Earlier in the year I decided to try out a new investing strategy and throw a pile of money only into companies that I LOVE and use all the time. Places like Amazon, Target, TJ Maxx, etc. I figured if I spent my money there all the time and am always getting addicted, others are probably doing the same! And then it would feel good supporting these places too – kinda like an all around happy energy flow or something ;)
So when it came to invest $22,000 into my SEP IRA 8 months ago, I decided to pour half of it into all those companies I love and frequent all the time, and the other half into companies that were either recommended to me by close friends, or those I took a gamble on just to see what would happen. A fun little experiment to try out, but also totally separate from my big nest eggs that are invested a LOT more conservatively and outside of my personal reach. That way I don’t go overboard and kill off our family’s fortunes or something crazy like that ;)
(I should also make a note here that I do *not* endorse playing around with your money so much either, especially those who can’t sustain major loses. So don’t try this at home kids! Haha…)
Anyways, I thought it would be cool to see how our progress was going so far, and to compare MY strategy with those of someone else’s (those that were recommended to me) – even though it’s all my money that we were playing with here. And also MY risks and rewards! I ended up keeping most of them invested over the months, but there were a few that I have since sold off and thus skewed the overall numbers. You’ll see those noted down below though.
The companies I invested in that I love (none sold off):
- TJ Maxx (TJX) — I put in $2,000. Now worth $2,182.37.
- Target (TGT) — I put in $2,000. Now worth $2,161.83.
- Starbucks (SBUX) — I put in $2,000. Now worth $1,987.10.
- Panera Bread (PNRA) — I put in $2,000. Now worth $2,040.89.
- Amazon.com (AMZN) — I put in $2,000. Now worth $2,524.92.
The companies that were recommended to me, or I tried to hand-pick myself:
- Bankrate, Inc. (RATE) — I put in $1,000. Now worth $441.76*. (I sold at $798.35)
- QuinStreet, Inc. (QNST) — I put in $500. N0w worth $336.02*. (I sold at $491.70)
- SandRidge Permian Trust Common (PER) — I put in $4,500. Now worth $3,690.54*. (I sold at $3,960.54)
- First Potomac Realty Trust Comm (FPO) — I put in $6,000. Now worth $5,539.18. (Still have, but will sell soon…)
Can you tell which group was more successful? Haha.. Not that 8 months is nearly enough to really compare funds like that though, but still. Another cool thing about investing in companies you use is that every time you patron them it’s like putting pennies back into your pockets! Haha… A much cooler and fun mentality to have while investing than others. At least for me.
(Another interesting strategy? Investing in companies you HATE, but who you’re forced to pay anyways like your cable providers or energy companies/etc ;) Not as fun giving them your money than, say, the places you shop at, but as one commenter pointed out the last time we blogged about this, you at least KNOW those places are gonna bring home reliable streams of income! You’re giving money to all those places and you don’t even like them! Haha..)
Anyways, a total of $22,000 invested 8 months ago, which would have now totaled $20.904.61 had it not been for selling some of them off… When you factor in all that (I just put the money back into those same stocks I love above) – our grand *current* total comes out to about $21,686.88. $700 more than if I had left them all alone, but still $300+ lower than my initial investments from Day 1… Not the greatest outcome you could hope for, but it is what it is.
We’ll have to come back in another 8 months or so and see how things are looking then :) And in the meantime, I’m staying away from all those “recommendations” from people! If my new strategy here continues to be somewhat successful, I’ll run with it until I get another cockamaimy idea to try out, haha… As long as I keep containing myself within a small % of my overall portfolio, I’m more than happy to try new things until I come across a winning plan. Just consider me everyone’s guinea pig! ;)
How are your strategies coming along? Anyone knocking it out of the park? Hope so!
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PS: All numbers above are accurate as of 11/8/12, when I first pulled them for this article… Which also happens to be the time right after Obama won and crashed the entire market! D’oh.
PPS: In case you missed it, I *don’t* recommend this stock picking strategy to everyone. Make sure to do your own research and follow the paths that work right for YOU. I’m a bit more hardcore than most people, so don’t take any of this as advice! Cool?
(Photo by GabrielaP93)
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I like this strategy and think you could do even better if you start loving a company in its early days. Ok, it is hard to spot the next Starbucks, but if you start seeing people are going crazy for a certain brand, it can be time to put some money on it.
I don’t like oil companies but am forced to buy gas. With the supplies apparently limited in the future, I think it could be good money median term as prices should rise.
