My Twin Towers Appraoch To Stock Market Investing

A couple of years back, I read Fitz's post/quiz on how to tell if you were an investor or a trader.

It was a great article. You can make money either way - as long as it suited your strengths. Sure, I advocate long-term, "safe" investing; it would be irresponsible of me not to. But plenty of people make money by actively trading.

The next day or so, Burn wrote a post inspired by that quiz. After reading his 3-guard combo stock investing strategy, I thought to myself "That's a great strategy!"

I tried implementing a similar strategy. And that's when I realized investing involves creating a strategy that fits your personality and situation.

And so I'm sharing my own investing strategy. (True to form, it took me one year to react when it took someone else just one day to do the same.)

My strategy is sort of Jekyll&Hyde. Sure I'm patient and I invest long-term, but the underlying principles are vastly different.

On one hand I invest in an index fund through cost averaging. You can't get more "square" than that. It's textbook advice (at least it is now).  I'm diversified, the stocks are all blue chips, and the guy doing the work is an actual professional.

On the other hand, I'm "actively" trading/speculating on MEG. Sure, it's an index stock, but it's volatile, "cheap"(never been worth more than Php5 per share), and it isn't some undervalued gem. Sure COL thinks highly of it, but I've read other analysis that it's already over-valued. The real kicker, is that it's my entire stock portfolio, if we disregard the index fund.

If you think about it, I should be suffering from migraines and seizures by now because of the cognitive dissonance caused by this Jekyll&Hyde approach.

But for several reasons, this works for me and I'm less anxious.

On one hand, they're both long-term, and doesn't require daily or even weekly monitoring. Which is necessary, since I don't have a lot of free time to just obsess over market movements.

But stock investing, for whatever reason, is one of the things I'm curios of. Just handing money to a fund robs me the thrill I could otherwise get.

Plus I'm not a naturally patient guy. It's just something I learned (possibly because I'm pretty lazy). So while just "mailing it in" at an index fund  appeals to my lazy side, my impatient side wants me to do more and see more progress.

However, I don't want the pressure of managing my child's college fund, specially since I know I won't have a lot of free time to monitor it.

But having a stock I watch over lets me learn from experience, as well as encourages me to actively search for better ways to manage/invest.

In the end though, it works only because of position sizing. The more important goal (college fund) is on the "safest" investment (index fund) and has the majority of my funds, while only a relatively miniscule amount is allocated for riskier, direct stock investment (to be used as either start up capital or simply as a stock investing fund).

In the end, investments can take any form that suits our needs. We just need to be mindful and take the right precautions.


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