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What I learned in 2014
Old 12-31-2014, 01:33 PM   #1
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What I learned in 2014

In terms of investing, I learned a ton in 2014. A year ago I couldn't tell you what the S&P500 was, now I can tell you I'm beating it.

As for the Dog of Dow, you would be just about breaking even if that was your strategy in 2014.

Dogs of the Dow - High dividend paying stocks - Daily YTD Performance Tables

If you were to listen to analysts and charts and historical trends, you would have known this year was not the year for a Santa's rally which typically sees investors put back 1.5% of gains into the market. Typically those rally's do not happen when we experience such great gains the month before that small Santas Rally week between Christmas and New years and this year it was certainly no Santa's Rally. However, that could be a good thing because according to history if you look at what happened in 2000 Santas sleigh went for about a 33month slide or 38% decline.Christmas is over, but Santa rally isn’t | America's Markets

I also learned that market timing is impossible. I bought both a Stock and ETF this year that immediately dropped more than 5%, CASY and VDE. One has since recovered, the other I am using as a lesson, but I am going to bet that eventually oil prices will recover.

Its incredible how many things can affect a companies performance. Remember, at the end of the day you are buying shares of a company you feel has the capability to return earnings on your shares. You are investing in this company knowing there future earning potential is bright.

Buying low is key, I bought AAPL on the dip this year and man am I thankful for that. I will continue to use this strategy for a couple of individual stocks I plan to buy and hold for at least 5years.

Diversification is nice, but too much diversification and too many accounts can make managing your investments tougher. I am in the process of moving most of my invested assets to VG...keeping open any accounts through my other brokerages...Just in case.

Happy New Year.

AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 12-31-2014, 01:39 PM   #2
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Buying low is key, I bought AAPL on the dip this year and man am I thankful for that. I will continue to use this strategy for a couple of individual stocks I plan to buy and hold for at least 5years.
Buying low usually works, until it doesn't.

I've told a story I heard from another engineer I met recently. He worked for Nortel, and was selling high/buying low Nortel stock with his 401k. He built it up to $600K. And then after his last "buying low", it kept going lower. He eventually bailed out at $10K.

As we may recall, Nortel eventually went bankrupt in 2009. What was sadder was that the public and media hardly paid any attention. Nortel had faded slowly into oblivion ever since the tech bubble of 2000. I did not remember when I myself stopped following this stock (I owned it too in 1999). Same with Nokia or other tech stocks that were the talk on CNBC, Bloomberg and magazines like Business Week, Fortune, etc...

"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
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Old 12-31-2014, 01:59 PM   #3
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I also learned that market timing is impossible.
This is true. But then your post is also full of "buy on the dips" and charts and historical trend analysis. I wonder if you do not fully appreciate the issues of market timing. It does work when it works, which is what makes all that analysis and rules of what happens when seem so seductive. Beware. They all work, until they don't.
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