Interesting strategy. I just pick a good mutual fund and stick with it personally because I don’t have the time or care to research individual stocks right now. Stinks you took recommendations from others because otherwise it looks like you would have been up!
I invest my retirement money in mutual funds, but I’ve recently started a small investment account for me to “play” with. Right now I’m only buying stocks that pay dividends, but I definitely lean towards companies that I know and like. I’ve gone back and forth on whether I’m willing to invest in companies I dislike. Basically, I’ve decided yes on utilities and oil companies but no on tobacco companies. I was doing pretty well until last week, but I picked up a couple more stocks in the fall, so I’m just keeping my fingers crossed they go up from here.
I have been investing in individual stocks for a long time and personally enjoy researching them. Overall I have been doing pretty well, but I am not afraid to sell them when my indicators tell me too.
It’s funny that some of the recommended ones didn’t do so well. This is mostly why I do my own research before I am willing to invest in a company. Oh well, live and learn. Keep on plugging away and learn from your mistakes!
Personally I love oil companies. Most are solid plays for long term dividend growth and since the game is “rigged” in their favor (or so some people believe) you might as well come along for the ride. Of course I may just be an evil person….
I took this bait a little late, but for about the last month, I have had some shares of Apple, which I LOVE. Unfortunately they have taken a pretty big hit, but analysts seem to this they are going to rebound here, so I’m holding on….
Right now, I’m just investing in mutual funds and my company share plan. I really want to invest in individual companies but need to have more money invested. I don’t want to be the reason, our net worth crashes.
Just curious… why you are selling some stocks so early? Are they suppose to be long-term investment??
I have some shares of apple too… it tanks and I’m still holding it, hope for it to be rebound.
@NicoleC,
I don’t want to speak for J.$, but I think these mentioned are just more of his “fun” investments vs. his buy and hold funds that he has in his retirement accounts.
I just started playing around with more sector / ETF funds. It’s cool, but I’ve had the same short term success as you, pretty much up and down and hovering around where I bought it. We need the ULTIMATE investment tool: A time machine! Man, how I wish I could have bought Google, Apple and Microsoft stocks back in the day for a song. Those folks are very happy. Just gotta look for the next one.
I think the difficult thing here is that this strategy overweights the consumer sector. I mean, how many people love utilities or energy companies? Just something to be aware of as you could end up with a non-diversified portfolio if you aren’t careful.
I use weseed fake money for my entertainment purposes. I have two portfolios- one of companies I can know more about than average (e.g. drug companies) and that I actively like, and one of “evil companies”- whenever a company does something specifically despicable, I add it to that list (lot of oil companies, also AIG and goldman sachs, which is up quite a bit from when I “bought”). Right now, the good companies are winning!
Wow, check out Starbucks!!! You did good all the way around really!
I meant Amazon – doh! Look at Amazon~! Not bad!
Warren Buffett likes the “hate” category: he likes it when that company in some way is able to overcharge you and get away with it legally. American Express is one of his long time favorites. Makes sense, but I can’t bring myself to follow suit. I just don’t like making money off of other people’s misery. Which is also why I don’t invest in Altria (Marlboro), even though the stock is an awesome investment.
@Pauline – Oh yeah, that would be ideal :) And on the other hand it would be smart to avoid OVERLY hyped companies too (*ahem* Facebook). But with everything in stocks, you just never know!
@Lance @ Money Life and More – That’s probably the smarter, more safer way, to do things, but also the most boring ;) So I do that in the bulk of my portfolio and then leave a little wiggle room for stock speculating. But you’re right, it def. helps doing your own research at least in theory… Apparently not with my friend, though :(
@SMB – Cool! I like the way you think :) I haven’t dabbled into dividend stocks as yet (at least not on purpose anyways), but I do like the way it all sounds. Maybe I’ll poke around and find one to experiment with on the next round.
@Brian – Haha… One of the other funds my friend recommended to me a while ago was in Oil too which I’m also keeping around for the time being… Overall he had picked winners for me for YEARS, but this last round wasn’t too hot… You win some and lose some, eh?
@Kevin – Yup! Apple is one of those cult ones too that just seem to go up and up and UP over the years. Until some day it doesn’t ;) But that could be 10 years from now for all we know, so I’m still a fan of theirs as well – even though I don’t single them out for my stock playing game.
