C’mon newbies — stop all this woulda-coulda-shoulda crap!

It’s time to repeat one of my core messages once again — there are no guarantees in the stock market.

Zero – zip – nada – none.

Period.

If you’ve got some years of investing or trading under your belt — you already know this.

But most of the people reading this particular forum — as opposed to my main business forum Cathleen’s Corner, which is now hosted on a private site at EnterActive Media — are newbies.

That’s why I tend to keep things a little more simple here.

I don’t dwell as much on puts, calls and options trades as much as I do at Cathleen’s Corner, because, quite frankly, it’s a bit over the heads for most readers here..

Therein lies the problem.

Many readers of this forum, who claim their intention is to be in the market for the long-haul as an investor, want a surefire-can’t-miss “If I just hold on to it for a year, it will likely go up” pick.

Although I block all the messages on this board — except for a few by EAM members with passwords — many so-called potential long investors here are already in a state of panic over the past week-and-a-half — and they haven’t even invested a single dollar in the market.

Unbelievable.

It makes me shake my head in frustration realizing that while they may be reading what I write — something tells me they’re not comprehending it — and are just scanning to the bottom to see what’s on my due diligence list.

I can’t tell you how many newbie investors have seen the sudden burst in the market and are throwing their hands up in the air that they missed out.

Let me state this very clear — if this is how you are feeling — you have a whole lot more homework to do before you ever invest a single dollar.

If you’re panicking because you think you missed a sudden pop in a stock — how in the world would you have been reacting if you had invested some hard-earned money and the market took a sudden nosedive?

Holy crap – I don’t want to be in the room with those people.

Here’s the thing:

If you liked the ABC company two weeks ago when it was trading at 5 bucks a share, but you didn’t invest any money and it is now trading at $6.50 a share — there is no reason at all to be panicking with fear that you missed-out.

If you truly are going to be a long-haul investor — and you’re really looking for companies that are going to look great a year from now when the market may not be as volatile — and you honestly did your due diligence and you really like what you see — then you should still be just as interested in buying the company now, as you were two weeks ago.

The only question is — how do you actually invest in it?

When a stock rises with a sudden pop across the entire market, I, personally believe it’s best to wait for a little pullback.

Let me address that further — although there are certainly no guarantees in the market that any stock or sector will have a pullback — it usually does happen.

The “trick” is to cost leverage your way into a position.

So, for instance, if you have your first $1,000 that you’re ready to invest in the ABC Company, but it is now trading at $6.50 and you’re stomach can’t handle it if it suddenly plunges to $4 when you buy at the peak — but yet you’re going to be kicking yourself like crazy if next week it jumps to $8 — then here’s what you do:

Find a good online broker where they give you the first 10 or so trades for free — and make sure there are no hidden transaction charges.

Put in a buy order for $250 worth of the ABC Company at $6.50/share.

Again, make sure you place a limit order at your price target, otherwise, there’s a damn good chance you’ll be paying a whole lot more for a whole lot less.

Then sit back and wait.

If it suddenly surges in the next few days to a week — good for you — you just made a little extra money — and resist the urge to kick yourself because you didn’t invest your full grand.

However, if the stock pulls back to $5.75 — don’t kick yourself because you didn’t wait — pounce on the opportunity to buy another $250 worth of the company at a better price.

If it pulls back even further to $5.25 — again, don’t panic — if the due diligence is still showing you this is a strong company with a good balance sheet and has no bad buzz behind it — then jump up and down with joy as you buy another $250 worth of the company at an even better price.

And then when the stock suddenly has another pop to say $6 — buy another $250 worth of the company.

Stocks are going to go up and down — that’s how it works.

Even more so in a volatile market.

There’s a lot of smoke & mirrors going on right now.

While the market is enjoying the influx in cash from the fed, and private equity investors are snapping up some great deals — the street is not fooled for even one split-second that the influx of cash on companies’ balance sheets did not come from earnings — and instead came as a loan with restrictions from Uncle Sam.

The street wants to know what these companies are going to do in order to start making money on their own, so they can repay the loan.

The street knows the jobs reports are not looking good.

You can’t fool the street.

And if you try to ride their coattails — you’ll get crushed.

But you can be just as smart as the street.

The only sure-thing you can count on is your own homework in doing the due diligence.

Read a company’s balance sheets. If it’s full of fuzzy numbers — don’t buy it.

Listen to the analysts calls.

Don’t be too concerned about what already happened — focus on what the company looks like going forward — that’s what the street primarily cares about.

And get over any of your coulda-woulda-shoulda crap!

The best investors don’t second-guess themselves.

They cost leverage into a position — and hold on to a stock until the fundamentals change.

If you truly are looking to buy cheap in this bear market with the intention of holding what should be a strong company in a year — then stop acting like you’re a day trader and you missed a sudden pop or feel crushed by a sudden pullback.

Follow two rules closely:

Do your due diligence and cost-leverage into your position.

Same names are on my due diligence list as mentioned in previous recent columns.

The usual disclaimer: Don’t base any of your investment decisions on anything you read here. Do your own due diligence, or at least enough research to pick the right professional to do it for you.

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One Response

  1. I like buy scrach ticket to win money because man at store is good guy…he sell good ticket..and he is funny man too

    invest is just gamble like casino or bet on football games with my friends

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