Getting into market

Just joined Fool Advisor service. As part of coming on board, they asked me to promise two things: invest in 25 stocks AND hold stocks for 5 years

So I have $15K to invest using Fool Advisor service. This money is discretionary. I have 2 questions:

  1. In current market conditions, do you jump in now with all $15K or smooth it out over 3 months?
  2. It’s hard to make $15K cover 25 stocks given the typical stock prices in Fool Advisor. So how many stocks does $15K fund? My brokerage doesn’t allow fractional shares of ordinary stocks.

thanks
Ken

Personally i would wait until the market seems to bottom. Down market does make for good buying opportunities, but one never knows if there are more declines ahead. Moving averages are pretty good at indicating trends. But the risk is still there.

Good luck with your choices.

Yes, $15k for 25 stocks makes for small positions. I’d start small. 15 stocks for $1000 ea. Or as far as $1000 goes. One or two shares of expensive stocks is a reasonable beginning. You can always add more funds later.

Just joined Fool Advisor service.

Welcome aboard! Be aware this is a public board and you don’t have to be a subscriber to reply.

As part of coming on board, they asked me to promise two things: invest in 25 stocks AND hold stocks for 5 years

So I have $15K to invest using Fool Advisor service. This money is discretionary. I have 2 questions:
1) In current market conditions, do you jump in now with all $15K or smooth it out over 3 months?
2) It’s hard to make $15K cover 25 stocks given the typical stock prices in Fool Advisor. So how many stocks does $15K fund? My brokerage doesn’t allow fractional shares of ordinary stocks.

I am not a Fool subscriber. Here’s what I would do:

  1. Identify 25 stocks I would like to own.
  2. Rank them 1-25 from best opportunity on down. #25 isn’t the “worst” opportunity it’s just the least best of your candidates.
  3. Start wading in with that $15k on the top few ideas.
  4. Take your time; this isn’t a race.

Holding too many stocks becomes a homemade index fund. I prefer to concentrate on my best ideas. I do hold a lot of index ETFs in addition.

Regards,

  • HCF
    doesn’t color inside the lines

re: Brain Farts

https://skillpath.com/blog/brain-fart-causes

Take the 15K and divided my 25 with the below-listed portfolio

Ken,

Investing is a Business and must be treated as such. This is a traders market and not for the HODlers (hang on for dear life)

There are only 4 stocks to own FOREVER and trade per the charts below where it will tell you what to do. GDX, XLE, XLF, XLK. https://schrts.co/YJZjtfbA
https://schrts.co/xjzqWvBv -

I use Simon Sez III for the Forever group with Zero (0) losses.

https://stockcharts.com/h-sc/ui?s=GLD&p=D&yr=0&m… just follow the 13 ema over 50 ema.

Buy when the red line crosses up and over the Blue line heading north and sell when the red line crosses back down heading south if YOU want to help protect your ASSets.

The above chart/s are for beginners.

https://www.youtube.com/watch?v=5Ov6kl5XmUQ&t=159s he started from scratch

https://www.youtube.com/watch?v=kHbUQct14IE

Simon III, and the company will make you a wealthy person over time by learning Risk and Money Management skills.

re: Swing Trading
re: Stockcharts
re: Barchart
re: Price Label
re: 999 to 1000 percent batting average

So What Is Swing Trading?

Swing trading is the buying and selling of stocks all within the timeframe of a few days or several weeks. It’s a lot like day trading except the timeframe. After each buy and sell cycle, your slate is clean with no carry-over. It’s the opposite of passive, low-maintenance investing. Swing trading is active short-term investing because the “buy and hold” mantra does not apply.

Simon Sez III. “Wait-one bar” after Price label to Price label rule signal Quillnpenn 12/1/2020

Re: New ACP stock charts via Stockcharts.com for subscribers.
Re: https://stockcharts.com/acp/?s=RIOT
https://stockcharts.com/acp/?s=%24ETHUSD daily
https://stockcharts.com/acp/?s=%24ETHUSD 30 minute.
https://www.barchart.com/stocks/quotes/RIOT/interactive-char…

When a Price label appears do the following:

1 ) For the TOP Price Label, we wait and wait until the next bar when the price drops below the high signal to SELL the stock to help protect your ASSets.

