Welcome to Investing for Beginners podcast this is episode 59. Tonight Andrew and I are going to answer some reader questions, he’s gotten some emails and we wanted to go take a moment and read through those. We’re going to read some stories and we’re also going to answer some questions so I’m going to go ahead and start us off.
The first one I’m going to read is from Anthony the letter starts with:
Andrew,
I just wanted to express my gratitude for what you and Dave are doing with your podcast. One of the things you both preach frequently it’s patience and resisting the fear of missing out. This recently saved me a decent amount of money. There was a stock that I really liked because they were selling in a bargain I mean this stock would look great. I invested once a month in research during the time in between about two weeks before I would normally make a purchase I noticed the price kept going up and going up. I felt like I needed to buy in NOW or else I would lose potential gains it took all of my willpower to just hold off and wait until the month was up before buying in.
I’m sure you can guess what happened next they went back down to its original price the next week then I went down a little further by the time I bought it it was actually spent less than it would have been if I had bought it a month prior this just goes to show how little things like having a little patience can help you in your financial success.
Thank you for your time and hard work you put in your effort is truly helping others towards achieving financial freedom.
Thank You,
Anthony
Dave: well Anthony you’re welcome. Glad you are finding some value in what we’re doing that’s what we’re here for is to try to help you guys.
Andrew: your thoughts that’s perfect that’s we’re going to start the show on the peak and it’s just going to all go downhill from here all right.
Now that we pat ourselves on the back let’s actually help some people.
Here’s two questions from Josh both good questions. so we’ll tackle them one at the time.
Hi Andrew you talked about dollar cost averaging and its importance however how do you distribute across your portfolio all into a single position or spread out across multiple?
How much is too much to put into an individual stock I have five thousand dollars putting a thousand dollars into 5 stocks makes sense. However is there awaiting to placing more dollars into one position versus another? Can you invest too heavily or not enough into a single position while neglecting other positions?
Several questions sort of saying the same thing, love to hear your thoughts.
Thanks Josh
Dave: I guess my thought on what Josh’s question is equal waiting to start would probably a great thing to start with that’s kind of how I do it. But then as you find more information about the companies you can adjust that as you go along and get more comfortable with how you’re investing.
There’s never really going to be a right or wrong answer this is really going to be more depending on what you’re comfortable with and how much volatility each of these particular stocks are going to have and how much you can stomach investing into a company that is air quotes losing money or is going down in price maybe not losing money is the best way but maybe the stock market is punishing the stock and you still think it’s a great position.
Then that’s when your strength of conviction of what you’re doing is going to come into play. So that’s really kind of how I would look at it Andrew what are your thoughts?
Andrew: yeah I agree and you’re kind of alluding to the idea where it’s going to change as time goes on so something that investors are going to have to think about.