Since you are going to go ahead and try to pick your own portfolio of stocks, I see that you decided to not take my advice. I also do not possess everything in index funds. The challenge and the thrill are in the handful of stocks that increased several hundred percent or more. I can put a new wing on my house (trailer?), after just one or two more of those. I understand that, Warren Buffett probably didn't become a billionaire by investing in index funds.
While we are on the subject of Mr. Buffett, you should know that he as a Master’s Degree from the Columbia Business School, majoring in business and economics. Benjamin Graham and David Dodd who were leaders in value investing, were the two prominent securities analysts of the time that he studied, while there. Buffet, went on to carry this style of investing to new heights. And becoming a billionaire by the 1900's,
Beware!
The work about to be written by me is not a tutorial on value investing or any other topic; if anyone is interested in gaining in-depth knowledge, both the philosophy and techniques, about value investing, then referring to the works of Graham, the Fishers, and others is highly recommended
I'm going to share with you what I believe precipitated my own great achievements and monumental downfalls.
I'm going to go through the ones that didn't make it first, which include an e commerce company as well as a set of sports bar franchises. I lost nine-tenths of my first investment and lost everything on my second and third investments. What make me decide on these losers and the events that followed? I made a purchase of two thousand shares based on a tip from someone at work, their information about a recent contract for the hotel chain convinced me the ten cent share price was a worthwhile investment. This investment languished for years until they picked up a new CEO, who I happened to know from experience was a corporate raider and company killer, who finally pulled the life support by sucking the remaining money from the dying corpse.
When the e-commerce enterprise announced a major long-term contract with the U.S. government. That was the day when I bought it. After being hit by cash flow problems that they couldn't overcome they declared bankruptcy in less than one year following my investment. When the announced plans to build a new electric car, I bought stock in the automaker's company. Even though the company continued to go on and made a substantial profit last year, they asked for a government bailout several months later and my stock became worthless.
I made a bad decision at some point, but what was it? Each and every time I used news stories and positive sentiment to help me decide on what to buy. Except for the automaker company, I did not do extensive research on the decision I made when it came down to buying those Stocks!
A computer maker, an oil company and a bank were my winners, which were just the opposite. I bought the computer maker at $40 a share - it split twice and I sold for a profit for eight times my original investment, The oil company I bought at $4 a share and sold somewhere around $45 a share (What a mistake to break my own rule, I lost money there it is now at $110).The bank didn't do so well. I only made about sixty percent on that one.
How did I get this to work out? In every case I did extensive analysis bought company that had higher values then perceived by the market. For instance, the situation of the oil company was such that the value of the stock was lower than the current oil they already had pumped out of the ground and were holding for sale-crazy.
So remember to always do your homework no matter what your friends suggest or what you read in the news. Otherwise, if you just want to gamble, I know of several nice casinos where they serve free drinks while you unload you money, if you just want to gamble.
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