I’m a beginner in investing. I followed Rule Breaker’s advice since 2020 and put a big amount of money on LMND, ZILLOW, TDOC, and now I’m at 70-80% loss.
What should I do with these stocks now? Esp. Fool.com recently put some of them in the penalty box. What does penalty box even mean? Should I keep buying to balance out the loss?
Those companies still seem to have long-term potential and I’m okay to keep them in the next few years. Just don’t know if I should put more money into them or should I ignore and focus on other stocks.
thanks so much for any advice!
This a public board. Rule Breaker has its own private discussion board. You would be best off to post your questions there.
We seem to be in a bear market with many more pessimistic now than they were before. Buying at regular intervals results in dollar cost averaging and a low average purchase price. That’s a reasonable strategy for stocks you are satisfied are of good quality and are likely to recover.
Many are holding cash until the market settles down. We hope the market will bottom one of these days. That is when many of us will do some buying.
lanale,
In addition to the losses on your stock purchases, you need to add the money you wasted --err, spent-- on a subscription to RB. Instead, you should have bought a used copy of Ben Graham’s intro to value investing, The Intelligent Investor. Or if a more “growthy” style of investing appeals to you more, then any of Peter Lynch’s books.
As for what to do about the stocks you’ve already bought, DO NOT ADD MORE MONEY. Instead, keep them as reminders that you failed to do your homework before you bought them. One of these days --maybe-- they’ll recover. Or maybe they won’t. Who knows? Meanwhile, just regard them as very expensive warnings not to jump into things you don’t understand.
In addition to doing some basic reading, I’d suggest you find an investing buddy. I’m guessing from the photo you included in your brief bio that you’re female, which puts you into immediate conflict with the reckless, male-oriented approach to investing that the Motley Fool prefers. Seriously, there are deep and profound differences in how the two sexes view and deal with ‘risk’. This isn’t to say either approach is better or that there aren’t reckless women, for whom that idiot, Cathy Woods, is the poster child. But if you don’t hang glide, rock climb, etc. and aren’t an adrenaline junkie, you shouldn’t be trying to follow TMF’s model of investing, which isn’t ‘investing’ in any meaningful sense of that term. What they advocate is ‘speculation’, nothing more.
Right now, you’re suffering financial damage and emotional damage, and you need a win to clear your head (and heart). So, do this. Take advantage of Schwab Starter Kit offer. “Open and fund your account and get $101 from Schwab to split equally across the top five stocks in the S&P 500®, plus education and tools to help you take the next step.”
Now here’s the good part. The funding requirement on your part is a mere $50. Once you’ve done that, they give you $101 worth of stocks. ShaZamm! You’ve tripled your money. Furthermore, once the stocks are in your account, they can be sold if they don’t do well. So you’re trading on their nickel. But you still need someone to talk to. So talk a girl friend into opening an account as well, and then the two of you learn together how to make sense of the craziness of markets.
Lastly, and again, there really are no right ways to do any of this investing/trading stuff. There are only ways that interest you enough that you’re willing to do the work --and accept the risks-- they require. That means you gotta do some exploring to find a niche that suits your means, needs, goals, and personality.
Caminate, no hay camino. Se hace camino al andar. [roughly, “There are no roads but by walking.”]
Arindam
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https://www.investopedia.com/terms/f/frontrunning.asp
https://www.investopedia.com/ask/answers/05/061205.asp
https://www.investopedia.com/terms/h/hodl.asp
https://www.merriam-webster.com/dictionary/pied%20piper
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https://www.investopedia.com/terms/s/swingtrading.asp
https://www.investopedia.com/financial-term-dictionary-47697…
lanale,
First, you did not fill out your rap sheet to show what kind of investor/trader you may be with respect to money and risk management.
Going to assume you are a HODLer (hanging on for dear life) based upon getting bum information from the Pied Pipers.
Let’s see how much damage was done on what date you purchased the stocks in question.
Going to assume you don’t know how to read charts and trade accordingly.
Being a Swing Trader is how we make money no matter what the market is doing with accuracy. The Pied Pipers only want to know is “what is in your wallet”.
Barchart dot com and Stockcharts dot com are free other than registering.
Now let’s review how you got in trouble by not learning how to read charts to help protect your ASSets. It is your money and not the Pied Pipers. This buying and hodlering for 3 to 5 years do not work when we are in a traders market.
Conservative trading
LMND : https://schrts.co/SFhUJqBx As a swing trader we would have 15 out of 15 successful trades with 0 (zero) losses.
https://schrts.co/AwKnJVQC Now on or about the first week of July LMND should have been sold and would have to wait until the next cross-over signal appears. That is when to buy is when the red line (ema 13 ) crosses up and over the blue line (ema 50) and to sell is the inverse when the red line (ema 13) crosses back down over the blue line (ema 50).
Z : https://schrts.co/FajftkrY Since the "V’ we would have had 21 out of 21 successful trades with 0 (zero) losses.
https://schrts.co/CYqFtNcy Now on about March 4th, 2021, Z should have been sold and would have to wait for the REDLINE to cross back over the BLUE LINE heading north.
