Nicolas Darvas & Gary Smith
Welcome, Berkshire_Bull! I hope you're not a Wal-Mart greeter. Many of us see that position as a last-ditch solution to a busted retirement portfolio, and we'd hate to have to compete with finance majors for it.
"Reader"s point may be that, while you can certainly win by picking winning stocks, you can also win by not losing-- IOW by DCA'ing into index funds.
Reader's advice is very good for 99.9% of the investing community. You're at a point in your life where, if you're interested in stock picking, you should do so. You'll either do fine (and perhaps maintain or even improve your record) or you'll blow yourself up and teach yourself a valuable lesson. Both of those are much easier to accomplish when you don't have a spouse, kids, mortgage, or other obligations. At this point in your life you probably don't sleep much at night, let alone worry about its quality.
Most of us fund our liabilities (living expenses) with our retirement portfolios/pensions. Those of us interested in picking stocks tend to do so with money that we (and especially our spouses) won't mind losing. Very few (if any) of us retired due to superior stock picking. Most of us did it with superior savings, frugal living, govt pensions, or business-owner/stock-option windfalls.
I believe that the credibility of your self-assessment depends on the number of bear markets you've been through. Bull-market trading records are irrelevant since any chimpanzee can make money then (and several have). After 1973-4, 1987, and 2000-? I feel much more comfortable with a govt pension and a bunch of index ETFs to pay the bills while I re-learn how to make money while the rest of the market isn't. While it's great that you're making money, you'll learn even more by reading up on market psychology during the 1970s. Business Week's 1979 article "Are Stocks Dead?" is a classic.
Gary Smith's "How I Trade For A Living" is a great peek at a trader's life-- even if you only read the first chapter. I think his biggest lessons are (1) Indicators don't tell you when they stop working or when they start working again and (2) If you're picking the right investment then you shouldn't hesitate to put a large percentage of your portfolio into it. With Gary that turned out to be junk bond funds. Gary's pretty much retired in his late 50s but you have to consider if you're willing to model your life after his.
I guess anyone investing in Health Grades also should be familiar with Manuel Asensio. He tends to greet messengers with flamethowers but his research & reporting is no less valid for his ranting & raving.
http://www.asensio.com/Index.aspx
I can't say that concentration is a good thing when you're buying your employer's stock, even for Bill Gates. But again you're young enough to have an earnings potential big enough to recover from any catastrophe. You just have to consider the impact of Wal-Mart having a bad quarter, watching their stock getting whacked 25%, and then "retaliating" by laying you off. No, it probably won't happen. But could you survive if it did?
Berkshire Hathaway has been very, very, good to us and our kid's college fund too. Outside the retirement fund, I'm long Nortel (NT) & Costco (COST), short K-Mart & Greenfield Online (SRVY), and looking for a shorting entry point on Google. I don't know if I'll ever get into microcaps on fundamentals. While I could analyze the books of a company like Health Grades, I'm afraid that I'd take Asensio's approach by researching the felony records of their executives & directors...
ive always been a saver, i inherited that from my dad... sophomore year of highschool i was able to scrape together $3100 and open an ameritrade account. I bought Philip Morris and Berkshire Hathaway "B". MO at $18 and BRK.B at $15xx. Well they went quite a bit higher, In the meantime i added more money and bought ANF and CAPX. I've probably owned somewhere in the ballpark of 2 to 3 doezen different stocks over 4 1/2 years and I think i've only had to sell 4 or 5
