Confession: I bought a stock. What is wrong with me?
- fredflinstone
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Confession: I bought a stock. What is wrong with me?
I understand the Boglehead philosophy and agree with it. Yet on Friday I did something I have not done for more than two years: I bought a stock.
I did so on the advice of my sister, a surgeon, who raved about the company's flagship product. If I understand correctly, it's an anesthetic ointment that is placed on incisions after surgery. My sis says it works great and allows her to control her patients' pain without using narcotics. She claims it speeds post-operative recovery and reduces time spent in the hospital.
The total amount I invested is equal to about 0.3 percent of my liquid assets.
I don't know anything about this company other than its name and market cap. I spent all of 10 minutes doing "research" on Google Finance. I don't know the name of the ointment. I can't even remember the company's ticker.
Does my sister know something that Mr. Market doesn't? It seems improbable -- no, impossible -- and yet I wonder if maybe -- just maybe -- she does.
What is wrong with me? Do I need an intervention?
I did so on the advice of my sister, a surgeon, who raved about the company's flagship product. If I understand correctly, it's an anesthetic ointment that is placed on incisions after surgery. My sis says it works great and allows her to control her patients' pain without using narcotics. She claims it speeds post-operative recovery and reduces time spent in the hospital.
The total amount I invested is equal to about 0.3 percent of my liquid assets.
I don't know anything about this company other than its name and market cap. I spent all of 10 minutes doing "research" on Google Finance. I don't know the name of the ointment. I can't even remember the company's ticker.
Does my sister know something that Mr. Market doesn't? It seems improbable -- no, impossible -- and yet I wonder if maybe -- just maybe -- she does.
What is wrong with me? Do I need an intervention?
Re: Confession: I bought a stock. What is wrong with me?
Nothing is wrong. Like everybody else you think that you are smarter than the market. Like everybody else you crave the rush of making money due to your superior abilities or "inside" information. Your discipline failed. It's OK as long as it doesn't become a habit.
"Money won is twice as sweet as money earned"
-Paul Newman in The Color of Money
BTW, I am an anesthesiologist. Out of professional curiosity ONLY, What is the name of the product or company?
"Money won is twice as sweet as money earned"
-Paul Newman in The Color of Money
BTW, I am an anesthesiologist. Out of professional curiosity ONLY, What is the name of the product or company?
Re: Confession: I bought a stock. What is wrong with me?
I own some individual stocks too. I dont really buy on tips from others. There are situations where it seems markets lose there collective minds and when a company in an industry is doing poorly every company gets crushed. Soon afterwards, people realize that the world is not ending and rush back into those very companies they dumped. Pharama's in '94, chips in '96, gold co's earlier last decade, Oil service companies in 2001 when oil was 17 bucks. Market participants experience herd behaviour and in all those situations I made killing going against the grain. The key was individual stocks never made up more than 10% of my total portfolio. So having a few stocks which may improve your returns a tiny bit is ok. It may not work out and you may lose a bit more but that wont keep you from your goals. I hope this absolves you of your guilt. Now say 10 hail Bogles and get back to life...
- nisiprius
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Re: Confession: I bought a stock. What is wrong with me?
My daughter, when she was fresh out of college, landed a job at a Fortune 500 world famous megacorporation. As an act of pure flippancy or superstition or act of faith, I immediately bought 25 shares of that company's stock. Possibly as self-assertion that I was feeling rich enough, not to light cigars with $100 bills, but that kind of thing.
This is a dull and undramatic story; I paid--whoa, the price was exactly in eighths of a dollar, it doesn't seem that long ago, is it really possible that the exchange hadn't been decimalized in 1999?
Anyway, my investment diary says "Rationale: Sentiment. Sound investment in the equity asset category. Some say this company is almost a mutual fund because of the diversification of its businesses." Paid about $2,600. Future intentions (notice the baked in assumption that it will go up) "Hold as long as my daughter keeps working at megacorp. Exception: if it drops more than halfway from peak to purchase price, sell it and take the profit." Rather embarrassingly, it appears that I sold in 3/2000 for $3,100, but did not record my rationale in my diary. Apparently greed overcame sentiment, but checking the price chart it does appear as if I might have at least been following my plan--selling if it dropped halfway from peak to purchase price. But it was a short-term peak.
