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[Cahaba Valley Farm]

I am with you on investing in individual companies. It can be done, but many are just rolling the dice. It takes a lot of knowledge and work to do it correctly.

I would like to know the answer to this. The financial media is notorious for pushing the folklore of these million dollar stocks but of course they never bother to explain how anyone would have picked these stocks in their infancy when no one knew anything about them.

Based on this, I purchased Enphase when it was $49 per share and have the inclination that a type such as "Torvy", would blame me for insider trading.

My hats off to you arrow for your foresight to purchase such a stock. I hope you bought enough shares to be one of the $25 million dollar winners that the article was talking about. What I took away from this is you were an industry insider that had an understanding of the competitive and technological landscape. This makes sense to me. I appreciate you sharing that with me as I could not for the life of me understand how anyone would have just picked such a company to invest in.

 

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I would like to know the answer to this. The financial media is notorious for pushing the folklore of these million dollar stocks but of course they never bother to explain how anyone would have picked these stocks in their infancy when no one knew anything about them.

My hats off to you arrow for your foresight to purchase such a stock. I hope you bought enough shares to be one of the $25 million dollar winners that the article was talking about. What I took away from this is you were an industry insider that had an understanding of the competitive and technological landscape. This makes sense to me. I appreciate you sharing that with me as I could not for the life of me understand how anyone would have just picked such a company to invest in.

Thanks CVF but no, I did ok on the stock but I did not purchase enough shares to become an instant millionaire. I first saw this stock, I recall around 6 bucks. I consider those kind of stocks to be "penny stocks" and do not touch these. I have a friend who does and he has become quite rich but he spends 4-6 hrs per day hunched over his computer studying this stuff. That is not for me.
I have simply utilized what I saw around me and this was honed in by being a logger where you put your life up for grabs just about every day if you are not observant, patient, careful and project circumstances. Sought of like looking into the future so the tree wouldn't kill you.
I applied this thought process to stocks and asked "what are people doing now". What are people moving toward? What do people want?
I picked stocks based on "feeling" of the specie direction more than sustained study of market trends. Just common sense.
People , like water, kind of seek their own level and the bulk want to do so as easily as possible.
Intuition is what I utilized more than anything else and fortunately, it has panned out to be about 90% correct.
Just about anyone can do this if they give themselves the time.

In the meantime, I feel one of the biggest mistakes one can make is to stay "idle" in body, mind and spirit. I can't stand to exercise and that is why I have this part time job at the tractor store where I walk, stoop, bend, stretch, climb, sell and deliver.. I love doing it so it's not really a job for me.
I go by that old Chinese proverb of "Man stop...man die."

 

[rScotty]

I'm glad you shared this because I have seen many of these same type of articles and the question I am always left with is how or why would any investor make a $10k investment in a company that they know nothing about and has no track record or history to it?
....SNIP....

Hello Cahaba, I see the problem. Let me help. You are concerned that investing in individual company stocks is a hit or miss type of thing. Yes, that is true. Yes, some go up and others go down and there is absolutely no way that common guys like you or I can know which. To make matters worse, there are somewhere between 3 & 4 thousand different individual company stocks on the market. Not all are good.

But that misses the point.

The point was that the investor type TBNers here - guys like Torvy and myself - were NOT talking about individual company stocks. We are instead talking about "Index Funds".
Index Funds are sold on the stock market just like any stock, but they do not represent any single company. Instead, they are a basketful of some of each stock that makes up a Stock Index.

So if you are to buy one share of the S&P Index Fund, your one share will be composed of a fraction of every one of the 500 stocks that S&P looks at when they make up their S&P 500 Index.

And over time, that S&P 500 has always gone up. Always. No, not every day, or even every year - but overall the stock market outruns inflation by a large amount. Unless some catastrophic event takes down the whole world's financial system, Index Funds are the best bet going.
And that is the point that was being made.

rScotty

 

[AndyMA]

I'm glad you shared this because I have seen many of these same type of articles and the question I am always left with is how or why would any investor make a $10k investment in a company that they know nothing about and has no track record or history to it?

