So I think I've read too many threads and articles on "the perfect stock" and now I feel like I am too cautious when it comes to picking a stock or investment route.
I spend hours searching for what seems to be the golden egg, and meanwhile, my money sits and does no work for me in growth.
What did you do or use to help you create a balance between being cautious, but also not spending hours searching for the "perfect one".
Any advice would be GREATLY appreciated.
Do you ever feel like you are too cautious with investments?
byu/Own-Syllabub476 instocks
Posted by Own-Syllabub476
28 Comments
Yes, I take action but I still feel like I mostly invest in mature businesses that are significantly undervalued (in my opinion), while I see other people putting money and making bank on 0 revenue speculative stocks and momentum trading.
I guess at some point they’ll blow up and I’ll probably be fine with my defensive stocks but I’m still envious haha
Tbh, I am not. Invest into companies which I know too “powerful” to fail and I put good position in them and wait. Such as Nvidia.
That’s basically what Warren Buffet / Charlie Munger had done. I remember Buffett said something like most of the investors would benefit from having a 25 trades limit for their entire life, because then they would start to do proper research and really think through their decisions.
If you have low trading costs on your platform, you can put it in the ETFs or something with decent liquidity and low risk, but otherwise keeping the cash is fine as long as you think you will make some transactions not years from now.
I think this mentality applies to other facets of life. Half-in, half-out equals half-baked results. Go all-in and enjoy the highs and lows.
You have to invest in line with your own risk tolerance. Sounds like you’re just risk-averse. Go 90% into a global ETF, and use the 10% as ‘fun investing’ where you don’t feel as much pressure for your stock picks to make or break your portfolio.
All the time. I have chronic looking-back-with-deep-regret syndrome. I see plays that are wildly valuable, but I lack the confidence to pull the trigger to make any moves.
Then months or a year or so later I am suffering with indignation
Just have a mixed portfolio.
I’m not a trading guru by any means but seem to have a good stock picking process, so lately I’ve been trusting that process. FYI I also DCA into an all World fund every month and my pension is in mainly SP500 companies.
In a nutshell, I only invest:
a) long term (5-10 years)
b) something that is potentially going to make me rich, so it must be capable of beating the market by a long shot (by the market I mean S&P500)
c) USA tech only (that’s where the money in our lifetime is. After all, the US stock market dominates all other markets, so I’m not interested in UK or China for example)
d) Has to be past the ‘startup’ phase, $5 billion market cap plus.
e) Never go ‘all in’, maybe at the start, I did with Bitcoin at around $6k when I was poor.
f) Have conviction and don’t listen to the FUD. Market makers will try to get you to sell.
So far my winners have been: Bitcoin (@ $6000), Tesla (@$200 pre split but sold way too soon so lost out on run), Rocket Lab (@ $5 then went in heavier), Reddit (@ $70 then went in heavier). While my portfolio is not large by any means, the return over 8 years has been great, so I’m gonna keep doing what I’m doing.
Keeping it simple
You gotta get wasted and loosen up and make some of the big moves you were too scared to make. Trust me bro.
I sell covered calls all the time. Some get blown out of the water and I miss out on some real gains, but you can’t beat yourself up over it. No one ever went broke locking in gains, nice clean consistent returns.
As far as being cautious, I feel like a most worth while stocks are overvalued right now. Everything is up so much over the last 6 months, no good deals. ( Amazon, silver, gold, Costco, delta, visa, jp Morgan, spy)
We need a healthy pull back and companies are starting to release mixed forward guidance.
Caution comes from two things: your own knowledge of stocks and how to de-risk your positions, and a lot of advice. Frankly a lot of advice in investing steers people into safe bets, largely because going any riskier requires being a lot more knowledgeable and experienced.
So if you are wondering if you should be taking more risks, start by addressing your knowledge of investing. Put a bit of money into an individual equity, get to know what it’s like owning them. Owning individual equities requires a disciplined mind and tolerance for loss, both of which are tough to accept and can take time to acquire, so start by taking a small equity position, maybe in a safer bet, and learn more about investing and investment risk.
Short answer: Yes. Sometimes i wish i would take more risks. I have a lot of Stocks on my watchlist, that have massive gains.
Sad that i did not invest in most of them. And sad i did not invest more in the ones i did invest in (Alphabet for example…)
I thought I was up until today
In my years of investing index funds were never for me and I am well ahead. However I am careful to what I choose.
Make a bet and ride it out if it drops decide if you want to sell.
Buying penny stocks is not an excuse for risk takers to blame themselves
If you are long term sensible investor is somewhat ok to feel that way in bull market when there is so much random “investors” doing 50 precent a year. Then you feel like an idiot if you are cautious. MOst of these perfect stocks are just random “throw it on the wall an see if it stick” kind of things. THere were numerous stocks that completely tanked and were claimed to be the ONE. But you forgot about them because noone comes two years later to tell you about the stock they lost money on.
Those people who think they have it figure out because of last years bull market will be wiped out sooner or later and it will return to normal.