So, just a typical retail investor's stupid move. Bad strategy, good outcome in this case. In a sense, bad outcome because after I sold the stock went much higher. But then in another sense, good outcome, because after it went much higher, it went MUCH lower. Meanwhile my daughter has had a good career in that company...
I think the point is that there really is a strong temptation to buy individual stocks, if you are reading enough about them or listening to financial news media, and if you already have a brokerage account. As with all the behavioral stuff about eating less if you serve your food on small plates, the cure is to tinker with the temptation end, not the resistance end. My wife and I have a rule that we will not keep certain kinds of food in the house--a loaf of white bread, for example--because we know that we do not resist the urge to suddenly eat eight or ten slices of it. And the day after Hallowe'en, we bring all the leftover candy to work and leave it on the table in the cafeteria and walk away.
This is a dull and undramatic story; I paid--whoa, the price was exactly in eighths of a dollar, it doesn't seem that long ago, is it really possible that the exchange hadn't been decimalized in 1999?
Anyway, my investment diary says "Rationale: Sentiment. Sound investment in the equity asset category. Some say this company is almost a mutual fund because of the diversification of its businesses." Paid about $2,600. Future intentions (notice the baked in assumption that it will go up) "Hold as long as my daughter keeps working at megacorp. Exception: if it drops more than halfway from peak to purchase price, sell it and take the profit." Rather embarrassingly, it appears that I sold in 3/2000 for $3,100, but did not record my rationale in my diary. Apparently greed overcame sentiment, but checking the price chart it does appear as if I might have at least been following my plan--selling if it dropped halfway from peak to purchase price. But it was a short-term peak.
So, just a typical retail investor's stupid move. Bad strategy, good outcome in this case. In a sense, bad outcome because after I sold the stock went much higher. But then in another sense, good outcome, because after it went much higher, it went MUCH lower. Meanwhile my daughter has had a good career in that company...
I think the point is that there really is a strong temptation to buy individual stocks, if you are reading enough about them or listening to financial news media, and if you already have a brokerage account. As with all the behavioral stuff about eating less if you serve your food on small plates, the cure is to tinker with the temptation end, not the resistance end. My wife and I have a rule that we will not keep certain kinds of food in the house--a loaf of white bread, for example--because we know that we do not resist the urge to suddenly eat eight or ten slices of it. And the day after Hallowe'en, we bring all the leftover candy to work and leave it on the table in the cafeteria and walk away.
Last edited by nisiprius on Sun Mar 16, 2014 7:37 am, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Confession: I bought a stock. What is wrong with me?
I don't believe 0.3% is a bad thing.
Some would call that "fun money"
I own individual stocks too
Some would call that "fun money"
I own individual stocks too
Re: Confession: I bought a stock. What is wrong with me?
Congratulations, Fred. Have fun watching it--seriously.
Might work out. Might not. So what?
It's an experience.
Lev
Might work out. Might not. So what?
It's an experience.
Lev
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Re: Confession: I bought a stock. What is wrong with me?
Don't be too hard on yourself. You don't have to be 100% boglehead. Wait! You said the individual stock represent 0.3% of your portfolio? Well, if your portfolio is 99.7% boglehead you will still do great. You will even if it is 95% boglehead.
I don't invest in individual stocks not only because I don't believe in luck but also because i dont have time to research them. But I find myself buying a lottery ticket every once in a while when the jackpot rises to several hundred millions. And while I do it I know that I wont be the winner. No one is perfect.
I don't invest in individual stocks not only because I don't believe in luck but also because i dont have time to research them. But I find myself buying a lottery ticket every once in a while when the jackpot rises to several hundred millions. And while I do it I know that I wont be the winner. No one is perfect.
- neurosphere
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Re: Confession: I bought a stock. What is wrong with me?
Oh! I know that product very well. Although I stopped using it recently because I find that although the patients have less pain, they keep getting readmitted with wound infections and scarring. I had one patient almost die.fredflinstone wrote:I understand the Boglehead philosophy and agree with it. Yet on Friday I did something I have not done for more than two years: I bought a stock.
I did so on the advice of my sister, a surgeon, who raved about the company's flagship product. If I understand correctly, it's an anesthetic ointment that is placed on incisions after surgery. My sis says it works great and allows her to control her patients' pain without using narcotics. She claims it speeds post-operative recovery and reduces time spent in the hospital.