Very recently I was reading about a company out in Arizona called Enphase. It's a solar panel company that has skyrocketed in value over the last 10 years without much explanation other then a so called battery storage technology that they have supposedly come up with. And an article almost identical to yours was saying that if you had of made a 10k investment in the company 10 years ago it would be worth 25 million today. The problem is who in the hell would have picked an obscure solar panel company out in the middle of the Arizona dessert to make such an investment?? And if they did then why?? In case you haven't noticed, solar panels are not mainstream and I have never seen anyone out in my part of the country buying them. Then add to all this Solendra which went bankrupt...so why would anyone make such an investment?

This is where all this turns into a type of lottery. If you pick the winning stock then you could get rich. The problem is who knows what and where those stocks are going to be. Even with the article you sent me it has Monster at the top of the list. Dude, I have been seeing that brand for years in all the gas stations and they have many competitors in the same market as them such as Red Bull. Why would anyone have invested 10k in a energy drink company in 1995? There was no established market for energy drinks back then. The same is also true for Bitcoin. The few hundred people that bought shares in Bitcoin when it first went public had no clue that it was going to become the speculative circus that it has turned into. It was nothing more then a total crapshoot like pulling a level on a slot machine. There was ZERO investment strategy that went into that. But now the financial media will hold them as some genius investors which they weren't and still are not.

I was fortunate to buy Enphase at $1.39 when it looked like it was going to go bankrupt because of 25 year warranty liability on products. Sold it at $259 High was $288

Andy

 

[Cahaba Valley Farm]

I was fortunate to buy Enphase at $1.39 when it looked like it was going to go bankrupt because of 25 year warranty liability on products. Sold it at $259 High was $288

Andy

Please explain why you invested in that company especially at that time.

 

[Cahaba Valley Farm]

Hello Cahaba, I see the problem. Let me help. You are concerned that investing in individual company stocks is a hit or miss type of thing. Yes, that is true. Yes, some go up and others go down and there is absolutely no way that common guys like you or I can know which. To make matters worse, there are somewhere between 3 & 4 thousand different individual company stocks on the market. Not all are good.

But that misses the point.

The point was that the investor type TBNers here - guys like Torvy and myself - were NOT talking about individual company stocks. We are instead talking about "Index Funds".
Index Funds are sold on the stock market just like any stock, but they do not represent any single company. Instead, they are a basketful of some of each stock that makes up a Stock Index.

So if you are to buy one share of the S&P Index Fund, your one share will be composed of a fraction of every one of the 500 stocks that S&P looks at when they make up their S&P 500 Index.

And over time, that S&P 500 has always gone up. Always. No, not every day, or even every year - but overall the stock market outruns inflation by a large amount. Unless some catastrophic event takes down the whole world's financial system, Index Funds are the best bet going.
And that is the point that was being made.

rScotty

Scotty I appreciate your attempt to bring clarification but I understood what you and Torvy were saying. And to be clear and fair this conversation turned into two conversations at once. I initially took issue with Torvy about his confidence of taking a lump some of money and investing it in the market to outperform the interest on his debt obligations. We hashed that out and had that conversation and then I pointed out how the financial media loves to taught individual stocks that would make people rich if they bought and held them for a 10-20 year period of time. Investing your money into the S&P 500 can bring you a nice, hearty return but it will not make you rich unless you have a lot of money to invest and can lock up that money for years and decades at a time. Then the tax penalty for taking it out is enormous when you finally make the big money. My soap box here is the improbability that a person is going to pick one of these lotto stocks and hold it to a 10-20 year multi million dollar maturity. That is so far fetched to real life stock investing. It's like some glammed up, Hollywood, fairy tale version of how people actually invest in the real world. To me it's just industry propaganda. If I am wrong about this however, I am all ears and would love to know how such a thing could be done.

