Don’t do it all at once – if you have the choice. In investing, you have that choice. People get spooked by thoughts of having to make a major life-long obligation, or by worries of losing everything. Have you heard the term “liquid assets”? They’re called liquid because they should be able to move easily. Easy is good, especially if you’re trying something new. If you’ve got a nice mix of smart, wise, and lucky easy can turn into ease; which is true in investing and much of the rest of life – but there are no guarantees.
I’ve been called a Renaissance man often enough that I no longer have to check the spelling of Renaissance (though I do have to type it slowly to make sure I get it right.) I have a few decades behind me now, and without great intent I’ve developed a varied and eclectic mix of skills, talents, and endorsements. Unfortunately, today’s job and business market concentrate on experts and expertise more than experience. At least I have a lot of stories to tell.
Almost all of my experience comes from trying something, making mistakes, then trying again, making different mistakes, and repeating until I’ve gained enough proficiency to have fun. My first classes in dancing and in karate involved a lot of stumbling. Now, not so much.
As the stock market hits records, people become more interested in investing. That’s actually the opposite timing from conventional wisdom, but the markets and wisdom have little to do with each other – in general. And yet, I encourage people to invest if, if, they go slowly and check in with themselves frequently, and are willing to back out if it doesn’t fit their style or goals.
My start was small enough. I bought a few shares of what was US Steel, held them for a few months, then cashed them in on my first SLR camera. A few years later, after college, I got back in for the price of a pair of hiking boots. A few years later, my purchases were the same as a B&B weekend. A few years later, they became the size of small vacations, then the same as a used car, then a new car, then a (very) small house.
Some of my purchases kicked off major episodes of buyer’s remorse. The feeling usually stemmed from some factoid I’d overlooked, or simply from the realization that I had acted rashly rather than rationally. Most stocks spend most days lazily wandering about some average, and a sale a few days later may only mean the loss of a commission. Before discount brokers, commission losses were so large that attitudes about investing developed that persist today. Reluctance remains, yet the situations have changed. People spend more on shipping from online shopping than from what most brokers charge for a trade.
I just spent the last couple of hours catching up with my portfolio. I actually made some trades this week. As I said at the end of last Saturday’s post, I sold some RSOL. It had done so well that it became half of my portfolio. In the last year it has gone from $0.82 to $4.42 (actually peaking out at $7.17). The rebalancing is happening in small steps. I bought a bit of MVIS. Thought about it for a day, and bought a bit more. A day or so later, I bought some GIG. Half of the funds from the RSOL sale are still sitting there in the account. I’ll get to them, but there’s no rush.
MVIS and GIG also are very good examples of taking small steps. In both cases they had previous incarnations (reverse splits) that took multi-thousand share positions down to a few hundred shares. As I bought these new shares, I reviewed the history of my positions. I accumulated thousands of shares by making many small purchases. Usually I held, but sometimes I’d back out a portion, then step back in later.
MVIS and GIG are also very good examples of how easy investing does not mean easy money. In one case, MVIS, my purchases this week doubled my position for less than a twentieth of the cost of the rest of the position. The stock has dropped that much over the years. I could’ve done the same with GIG.
If you’ve been investing for a while you’re probably questioning my purchase. Good. I questioned it too. Past performance is not predictor of future results. That caveat works up and down. The true test is what I think the companies and their stocks are worth, and whether their current value is much below that. I think both MVIS and GIG should have a much higher stock price based on Present Value of Future Revenues Discounted for Risk (go read my book for details.) It’s been true every time I bought the stocks.
Pessimists weigh in with, “And you were wrong all those times.” Optimists weigh in with, “So, if you have enough patience it will all work out right.” I weigh in with, “I’ve reviewed decades of my own performance and patience usually pays often enough.” (And there sits the counter argument in the paragraph above. “Past performance is not predictor of future results.”)
Taking small steps makes it easier to step back. Lots of steps got me across Scotland. Just keep pedaling got me across America. Lots of stumbling taught me how to stumble less when sparring or dancing. Lots of little steps got me the title of millionaire, for a while. Whether it does again or not, one way to get through anything is to take lots of steps in the direction you want to go. Bit by bit is so much easier than all at once. Make it easy.