NOTE! The preceding paragraph is untrue. I have no idea what product you are talking about, I don't use it, and no patients were harmed in the writing of the previous paragraph.
But my point is, somewhere they may be a person who has this observation, and is shorting the same stock you bought. That's why I don't buy individual stocks. I don't have all the information I would otherwise want.
Re: Confession: I bought a stock. What is wrong with me?
Come on. Tell us the name of the drug. The health care members here want to know.
Some sort of lidocaine ointment? EMLA cream?
Some sort of lidocaine ointment? EMLA cream?
- market timer
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Re: Confession: I bought a stock. What is wrong with me?
Description and price movement make it sound like GE.nisiprius wrote:My daughter, when she was fresh out of college, landed a job at a Fortune 500 world famous megacorporation.
- nisiprius
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Re: Confession: I bought a stock. What is wrong with me?
Actually, I think there is a moderately serious danger: the Peter Lynch theory, "invest in what you know."
Resist devil on your left shoulder that whispers "Aw, go ahead, you don't need to be able to read the Disney balance sheet because you have been to Walt Disney World."
I have a couple of times in my life bought individual stocks because I felt that as a knowledgeable user of the product, I just "knew" something about it that the cold-hearted analysts look at the numbers were missing--that this particular product was just so great, so wonderful, that as people discovered how great it was it was bound to succeed... and that the analysts who didn't use it personally would not appreciate its greatness. That is to say, I felt that my personal fan-like consumer appreciation of the product constituted a kind of legal "inside information" that meant I did know something that the market didn't know.
This is a dangerous temptation, because, for better or worse--and even if we think we are resisting it--we live in a consumer society where most of us have our personal self-esteem tied to our ability to make shrewd consumer choices. I certainly do. Part of me is detached and laughs at the part of me that isn't, but the part that is a fan of certain products is there.
"Buy what you know" is dangerous because it is (one more) rationale for speculation. It is good to be aware of the depths of one's ignorance; it is bad to let someone encourage you to think that your keen appreciation of, let us say, the taste nuances of some brand of beer is actionable investing knowledge.
The first rule of investing is "do not invest in what you do not understand." Anything that numbs the pain of ignorance is dangerous.
Resist devil on your left shoulder that whispers "Aw, go ahead, you don't need to be able to read the Disney balance sheet because you have been to Walt Disney World."
I have a couple of times in my life bought individual stocks because I felt that as a knowledgeable user of the product, I just "knew" something about it that the cold-hearted analysts look at the numbers were missing--that this particular product was just so great, so wonderful, that as people discovered how great it was it was bound to succeed... and that the analysts who didn't use it personally would not appreciate its greatness. That is to say, I felt that my personal fan-like consumer appreciation of the product constituted a kind of legal "inside information" that meant I did know something that the market didn't know.
This is a dangerous temptation, because, for better or worse--and even if we think we are resisting it--we live in a consumer society where most of us have our personal self-esteem tied to our ability to make shrewd consumer choices. I certainly do. Part of me is detached and laughs at the part of me that isn't, but the part that is a fan of certain products is there.
"Buy what you know" is dangerous because it is (one more) rationale for speculation. It is good to be aware of the depths of one's ignorance; it is bad to let someone encourage you to think that your keen appreciation of, let us say, the taste nuances of some brand of beer is actionable investing knowledge.
The first rule of investing is "do not invest in what you do not understand." Anything that numbs the pain of ignorance is dangerous.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Confession: I bought a stock. What is wrong with me?
A corporation is not an inherently good or bad investment; it may be good or bad at a particular price, and the corporation's products determine this price because they are the drivers of profit. If the latest iPhone is a flop, Apple's stock price will fall. If Dodge comes out with a good new car, Chrysler's stock price will rise.
And the same thing applies to this pharmaceutical company. Investors in the company should already know how well this product is selling (if it has been approved by the FDA) or estimate how well it will sell (if it is in clinical trials), and the price reflects those sales. If the corporation makes $2 per share in annual profits on the product, and a normal price/earnings ratio for the industry is 15, then the $2 per share should cause the share price to rise by $30 from the time research on the product started to the time of FDA approval. That has probably already happened, unless your sister gave you inside information (which would be illegal).