TDOC : https://schrts.co/wiicrksK Since the “V” we would have had 20 out of 20 successful trades with 0 (zero) losses.
https://schrts.co/rznmQWqk Now on or about November 10, TDOC should have been sold. It will be a very long time to buy back TDOC
If you want to be a Swing Trader in managing your own portfolios and not constantly buying the latest hot steamin tip from the Pied Pipers, let us know and we will show you for FREE how to be a successful trader going forward by using two (2) simple rules. My two (2) Eight grade nieces are swing traders and are now in the 6 digits since 6th grade. They manage what I manage for my wife below.
This is my wife’s portfolio which I manage since 2006.
re: Simon Sez III, Simon IV
re: Lucas
https://www.ellevest.com/ for women run by women.
https://www.ellevest.com/personalized-portfolios/how-we-inve…… this is the matrix I use for my wife’s portfolio.
- The Matrix -
VTI - VOE - VEA - BSV - SHM - BNDX - VNQ
VTV - VB - VWO - JNK - HYD - EMB - VNQI
VO - VBR - BND - MUB - TIP - cash - FTGC
I use my Simon Sez II -
I use my Simon Sez III
I use my Simon Sez IV
As my pet spider LUCAS says " Be the spider and let the prey come to you. "https://www.youtube.com/watch?v=ZoYVZmKSYFg
http://production.assets.ellevest.com/documents/Ellevest-Whi… go to page 5 to see The Matrix.
Next, the girls are managing the SPDRs (all 12) XTR is the 12th stock. I have been trading the SPDRs for my wife since 2006.
https://www.sectorspdr.com/sectorspdr/
Going to try and send you a sample chart of XLE via the PM and describe what you see in 23 words or less. Do you see the opposite of what you are going through at the present time? You will see that you will not lose a single dyme.
The next project is to learn how to trade via the Tetter Totter in lot losing any money.
The next project is to learn how to trade via the 2.5 % theory earning $ 20.00 on Day one to 8 mill on Day 365. If you like 3.0 percent then https://tinyurl.com/y3cvy4a4 is very very simple to understand and execute.
Doncha hate it when you have too much homework.
Something to ponder. Do what you’re doing or learn how to be a successful trader for the rest of your life and not depend upon others who are liars and clueless.
Quillnpenn - a poor church mouse scratching for a living as a Swing Trader for over 45 years.
------------ Vision - Multi-Millionaire…Goal - earn 1.3% - 2.5% compounded Daily per the 2.5 percent theory.
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Hi, lanale.
The last 2 years have been difficult for investors, especially new investors trying to navigate the unpredictability and uncertainty of the market. As has been noted, your Rule Breakers advisors offer you their recommendations, and that is certainly a source of information you should consider when making your own investment decisions.
Another source of information is your own gut instinct. As you noted, the companies you listed seem to have long-term (3-5 years or longer) business growth potential. If you have strong conviction in them, then that is another factor to consider.
In terms of whether to add, I like to employ what I call 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.
Now here’s where it gets really fun (or frustrating, depending on your point of view). You don’t have to follow just one strategy. Your strategy can be to be flexible with your strategy, to adapt as your investable cash, your conviction, your opportunities, and where you are on your investing journey dictates. Just keep the focus on your conviction in a company’s long term (3-5 years or longer) business growth potential and don’t be distracted by short term market movements.
For me, I take advantage of the many Service and Premium Community resources here a The Motley Fool to take some of the weight off my shoulders. If I can no longer remember what a company does or how it plans to grow its business, then it may lose its spot in my portfolio, but I am personally comfortable with over 100 positions. Don’t be like me, though, be more you.
For members of managed portfolio services, your Portfolio Rankings provides the latest conviction thinking from your service’s analyst team, as well as quarterly allocation guidance to advise your own portfolio strategy. It is not necessary hold a position in every company, though you are encouraged hold as many as you want or can.
If you are a Stock Advisor, Rule Breakers or Everlasting Stocks member, you are going to get more Recommendations and Best Buy Now opportunities each month than you can reasonably invest in, so don’t feel pressured to invest in everything or anything until you are comfortable with your investment decision. 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.
One strategy would be to focus on the Best Buy Now opportunities which are also Starter Stock companies, followed by the remaining Best Buy Now opportunities, then the remaining Starter Stock companies. Your Analyst Team thinks the active recommendations are good long term, buy-and-hold opportunities. You can also use the Allocation Tool to develop your own allocation strategy between small-cap, mid-cap, large-cap and other allocations.
Note that Stock Advisor Best Buy Now companies are now called Timely Stocks and Starter Stocks are now called Foundational Stocks as part of the new Find Stocks tool.
Fuskie
Who when he was first starting out on his Foolish investing journey, he tried to apply a lot of form and structure to his portfolio, but as he got older and more foolish, he realized that being able to predict his winners and losers 3-5 years (or longer) in advance was as much about luck as skill, and his own portfolio strategy is much more fluid and driven by patience and opportunity…
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