Originally Posted by ERD50
Good list, but even after you do all that, you need to realize that others are doing it too. And they are driving up the price of any 'bargains' to the point they no longer can be expected to provide above-market performance.
I've come to the conclusion that stock or sector picking isn't about analysis because if it is definable analysis others can and will do it too, and then you are just competing with them. It's about predicting the future, and AFAIK, that is not a learn-able skill set.
One thing that always resonated with me about these arguments is that their goals, requirements and timelines are not the same as mine. So while we may be looking at the same company our actions will not mirror eachother due to these different situations.
The market also seems to have a herd mentality when reacting to news. Over longer timeframes those smooth out into an 'efficient market' but there seem to be many short term irrational dips to me.
My method isn't sexy but it seems to work as I'm up 2.5% on the DJIA over the last 15 years. (Although I'm tied with the DJIA YTD thanks to Netflix's 'slight' downward trend today) Some years I'll only have a couple of trades but I setup orders at prices that seem like steep discounts. The price is pretty low so many never fill but when they do they do well. Some recent examples: LOW at $64.4, APPL at $93.7, WMT at $58.9 (that one has been around for maybe 2 years before filling), HOT at $61.7 with Starwood being about the riskiest stock I've invested in in a while. I also have a strong preference for companies with a long history of increasing dividend payments
I still have index funds as I am still in my accumulation phase and things I consider 'good deals' have never lined up with my paychecks. When an order fills the money comes out of a moderate yield, tax exempt bond fund and I reallocate incoming new money into the bond fund to replace the debit. Occasionally things will fill quickly (like they did at the start of this year) so I will re-balance and\or pause\cancel the orders.
No guarantees in life though so I won't really know if what I am doing is the right move for a few more decades