And the same thing applies to this pharmaceutical company. Investors in the company should already know how well this product is selling (if it has been approved by the FDA) or estimate how well it will sell (if it is in clinical trials), and the price reflects those sales. If the corporation makes $2 per share in annual profits on the product, and a normal price/earnings ratio for the industry is 15, then the $2 per share should cause the share price to rise by $30 from the time research on the product started to the time of FDA approval. That has probably already happened, unless your sister gave you inside information (which would be illegal).
Re: Confession: I bought a stock. What is wrong with me?
Oh my. Obviously you've been infected by Pyogenes morgana-nomura, a encephalopathic fungus. As it consumes your brain tissues you will eventually feel the urge to climb up a tree, then partway up the fungus will punch through your skull with a kind of spike-like protrusion and essentially nail you to the trunk (think Alien, only more pointy). After that spores that develop within your skull will rain down on passers-by, leading them to go out and buy even more stocks, usually from full-service brokers, but the fungus may have evolved.I bought a stock.
But seriously, just because "all information is out there" doesn't mean that everyone reaches the same conclusions about it, and even if they do, it's not necessarily predictive. There are too many unknowns. Your guess is as good as the market's.
Nevertheless, if you feel the urge to climb a tree or buy more shares, go see a doctor before it's too late!
- Taylor Larimore
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'Winning the Loser's Game'
Fred:I understand the Boglehead philosophy and agree with it. Yet on Friday I did something I have not done for more than two years: I bought a stock.
You have about a 50/50 chance of making above average return on your new stock purchase. Hope that you lose money so that you won't continue the "Loser's Game" of speculating in stocks.
If you, like Walter Mitty, still fantasize that you can and will beat the pros, you'll need both luck and prayer. -- Charles Ellis, author of "Winning the Loser's Game."
Best wishes.Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand. -- Jack Bogle
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Re: Confession: I bought a stock. What is wrong with me?
Don't sweat it man. Individual stocks can be a whole lot of fun. Don't go overboard with them.
About 15% of my retirement portfolio is in individual stocks. I have de-emphasized these over the years. The bulk of my retirement is in mutual funds, index funds, and ETFs based on indexes. Why do I keep them? I get good dividend income from them and they actually have done pretty good. At least I haven't gotten hurt. Individual stocks coupled with active mutual funds were my primary investment vehicles. I am over time indexing more and more.
What I found was that all the time I spent at the public library pouring over the Value Line didn't improve my results. Reading Peter Lynch's books didn't turn me into Peter Lynch. Reading about Warren Buffett didn't turn me into Warren Buffett. After the 2000 crash, I pretty much waved the white flag. I work with an independent broker but I don't trade the stocks very much. Mostly bought good stuff and let it ride, collect the dividends.
So even in the brokerage account, I have trimmed my individual stocks over the years in favor of ETF's and mutual funds. I have load funds in there with lower expense ratios. Since I don't trade much, the commission expenses have been low.
I think part of the allure is being able to brag about your investing prowess. Individual stocks are a whole lot more interesting to talk about than active mutual funds, and active mutual funds more interesting than Index Funds. Nothing would kill a discussion faster than saying, "Oh I've got my whole retirement in a Vanguard Target Date Fund." Or, "I just buy index funds and forget about them." It is just that individual issues make you seem smarter. You are perceived as having done your homework.
It is like the difference between the good old reliable family car and that sexy sports car you always wanted to own.
Another reason that I like the individual issues is that it gives me the feeling that I really do own a share of businesses. The annual reports that clog my mailbox give me a feeling of ownership. I like the feeling of seeing the dividend hit my account.
Pretty much, I am in my mid fifties and this is my idea of excitement.
About 15% of my retirement portfolio is in individual stocks. I have de-emphasized these over the years. The bulk of my retirement is in mutual funds, index funds, and ETFs based on indexes. Why do I keep them? I get good dividend income from them and they actually have done pretty good. At least I haven't gotten hurt. Individual stocks coupled with active mutual funds were my primary investment vehicles. I am over time indexing more and more.
What I found was that all the time I spent at the public library pouring over the Value Line didn't improve my results. Reading Peter Lynch's books didn't turn me into Peter Lynch. Reading about Warren Buffett didn't turn me into Warren Buffett. After the 2000 crash, I pretty much waved the white flag. I work with an independent broker but I don't trade the stocks very much. Mostly bought good stuff and let it ride, collect the dividends.
