I am an Impulse Shopper!
I thought it was just cars and houses, but I learned this week that I am definitely an impulse shopper. Once the money was in my brokerage account I simply couldn't pass up the deals that I thought I saw, and today was no exception. I picked up 200 JNJ at $62.06 this morning to add to the 400 BMO from earlier in the week, bringing my total spending spree to just over $40,000!
Wow. That's a lot of money.
Okay, here's my justification...
I believe that I spend a lot of time looking but when I actually buy it is a quick decision. Perhaps this isn't the same as impulse? After all, my past major impulse buys seem to have mostly turned out well for me. So I must have done my research and possibly have good instincts.
Or maybe I've just been lucky so far. ;)
Anyway, I read a short personal finance book called "Five Secrets a Millionaire Taught Me" this week and one of the stories told of a woman using her investment purchases to satisfy her shopping urge. (In fact, he was suggesting that you buy precious metals and keep them in a jar in your house so she even got to take something home from "the store". I think the whole idea is somewhat bizarre, but that's off topic.) I suppose that so long as I spend my impulse money on things that are good for me such as solid investments there is really no harm in it anyway.
The good news is that both purchases turned out positive at the end of the week, so the critical test of sleeping well on the first weekend has been passed. But I realize now that the buy and hold forever strategy is going to be hard for me. I am more active than passive by nature and I want to watch my investments a bit too much. Oh well! What's life without a few challenges?
Have a great weekend!!
8 comments:
One of my good friends loves gambling and she unapologetically treats the stock market as an extension of the casino. Amazingly, to me at least, she makes money. So who's to quibble with your approach. It takes all sorts.
How can a girl be satisfied with stocks bearing such unexciting names like JNJ and BMO? They sound like some sort of medicine: "Take 200 mg of JNJ after lunch and 600 BMO before you go to bed".
Two years ago I bought a gold maple leaf. Now it's worth 50% more. Too bad the coin was comissioned by my uncle. The leaves are pretty. You don't have to keep them in a jar. You've got a large backyard.
But if you can't resist the shopping urge for trading, why not go for something more classy, like TIF?
What I do is combine buy and hold investing with trading a smaller amount of money. It's the way many or most large investors manage their money too. All the talk of Buffett for example only buying and holding stocks forever is wrong. He does both. What he doesn't do is never sell off whole businesses unlike the private equity LBO folks. Buying and holding doesn't mean holding forever neccessarily either. You do need to monitor both managers and individual stocks. For example Telecom NZ used to be a great dividend paying stock. Now I'm not so sure - its business conditions seem to have deteriorated and I sold it. My ideal "industrial stock" (as opposed to fund/financial stock) is taken over eventually anyway :)
I don't think implusiveness should be confused with decisiveness. The ability to make a quick decision can be a good thing, and if combined with a lot of previously acquired knowledge and insight, it can be a tremendously great thing.
The people who combine years of study and experience with an ability to act quickly are often the most highly compensated people in society. (For example: doctors, lawyers, professional althetes and musicians, executives, entrepreneurs, etc.)
It's one thing for people to walk into a mall and just indiscriminately start buying all sorts of things because they want more stuff. It's quite another for a rare coin dealer of 30 years to spot a $1000 coin selling for $5 at a yard sale and immediately buy it.
Investing is not any different than other fields in that respect. If you've already done your homework and know the relevant information, a quick decision can be very profitable.
Some of my best investment decisions in life were made in less than two minutes, but were backed by years of study that enabled me to spot a "steal". On the other hand, my worst investments have tended to come from getting involved in things I did not understand properly. I wish I could say the mistakes were faulty analysis or something like that. Unfortunately, with most of my losses, I knew right well that I had no idea what I was doing, but I did it anyway...now that's impulse!
did you happen to look at the stock's price action before buying...cause from the charts you have put up..the stock sems to be in a downtrend...i would have waited for some positive momentum or...waited till it stopped going down at least..to buy...but now that you..have ...i hope it does well.I also know it's quite hard to stay away from checking on how your stock is doing each day but 2-3 times a week have turned out to be optimum for me(to quench my worries and check my progress)!!
When I recently bought my first piece of real-estate (a condo), I expected to be really nervous when I signed on the dotted line (and everyone else talks about their hand shaking signing their first purchase).
Even though I'm a worrier by nature, I was totally calm and happy throughout the transaction (my only fear was the mortgage company or the lawyer would mess something up at the last minute), I had *NO* doubts about the purchase, because I'd already put in tons of time thinking about it.
Probably its the same for you. You understand why you're buying the dividends, you understand the companies and the price, so the actual buy deicison is easy (probably it was simply a matter of "can I affod to put this $40K into something long term?) then you were ready to buy.
Good for you!
wow - this stimulated a lot of comments! I'll add my two bits: have you read the book "Blink"? It's by the same author as "Tipping Point" and examines academically (but happily in everyday language) the question about our decision-making process. From Wikipedia: The author describes this phenomenon as "thin slicing": our ability to gauge what is really important from a very narrow period of experience. In other words, spontaneous decisions are often as good as - or even better than - carefully planned and considered ones.
Your decision was not split second, but I think the book would speak to you JNJ purchase :)
Hey everyone,
Thanks for the great support and comments! You brought up some angles on this decision that I hadn't even considered.
I didn't buy any stocks today, even though there is still money in my account because nothing looked good to me. So there is some balance.
I think I may consider taking moom's suggestion and keeping aside a portion of mad money for more active trading. Not sure what that will look like yet.
The saga continues...
MD:)
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