2 ) For the BOTTOM Price Label, we wait and wait until the next bar when the Price bar is rising upwards to BUY the stock.

eg…https://stockcharts.com/acp/?s=QQQ a BUY signal had occurred on 11/03/20. We are now waiting for the next SELL signal.

For the very first time when viewing a chart, the default will appear, however, make some minor adjustments for a better view.


Cheat Sheet:

Class - Simon Sez III - Holy Grail

Holy Grail: “something that people want very much, but which is very
difficult or impossible to achieve”.

Okay now for the Holy Grail part of having fun without really trying.
I believe we can make money with the aid of Simon.

The Rules:

Here are the following rules that I found so far broken into two (2)
parts. TOP and BOTTOM.

To SELL @

TOP: When you see the Price label = Wait-one bar rule applies to SELL to help protect your ASSets.

When you see the RED Candle, GREEN Candlestick below the Price label = SELL immediately when it appears.


To BUY @

BOTTOM: When you see the Price label = Wait-one bar rule applies to BUY.

When you see the GREEN Candle, RED Candle stick = BUY immediately when it appears.

I am using the Daily and the 30-minute charts to make money faster.

These charts are good for swing trading and for long-term investments such as the XL’s (xle, xlc, xlf, et.,al) to hold and trade forever.

https://www.sectorspdr.com/sectorspdr/sector/xlk XLK - Technology Select Sector SPDR Fund.

https://www.sectorspdr.com/sectorspdr/sectors been swing trading the XLs since January 1999 with a 99 percent batting average.


Do the following very slowly and you then shall not FAIL at becoming a very healthy wealthy person. If an 8th grader can do it during homeroom class, you can do it. If you decide it is too complicated then go back to the SA and get slaughtered by the Pied Pipers.

How to set up the Stockcharts with the new ACP charts.

  1. Go stockcharts.com assuming you are now a paid subscriber. If not, you can use the Kwik Setup at the bottom.
  2. click on Charts & Tools
  3. enter a ticker symbol in the StockchartsACP [new]
  4. now we have to set up the bells and whistles to look like the sample charts. At the top insert the XLE ticker symbol to the right of the word Stockcharts.
  5. at the top is a high-lited blue icon.
  6. below the XLE ticker will be 3 lines to be added. 5 o’clock position.
  7. the first line is a type of chart. I have Heikin-Ash
  8. second line RSI (4) by selecting the RSI from the indicators below.
    8a. Click on the word RSI
  9. make cosmetic adjustments. The period should say 4
  10. Click on the rsi line to dark blue
  11. Click on overbought to blueish look at the sample.
  12. Click on the Oversold to red ish
  13. Close
  14. Next add StochasticRSI from the indicators pool
  15. Make cosmetic adjustments. The period should say 14
  16. Repeat the same colour patterns as above.
  17. Close
    17a. Go back to the top and click on the first line below the CHART SETTINGS, then go to the bottom and click on Up Color, change to Dark Green.
    17b. Close
  18. Click on the second icon from the top and then look for Murphy (default) for color schemes. At a later time, you can change to what you like.
  19. Click on the 4th icon from the top and the default should have a blue dot next to the word trendline.
  20. go back up to the first icon image.
  21. review all the settings colors starting with Henkin-Ashi, then RSI(4), then StochRSI (14).
  22. Done and now click on SAVE at the top black URL line.
  23. On the far right is more ICONs loaded with good information. You can monitor how my XLs are doing by clicking on the Globe ICON and then Sector SPDRs and then click on a ticker symbol.

Now, click on the Daily and play with other timetables. If not a subscriber, you won’t be able to see the different timetables. The 4 hours I use for trading $ETHUSD all day long.


For a Kwik set up as a nonsubscriber.

  1. Call up stock charts

  2. Click on charts & Tools

  3. Enter PYPL in the Stockcharts ACP [new] box as an example

  4. At the top black bar, I am currently using OHLCBARS and CANDLESTICKS

  5. Where it says PYPL - PayPal Holdings, Inc., click on the ICON to the left and then click on the sprocket wheel on the right.

