Seeking advice regarding traditional/ long term stock investing

mizugori

Newbie
4 0
I would greatly appreciate some general insight regarding investing in stocks. I should note that I am primarily interested in medium to long term gains - not day trading.

Some background for context:

I have been interested in the stock market since I was a kid. I read books and articles about it, took a few online classes, etc - I tried investing in stocks a few times but I never had any luck with it. I never lost a fortune but I usually lost a small amount. However, I never really had the money to invest seriously.

The longest position I ever held was Ford which I bought at ~$14/share (which was cheap at the time, I think in 2009) and held for several years. That POS stagnated, and declined, and stagnated, and even despite having it automatically reinvesting the dividends, I lost money overall by the time I sold. News would constantly come out like 'Ford is likely to get a huge military contract' or 'Ford's new mustang is a breakout success' etc etc etc - yet the stock simply did not respond.

I do usually make a decent return on my 401k & IRA investments, and a few years ago I started buying mutual funds every few months and over about 2 years I made roughly 15% on those, then had to sell them to provide some of the down payment on a home.

Now I am finally in a good place financially, and I would like to invest in stocks and mutual funds to grow my available capital. It's also a losing proposition to hold onto cash right now. However, the more I hunt for the right investments, the more I feel like I just don't understand the market.

Everything I read years back essentially preached the traditional stock market approach - if you buy stock in reasonably established, sound companies, they should go up steadily over time. So buy stuff like IBM, Ford, etc and expect to make about 10%+. (This claim that decent companies go up 10% or better over time is cited in so many places it's not even funny.) They also credit this type of investing for making many of the most prolific investors wealthy. (Again every book seems to reference Warren Buffet investing in Coca Cola as a prime example of this type of reasonable, steady, long-term profitable investment strategy.)

I have not found this to be true at all, at least not over the last 20 years or so. I have looked at all kinds of companies like Verizon, ConEdison, ExxonMobil, AT&T, Ford, GSK, etc - yeah that's not what happened at all. If you look at their graphs they are not slowly and steadily going up over time.

In general I am starting to feel like the entire market has changed since somewhere around the early 2000s, and that mentality just doesn't work anymore. Am I wrong?

I have looked at a number of companies in detail and it just really seems like stocks go up and down more based on hype and innuendo, rather than actually running a sound business and being a good value. (Thanks social media!) How is it possible that stock in a company like Verizon, which has completely dominated the US cellphone market for arguably 20 years, hasn't steadily gone up over that same timeframe? They also had FIOS, which was immensely popular - buildings in NY would basically offer their first born children for the privilege of getting FIOS installed. It doesn't seem like their stock noticed though.

ConEd is another mystery to me - they have a complete monopoly over much of NYC for electricity and natural gas supply, and if their customers don't pay they can turn off their utilities - what other business has such an effective way of guaranteeing receipt of payment? I guess somebody should tell their stock this.

Don't even get me started on GameStop - they are basically the next Blockbuster. There is no logical reason to believe they will survive much longer, as video games are now available to download. This offers huge advantages over having to travel to a store in person to buy the game on physical media, which is prone to getting damaged or lost. Plus you don't need expensive retail storefronts to sell downloads. And you don't end up with a bunch of unsold copies when the game stops selling. But... enter Reddit and boom, it rockets up hundreds of dollars despite the company being in dire straits and having no sound business plan for the future.

I apologize for the long post! I would sincerely appreciate any guidance. I just want to invest and make a decent return - I am not expecting to put 5k into a company and have it turn into 100k a week later. I just want to achieve 10% or better gains annually, ideally investing in companies I have actually heard of.

Thanks for your time.
 

1nvest

Well-known member
308 109
I would greatly appreciate some general insight regarding investing in stocks. I should note that I am primarily interested in medium to long term gains - not day trading.

Some background for context:

I have been interested in the stock market since I was a kid. I read books and articles about it, took a few online classes, etc - I tried investing in stocks a few times but I never had any luck with it. I never lost a fortune but I usually lost a small amount. However, I never really had the money to invest seriously.

The longest position I ever held was Ford which I bought at ~$14/share (which was cheap at the time, I think in 2009) and held for several years. That POS stagnated, and declined, and stagnated, and even despite having it automatically reinvesting the dividends, I lost money overall by the time I sold. News would constantly come out like 'Ford is likely to get a huge military contract' or 'Ford's new mustang is a breakout success' etc etc etc - yet the stock simply did not respond.

I do usually make a decent return on my 401k & IRA investments, and a few years ago I started buying mutual funds every few months and over about 2 years I made roughly 15% on those, then had to sell them to provide some of the down payment on a home.

