Fear leads to...
smaller returns.
I was chatting it up with my boyfriend's mom the other day - trading stock secrets. And honestly, she has really good ideas right now - looking into all the right areas- energy, construction companies, REITs, ETFs, biotech, etc. But she can't seem to get over the huge tech bubble burn of the late 90's. That fear causes her to sell when she's only made a few bucks. And of course, after she sells, they skyrocket. (Practically investing's Murphy's Law). She does her research and chooses great companies, but she's simply too afraid to wait it out.
I, on the other hand, am here to invest for the long term. Since I'm younger and have more years of earning power ahead of me, I'm not as risk averse as she is.
Solution? I tried suggesting to her that maybe if she was too afraid of losing her entire position, to sell off the majority of it, and just keep a small portion - so that if it goes up, at least you're in on it too. And if it goes down, it doesn't matter - it was only a minimal position. She kind of laughed at the idea of keeping 10-20 shares of a company, saying that such a small amount is worthless. To each his own, I guess.
I own a few small positions. One of them, XOM, was merely because I miscalculated when I transferred money into my account to buy a position. Apparently I miscalculated by about $650 (after I bought whatever it was I originally wanted to buy). So I'm thinking, should I just withdraw it out or actually buy something with it? I bought a whopping 11 shares of XOM. (This was back in April) It's not too shabby - I've made a 12% return on it, and I can now expect nice quarterly dividends. So eventhough it's a small amount, they'll add up.
My new motto: Small amounts of money do make a difference.
P.S. Now that the markets have been wildly going up and down these past few days, maybe you should consider dividend stocks a little more seriously. (MCD just increased their dividend by 22%. Just a thought) Disclosure: I own shares of MCD.
I was chatting it up with my boyfriend's mom the other day - trading stock secrets. And honestly, she has really good ideas right now - looking into all the right areas- energy, construction companies, REITs, ETFs, biotech, etc. But she can't seem to get over the huge tech bubble burn of the late 90's. That fear causes her to sell when she's only made a few bucks. And of course, after she sells, they skyrocket. (Practically investing's Murphy's Law). She does her research and chooses great companies, but she's simply too afraid to wait it out.
I, on the other hand, am here to invest for the long term. Since I'm younger and have more years of earning power ahead of me, I'm not as risk averse as she is.
Solution? I tried suggesting to her that maybe if she was too afraid of losing her entire position, to sell off the majority of it, and just keep a small portion - so that if it goes up, at least you're in on it too. And if it goes down, it doesn't matter - it was only a minimal position. She kind of laughed at the idea of keeping 10-20 shares of a company, saying that such a small amount is worthless. To each his own, I guess.
I own a few small positions. One of them, XOM, was merely because I miscalculated when I transferred money into my account to buy a position. Apparently I miscalculated by about $650 (after I bought whatever it was I originally wanted to buy). So I'm thinking, should I just withdraw it out or actually buy something with it? I bought a whopping 11 shares of XOM. (This was back in April) It's not too shabby - I've made a 12% return on it, and I can now expect nice quarterly dividends. So eventhough it's a small amount, they'll add up.
My new motto: Small amounts of money do make a difference.
P.S. Now that the markets have been wildly going up and down these past few days, maybe you should consider dividend stocks a little more seriously. (MCD just increased their dividend by 22%. Just a thought) Disclosure: I own shares of MCD.
posted by L.Su at 4:29 PM
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