  6. Near the bottom are other settings and make sure the Price Labels and Y-Asix Labels boxes are checked off

  7. Close

  8. Next, add StochRSI(14) indicators as a confirmation signal to buy the stock. The cyan at the top is for selling as it crosses below the 0.80 line.

  9. Make changes for the blue (cyan) and the pink on the bottom

  10. Click off the blue chart pattern icon off (top left-hand corner).

  11. Viggle the mouse back and forth for fun

  12. Click on CANDLESTICKS at the top to see what it looks like

  13. Next, add True Strength Index (TSI)

  14. Make changes to the period settings to 16,8,4.

  15. change colors for the TSI Line to Green, and Signal Line to Red.

  16. The TSI is a confirmation of the Price labels. Green crossing up and over the red line is a buy signal. The inverse for selling.

  17. Click on C L O S E.

Being FREE you can’t see the minute-by-minute charts in the Daily box at the top. The daily is the default.

For fun look at UBER Daily chart and see my progress with 1000 shares at each buy signal starting way back in November. Should see 6 1/2 successful trades at 1000 shares

Enjoy the successful journey that has been presented. Please take your time. This is a lifetime project of earning wealth.

The ball is now in your court, it is up to get educated, put in the time, and learn or simply FAIL.

Quillnpenn - a poor church mouse scratching for a living as a Professional Swing Trader for over 45 years.
------------ Vision - Multi-Millionaire…Goal - earn 1.3% - 2.5% compounded Daily via the 2% theory.

1 Like

Quill,

You like StockCharts, and they do somethings well. But unless one has a paid subscription, chart templates can’t be saved, nor watchlists, nor does the site offer a means to do fundamental analysis. The far better site is www.barchart.com, where all of those things --and more- can be done for free.

Arindam

4 Likes

Quill,

Thanks. That’s a lot to digest. I think you’re describing technical analysis, right? Not familiar with it. So far my focus is on trying to find good companies to invest in.

Ken

Ken,

Yeah, Quill’s a ‘chartist’, aka, a technical analyst. But don’t be fooled when he scoffs at --and dismisses-- “funnymental analysis” as a waste of time. He’s more on top of that discipline than he pretends not to be.

The Motley Fool crowd hates Technical Analysis, as you’ll discover if you read any of the G Boyz books, as they do “market timing”. But there are clearly better times to be buying stocks, bonds, etc., and there are worse times. Fundamental Analysis (FA) provides part of that picture, as does Technical Analysis (TA). Both are necessary if one wants to keep oneself out of trouble.

What FA does well is provide info about the business. What TA does well is provide info about the dervivative based on that underlying company, its stock. Said another way, if you’re Buffet and buying whole companies, you only need FA. But if you’re a small investor who’s tryin to buy a fractional share of that business --via its stock-- you need to pay attention to what “the market” thinks about the stock as opposed to what it might say about the company.

For sure, there’s a connection between the two, and --for sure-- “the market” often gets things wrong, especially at the extremes (when technical can become fundamentals). But you’ll avoid a lot of grief if you don’t try to argue with traders who are selling a stock down for reasons that aren’t yet apparent in the fundamentals. Or as one of the best of the chartists used to say, “The tape tells all.”

If you want to see how this is so, work your way through Justin Mamis’ book, The Nature of Risk.

Arindam

1 Like

1) In current market conditions, do you jump in now with all $15K or smooth it out over 3 months?

Both (keep reading). I would hope you’re not buying any individual stocks that you haven’t done a bit of diligence on and decided you’re comfortable with the valuation. I wouldn’t worry too much about trying to dollar cost average the initial purchase of one stock.

I do tend to peek at the charts for a few minutes or sometimes for a few days before I buy something. I think I read on another MF board that someone said they never buy the SA pick the day the newsletter hits the inbox because of how many other people get the exact same stock tip at the same time, causing a temporary price bump. (I am not currently an SA subscriber nor am I a financial advisor; YMMV)

2) It’s hard to make $15K cover 25 stocks given the typical stock prices in Fool Advisor. So how many stocks does $15K fund? My brokerage doesn’t allow fractional shares of ordinary stocks.

The likelihood of finding 25 fantastic picks on Day 1 are slim. I would rather stick my money in an index fund than to buy 25 individual stocks all in the same year. With $15,000, I would do $1k - $2k each, diversify by industry, and build a watchlist for when I come up with additional cash.

