I’m not a particularly astute trader.
That’s why I’m such a believer in Warren Buffett’s advice to stick with low cost index funds for our family’s retirement.
I don’t spend all day combing the internet for all the latest information from every corner of the world and try to piece together exactly how the market is going to move based on a million inputs. Nor do I think I have an advantage that will allow me to perfectly time the peaks and troughs in order to outperform countless money managers who’s track records show they can’t outperform the S&P 500.
But as my wife and I continue to contribute as much as we can towards maxing out our retirement accounts while dollar cost averaging into index funds, I had an increasing desire to grow my knowledge and understanding of the financial markets.
I decided early on that wouldn’t gamble with my wife and I’s shared dollars, since I was really just looking to learn. But, we have factored “fun money” into our budget since shortly after marrying in 2012. Its intended for each of us to spend on whatever we want (clothes, lunch, shopping, gifts for each other, etc.), but I have a tendency to save mine up to buy big ticket items.
So, since I had money just parked in my savings, I figured why not put that money to work trying to better understand stock trading, and hopefully increase my account balance at the same time.
I’d read books like Larry Burkett’s The Complete Financial Guide for Young Couples, Smart Couples Finish Rich by David Bach, and Stock Market Primer by Claude N. Rosenberg, Jr. and wanted to try my hand at picking some winning companies and their stocks.
One thing I’ve always regretted when it comes to my ability to evaluate companies, is that I completely glossed over the portion of my Accounting 240 course that went in depth on how to analyze a financial statements.
I took the course at a college that kept a running total of points you’d earned and the maximum number of points available on the course’s site. The final for the class was in two parts — the first being multiple choice and the second being a handwritten analysis of a financial statement.
When I completed the multiple choice section, the points earned were automatically calculated. So I could easily determine that earning a 0 out of 100, or earning a 100 out of 100, would not impact my grade in the course either up or down. So, I thanked the teacher and took off a few hours early.
In hindsight, I wish I would have spent that time really mastering how to evaluate a company’s statements. Now, I have to relearn those basics, and it is still something on my to-do list.
So, over the past few years I’ve bought shares of various companies, mostly just based on whatever direction the wind was blowing at the time. Similarly, I tended to sell shares just when I decided I wanted to buy something (e.g. a new computer, etc.).
To give you the full backstory to how I got to this point, I will detail my prior missteps.
Prior Stock Trades
- Chipotle (CMG)
- Coca-Cola (KO)
- Canopy Growth Corp (OTC:TWMJF)
- Tesla (TSLA)
- Canopy Growth Corp (CGC)
- Apple (AAPL)
- MTN Group (MTNOY)
- Yeti (YETI)
- Microsoft (MSFT)
Prior Option Trades
- CGC
- SNAP
- SPY
FNMNY 