do us a favor dear editors and save us this kind of info from being publish...
As is often the case, sales of stocks are an indication of overall market weakness as well as weakness in the company involved. Thus, after selling a stock on a loss, as I did with Visa, I do not go and reinvest the proceeds into another company so as to risk compounding the losses. I wait for a partial sale of one of my own holdings at an appreciation target (what I call 'good news') which 'entitles' me to be increasing the number of my holdings (unless at my maximum of 20 positions).
Currently I am at 5 positions, reflecting the relative weakness, I believe, of the overall market. If I should sell a position now, at my minimum number of holdings, I do plan on replacing it with a suitable investment.
My own portfolio thus drifts between 5 and 20 positions in a fashion that I believe will reflect market tone without any calculations on my part. That is why I am referring to my own 'idiosyncratic' buy signals. They have nothing to do with the technical appearance of any chart, rather, they are due to sales of my own holdings at either appreciation or depreciation targets...what I again call sales on 'good news' or 'bad news'.
I hope this explains what I am trying to accomplish a bit better.
It is unfortunate that there are any investors who would choose to enter into name-calling and abusive comments to a fellow investor. I have modestly referred to myself as an amateur. But I have been blogging for over 5 years and have been writing about hundreds and hundreds of stocks on my blog.
Flip through all of the pages on my website and see what you think before you choose to pass judgment. I think many of you will appreciate the time and effort that has gone into my analyses.
With your experience, i dont believe your an amateur. I do believe that selling your visa share was an amatuer move. Something that i wouldnt expect from an investor with your experience. You have to look at the prospects and growth potential and not just simply 8% loss.
You didnt even give valid analysis on why you sold your shares. Simply 8% loss.
I sold my shares because they had incurred an 8% loss. That is my rule. I didn't even make that one up. I adapted it from William O'Neil of IBD fame.
www.investors.com/lear...
"Key Points To Remember
* The first sell rule is to get rid of any stock that falls 8% below your purchase price.
* It's critical to follow this loss-cutting rule regardless of how highly you value a stock. Personal opinions get in the way of smart selling decisions.
* The larger the loss, the higher the recovery you need to get back to the break-even level. (A 50% loss on a $100 stock, for example, requires a 100% gain to get back to $100.)
* Strong stocks sometimes initially retreat close to their buy point (as determined by the stock's chart pattern). This doesn't necessarily mean you have to sell, unless the stock goes 8% below the purchase price.
* Avoid making sell decisions based on tax concerns or commission rates."
My entire point, as you can see from today's market, that a sale at an 8% loss may be due to some intrinsic factor with something wrong with the stock or something wrong with the market itself dragging down all stocks. Either way, I prefer to step aside.
Was it wrong to only change my rating to "hold" while I had personally sold my shares? I don't think so. My own rating is based more on fundamentals rather than technicals. My own sale was based on my own entry point. I would suggest that we all could benefit from limiting our own losses in this fashion.
However, for me to change my rating to "sell" because I had incurred an 8% loss seems a bit far-fetched. Better to dip to a "hold" rather than leaving it at "buy". Just my own take on it I guess.
Simply an 8% loss was my reason for selling.
And I shall use that reason again in the future.
I do not understand the outrage, the disparaging comments bordering on abusive and disrespectful, that I received from many a booster of Visa shares because I was honest and straight-forward. A lot of these so-called experts could use a bit of straight talk as well.
I like Visa stock and believe that the long-term prospects are probably quite good. But I am very concerned about the immediate prospects for the market itself.
And that is why an 8% sale, as long as you don't go immediately and reinvest the proceeds, can be helpful.
Bob
The lesson: If you believe in a company and have done your research and homework you should trust your judgement and intuition. Dont follow an analyst or a calculator. The price of Visa will likely be $100 by end of the year. You will be kicking yourself for selling when the stock hits that price. In fact Visa will go to $150 in 2 years, with all the prospects and growth opportunity.
So while you will continue to use your calculator for your investment i will use my head and knowledge for investments, as should successful investors.
Dont get me wrong i leave my emotions on the side, i will dump a company quickly if i feel that the prospectives are not strong. But i dont simply dump a company b/c of temporary 8% loss. With the current market and volatility stocks may move up/down by 10%.
Reason why you are getting bashed on SA is b/c of your reasoning for selling a stock. YOu provided NO GOOD INSIGHT such as prospectives, growth, analysis, earnings, concerns of Visa...whether they be good or badd, to justify your decision........only 8% loss.
And readers on SA wants to hear "reasonings" so they get good insight in making investment. If i wrote a article and simply claimed i sold my stocks b/c of 8% loss without useful insight..... i would expect readers who took time to read my article to be pissed.
Nobody wants to read a useless article.
Absolutely yes without a second thought! That contradicts your "advice" at best. Whether based on a book, theories or quotes, a "hold" does not translate into a "sell" action on a stock. A hold means you believe in a stock on fundamental reasoning and your actions should follow your analysis.
What you are essentially saying is that, while you believe Visa is a good stock for long term investment, you are selling because of short term losses due to a mere 8% decrease. Does that even sound logical to yourself - considering you have probably a more experience amateur than I? :)
Are you sure you're not a politician? They too say one thing and then do another as you have done with your advice to investors versus your own personal investing actions. If you're not, maybe you should consider a career in politics.
I definitely would not consider you to be an "amateur" as you say. With all of your years of investing, years of blogging and giving advice to the masses, you are no amateur and should know better than to give out advice without backing up that advice.
I on the other hand am a true amateur since I have just begun to invest in stocks with the debut of Visa. Even I, in my amateur-ish experience could see that Visa is a once-in-a-lifetime opportunity. During the past few months V has had many a down day and never once have I thought about selling it. Why? Because like Adesai stated the fundamentals behind this stock are very strong. If I would have used an 8% loss all by itself w/o understanding more about the stock I'm investing in, then I would be kicking myself right now. Instead because I have learned about the fundamentals of investing in this stock and can see its potential I have made about 30% on my investment!!!!
Seeking Alpha has more screwballs than you will see anywhere related to Visa. My favorite comments go something like " O gee VWINNER you are the greatest" Although he changes his opinion on where Visa is every other day.
I will say for myself that I have never changed my opinion on V- in good times or bad. V is a winner.
Take a look at how V has done recently and then compare it to virtually any stock remotely connected to the financial sector and it is holding its own.
Where are my critics now?