Now I am finally in a good place financially, and I would like to invest in stocks and mutual funds to grow my available capital. It's also a losing proposition to hold onto cash right now. However, the more I hunt for the right investments, the more I feel like I just don't understand the market.

Everything I read years back essentially preached the traditional stock market approach - if you buy stock in reasonably established, sound companies, they should go up steadily over time. So buy stuff like IBM, Ford, etc and expect to make about 10%+. (This claim that decent companies go up 10% or better over time is cited in so many places it's not even funny.) They also credit this type of investing for making many of the most prolific investors wealthy. (Again every book seems to reference Warren Buffet investing in Coca Cola as a prime example of this type of reasonable, steady, long-term profitable investment strategy.)

I have not found this to be true at all, at least not over the last 20 years or so. I have looked at all kinds of companies like Verizon, ConEdison, ExxonMobil, AT&T, Ford, GSK, etc - yeah that's not what happened at all. If you look at their graphs they are not slowly and steadily going up over time.

In general I am starting to feel like the entire market has changed since somewhere around the early 2000s, and that mentality just doesn't work anymore. Am I wrong?

I have looked at a number of companies in detail and it just really seems like stocks go up and down more based on hype and innuendo, rather than actually running a sound business and being a good value. (Thanks social media!) How is it possible that stock in a company like Verizon, which has completely dominated the US cellphone market for arguably 20 years, hasn't steadily gone up over that same timeframe? They also had FIOS, which was immensely popular - buildings in NY would basically offer their first born children for the privilege of getting FIOS installed. It doesn't seem like their stock noticed though.

ConEd is another mystery to me - they have a complete monopoly over much of NYC for electricity and natural gas supply, and if their customers don't pay they can turn off their utilities - what other business has such an effective way of guaranteeing receipt of payment? I guess somebody should tell their stock this.

Don't even get me started on GameStop - they are basically the next Blockbuster. There is no logical reason to believe they will survive much longer, as video games are now available to download. This offers huge advantages over having to travel to a store in person to buy the game on physical media, which is prone to getting damaged or lost. Plus you don't need expensive retail storefronts to sell downloads. And you don't end up with a bunch of unsold copies when the game stops selling. But... enter Reddit and boom, it rockets up hundreds of dollars despite the company being in dire straits and having no sound business plan for the future.

I apologize for the long post! I would sincerely appreciate any guidance. I just want to invest and make a decent return - I am not expecting to put 5k into a company and have it turn into 100k a week later. I just want to achieve 10% or better gains annually, ideally investing in companies I have actually heard of.

Thanks for your time.
Take a look at a book from Stan Weinstein. It focuses on which stocks to choose and when. Its technical analysis however, so where you may in the past looked at value investing, this is about defining what the trend is, and entering into that trend. Its suitable for all markets.
It looks at the weekly timeframe which might be right up your street
It will still take time, work and practice to get it right but it gives you a really solid base from which to work from
 
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ARBinstruktor

Junior member
33 4
I would greatly appreciate some general insight regarding investing in stocks. I should note that I am primarily interested in medium to long term gains - not day trading.

Some background for context:

I have been interested in the stock market since I was a kid. I read books and articles about it, took a few online classes, etc - I tried investing in stocks a few times but I never had any luck with it. I never lost a fortune but I usually lost a small amount. However, I never really had the money to invest seriously.

The longest position I ever held was Ford which I bought at ~$14/share (which was cheap at the time, I think in 2009) and held for several years. That POS stagnated, and declined, and stagnated, and even despite having it automatically reinvesting the dividends, I lost money overall by the time I sold. News would constantly come out like 'Ford is likely to get a huge military contract' or 'Ford's new mustang is a breakout success' etc etc etc - yet the stock simply did not respond.

I do usually make a decent return on my 401k & IRA investments, and a few years ago I started buying mutual funds every few months and over about 2 years I made roughly 15% on those, then had to sell them to provide some of the down payment on a home.

Now I am finally in a good place financially, and I would like to invest in stocks and mutual funds to grow my available capital. It's also a losing proposition to hold onto cash right now. However, the more I hunt for the right investments, the more I feel like I just don't understand the market.

Everything I read years back essentially preached the traditional stock market approach - if you buy stock in reasonably established, sound companies, they should go up steadily over time. So buy stuff like IBM, Ford, etc and expect to make about 10%+. (This claim that decent companies go up 10% or better over time is cited in so many places it's not even funny.) They also credit this type of investing for making many of the most prolific investors wealthy. (Again every book seems to reference Warren Buffet investing in Coca Cola as a prime example of this type of reasonable, steady, long-term profitable investment strategy.)

