Intitial Troubles

IMG_20140516_210603

The feeling of inadequacy is probably one of the worst, because you know that you want to do something but for a reason or another you never feel “up to it”.

I have been toying with the idea of investing to supplement a pension scheme that I thought I was likely to get if I worked until 60/65. Then all of a sudden (thanks to financial crises, corrupted politicians, work life that looks all good and nice when you are a student but turns pretty sour when you join the rat race) the realisation that the “supplement” might actually become the “main course” of my future sank in and I decided that it was time to start investing with a longer “scope”.

I read a lot of blogs, I did my research, I am an Economics major after all.

One of the worst initial troubles is (yes at the time of writing I still feel quite “weak” on several points) “entry points”. On one side I decided that I wanted to start investing, on the other I have a market that is close to the maximums and everyone is screaming for “bubbles” and “crashes” behind the corner.

Well if all the readings are good enough entry points are not so important if you are planning to hold the stocks for a long time, of course monitoring P/E ratios and other indicators is important, but in the end if you are planning to stick with a stock for long, entry points (pretty much like “exchange rates”) are not a major issue.

Clearly if the stock that you want has a low P/E or the exchange rate is particularly favourable, nobody is going to complain! Certainly dividends can supplement or become a great part of a retirement scheme, but also getting the stock to appreciate over time is quite nice (especially because always seeing red numbers is quite depressing).

All things considered, in these 6 months, after I started “swimming” in this pool, a lot of fears have gone away, but I also see that there is a lot of reading and research to do in order to make “half” sensible choices with one’s stock picks.

And what about you out there? When you started investing, what was the thing that blocked you the most?

Advertisements

7 thoughts on “Intitial Troubles

  1. Hi Stalflare,

    My biggest hang-up at the beginning (in 2012 or so) was in deciding what to buy and then worrying about “should I buy now or wait a day and see if the price drops”. I found it easier to buy mutual funds starting out but gradually bought individual stocks too.

    Gradually over time though, I came to the same conclusion as you that it really doesn’t matter all that much if you’re holding for the long term. For value / total return investors, current valuations are more significant.

    I think a dollar cost averaging approach is a reasonable way to go. Even assuming I know for sure that a stock is “10% over-valued”, will buying 10% less of it (assuming the market actually corrects the price) really matter all that much in 30 years time? That 10% premium simply lowers the current yield that I get now, but if the yield is “good enough” even at the higher price then I’m still ok with the purchase.

    That said, while I’m making monthly purchases, I’m not investing as much cash as I could right now while the market is at all time highs.

    Best wishes,
    -DL

    Like

    1. Ciao DL,

      Thanks for posting, you are actually my first guests on the blog, so thanks for the support too! 🙂
      Right now I am still buying many initial positions (soon I will post the stocks that I am holding), some were done following quick decisions, some were more studied. I am still learning, having said that I have done only 1 “dollar cost averaging” operation so far, but from the end of this month this value will certainly increase, because it’s fine to have a diversified portfolio, but too many stocks are not easy to manage and it’s better to focus on some only. As to the valuations I agree with you, 10% doesn’t make a lot of difference, so in the end the biggest woe (exchange rates) have been written out.
      On stock evaluation I have more difficulties in pinpointing the “real value”, but then again if the price falls I keep a reserve cash to eventual averaging, so if the company has an interesting profile I’d keep buying if price fall due to bubbles or something like that…

      Honestly speaking I hope never to experience a bubble crash, but I know it’s a daydream, sooner or later some correction will happen… 😛

      Like

      1. Hi Stalflare,
        Hopefully I’m just the first of many! 🙂 Congrats on starting your blog and I hope you find it rewarding and fun!
        Best wishes on your financial journey and I look forward to reading more about it,
        -DL

        Like

  2. Hey Stalflare,

    We don’t have enough information yet, but it seems like you are swifting from EU based stocks to US based stocks. There are some very nice picks in your portfolio. For example T, CVX, JNJ, MCD, TROW and WMT.

    Your portfolio looks a lot better than mine when I started this journey about a year ago. Perhaps theres an age difference, but to me it seems you are definitely on the right track here!

    Keep up the good work and let the dividends + growing snowball do the rest.

    Best wishes, DfS

    Like

    1. Ciao DFS,
      Thanks for posting! Let’s say that I spread a lot of the original cash that I had in different stocks, that was already a “wrong” move because in Italy costs of trading are quite high and this drove my costs up, hence performance is affected… I am overweighting USA because in Europe dividends are more “rare” and we do not have the same track record that you can get in the USA. On the top of that I traded initially at 1.24 so exchange rate is helping me immensely to keep the PF slightly profitable.
      Thanks again for stopping by, I really appreciate!

      Ciao ciao

      Stalflare

      Like

  3. How do I pick stocks? For now, I don’t 🙂 I am building up an index base to complement my funds base. Once that is in place, I might go to dividend investing. Curious to hear why you went the dividend route

    Like

    1. Ciao ATL,

      Now you got me curious I am going to add your blog to my daily “reads”.
      How did I start? Let’s say that my strategy before was more focused on bonds and T-bills, no foreign currencies (all hedged trades if I was to invest outside of Europe), almost no maintenance of my PF. A lazy approach. There is a lot of literature on lazy PFolios, and to be fair with you I still look at my previous positions with a bit of “nostalgia”… Shame is that in Pizzaland (Italy) all the instruments that I was using have a very unfavourable tax regime, so in the end the investments were not tax efficient. Add that “cut the middleman” policy is in place for me, ETFs and FUNDS are expensive by nature, of course you pay for a service, and an opportunity to have better returns, but as I outlined in other posts it’s all about what you want to do with your money, right now if I can have a NET return around 2%/3% I am an happy bunny (this is for 2015/2016).
      If you forget the capital that you invested, DRIP can grant you a decent 2% NET without breaking too much sweat, of course if you are also careful with the investments and follow the (few) stocks that you have you might even get a gain in stock price too, which will add to the “potential” return of the Portfolio. This is what got me started, I have still a long way to go because I can see that I am making a lot of mistakes, but that doesn’t scare me all that much to be honest… 😛 Surely at the end of 2016 I will stop and make a review of what happened “so far” and then I can start drawing conclusions…

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s