How to choose the stocks you buy

September 1st, 2009

I use the pin and blindfold method

Way back in October 2006 on a day when the stock exchange was roaring along, I saw an article somewhere on the internet tipping a share called Sirius XM Radio Inc. and known as SIRI. I proceeded to do my due diligence which consisted of about 4 minutes scanning the company profile and another 2 minutes understanding what satellite radio was all about. I checked the balance in my account with my broker and instructed him to buy 100 shares. Total outlay for me was $394. I can afford to lose that, I thought.

Not my first time

Years ago I did something similar with a stock called Yahoo. I ended up buying a new car with the proceeds when I finally sold the shares. My goal is to repeat the exercise. Unfortunately SIRI has not behaved as the writer of that article predicted and I have felt misled in a way. More than once I have been tempted to erase the SIRI line from my portfolio so that it will no longer distract me when I am reviewing my retirement fund. The truth is I lost all interest and when the stock eventually fell to 15 cents I quit following it. At that price it wasn’t worth the energy of watching it or the cost of calling the broker.

Today’s article

There is another article about Sirius today. I had to look for the price of the stock before I started reading. Wow! Up all the way to 69 cents! More exciting is that the writer says, “Sirius has begun to shed its bashed and tarnished negative image and is starting to show real promise again.” I’m all hyped up. It’s like, “Surprise!”

Will it or won’t it?

Actually I’ve become so used to it not doing anything that I don’t mind what it does. Much more interesting is the fact that I own some stock in a company that people write about – that makes me feel that I am doing something right. The Sunday afternoon stock market investor For someone who plays around in the stock market like me, these casual purchases and sales are probably the most dangerous form of ‘money-play’ outside a casino. I do not play in casinos because I am afraid of losing money. Playing in the stock exchange is different. It suggests that you have some knowledge, that you are financially savvy and are a man of the world. It allows you to initiate sophisticated discussions at dinner parties and being able to nod wisely at the right moment. It also allows one to utter the correct mourning noises when someone talks about their losses.

Back to SIRI

So SIRI, I am not counting on you to bring me a new car, nor to make me huge globs of money. In many ways you are paying your way already. I’m going to reinstall your line in my portfolio.

This entry was posted on Tuesday, September 1st, 2009 at 9:29 am and is filed under Economy, Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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