What inexperienced investors can learn from T.Gal

[PuckiTwo]

......my 1st purchase for trading purposes only, was 226 shares, but I paid about $5 per share [not $600+], and made a moderate profit [for a moderate investment], after holding some months. Then I used the same capital + profits to do my 2nd trade, and so on.

The above is copied from a conversation between T.Gal and another poster. I read most of T.Gal’s comments on the forum, so should every inexperienced and new investor. Of course, newbies should also read the recommended “Eight with Weight” books.

But here is somebody who speaks from her own experience and her posts hold an investor wisdom you will not easily absorb from books. T.Gal consistently states in her posts that it takes/took her sometimes months, years before she moves a stock - it’s like a red thread thru her posts.

To me this is one of the most valuable messages a new investor can learn. She teaches patience by practising it. Before I read her messages on CMF I drove myself and our advisor nuts when a stock dropped, simply didn’t know what “holding a long time” meant. For some people, especially when their investment disappears in front of their eyes, “a long time” could be days. I learnt thru her comments that (of course, depending on circumstances) it is “allowed” and necessary to wait and force myself to be patient.
I wonder how many new and inexperienced investors are in the same position as I am and not being patient enough to wait how a stock develops. It’s not easy, but to know that somebody else is successful with it is a huge encouragement.

[thenegotiator]

i am sure that T.gal will be very happy with ur comments Pucki.
do not forget that T.gal is an active trader also

[Sampson]

What's more is that she knows so much about sports

[dogcom]

Do you wish to invest or trade?

A good advisor doesn't want to buy and sell a stock in the matter of a few months or days because of a little price movement.

T.gal has her system and way of doing things and is a good read but like any trading system using real money it take a long time to be comfortable playing it if you can last long enough to do it. Also holding losing positions can go on for years holding your money hostage while you make very little return while you wait.

[Beaver101]

T.Gal is indeed very knowledgeable, can learn alot from her. Don't even try banning her... (I tried).

[GoldStone]

Do you wish to invest or trade?

Pucki, think long and hard about this question.

Investing and trading are not the same.

If you are a long-term investor, you should pay no attention to T.Gal's active trading (with all due respect to T.Gal).

[Square Root]

There are a lot of"traders" on this site. Being an "investor" I generally ignore them. I am not complaining. But keep in mind if your objective is to create a nestegg for retirement, frequent trading may not be the best approach.

[Belguy]

I still maintain that, for a young INVESTOR, the best approach is to INVEST in a short portfolio of perhaps four or five of the lowest fee, broadest based ETF's and then just hold them forever, trading only for rebalancing purposes.

This form of INVESTING is not for everyone as it is deathly dull but history proves that you will outperform the vast majority of stock TRADERS over the long haul.

I get a kick out of all of the TRADING antics on the 'what are you buying' and 'what are you selling' threads on this forum and my final thought to them is "good luck to you over the long run" as it will take more luck than skill to outperform long term buy-and-hold index INVESTORS.

Start by looking at the model portfolios at www.canadiancouchpotato.com

[Toronto.gal]



1. Of course, newbies should also read the recommended “Eight with Weight” books.
2. But here is somebody who speaks from her own experience....

1 & 2: yes, and yes!

Thanks for your kind words Pucki2 & for reading my posts.

I started my [serious] education in stocks in 2008, a topic that I had previously had no interest in whatsoever, hence leaving all decisions to my previous FA. Then, I purchased my 1st stock in Oct.09 and placed my first trade [the one you quoted] in April/2010.

That 1st trade had definitely been a highly speculative one [biotech], but a good learning experience of not only the art of trading, but of that exciting/interesting market sector [definitely not for complete newbies with no interest in the sector, nor the faint of heart]. Lucky for me, it turned out to be a good one, though given the amount involved, I would have been fine had it not worked out.

The trade you mentioned, was purchased in 2010 @ $4.86 & sold @ $6.30, so $325.44 profit [- $13.90 commissions]; not bad for an initial investment amount of $1,098.36. My 2nd & 3rd trades of this stock had given me similar return; each time increasing the # of shares by the profit amount, so essentially, subsequent trades were made of initial capital [not new] + profits, so if stock had gone to $0, my own capital was still no more than $1K+. I continue to trade this stock [and others as u know], in much higher volume by now as I now understand the sector & stocks much better, and have traded it numerous times in 2.5 years, so by now, I trade this particular inexpensive stock with 100% profits.

For a new & inexperienced investor, I always recommend LOTS of basic learning & reading before starting to invest in the market, and also as you mentioned, there is even a recommended reading list on the forum, which was especially put together for newbies [a team effort of 3 members here] , so that they start well with the basics so as not to get discouraged to pursue financial literacy. However, all the reading in the world won't make you experienced until you start the practice, which should be in 'baby steps' like the above example.

dogcom: as you know, I did not start as a trader and I'm mostly a long-term investor. As well, most of what I trade, I also hold long-term. I trade simply due to high volatility & use most of the profits to add to long-term positions.

The stock price of the above example, which I purchased/sold in 2010 for $6+, is now $3, so it was an ideal stock to trade, and not hold long-term [biotechs are tricky & dance to a different tune than that of Mr. Market].

Another example, MFC, which I bought in 09, is now, 3 years later, still considerably lower than in 09, but this is a stock that I want to hold for years to come, so while I'm holding, trading has in fact, allowed me to adjust some unrealized losses [DCA].

RIMM on the other hand.....well, we all have painful experiences, no matter how long we have been investing. I still own the stock [as well as trade], but only the ones I purchased earlier this year. Though I had some realized capital losses, I actually recovered as I invested the returned capital in another tech stock that has since almost tripled for me [no, not AAPL, though I own that stock since 2010 and still hold long-term, too, I might add].

From my own personal experience, I don't believe that in extreme high & lengthy volatile periods, that ALL stocks should be held forever & simply rebalance, hence, I either: average down/up [the latter mostly with dividends & profits]; book a % of profits [for re-balance & risk management]; sell completely [depending on stock & other better opportunities]; drip; trade, etc. Another words, I'm NO couch potato type investor.

I have learned a lot from this forum, but I'm responsible for my own failure/successes/research; nobody here encouraged/forced me/taught me to trade, VOLATILITY did, AND I'm not telling people to trade, I'm just sharing my experiences, which is what this adult forum is for.

SR: and why do you think there are traders? Isn't it because of current market conditions [or conditions that have lasted now several years?]. My focus is on accumulating the right stocks and perhaps some day, get the $400K in dividends you get [if I remember correctly, it's you who told us you're/were that good of an investor], and not just accumulate/buy with fresh capital, which does not fall free from the trees.

I do think there is a bit of jealousy here sometimes between active vs passive investors [especially from the most passive investor here of all]. But remember: effort/discipline/knowledge [yours, not that of others], = power!

'Forty per cent of Canadians fail investment knowledge test: CSA'
http://business.financialpost.com/20...edge-test-csa/

[Belguy]

Another approach is the so-called 'core and explore' portfolio whereby a certain portion of your portfolio is INVESTED long term in low fee, broad based index funds while another portion is used to TRADE in individual stocks. Over time, you will be able to compare your results from each approach.