@savvyfinanciallatina – Haha, good call :) Plus if we’re talking your nest egg of retirement funds here, I wouldn’t recommend it at all anyways. Much better to be more conservative and broadly invested than in hand-picked stocks. I do the same thing, so you’re in good company :)
@Nicole C. – Mainly for two reasons: 1) My friend who recommended them said the stats and analysis don’t show the same thing as when he first was recommending them – so he’s now telling us to dump. And 2) I get bored and would rather have more fun investing in companies I DO care about if the chances are just the same, or better, than what others are recommending. Cuz at least I like the companies personally :)
@Cherron – Wouldn’t THAT be nice! The next best thing would be to keep our ears open on new and exciting trends for the future like Pauline up there mentioned about… Much harder to do of course, but odds are one of them will hit it big, yeah? Just depends on how quick and how much $$ you have in there when that happens ;)
@Jason – True true… but since I’m more balanced across my main nest egg of funds elsewhere, this one I’m trying to only have fun and play “my way” rather than consider all the variables out there that you normally should. Whether that’s smart or not :)
@becca – Haha good idea! Do you think you’ll then use that knowledge to invest for real down the road? Or you simply keeping it a fun risk-free game? I tried to do something similar back in the day, but I quickly learned it doesn’t hold my interest at all – specifically because I never act the same when real money is swapped in for fake money. Just like in poker :) I have to personally learn the real way to get anything out of it, but it’s great you’re enjoying it! It’s def. the safest!
@debtgirl – Hehe yup! At some point over the months it went up like 15 or 20% in one day! It was crazy… hopefully Starbucks and the rest will too ;) But only after I pick up some more, haha…
@William @ Drop Dead Money – Hah! Really? I didn’t know that about him. And funnily enough, the last stock game I played – and which I’m stil investedin – was only buying stocks that he has recently :) I figured he’s the best of the best so why not just cheat and copy him? Regardless of whether he gets them for cheaper and all that cuz of the way he operates. And this includes AMEX too. In fact, most of the stocks are up by quite a lot since that day, although it was also at the bottom of the market too… Here’s the post on it if you’re interested:
Just call me Warren Buffett The 2nd in stock picking.
I didn’t invest in AMEX till my 2nd round of following him, and since I use Amex and love them, it was fine by me anyways :) But I can see the appeal of staying away from things you don’t believe in. I’d probably do that if there was one on crack or bullying, haha…
I think investing in companies you are passionate about is a great way to go out investing. If you don’t believe in a company and share some of their values, I personally don’t think they make good investments… and you proved that right here!
Good post…I’ve been thinking about selling off the mutual funds I was recommended into and its refreshing to see someone else who has done just that. Mine will be at a loss too, but I feel like things could get a lot worse and I might be better managing my own money.
@Janine @ My Pennies My Thoughts – So far so good :) I’ll have to keep my eye on them as time goes by to see if it’s a winning strategy or not… But so far I’m liking where it’s going!
@Jon B – Worth a shot, right? You can always go back to recommended funds at any point too down the road :) I’d just make sure the bulk of your investments are good to go if you’re planning on picking stocks here and there for fun like I am… I wouldn’t dare do it with all my eggs :)
hey everyone just wanted to drop my two cents in as a former stockbroker turned individual investor. I have found that investing emotionally, and yes that does mean in brands that you are in love with, not to be such a great idea. Its really good to have a great experience with a brand or company, but every technician will tell there is a difference between XYZ the company and XYZ the stock. I tend to follow macro moves of the market with index and specialized ETFs and use market based indicators to move in and out of investments. I have had good success with this strategy over the last two years. I journal my thoughts about the market daily on my blog. Good Luck Everyone…
I bet your right :) But that’s also not as fun nor 100% guaranteed to be successful either or else all professionals would be right all the time… Cool you’re blogging about everything though, I’ll have to check it out – thanks for stopping by.
Rate and QNST? who made those recommendations – another blogger?
Haha no – actually those were 2 I also tried myself just ‘cuz it was the closest thing to investing in blogs/money advertising :) My friend who recommended those others up there told me no way in hell he’d put money into RATE or QNST because the numbers looked horrible but I didn’t listen… and was def. right on those! If only he was right on the others too ;)
Good points! Thank you!
One small suggestion is that you limit your position sizing so that you are not exposed for more than 4 – 5 per cent of your fund on any one security. That will allow you to upgrade your holdings more often.
@Jon B – Glad it helps! :)
@daveM – Yeah, good idea too. Especially if you’re playing a lot more riskier w/ your money than other investments – it’s good to cap it at a smaller % until you figure out what works/etc… or maybe until your risk tolerance changes ;)