investing 101

BUY AND HOLD

2007-12-25T07:04:00.000-08:00

We continued our research and found another stock, also a food product. We could, at least, eat our investment. We bought Canada Bread at $21.00. It quickly jumped to $25.00. We were quite pleased. Then, we read about the low carbohydrate diet that everyone was going on. We thought that we should sell Canada Bread. We did. What we didn't consider was that most people don't stick to a diet very long! We watched as Canada Bread went up to $60.00. We learned that if the stock is good, buy and hold.

A stop loss

2007-12-19T14:10:00.001-08:00

Our investment did well. It went from $6.00 to $8.00 to $12. 00. We were so excited. We hadn't lost the whole investment. Remember, many people coming out of the hi-tech boom did. Then, one day the market was very volatile. Our shares dropped several dollars. Someone - I think it was me - suggested that we put a stop loss on it. We did- at $9.00. The market continued to be very volatile. The shares dropped again and were sold at $9.00. We decided we wouldn't be greedy and accept, gratefully, all the gains- be what they may. However, it did hurt when we watched the stock rebound and climb to $24.00. It didn't remain there and today I can not find it on the TSX.

Our First Investment

2007-12-18T08:38:00.000-08:00

We had been accumulating money. Once our Constitution was signed, we agreed to contribute $50.00 every month. We were somewhat anxious but having listened to all the advisors who had been kind enough to speak to our group, we felt that it was time to purchase our first stock. What to purchase? Several people made recommendations. However, some members didn't feel comfortable with the suggestions. Then, one stock was recommended and everybody agreed, "That's for us!" The stock was Cool Brands on the Toronto Stock Exchange. Who can refuse something good to eat.? It was, at the time, selling at $6.oo/share. We had enough money to buy at least 100 shares. We were hooked up to TD Waterhouse web broker where we could purchase the stock over the internet for $29. We did, we waited and we watched our investment.

Preparation

2007-12-16T12:01:00.000-08:00

We told people in the investment field what we were doing. Many (from investment gurus to stock brokers to financial planners) offerred to speak to our group. We invited them to our meetings. We learned about the P/E (price to earnings). A stock is overvalued when the ratio becomes too high. 10 to 15 is a good ratio but only one of several factors to consider when buying a stock. A company's revenues and net earnings, its CASH FLOW ( a big consideration), its debt should all be examined. Has its financial status improved over the last few years? This information should be available in the companies annual statements, its balance sheet. The nature of the business is important. Horse-drawn carriages are probably not a big seller.

We began to follow the business section of the newspaper. Some journalists have a good business sense for recommending winning stocks. It takes awhile to figure out who those journalists are!

The internet was a great source of information. We could go to a companies website and find all sorts of information. There are other sites where we could check out a stock.

Tomorrow, I will tell you about our first investment.

Forming an investment club

2007-12-15T05:17:00.000-08:00

I mentioned yesterday that I invested in the financial market at the height of the hi-tech bubble-and almost lost my shirt. I wasn't alone. Sometime in 2001, a friend asked me to create an investment club where women inexperienced in the stock market would learn about investing. Many people expressed an interest in joining. We had numerous meetings but, finally, 14 women decided to take the plunge and form a club for investing. We then spent another year drafting a constitution. Other investment clubs had their constitutions which they shared with us. We were then able to personalize the constitution to our requirements.
Tomorrow, I will tell you what we did next.

The Beginning

2007-12-14T18:50:00.000-08:00

I was young once upon a time. I worked, saved my money as much as I could. I was told that if I invested in a registered retirement savings plan, I could use the investment as a tax deduction. And, prepare for my retirement. At the end of the year, I went to the bank to invest my money in a registered retirement savings plan. The young man who assisted me had all kinds of suggestions to make. It was the height of the hi tech bubble and most of his suggestions involved investing in that sector of the economy. Inexperienced, I listened to him - much to my regret, later. The high tech sector collapsed and so did my investments. In fact, if I still held on to them, I would not as yet have recouped my investment. I wasn't going to make the same mistake again. So, I asked friends about their investments, read the business section of the newspaper and joined an investment club.
Tomorrow, I will tell you about that experience.