Returns

Current Returns

Welcome to The Phone App Investor.

Online Stock Trading has finally made its way to the masses. With the advent of various new smartphone apps and websites, just about everyone has the opportunity to invest in the stock market. Also gone are the days of $1,000+ required minimum balances. In many cases, you can begin with as little as $5. This website is dedicated to comparing and contrasting two popular online stock trading investment apps - Robinhood and Stash. I plan to deposit $5 into each account each week and then track and share my successes with you.

Tuesday, November 21, 2017

Buy Stocks On the Way Up


There's an old adage that says the way to make money in the stock market is to buy low and to sell high.  That, of course, is an irrefutable truth.  The only problem is that many investors confuse this bit of conventional wisdom with the assumption that if the price of a stock is going down it is low, and if it is going up it is high.  Consequently, they buy stocks on the way down and sell on the way up.  There's hardly a worse thing an investor could do.

Stocks are bought on the expectation that they will go up.  If a stock is going up in price, it is fulfilling that expectation.  When the price is going down, it is denying that expectation.  Therefore, it is logical to buy a stock when its price has broken above an old high.  At this point there are no unhappy holders who are waiting to dump the stock.  If the stock is fairly valued, there should be clear sailing ahead.

phone app investor
Point where stock has broken above an old high
I'm not at the point yet where I am ready to start chart trading yet, but the principle is a good one to understand.  And even though I may not use charts to screen for investments, it is probably a good check before actually pulling the trigger on a new investment.

This is all a learning process for me and I doubt that I will ever even come close to understanding all there is to know about investing, but as long as I am progressing and making progress, I am happy.  Always remember:


"Risk is what comes from not knowing what you are doing."

Wednesday, November 15, 2017

6 Tips to Make Good Money in Stocks with Low Risk




In my real job I work as a Human Resources Manager.  In most of my professional roles, I have had at least some responsibility in administering the retirement plan benefits.  One thing that I have heard time after time over the years goes something like this: "I'm just scared of investing in stocks.  I can't afford to lose the money I have worked so hard for and will need in retirement."  The perception of high risk in stock investing is not totally without merit.  Visions of investors jumping out of windows back in 1929 are graphic reminders of the risk inherent in stock investing.
Stock Market Crash of 1929

More recent events in the market - the Great Crash of October 19. 1987, the Bear Market of 2008, the Flash Crash of May 10, 2010, and the ills of high-frequency trading have contributed to the casino image associated with stock investing.  This is very unfortunate because stock investing is one of the best ways the average person has of accumulating substantial wealth.  It just requires a few simple techniques and some discipline.  In fact, it can be a lot safer than investing in real estate (and a lot less work - I know from experience), collectibles or your own business.

Here are 6 tips to make good money in stocks with a reduced risk:

  1. Buy stocks with consistent, predictable earnings growth.
  2. Buy stocks with earnings growth rates equal to or greater than the sum of current inflation and interest rates.
  3. Do not put more than 10% of your money into any single stock.  Aim for a portfolio with about 10 stocks.
  4. Do not own more than two stocks in the same industry.
  5. Do no plunge into the market.  Spread your investments over time.
  6. User Stop-Sell orders to limit risk.
Stocks with consistent, predictable earnings growth are the safest stocks you can buy.  They represent the best-managed companies in the world.  A stock portfolio with an average growth rate of at least 14% per year has a high probability of doubling in five years.  In 20 years, it will have increased by 1,500%!

If you bought 10 stocks and limited your loss on any single stock to 10% by using Stop-Sell orders, your total portfolio risk is only 10%.  Your risk on any single stock is only 1% of your total portfolio.  How many other investments can you think of that have the upside potential of stocks with such limited risk exposure!?

And always remember:

"Risk is what comes from not knowing what you are doing."

Tuesday, November 14, 2017

WEEKLY PERFORMANCE (Week ending 11/10/2017)

weekly returns
Robinhood Portfolio

Last week was good for the Robinhood portfolio.  It was up 6.42% last week alone!  I know that it isn't sustainable, but how awesome would an annualized return of 333.84% be?  Like I said, it's a pipe dream, but a fun one nonetheless.  Since starting this online stock trading adventure, my return is 3.33% (compared to the S&P's 1.95%), which is nice because it was negative last week.  Annualized, I would be looking at about a 38% return.  Again, probably not sustainable, but at least I'm on the right track!
weekly returns
Stash Portfolio
Stash isn't doing as well, but I look at it more as a slow-drip, no management, deposit and leave alone-type account.  My goal would be for it to at least track with the market, if not do a little better.  Again, year-to-date since I started, the Stash account has a -0.24% return compared to the S&P's 1.44% (remember that the accounts/portfolios weren't started and/or funded on exactly the same day - thus the variance in the S&P's return between the two portfolios).