Arindam,

Feeling overwhelmed at the moment - so much to learn, so little time.

I like how you tied TA and FA together - makes sense. My sense is that TA is most important if your timeframe is short, like a trader.

thanks,
Ken

1 Like

Ken,

The father of ‘Value Investing’, Ben Graham, put it this way in his book, The Intelligent Investor, which you should definitely add to your reading list and work your way through, pencil in hand, underlining and making notes. “In the short-term, the market is a voting machine. In the long-term, a weighing machine [where it’s fundamentals that matter most.]” John Murphy, a well-respected technical analyst, put it this way: TA = Technical Analysis. FA = Fundamental Analysis. TA + FA = RA, aka, Rational Analysis.

Forget about the fancy charts you’ll see on CNBC and similar programs and their talk of Golden Crosses and such, because, by the time the 200-day MA crosses below the 50-day MA, you’re already too late getting out for TA to be of much help in controlling your risks. All you need to build and use are charts that make sense to you, given the securities you’re trying to trade/invest in and their volatilities.

Just as there are dozens of good books that explain investing from a fundamentalist viewpoint, there are dozens that explain how to use technical analysis to make informed decisions about whether to get in, or out, or sit tight. This is what none of the Motley Fool staff understand, that TA is nothing more than a means to help manage investment risk. They hate TA and bad mouth it endlessly. But they also end up with an endless list of subscribers whose complaints all go like this: " On advice of the Motley Fool, I bought such and such. Now I’m losing money. What should I do?"

Invariably, they are told to “keep the faith” and to “sit tight”, that “prices will recover”. Maybe they will. Maybe they won’t. Meanwhile, a lot of financial and emotional damage is being done that could have been avoided just by looking at a price chart and admitting that the fundamentals have changed and that “the market” --its infinite wisdom-- is acting on that information. Is the market always right? NO! But which side of that trade do you want to be on as they vote with their feet and dollars to get in or out?

Fundamentals speak to What? and Why? Technicals speak to When? One’s risk management metrics say How much?

Arindam

2 Likes

So I have $15K to invest using Fool Advisor service. This money is discretionary. I have 2 questions:
1) In current market conditions, do you jump in now with all $15K or smooth it out over 3 months?

What I have been doing:
Put half in now, and save half for later. If the market goes up, I’m glad that I have put some in already. If it goes down, I’m glad I didn’t put it all in.

This is more for regret minimization. If it were possible to time getting out of the market AND getting back in, people who do it for a living (with lots of staff to research and gather information) would already be doing it.

If you look at someone who invested on the “worst” day of each year, over the long haul he’d only be a little behind someone who invested every month. Time in the market is much more important than timing the market. The real losers are the ones who get out (sometimes at the bottom, sometimes elsewhere) and then don’t get back in missing out on the big growth market. I knew a guy at work who side-stepped the 2008-09 crash, didn’t get back in when things started going up, and waited for the next crash to re-buy stocks…but missed out on the subsequent >300% increase.

Also, with $15K, the vast majority of your investing assets are still to go into the market over your career. So, essentially it’s not invested right now. That might ease your mind about getting into the stock market now.

“If you look at someone who invested on the “worst” day of each year, over the long haul he’d only be a little behind someone who invested every month.”

But as Ben Stein --and many other have shown-- both would be multiples behind someone who bought on (or close to) the best days to be buying. Timing matters, and it can be done, which calls to mind something Eisenhauer (or maybe it was Henry Ford) used to say.

“If a man thinks he can do something, or if he thinks he can’t, he’s generally right.”

Right now, financial assets are very, very expensive relative to their historical norms, never mind the current gov’t is doing everything it can to ensure economic destruction. This is NOT a time to be trying to put gobs of money to work in supposed, “Buy-and-Hold” situations.

Hi, Ken. I would not factor in the current market conditions when putting together my investment strategy. Good investments are good investments regardless of the market.

I cannot offer individual or specific investment advice. Every Fool has to figure out an investment strategy that works best for them.

