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My IRA funds have been my most direct, actively managed part of my portfolio. My first job out of college (1988-90) was a low-paid auditor at KPMG Peat Marwick. I did however manage to set aside roughly $9,000 into my 401-K, transferring that into a Wells Fargo IRA after leaving.
I left my modest balance in the funds offered by Wells Fargo (fund custodian) for a period of time with very small gains, but made my first major investment in Intuit in 1994, later buying Microsoft in 1995, Matrixx Initiatives in 2003 and Netflix in late 2004. Actively investing has been an intermittent hobby of mine since my early 20s. My first memorable exposure to investing was in early college (1985) when my parents gave me two shares of Berkshire Hathaway stock ($2,075 per share); they later bought me six more at roughly $6,000 per share. I still have four of those eight shares. Having these shares, reading Buffett’s reports over my lifetime and personally benefiting from Buffett’s investing skill has helped shape some of my investment thinking. If you can find a good business, one where management has demonstrated consistent performance, buy it, preferably when others are disenchanted with it. Obviously, reading about Buffett and being able to emulate his talents, even on a modest scale, are quite different things. Also, in the early 1990s I read Peter Lynch’s “One Up on Wall Street”, reinforcing my belief that if you notice a product that you think makes sense, do some research on the company that makes it and it may be a good buy. My best purchases have fallen into the following categories:
Until recently, my method for searching for such companies has been rather haphazard. I would notice a once solid company that I liked take a beating. Or I would discover a product I really liked and research it. This has led me to research many companies, but I have not made many investments. Companies that I like and have researched (Trader Joe’s[private]; Container Store [private]; Tivo [unclear economics]; CNET [confusing product mix; sketchy governance]). Potential “Fallen Angels”: Vonage, Sirius and XM Satellite, Krispy Kreme, Dell Computer (tracking all of these). Attempt To Develop A Consistent Methodology My "Buys":
My "Holds":
My "Sells":
Major Stock Averages
So, not bad. I did not do much further due diligence or research at the time, and intended to keep tracking them and build a portfolio, but more or less forgot about them. I worked in the wireless industry so actually bought Sprint, wanted to buy Nextel but it had started a mini-run up, so I waited for it to slow down or dip again, and it never did. Ouch, lesson learned, I hope. Anyway, finding this tucked away on my hard drive was interesting. I knew how I did on the stocks that I talked about above, but this gave me additional confidence that I might be able to do this more methodically. So, I spent time in the fall of 2006 trying to solidify my approach. My two approaches, Hidden Gems and Fallen Angels are summarized on this site. As a side note, here are the returns of my friend's picks: Roger's Buys:
Roger's Sell:
This is a subset of the e-mails I received from Roger at the time, but my casual tracking of his picks suggest that these are pretty representative of his overall picks. I almost gave him a bunch of my assets to manage around that time, but did not. Now, his minimum for assets is greater than my net worth. Lesson learned, I hope. If you want his contact information, send me an e-mail. He clearly knows what he is doing. Aside from a methodology, I tried to better research my picks. This can feel a bit overwhelming. I know the analysts live & breathe their industries, and that focus must have great benefits. But, with the web, it is easier for an individual to get much more information much faster. So, in my research, for any stock that I chose to purchase, I did the following: read several analyst and industry reports, listened to investor calls, read a few of the most recent 10-K's and most recent 10-Q. Another step I could have taken but did not was to try to get someone at the company to talk to me. I did send a few e-mails asking for contact information of someone to call, but got nothing back. In one case, TLF, I did visit a retail store and talk to a manager about the business. So, how much is enough is a struggle for me, but I guess that is what investing process is about, learning how to do it well.
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