The New York Times (my fave) recently ran a fantastical article on small investor’s new faith in stock marketing investing. I quote an interesting passage: “In good times and bad, many individual investors tend to buy and sell at precisely the wrong moments. They dump stocks after the market falls and buy stocks after the market rises--the opposite of what investors aim to do.”
The purpose of this blog is to encourage you to do something brave: SELL!
One of my best friends, a bicycle-riding MSP from Los Angeles, sadly did what the NY Times warned against. He and his wife had built up a significant investment portfolio over their respective careers. His wife, now retired from a handsome County of Los Angeles job, had expectations to count on the investment portfolio for future earnings…and then came the financial industry crash that occurred in late 2008. This couple sold at the bottom in June 2009, unfortunately having to take significant loses. They had lost confidence – I get that is was a scary time.
My own investment story is much simpler and modest. Think of it as the accidental investor. For year and year, my earnings have been plowed back into SMB Nation to finance new ideas such as the Microsoft Response Point-inspired Telephonation.com site. All good, and very common for a small business owner to invest in what they know best. However, in mid-2009, I spoke with my wife about finally opening an investment account. We went with Charles Schwab. Each month, we made small contributions to three accounts: husband/wife, Son #1 and Son #2. I could afford it, plus I just knew it couldn’t get any worse. We illuminated the BUY sign.
Carefully study the chart in this article and witness the following. Since mid-2009 until today, the DJIA and corresponding equity markets have had a significant rally. Almost unbelievable for a Bull like me to believe! My opinion is that some underlying numbers (jobs, national debt) don’t support these record highs. As Prince would say (and I’ve modified), I’m not sure we should party like its 1999!
So today I’m issuing the SELL order on our portfolio. By the time you read this, we will have liquidated all three accounts into a 100% cash position. This will allow us to realize and recognize a handsome four-year return and preserve our capital. Granted, interest rates are unexciting, and I might miss out on another round of market gains. But I’m locking in my success now and will then search for new investment(s) for the cash.
Since my mind is always churning away, especially when I am in writing mode, I was got to also thinking that since marijuana was recently made legal by Washington State lawmakers (as per voter’s wishes), it might be a quite lucrative to invest in medical marijuana dispensaries, which seem to be the next big business venture. Tune to any major news outlet, and at least one per day is reporting on how medicinal marijuana is raking in the money. For our readers who know and “get” my sense of humor, you must remember that this is me thinking aloud, and of course I have to add in my anecdote, so therefore, I will leave you with this: With the current state of the market, if I did decide to put my money on a medical marijuana dispensary, I could at least say I bought low and sold high!!