My feeling is if you are a Stock Advisor, Rule Breakers or Everlasting Stocks member, you are going to get more Recommendations and Best Buy Now (timely Stock) opportunities each month than you can reasonably invest in, so don’t feel pressured to invest in anything until you are comfortable with your investment decision. Read the recommendation analysis, join the conversation on the company’s Premium Community discussion board, and make sure you share the analyst team’s conviction in the company.

In any given month, that could mean opening new positions, adding to existing positions, or holding your cash back for the next month when hopefully you’ll like the opportunities better.

For Stock Advisor/Rule Breaker subscribers, one strategy would be to focus on the Best Buy Now (Timely Stock) opportunities which are also Starter Stock (Foundational Stock) companies, followed by the remaining Best Buy Now (Timely Stock) opportunities, then the remaining Starter Stock (Foundational Stock) companies. Your Analyst Team thinks the active recommendations are good long term, buy-and-hold opportunities.

You might want to build a Buy Watch List divided into four categories. First, there are the Must Haves, companies in which you have deep conviction and absolutely want in your portfolio. Second, there are the Strong Haves, companies in which you have strong conviction but wouldn’t just totally die if, like, they weren’t in your portfolio. The third category is the Nice Haves, companies in which you have positive conviction but aren’t especially excited over. The last category is Never Haves, those companies you just flat out think are wrong for you.

This way, when the market presents discount opportunities, you are ready with a shopping list. The trick is to already have the list of companies you want to open or add to a position on in advance and then your focus is on the opportunity rather than the market price.

One unofficial rule many Fools follow is buying in thirds. Let’s say you want to purchase about $2500 of a company. You could buy $1000 now, then another $750 on a future dip in price, again the final $750 down the road when the price is again at a discount. That could be next month, next quarter or even next year.

This is a form of dollar cost averaging which can even out your cost basis. Not relevant if your investing through a tax-advantaged account, but important if you are watching your potential capital gains and losses. It also lets you spread the cost of a position over time, which can be helpful if you are adding cash to your portfolio periodically rather than all in one lump sum.

In terms of how many positions to maintain in your portfolio, again, there’s no hard and fast rule. The goal is to maintain diversity so that your portfolio does not carry too much risk from a single investment. The Gardner Brothers have suggested 15-25 companies is a good, or at least aspirational, starting point. How many total positions and how much you invest in that initial position is just a question of with what you feel comfortable.

Tom Gardner has encouraged Fools to own 10-20+ stocks, hold them all for 5+ years and expect 40% of them will lose to the market. Just 10-25% of remaining positions will drive 90-100% of the returns. That last point is why it’s essential to diversify, because there is no way of knowing in advance which companies will do what. This is just a starting point, however. Portfolios can grow to as many positions as they feel comfortable managing.

One trap many fools fall into is thinking too much about how many shares they own and not enough about the value of those shares. They think they are somehow doing better buying a lot of shares of cheaply priced stocks rather than just a few shares of more expensive companies.

But the market price of a share of stock is completely dependent on the total market value of the company divided by the number of outstanding shares. The higher the market value, the higher the stock price. The more outstanding shares, the lower the stock price. However, neither market value nor the size of the shareholder pool is a measure of performance.

Regardless of whether you own 1000 shares at $1 per share, 100 shares at $10 per share, 10 shares at $100 per share or 1 share at $1000 per share, you still own $1000 of that company, and if the share price goes up 10%, you’ve gained $100 any way you split it. If there’s a company in which you would really like to invest but is too expensive for your available cash, just wait until you can save enough for a share.

Many Fools watch their portfolios daily, hanging on each climb or drop in stock price and wondering what each piece of news means to the market. I like to say invest in companies, not markets. So instead of dwelling on quarterly earnings numbers, focus on how and what management says is happening with the business. When there’s a big drop in the stock price, ask yourself whether there was any significant change in the company’s operations that triggered or resulted from the market’s actions. If not, it may be a buying opportunity.

Foolish philosophy emphasizes long term (3-5 years or longer) investing in companies rather than short term trading of stocks. Focus on the company’s performance, not the market’s performance.

Another trap Fools try to avoid is investing emotionally in reaction to significant news or large price swings. Fools try to never make investing decisions out of fear or panic, or unfounded optimism and irrational hope. It’s not that Fools embrace risk but that we try to manage it through research and rational decision making. It is said that fools rush in, but Fools invest with purpose.

