Monday, April 18, 2005

Congratulations again to Sandra Kupsky--GME UP!

Sandra and I selected our favorite characteristics of a good stock and Sandra has been running screens and doing additional research to find our stock of the week selection. Sandra and I are both amateur investors who make our stock selections as a hobby. We discuss selections openly with you for educational and entertainment purposes only. There will be times when we or members of our family will buy the stock of the week selection and there will be times when we will not.

One of the important rules that investors should learn is that it is "time" in an investment which makes the real difference. Buying the investment at the right time can be helpful but neither Sandra or I believe in taking short-term profits. We like to make 100, 200, 500% or more. Never-the-less, it is nice when selected stocks do well soon after they have been selected.

Today, GME (Game Stop) announced the purchase of a large competitor; both stocks went up! GME believes the purchase will be accretive to earnings the very first year!

Of the measures that we use to select stocks, several of them are based on valuation. It is our belief, (like David Dreman and others) that good surprises are likely when you buy "value" stocks. The stocks we select are often a mixed breed. We like to buy growth, relative strength and value. We like to keep trading costs and carrying costs low. We simply do not know how one should expect to do well if he is paying 1.5% or more annually in fees. On stocks that we buy and hold for years, the total cost and fees are less than .005% annually.

Ironically, it is the losers that cost us the most. If we buy a stock and it goes down, we are likely to sell it. We pay the double commission to buy and sell but we try not to let a loser run. In taxable accounts, we book our short-term loss to save tax money and seek out another long-term tax deferred and tax advantaged gain.

Sandra--keep the winners coming!