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

By  +Follow December 9, 2013 3:32PM
Tickers Mentioned:

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
David Blair
19 Sep 14 10:41:17
$SHLD Continued move down today. Chart from yesterday. http://t.co/yl1SmQdRNA
Don Pagach
19 Sep 14 10:16:11
add Eddie Lampert to the Ron Johnson hall of shame $shld
19 Sep 14 10:06:37
3-star analyst Gary Balter from Credit Suisse reiterated a SELL rating on $SHLD. Gary has a 62.8% success rate http://t.co/Ri4VjUMxjR
19 Sep 14 10:02:10
$SHLD mite actually scalp this turd long soon, not till monday tho
TheStreet Alerts
19 Sep 14 09:54:38
Why Sears $SHLD Stock Continues To Decline Today http://t.co/yurtabkQvF
Victor Clark
19 Sep 14 09:26:39
I'll watch $BABA from the sidelines while I ride $SHLD down. Put on your Sunday best kids!
Maglan Capital
19 Sep 14 09:23:44
Sears Eddie's Grand Liquidation continues $SHLD http://t.co/ZtHgW762Am
19 Sep 14 09:10:52
$SHLD - SHAREHOLDER ALERT: The Law Firm of Levi & Korsinsky, LLP Launches an Investigation into Possible http://t.co/MbQnXVM90X
19 Sep 14 09:10:48
$SHLD - SHAREHOLDER ALERT: The Law Firm of Levi & Korsinsky, LLP Launches an Investigation into Possible http://t.co/4LdL3XvpnZ
19 Sep 14 08:50:36
$SHLD and $CAT shorts working well....
19 Sep 14 08:47:43
there's definitely a price i would buy a ton of speculative $shld LEAP call options at... i mean i DID read 600+ pages of back and forth.
Media Sentiment
19 Sep 14 08:29:37
$SHLD received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 183
Drew McElligott
19 Sep 14 08:29:01
Frowback Friday- what's Bruce thinking? $SHLD http://t.co/qFgJtytf9i
19 Sep 14 08:12:41
Scots said no. My two CEO’s for $ORCL. $SHLD told to close doors. Trade Demo $BA long call breakout. http://t.co/ngyQ9HPRge
Drew McElligott
19 Sep 14 08:11:31
PSA: the curbside service $SHLD promoted this week won't be available @ the stores they're clos- err- transforming. http://t.co/JMglAHZuKi
Drew McElligott
19 Sep 14 07:59:44
Not a "store closure" $SHLD, but a transformation incubator! "Sears closes Forsyth mall location: http://t.co/PC8CunDyo6
19 Sep 14 07:57:22
So how much of the $SHLD float is free? Dangerous short IMO.
19 Sep 14 07:57:13
$SHLD - continues to move lower.... http://t.co/V2dXZbMCrt
Drew McElligott
19 Sep 14 07:56:54
Don't call it a closure, call it "funding a transformation" @ $SHLD... "Gastonia's Sears store to close" http://t.co/2jzBUZAjse
Drew McElligott
19 Sep 14 07:49:24
2 narratives- members or assets? “We have many assets at our disposal to continue to fund our transformation” http://t.co/ibShxO6MiG $SHLD
Jim Sheetz
19 Sep 14 07:41:01
@BrianSozzi @ContraryMary Jim Morrison, "This is the End".. continues. $SHLD
19 Sep 14 07:25:49
I think Berkowitz is brilliant but with $SHLD and $JOE drops, he is having a tough week. Fairholme trails S&P badly over last 5 years
Steve Feffer
19 Sep 14 07:01:55
Wouldnt be surprised if $BBY buys $SHLD to increase margins on their high end d8vision Pacific Sales. Any thoughts @jimcramer ?
19 Sep 14 07:00:32
We like gapping stocks $SHLD http://t.co/NsK8CXaXUq
19 Sep 14 06:46:48
$SHLD - U.S. Hot Stocks: Hot Stocks to Watch http://t.co/KF7OAXUTZa
19 Sep 14 06:45:58
$SHLD - U.S. Hot Stocks: Hot Stocks to Watch http://t.co/oKAFd76skz
