summary of what I have learned with my funny money

[Zaphod]

I dont know that you've learned anything in 3 months. Really should give it some time (not that it will change the answer, but you could say the same about any endeavor viewed under doomed to fail circumstances). What you've really learned is the emotional toll of individual stocks I'd guess.

Agree with the above your picking is pointless unless you have entry/exit guides and timelines for it to happen in. Have rules. Otherwise, you'll do exactly as you did and cause yourself stress in between. If you have rules there is no need to stress if nothing happens or not to a degree enough to change anything, and if some parameter is hit, you just follow the plan. Makes things easier.

I decided a while back I wanted little to do with individual stocks and switched to etf index funds.

[ajm184]

Not sure you have learned anything except that emotion is bad and costs money.  Not sure there are 'rules' when is comes to individual stocks, but a couple of guidelines I have used in past when holding individual stocks in my Roth IRA:

a. Research.  Know about a companies  business, customers, competitors, financials.  It is tedious and painful, but useful.  There are plenty of really good equity analysts out there who base their recommendations on nothing but a company's SEC filings.

b. Have a view.  Why do you believe this stock will increase in price?  Write it down so that you can re-examine your premise over time.

c. Price points- What point will you get in and or out?  A number of years ago, I bought INTC (Intel) for $19.22/share, my thought being 'It's beaten down stock trading within 3% of its 3 year low, I think I can get 3 to 4 dollars and move on'.  I was foolish, because when it moved to like $24, I ignored the 'get out' price I had set.  Ended up working out, as I sold at $36/share, but discipline needs to work on both entry and exit.

d. Dividends mean you don't have to be right, right away.  I've never owned Amazon individually either.  Dividends allowed me on several stocks to do get out slightly above break even or lessen the losses (GM in 2000 or 2001 comes to mind).

e. Conviction- If your view and circumstances haven't changed have the ability/willingness to buy more if the price drops beyond your initial entry point. This worked well for me in the last year, bought Nucor at $46/share because both presidential candidates were talking up infrastructure spending and love the company's business model, prices drops to 40'ish put more money (an additional original investment amount).  Sold at like $60 $61/share earlier this year.

f.  You will lose money despite a. through e. above.  I owned CS (Credit Suisse) ADR's at like $28/share, thinking the CEO was the right person to offrisk assets and transitions its business model to greater focus on Wealth Management.  Instead, some idiot CS traders hid their book from risk management creating huge issues when they came to light.  Ended up selling at just over $15/share.

g. You are shooting for above 50% (and your a rock star if you get to 52% LT) on winners versus losers.  Ideally, lessen the losers and crush it (2 or 3 bagger in Peter Lynch parlance) with the winners.

g. Re-examine your assumptions around b. all the time.

[Dreamgiver]

If that's what floats your boat, get into options. Much bigger upside for funny money.

[Dicast]

There is also the pain of tax time.  Lots of in and out purchases, gains/losses.  It is easily doable but annoying.  I did the same thing when I was in college with about $1500 and never want to deal with it again.

[q-school]

Only three thousand makes it hard. It's basically gambling. Especially with your desire to almost day trade. Plus the tax hits are significant.

I didn't start investing individual stocks until I had quite a bit more and even then I held for years.

Glad you recognize it's play money

[u500_insulin]

I thought I would post my experience after starting to play in the market a little.

I wanted to be able to do some stocks in a taxable account to get some real life experience.

I put 3k into an account and would buy different stocks based on the news or how I felt a particular day.

 

At the end of the 3 months, I have not gained any money nor lost. I have lost time and gained stress thinking about my individual stocks:

I bought Apple, netflix, NVDA etc.

I ended up buying at wrong time and selling at wrong time

Example for this week: Sold Chesapeake energy after holding it for a while to cut my losses, then it goes on a three day tear    Earlier this month I saw that other stocks soared just after a week or two selling them for a small profit or just at even.

 

I realize now by my own experience, it is better to have rules and stick to those

My rules are as follows for play money:

if you buy certain stocks: for me: Berkshire Hathaway or Apple (never sell) hold until absolute need to sell or in old age. Just forget that you even own them, that way cannot be tempted to sell.

I am glad that I got the real life experience which is echoed in passive investing (Bogle). You can't outsmart the market in the long term.

 

Love to hear other people's experience