After Hours: Developing a Stock Investing Strategy

Developing a strategy for investing in the stock market is just as essential as the toilet paper we use.

That said, I try to apply a simple strategy that is not too hard to follow, nor too complex that the average person won’t understand.

As Leonardo da Vinci was quoted as saying,

“Simplicity is the ultimate sophistication.”Leonardo da Vinci

Fundamental Analysis

Definition of Fundamental Analysis

A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors.

In the broadest terms, fundamental analysis involves looking at any data, besides the trading patterns of the stock itself, that can be expected to impact the price or perceived value of a stock.

Basically, I try to invest in companies that have good fundamentals, meaning their business model is something that has succeeded and is easy for me to understand.

Technical Analysis

Definition of Technical Analysis

A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

I also invest in stocks that have good technicals, meaning their charts look good, are trading at a reasonably good volume, and their track record (based on their charts) show an upward trend that signals growth.

Stock Investing Strategy

My strategy is simple…

  • First of all, I approach stock investing from a Zen point-of-view, exercising patience, calm, simplicity, the middle path. Not being too extreme and at the same time not being overly conservative.
  • I study the fundamentals of the company, but at the same time study the technical charts for trading volume and patterns.
  • Not being afraid to use my instincts, gut feelings, and intuition, while at the same time studying the fundamentals and technicals of the company.
  • I keep an eye on a company’s quarterly earnings, its current news and its relation to the general global events happening around the world. I study the technical charts from different time frames: intraday, days, weeks, months, years. I look for a good upward trend that is as free from volatility and less jagged fluctuations in the charts. And I look for good entry points at the low levels and follow through to a good exit point.
  • I watch CNBC and look out for reports on key stocks, whether good or bad, and watch for BREAKING NEWS that might affect the stock market in general.

Managing Only Four Sectors

Basically, I’m currently focused on the following sectors when it comes to investing in stocks.

  • Energy – Without a doubt, we live in a world that can’t exist without useable (and reusable) energy sources, be it natural gas or crude oil or electricity. Our world depends on a steady stream of vital energy.
  • Utilities – The utility companies that provide the energy needed to help us function in a modern technology-driven society are very important to us. They are the transport system that brings useable energy to our households and offices.
  • Healthcare – Where would we be without medical technology and the knowledge and expertise needed to help us live healthy and normal lives? My main focus on the healthcare sector are the pharmaceutical companies, creating and constantly research and developing modern drugs that will help treat diabetes, heart disease and other chronic illnesses. And medical robot technology is at the cutting edge of medicine.
  • Services – My main focus on this sector are companies like Whole Foods and Starbucks, companies that have a major impact on our culture, quality foods, whole organic foods, healthy foods that function as preventative medicine, the perfect complement to the healthcare sector.

The Only Thing Permanent is Change

It’s important to be flexible. It’s important to understand that the stock market is a perfect example of real-time change… of fluctuations, uptrends, downtrends, etc… and taking advantage of all this change.

My basic strategy can change at any time, as it’s important to adjust your strategy to the general trends of the market, whether it’s a bullish or bearish market. But, I definitely don’t do options to keep my investment strategy simple. And, I’m open to holding some stocks for a shorter duration, and other stocks for long term investment.

In the end, it is up to the individual to come up with his/her own investment strategy. My advice is always to do your own research, try to manage your own portfolio so you have more control over your investments, and be very careful not to invest into shady investment companies that might end up being fraudulent or Ponzi scheme. This is why I perfer to manage my own stock portfolio instead of having someone else manage it.

Consider it DIY investing, but you have to do your homework.

Comments

comments

Carlos Rull

Carlos Rull is a musician living in the San Diego area. His interests include Yoga, Eastern Philosophy, Zen Buddhism, and Gardening. He plays drums, piano, and composes New Age & Ambient music, and his albums are available on iTunes and Amazon.com.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.