19 Sep 14 06:41:01
$BABA IPO, $SHLD 52wk lows, $TGT weekly calls & $ORCL down on Ellison departure. Alan Knuckman reports $$ http://t.co/RmG7DfrgjI
Thudder & Wicks
19 Sep 14 06:21:35
Can $SHLD #Sears Close 2,300 Stores? http://t.co/AyB4Zkgopg
19 Sep 14 06:10:51
"This is the end..." Sears liquidation recommended again. $SHLD http://t.co/IQ2lP9bRCU
19 Sep 14 06:04:59
Berkowitz Lends A Shoulder To Sears http://t.co/Xz467PaXpA $SHLD $FAIRX
Jerry Khachoyan
19 Sep 14 05:55:21
OK so this friday's gappers/movers: $ORCL $RHT $TIBX $HIMX $JBLU $SAP $DRC $INVN $GLNG $CRR $SHLD $SFM $JD & of course $YHOO
Seeking Alpha
19 Sep 14 05:51:24
J.C. Penney Demonstrates The Value In Department Stores http://t.co/TPitkeiKzd $AMZN $JWN $KSS $M $SHLD $JCP
George Avidon
19 Sep 14 05:30:13
RT @TheTradeXchange: $ULTA Director 16000 $119.69 $SHLD Director 1000 $30.00 $HCOM 10% Owner 8000 $26.94 $REI Director 10000 $15.15 $CUZ C…
Christopher Angus
19 Sep 14 05:30:03
Stocks with major news: $AAPL, $ORCL, $BABA, $YHOO, $SAP, $CNQR, $GOOGL, $HD, $GOOG, $SHLD, $JBLU, $SNE, $AIG, $SC, $JPM, $GS
Duke Rexx
19 Sep 14 05:19:50
RT @TheTradeXchange: $ULTA Director 16000 $119.69 $SHLD Director 1000 $30.00 $HCOM 10% Owner 8000 $26.94 $REI Director 10000 $15.15 $CUZ C…
19 Sep 14 05:19:41
$ULTA Director 16000 $119.69 $SHLD Director 1000 $30.00 $HCOM 10% Owner 8000 $26.94 $REI Director 10000 $15.15 $CUZ Chairman 10000 $12.47
Thomas Hodgdon
19 Sep 14 05:00:44
RT @BrianSozzi: --->>Read this, it explains tons about @SearsHoldings http://t.co/U0f41V2cFG $SHLD
Perfor Mance
19 Sep 14 04:21:09
Option Millionaires: nlightn: $SHLD,...Can Sears Close 2,300 Stores? http://t.co/0Hd19dzT4i
19 Sep 14 04:20:27
nlightn: $SHLD,...Can Sears Close 2,300 Stores?: nlightn http://t.co/bh74rTXxZD
Brian Sozzi
19 Sep 14 04:00:39
--->>Read this, it explains tons about @SearsHoldings http://t.co/U0f41V2cFG $SHLD
Nicolás Botbol
19 Sep 14 02:23:47
Berkowitz has bought 170.000 more $SHLD shears @SeekingAlpha @YahooFinance @desdelabolsa @Ambitocom @gurufocus @MarketWatch @businessinsider
Nicolás Botbol
19 Sep 14 02:20:01
RT @rationalwalk: And then there is $SHLD near a 52 week low. Haven't seriously looked at it in at least a couple of years.
Nicolás Botbol
19 Sep 14 02:19:06
RT @well_mont: $SHLD : we are investing in our transformation. me: u r incinerating cash.
Nicolás Botbol
19 Sep 14 02:18:51
RT @SeekingAlpha: Don't Own A Company If You Wouldn't Display It On Your Wall http://t.co/IS4thjEABP $JNJ $WAG $KO $PEP $SHLD $PG
Stock Rocket
18 Sep 14 22:44:07
$NETE Gained 551.93% In The Past 6 Weeks! Major News: http://t.co/PU7GW934W5 $XRAY $FOSL $SHLD
18 Sep 14 22:36:59
$SHLD : we are investing in our transformation. me: u r incinerating cash.
Stock Moo
18 Sep 14 21:31:09
$shld: [$$] Sears Loan Highlights Pressure on Cash http://t.co/bjn9aA0wl0
18 Sep 14 21:22:00
Brattle St. Capital
18 Sep 14 20:31:50
Just looked at the top holders for $LE. Wow. ~50% Eddie and ESL, 10% Fairholme, 10% Janus, 8.5% Baker Street. Talk about closely held. $SHLD
Barbarian Capital
18 Sep 14 19:58:55
RT @BrattleStCap: The $SHLD thread on COBF is just an epic exercise in mental gymnastics
By  +Follow December 9, 2013 3:32PM



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