If investors were as practical with their investment portfolio as they are with managing a garden, they might make a lot more money! There are so many analogies between managing a stock portfolio and tending to a garden it is fun to take a look. I wrote about this in my first book, Magnet Investing, and now in the middle of summer, in my backyard in the Garden State, looking at my wife’s garden, I am reminded about how simple it should really could be.
In your garden, if you planted 10 seeds and eight of them grew well and two failed to grow, what would you do? You probably would give attention to the eight good growers and simply plant two new seeds. Portfolios are often managed very differently. Unfortunately for them, investors that operate with too much ego, tend to sit with the two stocks that did not go up, and sell the eight that went up in price. They do not want to admit failure with a bad investment and are pleased to take profits on anything that went up. This is the way to end up with a wasteland of a portfolio.
Just ask Jack. If you have a healthy flowering set of plants, just let the beanstalk grow to the sky. You do not have to be right too many times if you are lucky enough to find just a few 10 baggers! Remember, the only way to have a 10 bagger is if first to have a double, then another double. This takes immense patience and can only be achieved through high quality companies (seeds).
My investing strategy is to use The Magnet® Stock Selection Process to try to identify the companies most likely to outperform the market (belong in my garden). These companies are the “best of the best” based upon the Magnet® criteria. Once my best seeds are planted- using technical analysis to help identify the best time to plant/invest. I monitor my portfolio just like a garden.
As in gardening, there is also a time to reap. In managing money, as well as in gardening, you need to remember to routinely pick some fruit and go to market with your crops. For now it looks like some further growth is in store. The sun is shining and I like the way my portfolio looks right now! I’ll share a few ideas that look good to me now and are in The Investview Magnet Fund, but none are recommendations! Suitability is always the key. Call with questions. Healthy gardening…
Longs: Alliance Fiber Optic Products Inc. (AFOP), Super Micro Computer, Inc. (SMCI), Omega Protein Corp. (OME), Gilead Sciences Inc. (GILD), ARRIS Group, Inc. (ARRS)
Shorts: Teck Resources Limited (TCK)
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