I have not found this to be true at all, at least not over the last 20 years or so. I have looked at all kinds of companies like Verizon, ConEdison, ExxonMobil, AT&T, Ford, GSK, etc - yeah that's not what happened at all. If you look at their graphs they are not slowly and steadily going up over time.

In general I am starting to feel like the entire market has changed since somewhere around the early 2000s, and that mentality just doesn't work anymore. Am I wrong?

I have looked at a number of companies in detail and it just really seems like stocks go up and down more based on hype and innuendo, rather than actually running a sound business and being a good value. (Thanks social media!) How is it possible that stock in a company like Verizon, which has completely dominated the US cellphone market for arguably 20 years, hasn't steadily gone up over that same timeframe? They also had FIOS, which was immensely popular - buildings in NY would basically offer their first born children for the privilege of getting FIOS installed. It doesn't seem like their stock noticed though.

ConEd is another mystery to me - they have a complete monopoly over much of NYC for electricity and natural gas supply, and if their customers don't pay they can turn off their utilities - what other business has such an effective way of guaranteeing receipt of payment? I guess somebody should tell their stock this.

Don't even get me started on GameStop - they are basically the next Blockbuster. There is no logical reason to believe they will survive much longer, as video games are now available to download. This offers huge advantages over having to travel to a store in person to buy the game on physical media, which is prone to getting damaged or lost. Plus you don't need expensive retail storefronts to sell downloads. And you don't end up with a bunch of unsold copies when the game stops selling. But... enter Reddit and boom, it rockets up hundreds of dollars despite the company being in dire straits and having no sound business plan for the future.

I apologize for the long post! I would sincerely appreciate any guidance. I just want to invest and make a decent return - I am not expecting to put 5k into a company and have it turn into 100k a week later. I just want to achieve 10% or better gains annually, ideally investing in companies I have actually heard of.

Thanks for your time.

You are at the right place, but at the wrong time.
Valuations are rich, and they might get richer and you might miss opportunity after opportunity.
But you also might end up with a loss of 30%. Just look back a year ago.

My advice: Invest in the broad market, at least 80% of your funds, BUT diversified in time, using some kind
of cost averaging approach.

example: go for SPY, invest 5% each month in SPY for the next 16 months, you could use a SPXL or UPRO
for the first 3 months and a SSO for the following 3 month and then use the simple leverage. Any leveraged position
has to be converted into a simple position after at least 2 months.
By this way you can profit from a potential upside, by controlling your losses in a potential crash.
In case of crash (-30%) during this period, I would reduce the remaining number of investment installments to their half, ie doubling the investment percentage (10% per month plus an extra crash allotment of 10% to 20%)
NB: numbers don`t add up to 100%, but I hope your get the meaning

Depending on your risk appetite you could do the same with a QQQ, or some FANG etf.

The most important aspect is, that it is a ROUTINE, you can define rules and realize them without great brainwork. You are always in the market, but with small efforts.

As this is boring, very boring, you have another 20% of your funds as speculation wallet. You are allowed
to invest and to lose 1% point on any clever investment you might have found. 1% not basispoint more. So you can spend your time and efforts on finding 20 interesting bets. On these bets, I would place a trailing stop loss of 30%, and take profit at 100% (by cutting the current position into half). This is money your allowed to risk, but not to lose!

In 10 years you can call me and tell me about your experience.

happy spreading
 

yiehom

Active member
153 2
Here are some numbers/ratios of Verizon. For a value investor, I find there are too many stay aways

Revenues : 3-Year Growth: 0.59

Net Income : 3-Year Growth: -16.06

Free Cash Flow 2021 : -24.0070 Bil

Debt/Equity : 2.28
 

yiehom

Active member
153 2
Consolidated Edison's numbers are no better: No growth in revenues and earnings, negative cash flows, overwelming debts...

Rev 3-Yr Growth 0.59

Net Income 3-Yr Growth -10.29

Free Cash Flow 2021 -1.7230 Bil

Debt/Equity 1.14
 

camarint

Newbie
4 2
I advise you to pay attention, not too large companies, but young companies. There are many promising and fast-growing companies on the market right now which can bring you good profits quickly. You have to analyze the market and stock up on solid capital because the risks in such investments are much more significant than those in large companies: more risks - more profits. My view is that it's all legitimate. That said, I think the Liquid net worth of these firms' stocks is much higher. Allocate your finances wisely. Your success in this challenging business directly depends on it. I wish you good luck!
 
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