So even in the brokerage account, I have trimmed my individual stocks over the years in favor of ETF's and mutual funds. I have load funds in there with lower expense ratios. Since I don't trade much, the commission expenses have been low.
I think part of the allure is being able to brag about your investing prowess. Individual stocks are a whole lot more interesting to talk about than active mutual funds, and active mutual funds more interesting than Index Funds. Nothing would kill a discussion faster than saying, "Oh I've got my whole retirement in a Vanguard Target Date Fund." Or, "I just buy index funds and forget about them." It is just that individual issues make you seem smarter. You are perceived as having done your homework.
It is like the difference between the good old reliable family car and that sexy sports car you always wanted to own.
Another reason that I like the individual issues is that it gives me the feeling that I really do own a share of businesses. The annual reports that clog my mailbox give me a feeling of ownership. I like the feeling of seeing the dividend hit my account.
Pretty much, I am in my mid fifties and this is my idea of excitement.
A fool and his money are good for business.
Re: Confession: I bought a stock. What is wrong with me?
Good conversation.
That stock is part of an index, and buy buying the stock you are helping the index to go up, and we want to see upward movement on our index funds.
Thanks for reading.
That stock is part of an index, and buy buying the stock you are helping the index to go up, and we want to see upward movement on our index funds.
Thanks for reading.
~ Member of the Active Retired Force since 2014 ~
Re: Confession: I bought a stock. What is wrong with me?
NOTHING!
My mother bought 2 stocks in the 1970s - ATT and ITT. When she died almost 20 yrs ago she left us, her 4 dc, many stocks worth several thousands of dollars more than she bought. I still have many of them. It was a smart buy!
No, I don't buy stocks today but I'm glad she bought those 2!
My mother bought 2 stocks in the 1970s - ATT and ITT. When she died almost 20 yrs ago she left us, her 4 dc, many stocks worth several thousands of dollars more than she bought. I still have many of them. It was a smart buy!
No, I don't buy stocks today but I'm glad she bought those 2!
Early retirement 2018
Re: Confession: I bought a stock. What is wrong with me?
Nothing wrong with buying an individual stock,as long is it is not a majority of your assets.
I purchased Coca Cola ,Microsoft,Mcdonalds,Walmart,Praxair ,US Surgical(lost a lot),and have held for years.
Would do the same thing over again if I had the choice.
I purchased Coca Cola ,Microsoft,Mcdonalds,Walmart,Praxair ,US Surgical(lost a lot),and have held for years.
Would do the same thing over again if I had the choice.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: Confession: I bought a stock. What is wrong with me?
If you're under 30, I'd suggest realizing that, in fact, you're not as smart as the market as a whole (overconfidence is the main issue in this age group).fredflinstone wrote:What is wrong with me? Do I need an intervention?
If you're over 40, I'd suggest finding fulfilling ways to spend your time (boredom, leading to the vague urge to gamble is the main culprit here).
- in_reality
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Re: Confession: I bought a stock. What is wrong with me?
Undoubtably your sister has some influence over you. Undoubtably she knows the value of that companies product. Now how will the company do .... ???fredflinstone wrote:I understand the Boglehead philosophy and agree with it. Yet on Friday I did something I have not done for more than two years: I bought a stock.
Anyway, your sister had her say, did you have yours? Have you discussed your general approach to investing with her? Does she understand that in general stock picking is pretty difficult.
Assuming she got it right in this case, is she going to generalize that experience into believing that stock picking is something she is as good at as surgery?
Do you think your sister has a good approach towards investing?
I know my family members don't and I've slowly brought it up ... but it's not really my business. Now if they were recommending stocks to me like your sister is to you, I'd probably be more vocal in stating the reasons behind my belief in low-cost index funds.
I do think you sister knows more than the market about how the cream works due to her being a surgeon. That said, I don't believe she can know more about how the company will perform than the market. There are any number of things she can't know about --like potential competition coming out with a cheaper product, competition holding patents over part of the cream, lurking side effects, performance of company management etc etc...
- LazyNihilist
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Re: Confession: I bought a stock. What is wrong with me?
