Stock Investment Strategies I Use

The advent of online discount brokers has made trading stocks very tempting. Buy a stock today and if you read a bad opinion of the stock tomorrow, you can sell it easily and cheaply. The fact that it has gotten cheaper to buy stocks is great….but the temptation to turn them over quickly isn’t.

You see, ever since I bought my first stock in my 20’s, my strategy has been to buy and hold for the long term. I am investing for the long haul which in my case means retirement. I have always wanted to make sure I built up my savings so I could lead a comfortable life in my 60’s. I would like to be able to do what I want to do and go where I want to go (within reason), not being constantly restrained by a lack of money.

The stock market is the way I hope to reach that goal.

I believe too many people treat the market like some sort of casino game: Place bets, wait awhile, and then cash out and on to the next stock. As I just mentioned, it is very easy to invest like that in today’s environment.¬†But the reality is that buying and selling stocks on a frequent basis is something very few people can do profitably. Here’s why:

1) The first reason why it is hard to make money that way involves the fees. Even though it might cost only $10 or less on each transaction, those fees will add up significantly over time.

2) Another reason is that a person who makes lots of trades will inevitably be paying more in taxes: short term capital gain tax rates are usually higher (depends on what your income is) than long term capital gain rates.

3) Finally, trying to time the market and stocks is akin to telling the future. How many people can accurately do that? Not many!

I Look For Good Stocks I Can Hold

Many of the stocks I own in my other portfolios (I also have accounts at E*Trade and Merrill Lynch) were purchased 2 years ago or longer. Very rarely do I buy a stock with the purpose of selling it soon. I’m always trying to find companies that are solid earners, undervalued, and ones that should continue growing for many years to come. Thats what I am looking for as I search for stocks that can stay in my portfolio for a good while.

Of course there are occasions where shortly after buying a stock something could happen that might change my opinion and I decide to sell. However, my intent is almost always to find stocks that I will be happy to hold for at least a couple of years and maybe longer.

My stock investment strategy is to buy and hold stocks, not trade them. Even though it might not be as cool today as it was in years past to invest that way, I believe it is the single best strategy to grow your savings over time.

4 Responses to “Stock Investment Strategies I Use”

  1. Parag says:

    Hi Bruce,
    Your blog has been useful. I will start with my first job very soon, just graduated. I was wondering what are some good online trading platforms apart from tradeking. Can you list a few?
    My second question is, Do the online trading platforms show stocks of the entire global market as in listed on NYSE, NASDAQ, Tokyo Stock Exchange etc.? OR are they meant to show trades by users their services only?
    Also, do these platforms share public IPO information?

    • Bruce Alan says:

      E*Trade, Scottrade, TD Ameritrade, OptionsHouse, and Merrill Edge are all good and well established online brokers.

      Those brokers will NOT allow you to buy stocks on the Tokyo Exchange, Korea Exchange, or other foreign markets. Pretty much just the NYSE, NASDAQ, AMEX and some over the counter stocks. I’m not really sure how a person would go about buying stocks on any of the foreign markets as I have never attempted to do that. Some foreign stocks do trade on the US exchanges though, through ADR’s. For instance, Nintendo has been in the news every day for several weeks now and you can buy its stock through any US broker even though it is listed on the Tokyo exchange.

      IPO information is pretty sparse on any of these online broker platforms to my knowledge.

  2. Jack says:

    Dear Bruce,

    I’m 35 years old n very new to stock market and started google it yesterday to look for step and step guide. Luckily found your blog. Now I’m reading every single post one by one. I have a few silly questions in my mind. I will be more than happy if you can answer my silly question. u mentioned u started buying stock since 20 yr old. I would like to know u started with what amount?

    What is your total profit so far? within how many year? In order to gain that profit how much amount u deposit?

    So far I only have $3000 in my saving. but I would like to get motivated to buy stock after reading your blog. It’s really inspiration. Thanks for your time.

    • Bruce Alan says:

      Hi Jack,
      I think I started with around $10,000 or so and put almost all my subsequent savings into the market for many years after that. I have no idea what my total profit is as I don’t keep records like that and it has been many years. Anyway, how much you can or will make will be very different and it will depend on how much you invest, whether the stocks you pick do well, whether the market does well, and all sorts of other variables. Remember, there are no guarantees.

      I truly believe though, it is important for you to get started and learn about investing so as to take more of your financial future into your own hands. Everyone needs to learn how to manage their money and stocks are an important part of the equation. Good luck and thanks for reading.

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