Investcraft – The Art of Investing

Back in the year 1998, I remember my parents telling me to buy Nortel Networks Stock, hold it for years, and let it keep doing 2-for-1 stock splits until you’re rich. They said the same thing about Cisco, Intel, and Yahoo. If I listened to them, I’d be in pretty big trouble. So why exactly does the ole buy-and-hold strategy fail these days? Well, I think it’s pretty simple actually. Two things: Technology and Competition.

It’s definitely getting harder and harder to invest in the stock market these days. Individual investors are at such a disadvantage compared to investment professionals or stock gurus like John Paulson, George Soros or Warren Buffet due to the lack of resources, access to information and just general investing experience. It’s not that the individual investor can’t get access to these public documents or information — but rather, this information is not easily obtained. For example, do you really expect an average investor to spend time to attend every shareholder meeting of every company they’ve invested in? Or how about listening to every single conference call of every company they have in their portfolio? And those super long and boring 10-K and 10-Q’s SEC filings? And even if the average investor DOES wind up reading ALL of this info, will they truly understand it? Does every individual investor have access to or subscribe to analyst reports (which are usually pretty expensive)? Yes, these documents are all available but they all come with a hefty price in either time or money. Not only do you need the time to absorb this information, but will an average investor truly apply this information meaningfully to their investment decisions? Let’s just say that mastering the business model of every company they own stock in is quite a daunting task — even for investment bankers.

Staying nimble is the key in a volatile market. A shrewd investor needs to protect gains while minimizing losses. In this past week, I have switched around several positions in anticipating of this week’s economic reports. I locked in some gains while taking a few small losses on a few stocks that I did not want to hold going into this week’s job report. Below is a list of my current long positions along with some commentary below…

I have provided some updates to my 2010 stock portfolio. Before I list my holdings, I’d like to make a few comments about the general theme of my portfolio, my additions, subtractions, and the reasoning behind these decisions. Additions: THC, HMA, FNGN, SNV, UBS. Subtractions: BZH, MGM, AMAT, SLM, TOL, YHOO…

I think there’s a very fine line between investing and gambling. Both an investor and a gambler will take risks but it’s the taking of “unnecessary” risks that separates the two That’s not to say that a gambler can’t win big — I’m sure someone who dumped their entire life savings into Google (NASDAQ: GOOG) when it first went IPO is probably retired today. But on the other hand, a true investor has a clear plan — he/she has a time-frame/exit strategy and understands the importance of diversification…

Financials were the clear winners today, particularly regional banks. I have been pounding my fist for the past few months about financial stocks. They’re likely the first ones to recover when the market turns bullish. A lot of bank stocks look particularly cheap because they have such low price-to-book ratios. A good example is Superior Bank (NASDAQ: SUPR) that has book value of $16.43 but is only trading at $3.25. On the surface, it looks like a bargain but you have to look more closely at the company to get a clearer picture…

It’s been a while since my last post. I just wanted to give everyone my general take on 2010. Below is a list of positions I have in various companies. I have also listed some sectors I like for 2010 and sectors I don’t like. Again, this is just my opinion…but I have made my bets on certain stocks that I feel will outperform in their respective sectors…