Dear Mr. Market:
The holiday season is upon us! We will soon be spending time with friends and family at gatherings as we celebrate this time of year. Let’s take a moment to look at a conversation that commonly takes place this time of year:
John – “How are you doing? I heard you moved on to a new job a couple of months ago, how is that going?”
Jane – “I am great! Yes I did start a new job and am really excited about it, the company is doing great and I am excited about the future.”
John – “I’ve heard it’s a great place to work – their stock has been doing really well! How about the stock market this year, crazy huh?”
Jane – “Their stock is amazing! It’s helped my portfolio a ton, I’ve also got a couple of stocks that got me back on track and might make retirement come much faster than I thought!”
John – “Really? I haven’t invested much in individual stocks. Do you do this yourself or have somebody that helps you out?”
Jane – “I read a lot and buy some newsletters but basically I do it myself. It really isn’t that hard.”
John – “I just don’t have the time for that. What has worked out so well for you?”
Jane – “Well here are a couple of names you should look at that have been doing really well for me this year…”
And so the story goes… John writes a few stocks down on a cocktail napkin and puts it in his pocket with a smile as he thinks about the incredible growth his portfolio will soon experience. On Monday he signs into his online brokerage account and without doing any research or due diligence he buys large positions in 3 different stocks with the blind assumption that they will go nowhere but up…but do they?! Continue reading