Ask Paul B: Investing Do’s and Do Better’s

Dear Paul B,

I have been an investor for four years now. The market seems to be watching my every move. I cannot explain why the last three stocks that I had rallied an average of 38% within a few weeks/months after selling. I had been patient for years with two of them, yes years!! I am so angry, I could just scream. If any of my neighbors near the Arlington Heights Library hears me scream, don’t worry, I won’t jump (yet.)

Robbie

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Dear Robbie,

I can feel your frustration. Investing is 50% homework, and 50% patience. Our emotions often guide us in investing, while only the price action, and, as I refer to stocks “giving them the time to cook.” We cannot divine the exact time to buy or sell, but we can control our emotions so that our investments are given the appropriate time to prove us either right or wrong. How often do we wait 3 or 4 years of a losing position, and then when we see the “break even price” we sell. Why? I have learned throughout my forty years that the market does not care when or why or at what price I bought or sold. My timing could be perfect, but typically we must have the patience of a saint. My nightmarish experience began when I sold Autozone (AZO) after about four years. I was way early, but I eked out a 3% gain. My good friend, who is in the auto-parts business recommended it to me. I had a rather large position, and thought I was prudent to jump out when I did. Within three months the stock gained 20%, and it went on to become an auto after-market leader with hundreds of stores. My lack of patience cost me $80,000!! I cannot pass up an Autozone without grimacing, and a few choice words. Follow your investments with a few hours of research each week. More to come…

Paul B

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