Always remember:

"Risk is what comes from not knowing what you are doing."




Thursday, November 9, 2017

Portfolio Moves 11/08/2017

I have made some adjustments to my portfolio.  On Wednesday, November 7, 2017, Goldfield Corporation (AMEX: GV) went down in price enough to trigger the stop loss order that I had put in place.  While nobody likes picking a loser, especially one that "lost" so quickly, it is a relief knowing that I will always have a sell strategy in place that will limit my losses on any one stock to 10%.

With the sale of GV, plus the weekly $5 deposit into my Robinhood account gave me some available funds to work with.

Camtek

I first purchased 1 share of Camtek (NASDAQ: CAMT) at $5.99 and immediately set my Stop Loss at $5.26. Camtek LTD, incorporated in 1987, designs, develops manufactures and markets automatic optical inspection systems (AOI systems) and related products. The Company’s AOI systems are used to enhance both production processes and yields for manufacturers in the printed circuit board industry.  CAMT has a current value of $9.08 per share and has above average safety, which makes it a good value play.
camtek

Valhi

My next buy was Valhi Inc. (NYSE: VHI).  I purchased 1 share on 11/08/2017 at $4.19 and 1 more share on 11/09/2017 at $4.39.  Valhi operates in three business segments: chemicals, component products and waste management.  I set the stop loss at $3.29.  VHI has a current value of $5.97 per share and has about average safety compared to the rest of the market.

Vaalco Energy

As I mentioned in a previous post, I always have a few sub (or just slightly above) $1.00 stocks hanging around in my portfolio.  I still try to use sound decision making when selecting these stocks, but even with that I'm not expecting some atmospheric rise that will make me rich.  If nothing else, it gives me a place to park a few extra dollars once I have made my larger purchases and still have a little bit left in my account that is available to invest.  

With that said, I purchased 1 share of Vaalco Energy (NYSE: EGY) on 11/08/2017 at $0.924.  It has a stop loss of $0.79 per share.  Vaalco, incorporated in 1985, is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas. VAALCO owns producing properties and conducts exploration activities as operator in Gabon, West Africa, conducts exploration activities as an operator in Angola, West Africa, and has conducted exploration activities as a non-operator in the British North Sea.  This company is slightly undervalued, with a current value of $1.56 per share.  But, as one should expect, has below average safety.
vaalco energy
Always remember our maxim:

"Risk is what comes from not knowing what you are doing."

Wednesday, November 8, 2017

The Myth About P/E Ratios

the myth about P/E ratios


Myth #1: Price to Earnings (P/E) Ratios Tell You Whether Stocks Are Cheap or Expensive

P/E Ratios are easy to find.  Just about every newspaper, magazine and stock report publishes P/E ratios.  Everybody seems to talk about them when discussing stocks.  So, P/E ratios must be a great way to compare stocks.

Right?  Wrong!

A company's P/E ratio can be calculated by dividing the current market price of a share by the earnings per share (EPS).  It can be used for many purposes, including investment analysis, company valuation and client benchmarking.

If you were told that Schmuckatelli Inc. had a P/E of 7, and Fantastic Fans Inc. had a P/E of 14, would you buy Schmuckatelli Inc. instead of Fantastic Fans?  You might, but you shouldn't be comfortable making that decision.  Why?  Because you need more information.  You'd like to know a whole lot of things before you decided which stock to buy.  One of the most important things you'd like to know is what the stock is worth, based upon its earnings, profitability and other key financial data.  In other words, you'd like to have a sense of the stock's intrinsic value.  P/E ratios don't say anything about a stock's value!

What online stock trading investors need is a Value to Price ratio.  With a Value to Price ratio, investors would know immediately whether a stock was cheap, expensive or fairly priced.  But this means we have to have a way of computing value.  Of course there are theories and formulas for computing intrinsic value.  But they are complex and some sophisticated investors even say they are unfathomable.  Consequently, most investors (even the pros), don't begin to look at stock's intrinsic value!  They resort to trivial devices like comparing P/E ratios.

Just to show how easily the P/E ratio can become something more than it is can be demonstrated by a quote found on the The Institute of Chartered Accountants in England and Wales' (ICAEW) website: "A high P/E ratio means the company is highly-rated by the stock market, suggesting that investors think its prospects are good."  As I have tried to explain here, following that logic could lead to some really bad investment decisions.  We can probably all see the folly in doing a stock search to reveal the companies with the highest P/E, assuming that its prospects are good, when in reality, there is a good chance that they are just over priced.

The takeaway here is to make sure that you not rely on any one single ratio, measurement, or piece of analysis when making your investment decisions!

Always remember:

"Risk is what comes when from not knowing what you are doing."