The motto of The Motley Fool is to Educate, Amuse and Enrich. You’ll notice that enriching comes last and education comes first. And bridging the gap is amusement. So take advantage of the resources TMF has to offer to learn about investing as you build wealth for the future, and have fun during the process.

Fuskie
Who is throwing a lot at you but thinks the most important thing is for you to embrace and stick to a strategy and to ask lots of questions, because that is how you learn and grow as an investor…


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2 Likes

“If you look at someone who invested on the “worst” day of each year, over the long haul he’d only be a little behind someone who invested every month.”

But as Ben Stein --and many other have shown-- both would be multiples behind someone who bought on (or close to) the best days to be buying. Timing matters, and it can be done, which calls to mind something Eisenhauer (or maybe it was Henry Ford) used to say.

That’s mathematically correct. Now all you have to do is to figure out where the top is to get out, and where the bottom is to get back in.

My coworker got swayed by the host of a financial radio show, and got out before the big 2008-09 crash. Then he didn’t get back in due to the subsequent rise being a potential “bear market rally,” and he waited for the subsequent drawdown that never came. Meanwhile, people that just invested mechanically to take emotions out of decisions saw our assets quadruple.

Sure, the stock market can recede… but if you can’t stomach that, adjust your asset allocation so that you won’t sell just before a bottom. Last year I kept waiting for the pullback so I could do a Roth conversion, and stocks just continued going up. I’m glad I didn’t count on that nonexistent pullback to put money to work in stocks!

Curious,

Each person has to chart his/her own investing/trading path, according to their means, goals, and temperament. This is the mistake most financial “advisers” make. Be they persons or newsletters (such as the trash published by our dear forum hosts), they never account for the differing personalities of theie users/readers. But if one takes the insights of Jung seriously --especially as they have been commercialized and applied by Meyers-Briggs–, then would-be investors/traders aren’t monolithic but have (at least) 16 differing “money types”, who will have each differing approaches to managing risk.

For some, “market timing” is anathema. For others, it’s just common sense. Figure out who you are and act accordingly.

Arindam

Thanks, I like that approach. Gives me some reserve for the next SA pick.

I tend to agree with you stance. Too many people trading things like short squeeze stocks (https://pennystocks.com/featured/2022/05/31/best-penny-stock…) forget their strategy as soon as they see a little green in the account when the squeeze triggers, for instance. Thanks to all of this volatility, people are hunting a quick buck day trading but then allow greed to slip in unchecked. They either hold too long and miss the move or become gunshy as a result of holding too long and sell too early to miss the bulk of the move.

The most likely issue thereafter for those holding too long is they “hope” for a rebound. Let me be the first to say, if there’s volatility to the downside, it’s gonna take time to recoup those losses fully (if at all). Education is the most important thing for sure. Since anyone can open a trading account and fund it, there’s very little barrier to entry. But going about it haphazardly is what most newbies try to do until they realize: hey, I should probably learn something first.

“Education is the most important thing, for sure.”

I’d strongly disagree. “Education” is nearly irrelevant, because no one can trade another man’s game, and all attempts to “educate” carry embedded assumption that probably aren’t a good match for the would be student.

I’d say what matters is self-awareness and humility. The market will teach you what you need to know, one mistake at time, as long as you pay attention to her lessons. Typically, that means three things. #1, betting small enough that you don’t get yourself thrown out of the game before you’ve had a chance to learn the game. #2, writing an investing/trading plan, and #3, keep an investing/trading journal in which you do post mortems on the trades that didn’t work.

For sure, there will always be unavoidable, unforeseeable price shocks. But most of the time, evidence is there in the tape or the financial statements that should have served as a warning. As for the trades (or investments) that do work out, how many turned out that way out of sheer, dumb luck, and how many really were the result of sound analysis and consistent discipline?

It takes a lot of years and a lot of making mistakes before one begins to understand what’s probably possible and what should be avoided (or left to others). And those are lessons no one can teach you.

Caminante, no hay camino. Se hace camino al andar. [Roughly, “There are no roads but by walking.”]

Arindam

1 Like