 

[Torvy]

I think you have two or three groups of those investors.

One just gets lucky. You can play this game on Marketwatch...I use it with my students. Real numbers with fake money. Some people just get lucky...you rarely hear about the millions who lose $100. You hear about the one who makes a million. (just like Vegas)

Second group are those who are professionals. They pour over data and analyze businesses and industries. Most of these are about finance in general, but I would include industry insiders on this to a point. These guys win more often than they lose, but no amount of research can predict every possible future event. Of course, most professionals mitigate their risk by diversifying much in the same way index funds work. In my experience, true professional investors (like Buffett) make money over the long haul because they understand enough and research enough to balance well (these guys usually outperform the broader market...if they didn't investors would be better off sticking to the funds).

The third group is the true insider trading. These people hear about deals in ways the average investor cannot. Most of this is illegal. Hard to prove if the investor is not the actual insider or a close relative. Many politicians make money this way, not usually directly. This does not include industry insiders who just understand their industry and buy and sell within that industry based on expertise... Those are what I consider professionals as noted above.

 

[Hay Dude]

I think you have two or three groups of those investors.

One just gets lucky. You can play this game on Marketwatch...I use it with my students. Real numbers with fake money. Some people just get lucky...you rarely hear about the millions who lose $100. You hear about the one who makes a million. (just like Vegas)

Second group are those who are professionals. They pour over data and analyze businesses and industries. Most of these are about finance in general, but I would include industry insiders on this to a point. These guys win more often than they lose, but no amount of research can predict every possible future event. Of course, most professionals mitigate their risk by diversifying much in the same way index funds work. In my experience, true professional investors (like Buffett) make money over the long haul because they understand enough and research enough to balance well (these guys usually outperform the broader market...if they didn't investors would be better off sticking to the funds).

The third group is the true insider trading. These people hear about deals in ways the average investor cannot. Most of this is illegal. Hard to prove if the investor is not the actual insider or a close relative. Many politicians make money this way, not usually directly. This does not include industry insiders who just understand their industry and buy and sell within that industry based on expertise... Those are what I consider professionals as noted above.

There’s a 4th group. God-like investors who use insider trading combined with their influential positions of power to make 100’s of millions. They flaunt it in our faces because they know there’s a 2-tier justice system and they will never be found guilty.

 

[rScotty]

Scotty I appreciate your attempt to bring clarification but I understood what you and Torvy were saying. And to be clear and fair this conversation turned into two conversations at once. I initially took issue with Torvy about his confidence of taking a lump some of money and investing it in the market to outperform the interest on his debt obligations. We hashed that out and had that conversation and then I pointed out how the financial media loves to taught individual stocks that would make people rich if they bought and held them for a 10-20 year period of time. Investing your money into the S&P 500 can bring you a nice, hearty return but it will not make you rich unless you have a lot of money to invest and can lock up that money for years and decades at a time. Then the tax penalty for taking it out is enormous when you finally make the big money. My soap box here is the improbability that a person is going to pick one of these lotto stocks and hold it to a 10-20 year multi million dollar maturity. That is so far fetched to real life stock investing. It's like some glammed up, Hollywood, fairy tale version of how people actually invest in the real world. To me it's just industry propaganda. If I am wrong about this however, I am all ears and would love to know how such a thing could be done.

Well, I'm glad to hear that you understand it. You had me worried there for awhile.

As an old guy, I'd like to also take this chance to point out that those decades will pass whether or not you take the opportunity to invest. And once they pass they are gone. You can't go back and invest when it was smart to do so. But if you did, you can cash out at any time.

rScotty

 

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I was fortunate to buy Enphase at $1.39 when it looked like it was going to go bankrupt because of 25 year warranty liability on products. Sold it at $259 High was $288

Andy

Good going Andy. Hope you bought 10,000 shares at that price!