I love analyzing stocks. I’m not experienced at it, but by reading and investing and tracking my investments I have learned a lot of practical knowledge. By investing in multiple stocks, I learned what happens in real life with the ups and downs. I found a few stocks that I was lucky enough to be able to sell very quickly for a nice profit while others just went down for a very long period of time. In stock investing, you really need a plan. You need to know when you are going to sell the stock. Your exit strategy should have a particular price or PE ratio where it is not worth having the stock anymore.
PE Ratios as a Selling Analytic
Keep in mind that company earnings fluctuate over time. So if a company’s income goes up, then their stock is likely to soon go up as well. There is no point selling at a 10% gain on a company that made a 20% gain in income as the stock became more valuable than the increase in price. It makes more sense to have a selling PE ratio. When it becomes a less “efficient” stock to own, then sell it. But, decide ahead of time what your lucky PE ratio to sell will be.
What about happiness?
I purchased many stocks recently. Some I am satisfied with. IBM went down, but I’m not crying as I want to keep that stock during good times and bad. Whole Foods sells lots of holistic products which makes me happy. I’m just concerned about the future of their management. But, owning one particular stock made me upset. I meditated on their future and got a bad feeling. CBI is a stock I regret buying. Even if I can sell it at a small profit that nagging feeling that I am in a bad investment doesn’t leave me. Additionally, the quantity of that stock that I purchased was just too much considering how unstable they are. Investments not only can make or lose money, they can influence your mood.
I’ve decided that the mere thought of buying DIS (Walt Disney) stock makes me happy. They are a happy and magical organization that pleases children around the world. They are also very stable and well managed with high profit margins and along history in business. Additionally, I feel that Facebook is far overpriced as a stock, but that is because everybody loves them and depends on them for their social life. I want to buy a small quantity of FB stock just because the thought of it makes me happy. I’m also a fan of Mark Zuckerburg and am convinced that his venture will grow like wildfire over the next ten years. What happens after that? I’m not so sure.
And then for some reason, I really like KO which is the symbol for Coca-Cola. I cannot figure out why I like it so much. For the lifetime of Warren Buffet, Coca-Cola has been one of his absolute favorite companies. Even though I feel it is overpriced, Warren still has 14% of his multi-billion dollar portfolio in this stock. What is it about Coke that makes me so happy? I don’t even like to drink their product anymore (except in India where it is sweeter). So, what gives!
Investing can be for profit, but also can make you happy. So, why not find some happy stocks and enjoy investing like a child would? (And no, sorry, you may not use Monopoly money — this is for real.)