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My Abusive Love Affair With Stocks

by J. Money on Tuesday, August 9, 2011

wall street sign
(This is a guest post by Gutman, who has recently put together the greatest book on investing in stocks ever written (his words, haha…), and is offering it for free on his site right now)

Nobody really likes stocks. I mean, sure, they can make you quite a bit of money. Then again, they can just as easily lose it for you. They don’t listen to you half the time and researching them intently can oftentimes makes you want to punch a unicorn square in the jaw. And it’s certainly no secret that there are better, more fun, more profitable investments out there. And this is all coming from a guy who wrote a book about investing in stocks.

Let me share with you a few reasons why I rue the day I decided to invest in stocks.

  1. Stocks have no point. What are stocks really, other than a piece of paper saying that you own a piece of a giant, faceless corporation? What does this give me? Is it going to buy my imaginary wife a new dress? Will it teach my fictional son how to ride his bike? Will it put food on my theoretical table? Will they give me shelter during a hypothetical thunderstorm? Probably not.
  2. Stocks are boring. It’s no secret that to be able to make money with stocks (without risking losing it all) you should be prepared to do research. However, does anybody really want to come home from a hard day’s work and calculate a stock’s equity risk premium? Or study the competition’s 5 year free cash flow on invested capital trend? Personally, I’d rather spend my evenings running over pedestrians in Grand Theft Auto IV.
  3. Stocks will give you a heart attack . If you’ve ever invested in a stock then, chances are, you know what it’s like to have your heart ripped out of your chest and stomped on by an angry gorilla. One moment you will be giggling like a schoolgirl when you see you’ve earned yourself a few shekels. The next you’ll be weeping from seeing all your gains wiped out with the swift flick of the evil market wizard’s finger.

And now: why I’m a dirty stinking liar.

  1. Stocks have the most important purpose in the world. Sure, stocks may not babysit your pet leopard nor will they provide you with a place to store your rusty 1967 Ford Mustang. However, they will do something for you that a million trips to the supermarket (or whatever it is that you people do) never will:  they make you money. Family, shmamily.Happiness, shmappiness. Money can buy me a million families and all the sacks of happiness that I can fit into my gold-plated minivan.
  2. Stocks are exhilarating. Say what you will about investing, but I love it. I love learning of how a company lives and breathes. I love to dig into it and understand what it’s doing and where it plans to go. I love studying its strengths, weaknesses and how it stands up against the competition.  Most of all, I love to find a company’s hidden gem that nobody knows about yet. Something that makes it shine and prosper above all the rest. And once the rest of them realize just how amazing this company is, you’re already there, with a big grin on your face, laughing maniacally while twirling your mustache and singing ‘I told you so!’
  3. You will sleep sounder than a hibernating rhinoceros. You’ve bought stock of a company that is growing sales every year, is extremely profitable, has little-to-no debt and a ton of cash in the bank. To add to that, you bought it at a fraction of what it’s worth. Who cares if it drops a few percentage points here and or there, your stock is still worth more than what you bought it for! Remember that terrible stock market crisis back in 2008? Where all those people had to sell all of their worldly possessions so that they could pay the cable bill after losing so much money in the stock market? Well, if you had kept your money invested, you would have recouped all of your losses and actually made money since then (and a lot of it). You just have to have a little more foresight than a goldfish, which, sadly, it seems that the vast majority of people do not have.

And that is my bipolar recollection of why I love and hate stocks. There’s one final thing that I think needs to be said about stocks: it’s very easy to hate them. Why? Because people dislike what seems somewhat foreign to them.

————
Guest Post by Gutman. Who adds, “If you have even an inkling of interest in stocks or want to catch a whiff of why I love them so much, I’ve written a feature-length book on the subject. And it’s free (for now). So head over to my site and download it. You won’t regret it. Unless you absolutely despise sarcasm, humor or learning how to make money safely and profitably. What do you have to lose?”

(Photo by miss_millions)


{ 10 comments… read them below or add one }

1 Rachel August 9, 2011 at 8:02 am

I got through most of this post reading “stocks” as “socks”. HAHA Makes more sense now :)

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2 cashflowmantra August 9, 2011 at 8:52 am

Socks is too funny. This is a most appropriate post for the anxiety provoking market action that is going on right now. Love it.

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3 Stephanie August 9, 2011 at 8:56 am

This post made me chuckle. :-)

I totally agree with your second #3. The stock market crashes not infrequently (although to varying degrees), and it has always rebounded. If you’re close to retirement, you shouldn’t have that much money in stocks anymore. But if you’re young like me (I’m 28) and retirement is a long way off… if anything when the stock market crashes you should be buying! (On another finance blog I read, a commenter described it as buying stocks “on sale.”) In the long term, the market will inevitably rebound and you’ll make a ton of money.

That said, I don’t buy individual stocks. (See the first #2 – I don’t have time to sit around researching individual companies.) I stick with an IRA and trust my financial advisor’s judgment. ;-)

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4 Oren August 9, 2011 at 9:52 am

@Rachel: hmm I actually also do have a love/hate relationship with socks…maybe I should write about that too…

@Cash Flow Mantra: glad you enjoyed it! :)

@Stephanie: I couldn’t agree more, especially if you’re good at finding stocks that are “on sale”, which I actually show how to do in my book (pardon the shameless promotion). As for the second part – to each her own! It’s great to have an adviser that you trust :)

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5 Alison August 9, 2011 at 10:33 am

Glad to know that I’m not the only one that read it as socks and not stocks. :)

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6 Jenna, Adaptu Community Manager August 9, 2011 at 2:11 pm

Couldn’t agree more! I like the idea behind stocks. However, I can’t seem to get over the additive behavior I have with them. The tracking, updating, refiguring, stressed out feeling…

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7 Gutman August 9, 2011 at 5:40 pm

Whoops just realized I used the wrong name when I was responding to comments above (Oren)… Anyhoo

@Jenna: I know what you mean…that’s why I love a buy and hold strategy, just buy a few stocks that you know are excellent and are going places (at a good price, of course) and wait it out. I would only check the price of my stocks every few weeks or so. Once I started doing that my gains went up exponentially.

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8 JerryB August 9, 2011 at 8:40 pm

I love stocks and enjoy the research. However, I’m a bit conservative in my stock picks (S&P 500 Index for my RothIRA).
Now that I’m debt free I can add to my portfolio every month or so.
My current plan is to use David Fish’s Dividend Champion list as a starting point on where to invest next based on the upcoming Ex-Dividend dates.

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9 Million Mile Secrets August 10, 2011 at 10:54 am

Stocks are great long-term investments, but you need to have the strength to not bother about short-term fluctuations.

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10 J. Money August 14, 2011 at 2:03 pm

Thanks for guest posting for me while I was gone, brotha! Always enjoy a little fiestiness up in here for my people ;)

@Rachel – Hahahaha, that is hilarious… seems like something I would do too ;)
@Stephanie – I do the same for the most part, though I have an account specifically for me to play around with and try my hand at stock picking… it’s a small % of my overall portfolio that lets me be dumb/super-risky ;)
@Million Mile Secrets – Yep! Agreed. And if you’re REALLY weird/crazy like me, you actually enjoy seeing it go all over the place every week ;)

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