As long as the 'fun' money doesn't exceed 5% of the Total Portfolio, i'd say go for it. If there are any gains, it's good. If the stock drops, it's a good lesson to stick to index funds.
The strong do what they can and the weak suffer what they must -Thucydides
Re: Confession: I bought a stock. What is wrong with me?
Does anyone here remember fractional spreads? In the 70's I don't think mutual funds were all that popular, and index funds and ETFs didn't arrive till later. Methods available to the individual investor have changed quite a lot since the 70's. You have far more ways to invest, and much more information (internet, twitter, live dial-in investment/earning reports calls, etc.) You don't have to pay your broker $50+ fee for a trade plus commissions. Though some funds still charge loads, many no-load funds have become available, so you can avoid the 5% front end load, 3% back end load, and other endless 12b-1 fees.Michread wrote:NOTHING!
My mother bought 2 stocks in the 1970s - ATT and ITT. When she died almost 20 yrs ago she left us, her 4 dc, many stocks worth several thousands of dollars more than she bought. I still have many of them. It was a smart buy!
No, I don't buy stocks today but I'm glad she bought those 2!
As bad as individual stocks and managed funds are today, things have been much worse before.
If you believe in the invisible hand and efficient market theory, there's nothing wrong with buying a stock at any time, since you're buying it at market price and when you sell, you'll be selling it at market price, and the market will do what the market will do. Over time, the stock will grow to the expected value, but with higher expected volatility than less risky stocks or funds.
- pennstater2005
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Re: Confession: I bought a stock. What is wrong with me?
Nothing is wrong with you. You bought a stock. You came here and admitted it. That was the first step I don't know what the second step is. Someone should write a ten step program.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson
Re: Confession: I bought a stock. What is wrong with me?
As a medical professional I can somewhat relate. I've heard stories of medical students/doctors buying stock on tips from other docs and I remember watching a recent PBS special where a pharmacist put down alot of money on a pharmaceutical company because a new alzheimer's drug was expected to be approved by the FDA very soon.
Common denominator? They all lost money. As Dr. Bernstein said in his book, the average doctor may be very smart in his/her field, and I'm sure your sister is a great surgeon. But the fact of the matter is that the stock price/valuation has alot more to do with it than just one doc's opinion.
Besides, if this is such a great product it means it's already out and the prices may already be inflated by other investors who knew about this medicine while it was still in the pipeline. Bernstein warns specifically against buying on hot tips because once the average Joe hears about it...the stock price usually has already been jacked up and any profits usually are gone.
As another poster said...it's ok. Admitting it is the first step. Now where's the rest of that ten step program?
Common denominator? They all lost money. As Dr. Bernstein said in his book, the average doctor may be very smart in his/her field, and I'm sure your sister is a great surgeon. But the fact of the matter is that the stock price/valuation has alot more to do with it than just one doc's opinion.
Besides, if this is such a great product it means it's already out and the prices may already be inflated by other investors who knew about this medicine while it was still in the pipeline. Bernstein warns specifically against buying on hot tips because once the average Joe hears about it...the stock price usually has already been jacked up and any profits usually are gone.
As another poster said...it's ok. Admitting it is the first step. Now where's the rest of that ten step program?
- fredflinstone
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Re: Confession: I bought a stock. What is wrong with me?
thanks everyone. I can't argue with those who said this was a dumb move.
Re: Confession: I bought a stock. What is wrong with me?
Taylor, your answer has me smiling. I couldn't say it better myself
Keep It Simple
- fredflinstone
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Re: Confession: I bought a stock. What is wrong with me?
If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
Correction: it's up about 16%.
Last edited by fredflinstone on Fri Jun 06, 2014 7:31 am, edited 1 time in total.
Re: Confession: I bought a stock. What is wrong with me?
Sounds like you're going to be ok.fredflinstone wrote:The total amount I invested is equal to about 0.3 percent of my liquid assets.
You saw what happened when you didn't buy Facebook. And no, you don't.What is wrong with me? Do I need an intervention?
- pennstater2005
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Re: Confession: I bought a stock. What is wrong with me?
Care to share what stock?
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson
- fredflinstone
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Re: Confession: I bought a stock. What is wrong with me?
Pacira (PCRX)
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Re: Confession: I bought a stock. What is wrong with me?
