I created Fastball Financial out of a shared love of baseball and stock investing. Similar principles can be applied in both activities to achieve success. In baseball, good hitters wait for their pitch. You will generally get at least one good pitch to hit in each at bat. If not, you can take a walk, which is often just as good as a hit. If you chase a pitch, you’ll likely be out.
Very smart people often ignore such simple principles when it comes to investing. If you are interested in buying stock in a particular company, why would you not wait for an appropriate price? If you chase a stock, you’ll likely lose money (or at least not make as much). If you wait for the stock to go on sale instead, your odds of success increase substantially.
Let’s keep investing simple
Lots of websites provide very detailed and complex analysis about stocks and economic issues. While I’m certainly capable of performing much of that analysis, I prefer to keep investing as simple as possible. I don’t mean to downplay the importance of statistical analysis. It serves an important role in keeping things in perspective. However, statistical analysis can be overused to a fault (just as in baseball…but I won’t digress). Keep it simple. Know your company. Wait for your pitch.
Some players hit singles. Some hit home runs. Special players can do both.
I break stock investing into two general groups: 1. high growth companies (home run hitters), and 2. slow and steady companies that produce regular, dependable dividends (singles hitters). Good dividend stocks can be an important part of any portfolio. They produce regular returns that can be reinvested and compounded to attain exponential returns. I will cover such stocks when appropriate, but I prefer and have had more success with high growth companies.
Home run hitters are exciting. Everybody loves to see these stock charts flying high. I’ve invested in stocks that people said were expensive at $100, and then again at $200, and then again at $300. All the while I was able to smile, take my gains, and buy even more when the stock went down because these folks declared the stock expensive. However, you have to be disciplined in your approach. You must understand the company and wait for it to go on sale.
My goal on this site is to teach people that investing can be a simple process if you take the time to understand what you are buying and you wait for your pitch.
Dave is an actively licensed CPA with accounting and auditing experience in multiple industries including Software, Healthcare, Telecommunications, Professional Services, Manufacturing and Distribution.