- He bought the stock on 9/2 and spent $4992 (he had a budget of $5000).
- He sold the stock on 12/3 at $5868.
- Gross profit of $876, he has calculated a $525 net profit or an 11% return over 90 days.
His next move is to take the budget, plus profit and purchase two stocks in the next couple of weeks. He is already researching his next purchases.
3 comments:
I applaud your savings plan--I too follow a very disciplined savings approach; however, it is well documented that "market timing" does not work on ANY consistent basis. Because one is a "numbers guy" does not make one a stock picker. And selling a stock after 90 days and paying short term capital gains of 25% - 28% is the equivalent of day trading.
-Marty
@Anonymous but a gain is a gain. Sure you pay short term capital gains but oh well. You still made money. I wouldn't say analyzing a stock, making a purchase, riding it to near your target price and selling that stock is day trading. Day traders trade dozens of times a day.
Sure most people aren't willing to do the work to pick individual stocks. Monitor them, watch them look for changes in results, expectation or management on a regular basis but some are. I wouldn't recommend a rookie put all his retirement into individual stocks but as an "extra" account its a great motivator to stay involved in the game.
I would say however that you need to be a bit more diversified. I know that the gains might not have been as sweet but when you do pick a stock that goes down it won't be as painful either.
If when you guys have more time in the new year some of your analysis methods might be useful.
Great blog always excited when a new post pops up. Helps my wife and I stay motivated to hear others being responsible with money like us. Unlike most of the people in the world lately.
If you don't feel comfortable owning a stock for 10 years, then don't own it for 10 minutes.
-Warren Buffett
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