Stock Starter Series, Part 5: Final Insights

Welcome to the final post of a 5-part series for the brand-new stock investor – or the person still thinking about it! My goal in this series has been to try to simplify how to get started in this most exciting financial journey and now I will provide some final insights. If you’re just jumping in at this post, you won’t get a whole lot out of this series unless you go back and start with the first post.

I realize that the first four posts in this series have perhaps been a bit of a marathon.  Trying to simplify how to get started in something as multi-faceted as stock investing doesn’t necessarily mean that things would be short and sweet!

Also, I didn’t want to make any of those posts longer than they were, so I’ve saved some final insights for this one.

Let’s summarize the main points of the first four posts:

  1.  Stocks have been statistically proven to provide the biggest long-term returns out of any form of investment, especially after the first decade.  (If you buy quality stocks, of course!  And if you buy-and-hold them instead of buy-and-sell them all the time!)
  2. I consider online stock recommendation services to be your best resources for finding which stocks to invest in.  I suggest starting out with the Stock Advisor service offered by The Motley Fool.  Also, take the time to find a good investment advisor/stock broker by trying to find personal recommendations.
  3. I recommend saving up $1,000 at a time and buying two new stocks with that money.  However, this is only a suggestion.  Whatever plan you come up with, make sure you stick to it!
  4. You should never sell any stock unless you absolutely have to or if something changes that might negatively affect the company’s outlook.

About getting professional advice

I might have come across as not being too fond of the idea of having an investment advisor/stock broker.  However, I in no way wish to discredit or knock their expertise, nor do I want my mediocre experiences with an investing firm to imply that you won’t have success by choosing this route.

The reality is that, like all professions, there are those in the investing industry who are in it more for what they can get out of it versus what their clients can get out of it.  Some might argue that this industry is worse for this mindset which is why I’ve harped on the importance of really searching around for a good advisor/broker!

In the investing industry, advisors/brokers make a commission whether you buy or sell shares in a stock – so some don’t care whether your portfolio is winning or losing – but these commissions are often more than what you pay for trading as a self-directed investor using an online account.

I was surprised to learn only recently that the uncle who gave me the idea about where he finds stock recommendations still has an advisor/broker.  I had thought that, with what he has learned through his own research and his success stories, he was now entirely a self-directed investor.  Instead, I learned that most of his money is managed by a firm and that he does his “playing” on the side, i.e. choosing his own stocks and investing them via a self-directed online account.

I asked him why he wasn’t going all-in as a self-directed investor, given his track record doing so?  He replied that he’s always had good relationships and experiences with his advisors/brokers over the years.  He also said that he still trusts their judgement better than his own.

His one complaint, however, is how he pays rather large fees to remain with the firm he uses.  Those amount to thousands of dollars per year that I would rather spend on buying more stocks!

I didn’t dig deeper into asking if his overall percentage return has been greater with an investing firm/brokerage or as a self-directed investor.  If I find out, I’ll probably write a post about what I learn.

But to conclude my thoughts on this, I believe that having an investment advisor/stock broker at a local investment firm or stock brokerage is a MUST for any beginning investor.  HOWEVER, I still stick to what I wrote in Part 2 about ALSO subscribing to an an online stock recommendation service like Stock Advisor.  Here’s another reason why, besides not being ignorant:  if you learn about some companies of interest on your own that you present to your investment professional and he/she is in agreement, then you likely have some very good choices of stocks to add to your investing portfolio.  Having that second, professional opinion can be very useful.

However, if they’re ignoring or downplaying your input and trying to get you to buy only what they suggest, then I would ask if that advisor/broker owns those same stocks and how they’re doing!  If not, then they might just be doing a sell-job for their benefit and not yours, or using you as a guinea-pig for their ideas.  Time, in my opinion, to find somebody else!

At some point in the future, if you find that you’re willing to put the time and effort into doing your own research, then self-directed investing via an online account is a natural progression.  Again, not only will your trading fees be much lower, but with a certain portfolio value you also no longer pay an annual fee.  For me personally, this has been by far the best option versus my prior experiences with investing through a firm.  I also don’t spend even $100 per year on trading fees because I rarely trade.

About selling stocks

I’ll admit that I really don’t like selling stocks.  I love it when I’ve finally bought one and my return starts to increase by a large amount, sometimes even within a few weeks.  But what I really don’t like is selling.  My main reason?  I don’t want to miss out on bigger returns!

Some might call this greed, but I just don’t like the thought of missing out if I sell out.  In the previous post (Part 4), I shared about how selling only half the shares of a stock once the price has doubled (100% return) instead of all the shares enables me to get around this dilemma.

Here’s a story to illustrate when I might choose to do this as opposed to selling all the shares in a stock.

In October 2017, I bought a stock that rose from almost $26 to nearly double the following spring of 2018.  Then, news about a possible major disruption in its business model by a competitor shook my original thesis about this company and I got nervous as the price fell to near $34.  However, I was still ahead and so I held on.

The initial fears subsided (as they always do because short-term investors have short memories!) and the price began to creep up again to the point where that fall (September 2018) it was more than double, nearly $60 per share, but then the market correction knocked it down to the mid-thirties once again.

Even though the entire market had taken a hit in the fall of last year, I was still a bit leery of the specter of that competitor at some point making headlines once again with news about an actual plan, not just rumors, that would damage this company’s prospects in a major way and perhaps for a long time.  I resolved at that point to sell if the stock somehow got to being as high as it had been before.

Fortunately, that happened a lot sooner than I expected.  The market rally that essentially began in the last week of 2018 caused this stock to surge once again to where it had more than doubled my return, and so I sold half my shares at $57 in February 2019.

I decided to sell only half the shares because I was on the fence about this particular company.  It’s still the dominant company in its industry by a large margin, hence it’s future potential, but that doesn’t mean it’s immune to a competitor taking away a chunk of its business and potentially dealing a crippling, even fatal blow.

So by selling half my shares, I didn’t totally sell out.  I essentially took my original investment amount ‘off the table’ and put it into another stock that I was interested in.  The remaining shares in this company still have the potential to go up, but if they do go down due to this potential competitive threat, I at least was able to diversify into another stock that so far has done a lot better than if I had kept it in this one.

In other words, by doing this, I can sell while still not missing out on potentially bigger returns, thus solving my original dilemma!


This brings this Stock Starter Series to a close.  If you have any questions, please contact me.  Otherwise, leave any comments below this post or any other post that you’ve read in this series.

On that note, please feel free to dig through the archives on this blog, on the right side of this page.  (Also, be sure to click the Follow button near the top of this page.)  Nearly every big thought or topic that I’ve mentioned has been expanded upon at some point, so I hope that this can be a valuable resource if you decide to get more serious about stock investing.  Of course, I don’t claim to have the corner on truth.  Although these techniques have worked wonders for me, other bloggers might have ideas that work better for you.

However, the best sources of advice are from investors who have done this a lot longer than I have, so please learn all that you can about Warren Buffett and his mentor Benjamin Graham, read as many articles that you can on The Motley Fool site (again, the free one is, and perhaps even delve into books by other legendary investors like Peter Lynch.

To your future success!

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