By Dennis Miller

Buy, sell, hold, or pass altogether? This is the dilemma we face as investors, particularly if we subscribe to one or more investment newsletters. If a company was recommended in a previous issue, are we too late? Did the price escalate rapidly, or is it still a good choice? I subscribe to many newsletters myself, so it’s an issue I deal with often. Fortunately, the answer is likely the same no matter how many different publications you read.

Navigating Limitless Options with Limited Funds

Most of us do not have enough capital to buy into every recommendation we read about. I know because I tried (and wrote about it in my book Retirement Reboot). When all of my CDs were called in back in 2008, I felt a tremendous urgency to do something. I needed to invest, and I needed to make money.

After a few months of indescribable anxiety, I started reading about cool opportunities but found I didn’t have the cash to buy them. For a short period, I made the sad mistake of selling last month’s good idea for this month’s great find. I was a nervous investor, but all that buying and selling simply compounded my frustration – and wasted some money in transaction fees.

Most stocks do not skyrocket within the span of a month. Unless you are very lucky, even the most speculative investments usually take quite some time to bear fruit. Personally, I had to come to grips with the idea of doing my homework, investing for the right reasons, and then sitting still. Patience was a lesson I had to… ahem… patiently learn. I recall a particularly frustrating moment when I said to myself, “I want patience, and I want it now!” If only it were that easy.

To exacerbate the problem, one of “Miller’s laws” seemed to be at work. No matter what investment I read about, if I decided to pass, a few months later I would read that it had skyrocketed. If I bought in late at a slightly higher price than when it was first recommended, it would stop going up, and soon the newsletter would tell readers to sell. OK, I’m exaggerating; this didn’t happen every time, but it sure seemed like it.

Plan Your Attack

Most investment newsletters bring readers up to date on each stock in its model portfolio each month. For the Money Forever portfolio, we use three codes, Buy (or Buy Under $X), Sell, and Hold. Our Buy and Hold recommendations are updated monthly, based on the current price of the stock relative to the individual company and the market.

Take one of our speculative picks, for example. When we published our January issue, it was up 19%; we recommended investors Hold because it is a thinly traded stock with the potential to swing in either direction. Compare that to another stock in our portfolio, a major corporation up 18% in January but still recommended as a Buy. It is now up a total of 47%, and we couldn’t be more pleased. In a nutshell, we make our recommendations in real time, and always send a special alert if we are stopped out of a position midmonth.

Most good investment newsletters do the same thing. If a previously recommended stock catches your eye and is still recommended as a Buy, do your homework. In the Money Forever portfolio we make this easy by listing the initial recommendation date and price. From there, subscribers can jump to the archives and read the initial write-up on the company, something we strongly recommend doing. At that point, they can decide if and where the company fits in their personal portfolio.

Regardless of the publication, subscribers should always have access to past issues. That’s part of what you pay for, so use it!

Personally, when I add any company to my portfolio, I go into the trading platform of my online broker, usually after 10:30 a.m. Eastern Time, when the market has settled down. I check the high and low price for the day and compare those to the current price. I normally put in a buy order below the current price and let it sit. More often than not, the price will move back down and my order is executed. If the trade hasn’t been executed by around 3:00 p.m., I may adjust my order. Sometimes I have to raise it a bit, but in the majority of the cases, my system ensures that I get in at a slightly better price.

Consider the Source

Note that these principles apply to investment newsletter recommendations, and not to the ratings of major brokerage firms. At one time, I did business with a brokerage firm that used the following ratings: Strong Buy, Buy, Hold, and Sell. On one particular occasion, the firm dropped the rating of a stock I owned from Buy to Hold. When my broker called and suggested I sell, I asked why. After all, they had downgraded it to a Hold, not a Sell.

She explained that many brokerage firms really serve two masters – their clients and the major corporations who issue the stock. Whenever there are new stock issues, they have a tendency to rate stocks a bit higher to curry favor with their “other master.”

So, I sold the stock and tracked it for a few weeks. I did notice a lot more activity, and the price continued to decline.

We only serve one client: our subscribers. If we recommend that you buy, sell, or hold a stock, then that is what we mean. If we have a position in a particular stock, as a matter of both company policy and personal ethics, we won’t make a trade until after our publication has been out for several days, allowing our subscribers to trade ahead of us.

A good company is just that, a good company. But not every good company is a good buy on any given day. If, after doing your homework, you like a stock that we recommend as a Buy, try to get in below the most recent price at publication. Good deals come along all the time. The best way to turn something into a bad deal is to overpay.

At Money Forever both Vedran and I are diligent about our research and judicious about what we add to the portfolio. Like a good baseball player, we don’t swing at every pitch. And that’s how you want to approach adding stocks to your portfolio. Or you can let me and Vedran do it for you and instead spend your time enjoying yourself. Vedran and I feel so strongly about giving readers high quality research that we’re offering Money Forever for half price with a full 100% Money Back Guarantee for the first 90 days. If you don’t feel the service is going to be right for you then I want you to demand your money back: we like to earn our keep. For more on our half price Charter Membership offer and 90 day refund click here.

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