Thursday, August 25, 2005

Keepin' It Simple

I love to make my life easier. I am constantly looking for ways to reduce the clutter in my life, and to be honest, not do something unless I really need to. My life is crazy as it is, with kids, a house, new dog, etc. Luckily, my wife is a wonderful person who handles a lot of the day-to-day stuff in our lives.

That being said, I came across an article that I thought was pretty good in terms of some key messages for busy people. The Six Rules for Lazy Investors provides a great overview of some of my own personal investment philosophies. For example, "Trust the Explosive Power of Compounding" provides a great summary of why I am so passionate about dividend investing. Watching my companies throw off income and then reinvesting that income to receive even more income on the next dividend payment date is awesome. "No market timing, no day trading" is also a good one for those of us who do not have hours a day to devote to watching the market.

I do have to question the author's viewpoint on "Buy Quality and Never Sell". If you are investing strictly in index funds then this makes sense. However, if you invest in individual stocks like I do, then I do not believe that you can buy and simply hold. Instead, I tend to look at in terms of "buy and monitor" or "buy and watch" as I have heard it referred to before. Individual stocks can tank (i.e. Merck), and understanding why it tanked and making educated decisions in terms of holding or selling is crucial. It has to be a pretty drastic situation for me to sell a stock, but that does not mean that I never will. I am pretty lazy but I ensure that I find time to monitor the stocks in my portfolio.

I really liked this article - even through it was focused more on index investing, a la The Coffeehouse Investor. I think if I can follow these steps well, I will succeed at my goal and then some.


Blogger wannabe_ceo said...

That's a good set of rules. I seem to follow most of them.

8/29/2005 09:12:00 PM  

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