I was up 2000% YTD by October last year, by November I was down 95%
I think at this point I have a good sense of my investment risk tolerance and like to stay generally around – dial up a bit/dial down a bit – that line.
I am fairly aggressive, but also diversified and have tried to be increasingly “go anywhere” in recent years. I tend to have 5-7 buckets at any given time with various different bets/themes rather than just relying entirely on one playbook.
“I spend hours searching for what seems to be the golden egg”
I’ll spend hours in the early morning looking at company after company but it’s become very “automated” at this point. If something is an issue or I’m simply not interested/don’t have a thesis it’s just instantly on to the next name. I like to have a surface understanding of a lot of different companies so that if there is a broad trend or theme that becomes of interest, I’m not starting at square one.
“”perfect one”.”
You talk about the golden egg and perfect company, but what does that look like to you?
There are things that I find that aren’t perfect, but are interesting, relevant and good/check the boxes/etc and sometimes that’s enough for a small position and go from there. Druckenmiller has talked about “invest then investigate” and I definitely do that at times.
There’s been a few examples in recent years, but one from 2023:
“We’re in such a fast-moving world with all the new communications that if I get an idea and I think it’s attractive and for whatever reason that security price will be higher in a year or two, I generally go ahead and buy it and then tell the analyst to look into it.
And if it turns out I was wrong after they analyze it I get out. I don’t like to wait around.
I’ve… a lot of my best ideas, I’m not that smart. So if I see it, whatever’s going on to cause that idea to happen someone else might see it.
And by the time we get done analyzing I will miss 30 or 40% of the move and then I’m paralyzed because it just went up 30 or 40% and I don’t have the guts to buy it even if I think it’s going higher.
So we’re more in the camp of if we got a strong feeling, we’ll cut the analysis short and then by all means do our analysis thoroughly and then just unload it if it turns out my thesis was wrong.” (https://acquirersmultiple.com/2023/05/stanley-druckenmiller-buy-first-analyze-later/)
You should read into Peter Lynch and garp investing.
I’m probably not cautious enough with my investing so careful going too far with this but I always just think at the end of my life I don’t wanna be thinking about the shots I didn’t take.
If I take a shot and I miss and it goes to 0 so be it, but I’m trying to take every shot I can take and weave the best investment portfolio tapestry I can while I’m here.
So I just YOLO and for the most part let my winners ride to wherever they’re going and never sell, and let my losers ride to 0.
Yes, waiting for opportunity is the hardest part. I only trade with my Roth IRA. Last year i was all cash probably 9 months but ended the year up 67% on the two trades I did make. Now in cash waiting again. I just need to beat the market each year, goal is 30%. If I trade nothing and make 0% this year I will still be beating it.
No
Time in market > timing market. Don’t leave money unused like that, put it in sp500 or any other ETF while you research… maybe you’ll be convinced to just leave it there lol
No, I take smart risk and spread my bets along several stocks. So if I have 100K it’s spread among 10 stocks. Or 50K in one stock while the other 5 are spread evenly.
During the bear market, I went all in to the point I had zero dollars at times, worked out wonderfully. I could have been fd if we went into a recession but I was tired of this work ish so it was worth the risk for me.
My simple approach with my fun portfolio (the one I meddle with regularly), is to just make small bets on asymmetric upside potential. Which essentially means I go for moonshots but never invest more than 5% of the total portfolio. I then trim lightly the stocks that do well, and don’t worry too much about the ones that fail.
Please tell the class when you find the perfect stock and when you plan on buying it. It will surely crash that day. You suffer from paralysis of analysis. If you want to own single issue stocks then look at FinViz heat map and buy good ones. Dollar cost averaging into ETFs is probably the best route for someone like you. I DCA’ed into mutual funds when I was working and let it run on autopilot. I accumulated a nice nest egg. Slow and steady wins.
First, I don’t keep all my money invested. That may mean lower returns, but it also means I can always pay my bills, and not have to spend my days worrying about money.
Second, I don’t worry about meeting or underperforming benchmarks. These days you can buy a total market index fund and match market returns minus taxes and fees without any effort. But if you want to invest in individual securities then it will drive you a little crazy if you are always obsessing about the yardstick. If your investment process is stressing you out, then money aside, you are losing returns via the stress it causes.
Third, I think of stock ownership like owning a farm with partners, and managers who run it for us. Once purchased, I check the price of the “farm” only once or twice a year, and read each annual report when it comes out.
The main thing I’m looking for are businesses that stand a good chance of remaining profitable for a long time, and competent managers who communicate well and behave ethically.
Best of luck to you.
If you’re going to hold a stock for at least a year (which you should, if for no other reason than nabbing a lower capital gains tax rate), investing hours of research into that company is the right thing to do.
If you hate sitting in cash, allocate your reserve funds to VT, VOO/SPY, a standard 60-40 portfolio, a ray dalio all-weather portfolio, etc so you don’t have this FOMO compelling you to make rash decisions