What about this.....company comes out with revolutionary new product. Sister tells you and you buy stock. Product is unpatentable and some is bought, sent to China, analyzed, copied and sold as an unregulated cosmetic product. It is put on wal*mart shelves for $2 a quart....far below inventer's cost to make. Docs find this out and all cancel original orders and buy at wal*mart. Company goes chapter 11 and stock is disolved.
Bogle: Smart Beta is stupid
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Re: Confession: I bought a stock. What is wrong with me?
http://www.google.com/patents/US8182835Jack FFR1846 wrote:What about this.....company comes out with revolutionary new product. Sister tells you and you buy stock. Product is unpatentable and some is bought, sent to China, analyzed, copied and sold as an unregulated cosmetic product. It is put on wal*mart shelves for $2 a quart....far below inventer's cost to make. Docs find this out and all cancel original orders and buy at wal*mart. Company goes chapter 11 and stock is disolved.
http://www.drugpatentwatch.com/ultimate ... me/EXPAREL
Re: Confession: I bought a stock. What is wrong with me?
I made a very large amount of my portfolio with good bets on 3-4 stocks. I would be far poorer if I had gone with index funds. Now, I do use BH principles, but I am happy i didn't in the past when I made money on the stocks. I just don't think that I can keep getting lucky. So, individual stocks are not all bad,and can be very very good. Depends how well you guess or how well you see the future. And knowing when your luck may run out.
Re: Confession: I bought a stock. What is wrong with me?
Good guess, but it's actually iocane powder. "The battle of wits has begun; it ends when you decide and we both drink, and find out who is right, and who is dead".awval999 wrote:Come on. Tell us the name of the drug. The health care members here want to know.
Some sort of lidocaine ointment? EMLA cream?
Re: Confession: I bought a stock. What is wrong with me?
Well, Fred Flinstone, it appears that, as a caveman, you followed the old ways. It is part of your nature to go back to old ways from time to time. Here is what you do. Don't tell Wilma (you never do). You have two choices: 1) When the stock goes up, sell and rebalance to your asset allocation. 2) Involve Barney in an elaborate plot to buy MORE of this asset in order to undo what you have done with results similar to what you have had in the past. Your call.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: Confession: I bought a stock. What is wrong with me?
Thanks. Interesting products. Good luck.fredflinstone wrote:Pacira (PCRX)
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson
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Re: Confession: I bought a stock. What is wrong with me?
From time to time, I buy what I deem to be "value" equities - 18 months ago, I found one, picked it up and it appreciated over 130%. I didn't buy it at the absolute low either otherwise those gains could have been even greater. What does it mean? Not much - I never risk more than I can afford to lose. I buy and hold, long term. What is long term? Decades.fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Confession: I bought a stock. What is wrong with me?
What did the S&P500 do over that same time period?fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
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Re: Confession: I bought a stock. What is wrong with me?
Why would you compare a Large Cap Index with a small cap stock?John3754 wrote:What did the S&P500 do over that same time period?fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Confession: I bought a stock. What is wrong with me?
I know some indexers who put aside around 5% to "play the market" and bet on individual stocks for fun. It satisfies the classic gambling urge to play the market and take hot stock tips without seriously affecting your long-tern returns.
I don't do this, but I don't think badly of those who do.
I don't do this, but I don't think badly of those who do.
Last edited by William4u on Fri Jun 06, 2014 4:10 pm, edited 1 time in total.
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Re: Confession: I bought a stock. What is wrong with me?
+1 x 10 E3 My slave rides on the chariot with the crown saying " Remember you are mortal and Compaq was a great product but a stock disaster"nisiprius wrote:Actually, I think there is a moderately serious danger: the Peter Lynch theory, "invest in what you know."
Resist devil on your left shoulder that whispers "Aw, go ahead, you don't need to be able to read the Disney balance sheet because you have been to Walt Disney World."
I have a couple of times in my life bought individual stocks because I felt that as a knowledgeable user of the product, I just "knew" something about it that the cold-hearted analysts look at the numbers were missing--that this particular product was just so great, so wonderful, that as people discovered how great it was it was bound to succeed... and that the analysts who didn't use it personally would not appreciate its greatness. That is to say, I felt that my personal fan-like consumer appreciation of the product constituted a kind of legal "inside information" that meant I did know something that the market didn't know.
