While institutional investors are going bonkers over Wall Street and its constant switching between bull and bear markets, I’ve done pretty well so far. In fact, on Monday I hit a milestone with my investments – I reached over a 100% gain. For those of you who are not mathematically inclined, that means that (for example), I invested $10 into a company and now that investment is worth $20. And I think I’ve put together a decent strategy for this success.
My strategy, simply, is to invest in what I know and stick with the basic fundamentals of investing in the stock market. For example, anyone who has been trolling around my network of websites for a while knows that I know a little something about professional wrestling. I’ve been keeping an eye on WWE’s stock performance for years. My study has shown me that the stock, generally, is cyclical around WrestleMania. In other words, the stock usually goes up a little bit around that time of the year and then falls after the show and its hype go away. With that in mind, I bought a bunch of WWE when it was in its lull and then waiting for WrestleMania time to sell. Easy enough, right?
But my strategy hasn’t really been the traditional “buy low, sell high,” rather it has been to take a reasonable amount of risk on those companies which are showing some resilience in the current market like Ford. In December when Ford went to Congress with hat in hand saying that it needed more funds, I wouldn’t invest in the company. But as soon as they came out with projections that showed they could sustain their business without a bailout I put a bunch of money into their stock. The total of my investments in Ford are up 157% as of this writing (and the stock is even down when this post is being written).
I did the same thing with Sirius XM. I know what their product is and enough about their financials to know that this company could be a real threat once it clears up its debt obligations so I invested a ton of money in the stock when it was trading at 14 and 16 cents. The stock now routinely trades in the 40 to 50 cent range and I expect it to trade even higher in the coming months and years. Not a bad deal overall, huh?
But I’m also investing in companies like Barnes & Noble. The difference with Barnes & Noble and the other companies is that I’m not looking so much for an increase in the stock price with this company, but rather I’m looking to acquire their stocks so I can enjoy their quarterly dividend (which, last time around, was a quarter per share). Earning 25% on your investment each quarter is nothing to scoff at – I’ll take it.
I guess the other difference between me and the stereotypical investor is that I’m not dropping huge gobs of money into the market. Where most people think that the typical investor is putting in tens of thousands of dollars, I’m content putting in just a few hundred every few weeks (which has now built me up to a few thousand overall).
I always keep in mind, though, what else I might use that money for instead of investing. For example, if I’m buying $100 worth of Barnes & Noble I might have otherwise used that money for a night out at the bar or a night down in Atlantic City. In the long run, putting the money in the market is a much smarter decision. At least I think so.
This isn’t a suggestion for everyone out there to jump into the market, but I would encourage everyone to give it some thought. If you would otherwise blow the money on useless stuff, then why not?