Quote:
Originally Posted by almost retired Scotty
I'm a Portfolio Manager and I've been a portfolio manager for 14 years and I've been a broker for 30+ years.
I've seen many different ways to invest badly in my time but the easiest way to lose is to invest emotionally. People naturally are most comfortable buying when times are good and the stock is up and it feels good to sell and end the pain when the stocks are falling. For me the solution is to invest only when you can clearly see a bargain. You must be able to aproximate a fair value for a company so you can know when to buy and when to sell.
It is not a simple enough thing to put into a short post but it can be done reliably enough. With wide diversification the occasional value traps are more than offset by the majority of stocks reverting to normal values from depressed prices.
The market can be beaten. Many investors do so. I've done it by 2% + per year over the past ten years. It adds up to a lot over time.
For a good simple overview of the value philosophy I can refer you to a Buffett article from the 80's called the superinvestors of graham & dodsville. This article started me on my path of investing and it is as relevent today as ever.
Scotty
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This is why I use options. Find the value stock at a bargin and then by selling puts get paid to buy the stock at your price if you get put the stock and pocket the premium either way