Oct 29, 2008

"Buy when there's blood in the streets, even if the blood is your own."

Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying this. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. This is contrarian investing at its heart - the strongly-held belief that the worse things seem in the market, the better the opportunities are for profit.
I first heard this quote in a movie - Daniel Day Lewis in Gangs of New York after one of their bloody battles I think. The point is, and as I've been discussing with close friends, this is the perfect opportunity for us young folk. Which means, if you have cash and have thought of getting into the stock market, now is your golden opportunity, seriously.

So what do you buy? My advice has always been to make a list of 10-20 companies that you like (i.e. Apple - because you love iPods and macs; or Jiff b/c you just love their peanut butter; Chipotle - the burritos are amazing!, and so on).

This is because one golden rule of investing is that you should be able to devote 1 hour per week, per stock, to read up on the company and what it's doing. (I don't even get to do this, though) BUT, if you're buying stocks in companies you like, the more motivated you'll be to read about the company.

Here's a few that I own (and love):

  • Research In Motion (ticker: RIMM) (they make blackberry phones, which I think are amazing)
  • Apple (ticker: aapl)(need I justify? Apple is a superstar company)
  • Visa (ticker: V) (nothing fancy here, but I bought on their IPO per much excitement from the investment community)
I hope that helps get anyone started on making their list.

Also, Yahoo Finance is one of the best go-to pages to get good information (finance.yahoo.com).

That said, here's an article from today that I'll share - if you like any of these companies, they are worth checking out and considering for stock purchase.
Oh, and one more golden rule (from me at least) - BUY FOR THE LONG TERM! I don't flip stocks or day trade - I don't get hung up when the stock drops by 20+ percent (usually), b/c I am in this for years to come. I'll sell when I need to buy a house, or college education for my kids, and I know the stock will have grown almost guaranteed. So stick with it, and DO NOT freak out when things happen that scare the majority (like what's happening right now).

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