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What’s The Hardest Part About Learning How To Invest?

By  +Follow December 9, 2013 3:32PM
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The hardest part about being a member of the value investing school in a rising market is sitting still.

When markets rise like they have this year then inventory pool shrinks pretty rapidly and there is not a lot to do.

The few opportunities that exist can be bought and then it all becomes about sitting still and letting the value of your holdings become recognized by the market. Strong markets are a great time to catch up on your reading or indulge in some much needed recreation time. If you have done the buying part of the equation correctly and purchased shares at a significant discount to asset value it becomes all about the waiting game.

The waiting game can be very difficult at times.

Look at some of the news headlines from around the web today. Carl Icahn is fighting with Apple over a buyback. Is Bitcoin the new gold? We will taper? When will we taper? Is China expanding or contracting? Wasn't that a great jobs report today? What's the dollar doing? Sears (SHLD) is spinning off Lands End. Is Facebook going to be a Dow stock someday? All the news flow and questions come at you at a rapid clip from the TV, the internet and even the newspapers for those who still get their news and information via dead trees.

Then you have to face the siren song of the touts and bookies that surround the market. Try my simple system that will make you thousands a day with no effort. Get in on the next big thing. Buy gold to profit from the end of the world as we know it. Buy these penny stocks now to benefit from the coming wave of cold fusion. The Never Wrong Fund is up big this year. Better buy now. Our research department thinks this stock can moved from 20 to 22 over the next year.

That's 10 times the T-bill rate so you should pick up a thousand shares today.

If all that's not enough you have all your friends and relatives adding to the pressure to do something. Your golfing buddy's uncle knows a guy who is a big shot at Goldman (GS) who told him that that Twitter (TWTR) is going to $1000 and you should get in now. Everyone in the book club thinks this Tesla is a good stock because electric cars are really green and green is a good thing for the future.

Your spouse wants to know how come you don't own Amazon (AMZN) in your IRA because you buy stuff there all the time. Your business partners met a guy whose kid made a fortune with something called candlestick charts and thinks maybe you should look into that stuff. The neighbor is trading options in his spare time at home after he's done with patients for the day and expects to retire soon from this endeavor.

It can be maddening.

It is enough to make you miss 2010 when no one wanted to talk about stocks and you were left in piece to accumulate little banks and REITs trading at half of book value. Even worse it can have you questioning your philosophy and process. Maybe you should see if you can use those candlestick cloud things to tell when cheap stocks are actually getting ready to move. That would sure improve performance. Maybe a little Amazon would be a good idea. After all you just did all your Christmas shopping online. Hey! I bet that's good for FedEx (FDX) as well. It is very easy to get distracted and wander out of class at such times.

In the long run none of this stuff really matters very much at all and it takes discipline to ignore the temptations and occasional doubts.

In the world of investing there are only two questions that really matter. Is this stock cheap when you compare the stock price to the assets of the underlying corporation? When you look at the balance sheet is this stock safe. Do they have adequate resources to pay their bills and survive long enough to thrive again? Those are the only two questions that really matter to those of us in the deep value school of investing. Answering those two questions will render all the other questions and exciting offers pretty much irrelevant. The difficult part is ignoring the noise and all those well-meaning folks who don't get the basic businesslike concepts of value investing.

Tim Melvin is a value investor, money manager and writer. He has spent the last 27 years in the financial services and investment industry as a broker, adviser and portfolio manager. He has also written and lectured extensively on the markets with his work appearing on RealMoney.com, DailySpeculation.Com as well as several print publication including Active Trader and the Wall Street Digest. Learn which 3 low risk, high yield stocks Tim owns for the trade of the decade.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for shld
HotKeyTrading
22 Dec 14 02:30:02
Trending High On Social Media: $FOSL $RCPT $CYBR $MELI $AVGO $NCMI $ROST $EOG $CY $ULTA $RHT $MSG $SHLD $WSM $RH $ATHL $ADSK $AAL $UAL $S
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22 Dec 14 00:25:05
$SHLD Insider Buying: Bruce R. Berkowitz Buys 5,000 Shares of Sears Holdings Corp Stock http://t.co/b1UQYzAZtd
....J....
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RT @TALENTEDBLONDE: Srsly Eddie Lampert, quit wasting your ad budget on Sunday night football. $SHLD #NFL
TALENTEDBLONDE
21 Dec 14 18:30:03
Srsly Eddie Lampert, quit wasting your ad budget on Sunday night football. $SHLD #NFL
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StockBase
20 Dec 14 18:37:26
$SHLD exercised its option to extend the short-term loan from Chairman Lampert to February 28, 2015 http://t.co/FaGI5wzPDw
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20 Dec 14 17:01:05
Appreciate how quiet Eddie has made Sears this holiday season. $SHLD #xmas14
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20 Dec 14 13:03:04
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@SconnieTrader I merged $KSS, $JCP and $SHLD into #shitglomerate, converted whole thing to REIT & hired you to run it and I'm not clever, FU
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20 Dec 14 06:37:21
Separation from Sears Holdings can turn out to be a benefit for Sears Canada - http://t.co/Ku3ZEIqrmT $SHLD http://t.co/srSTzHIVdO
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20 Dec 14 05:30:03
Trending High On Social Media: $FOSL $RCPT $CYBR $MELI $AVGO $NCMI $ROST $EOG $CY $ULTA $WSM $RH $RHT $MSG $SHLD $ATHL $ADSK $AAL $UAL $S
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Trending High On Social Media: $FOSL $RCPT $CYBR $MELI $AVGO $NCMI $ROST $ULTA $EOG $CY $MSG $SHLD $WSM $RH $RHT $ATHL $ADSK $AAL $UAL $S
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Platinum Memberships Rose, After 528% Gains On Penny Stocks, In One Month! Big Update: http://t.co/2W3yKD2d5Q $XRAY $FOSL $SHLD
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19 Dec 14 20:50:30
Are you Bearish on these #stocks $SHLD $SPLK $ATO $FB #investing http://t.co/PA8w1NIr6L
EsanE
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$SHLD long term flirting w/ VAL but is it #DEEPVALUE? ST says value building on the lows so no. Sorry Eddie;) http://t.co/BurfsOQGxz
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19 Dec 14 19:50:21
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Spiking
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Trending High On Social Media: $FOSL $RCPT $CYBR $MELI $AVGO $NCMI $ROST $EOG $CY $ULTA $RHT $MSG $SHLD $WSM $RH $ATHL $ADSK $AAL $UAL $S
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Awesome #Stock #Research on $AMT $SHLD $MPC $FB Try this http://t.co/4B1xWmPan7
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Real-Time feed of company contracts, original agreements and executive updates from Sears Holdings $SHLD http://t.co/QnH2ZEr07u
UnionSquare Research
19 Dec 14 13:12:46
RT @DataLend: Sears Holdings $SHLD 83% utilized, fees to borrow still trending lower since October highs #securitieslending http://t.co/Fmo…
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19 Dec 14 12:52:07
Find out the latest on $SHLD $CBT $PAY $YOD Worth a look http://t.co/wJXtcA4WCI
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Sears Holdings $SHLD 83% utilized, fees to borrow still trending lower since October highs #securitieslending http://t.co/Fmou05QXdU
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@JacobWolinsky $SHLD in much stronger hands. Patience and prayer...
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19 Dec 14 10:50:00
This weeks Stocks you should Watch $SHLD $UPL $AIZ $IBM #overvalued http://t.co/UTgcvxyhKV
				
				
By  +Follow December 9, 2013 3:32PM
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