I think I am a retail investor, but I don’t follow the process as David describes in this great post . David was head of Yahoo Finance and now our head of product at Stocktwits.
My purchases do not move stocks. I don’t have to keep them secret. I like talking about them after the fact because I can. It helps me stay on top of the products and the mood surrounding the company and industry.
I keep lists. A lot of scribbled lists, some on stickies on my computer screen. Most I lose or just throw away the following week. The whole process of owning bits of company paper has gotten easier for me as I have gotten older and simplified the reasons I even want to own stocks and the reasons for buying them.
I like strong markets with many leadership groups and I generally buy into strength, sell into strength and get stopped out in periods of extreme weakness. The stocks I end up owning are onces that most people have heard of. The price is at or near an all-time high and I believe there is a catalyst that will drive the price higher. It’s not a perfect system, but the process forces a level of gardening/pruning that just naturally gets me back in the prospecting mode.
As I think longer term and bigger trends, my daily walks on the ocean have further solidified the way I do things. Supply and demand drives prices, but I try and take that out of my decision making and thought process. As a small investor I can’t control the supply and demand so I need to find big trends and recognize catalysts. I also rely on pattern recognition and the basic belief that all trends end, generally fast. As I watch the ocean rush in towards me and try to position my feet at the spot where the rush ends I am reminded how hard that is to do without taking in all the information around me and the amazing cycle and push of the ocean. The markets behave in much the same way. I am glad I try to ride in with the tide and step off early than stand waiting and hoping that I am not run over by it.
I use blue painter’s tape to tape print-outs of charts and adages on my walls (which my wife hates at times–urgh) but brings to life in vivid detail a magically powerful insight that blurs over time… Just took this one down…. from the upper right edge of one wall… apologies to the contributor whom i ripped it off from as i don’t recall the source but apropo…
Csikszentmihalyi describes “flow” as:
What the sailor holding a tight course feels when the wind whips through her hair, when the boat lunches though the waves like a colt– sails, hull, wind, and sea humming a harmony that vibrates in the sailor’s veins. It is what the painter feels when the colors on the canvas begin to set up a magnetic tension with each other, and a new thing, a living form, takes shape in front of the astonished creator.
Three primary factors in going from zero to flow are:
1. Engaging in an activity with clearly defined goals.
2. Engaging in an activity where there’s a sense of personal control.
3. Finding a balance between activity levels and abilities.
While we can’t control the viscissitudes of the market(s), there are certain things we do control- the buy and sell decisions we make, how much research we do, etc— that we can use to (promote) the odds of success in our favor.
NOte: Again, apologies to the person who wrote this that i ripped it off from. But i did have it taped to my wall with blue painters’ tape… making internal sense now, more than ever before…
It may be cheaper as a retail investor to buy stocks than funds because their are no fees other than a commision when you buy a stock.