This is a dangerous temptation, because, for better or worse--and even if we think we are resisting it--we live in a consumer society where most of us have our personal self-esteem tied to our ability to make shrewd consumer choices. I certainly do. Part of me is detached and laughs at the part of me that isn't, but the part that is a fan of certain products is there.
"Buy what you know" is dangerous because it is (one more) rationale for speculation. It is good to be aware of the depths of one's ignorance; it is bad to let someone encourage you to think that your keen appreciation of, let us say, the taste nuances of some brand of beer is actionable investing knowledge.
The first rule of investing is "do not invest in what you do not understand." Anything that numbs the pain of ignorance is dangerous.
there is no automatic connection between a great product and a great investment. They sucker doctors on this All the time !!!
Re: Confession: I bought a stock. What is wrong with me?
Because even though it's apples and oranges, many Bogleheads have their entire equity share in the S&P fund, and that is basically what Flintstone is "giving up."Grt2bOutdoors wrote:Why would you compare a Large Cap Index with a small cap stock?John3754 wrote:What did the S&P500 do over that same time period?fredflinstone wrote:... it's up about 16%.
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Re: Confession: I bought a stock. What is wrong with me?
The S&P 500 returned approximately 4.36% from March 16, 2014 to June 5, 2014. In other words, that stock purchase beat the pants off the S&P 500. But that means nothing, for investing is a long marathon not a short sprint.linenfort wrote:Because even though it's apples and oranges, many Bogleheads have their entire equity share in the S&P fund, and that is basically what Flintstone is "giving up."Grt2bOutdoors wrote:Why would you compare a Large Cap Index with a small cap stock?John3754 wrote:What did the S&P500 do over that same time period?fredflinstone wrote:... it's up about 16%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Confession: I bought a stock. What is wrong with me?
DS joined a company a year ago and was awarded stock options. The stock is now 2x and can now be exercised. Current portion that can be exercised will represent about ~30% of his portfolio. Remainder ~70% is in a couple of stocks and Indexes.
He can now buy a house. Sometimes, buying individual stock can get you there faster. Be aware of where is there.
He can now buy a house. Sometimes, buying individual stock can get you there faster. Be aware of where is there.
Re: Confession: I bought a stock. What is wrong with me?
You've proven you're good at stock picking... You should convert your entire portfolio into individual stocks.fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
Re: Confession: I bought a stock. What is wrong with me?
Sometimes buying individual stocks will keep you from ever getting there.LongerPrimer wrote:Sometimes, buying individual stock can get you there faster.
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Re: Confession: I bought a stock. What is wrong with me?
What's the difference between purchasing individual stock and being given stock options?
The former has your own money at risk in a lottery ticket, the latter is a lottery ticket given to you for which you placed absolutely zero at risk for. Let's leave out the part about "I worked for it, I deserved it, yada. yada"). Getting stock options is mostly dumb luck of being in the right place at the right time where someone else made the decision for it to land in your lap.
The former has your own money at risk in a lottery ticket, the latter is a lottery ticket given to you for which you placed absolutely zero at risk for. Let's leave out the part about "I worked for it, I deserved it, yada. yada"). Getting stock options is mostly dumb luck of being in the right place at the right time where someone else made the decision for it to land in your lap.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Confession: I bought a stock. What is wrong with me?
Having a tip land in your lap is not proving anything other than making a concious decision to gamble. Having a tip land in your lap, spending time thoroughly kicking the tires and then placing capital at risk, that's investing.HomerJ wrote:You've proven you're good at stock picking... You should convert your entire portfolio into individual stocks.fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Confession: I bought a stock. What is wrong with me?
I feel the same way-about Roullette. I know it's a suckers game but i play it anyway.What can i say.
Re: Confession: I bought a stock. What is wrong with me?
http://finance.yahoo.com/q/ta?t=3m&s=PC ... l+spy&ql=1 (a little further back starting time)fredflinstone wrote:If anyone cares, which I doubt, this stock is up nearly 20% since I bought it. I don't think this proves anything, but there it is.
Correction: it's up about 16%.
I'll take your word for it. I think SPY is up 6% and AAPL up 24% in same timeframe. What do you do today? When do you sell? What do you buy with proceeds? How often do you re-evaluate?