My Stock Portfolio
When I was ten years old, I started investing in stocks after I received shares of stock as gifts from my parents for getting good grades and for winning math contests. The catch is that I have to pick my own stock because my parents try to get me interested in investing early. After six years, my portfolio’s value has increased over ten-fold. Had my parents given me other gifts instead of stock, these toys would have broken or become too childish. Instead, their wise gift of stocks will help finance my college education and future career.
Basing my portfolio’s choices on Peter Lynch’s concept that an investor should choose stocks he is knowledgeable of, I have loaded my portfolio with stocks of software and semiconductor companies. Furthermore, I use the buy-and-hold strategy, proven successful by Warren Buffett, one of the wealthiest investors in our time. Adhering to this strategy, I sell stocks when the company's prospect of earnings loses its momentum. For studying a company’s finances, Value Line is my Bible. In addition, I keep track of the industry trends and follow up on companies' news, product cycles, and competitive edges. I also monitor my portfolio, calculating gains/losses with the Internet, not newspapers, pencils, and calculators. Using this technique, I have increased my portfolio ten-fold to over $520,000.
Here are my reasons for picking the stocks in my portfolio:
Microsoft – I bought my first shares of Microsoft in August 1993 because as a PC user, I had in-depth knowledge of Microsoft’s products, especially the popularity of the Windows operating systems, which gives Microsoft a dominant position in the fast-growing PC industries. Since 1993, I have bought more shares of Microsoft, which has split three times. The stock traded as high as $120 in January 2000 but down to $70 in 2002, with my adjusted share cost at only $4.5. A 16-bagger so far.
Intel – Intel holds second place in my portfolio. Along with Microsoft, these two companies form a "Wintel," a duopoly in the PC industries. This stock has also split twice since I bought the shares. My adjusted cost is $5.5 per share, a six-bagger.
Coke – I purchased Coke shares because Coke, an American icon, is well known internationally and also makes my favorite drink, Sprite. Its financial data looks good with a high margin and return on equity. It has split 2-for-1 since I bought it, a four-bagger. The share price of Coke was down in the last two years as a result of management change and the low down of oversea market. I have faith with the new management and I see the rebound of the worldwide market. I will hold onto Coke for a long time.
Lsi Logic – My roller coaster stock is LSI. I have seen the price move from $5 to $30, but now it has settled down to around $18. I bought the shares around $6 split adjusted. I decided to buy LSI because my aunt works there and I liked the technology "system on a chip." In the long run, LSI should be profitable.
Computer Associates – CA is one of the few software companies not in direct competition with Microsoft. The company is making the transition from mainframe computers to client-server. I bought the shares at a relatively low 15 P/E compared to 30 to 50 P/E of other software companies, such as Microsoft and Oracle. It is one of those sleepers not well understood by Wall Street pros. I bought shares at $9/share split adjusted and now, the share price is in the low-30s.
I have learned a lot about the stock market in my young investing career, making a good profit in the process. Originally, not knowing anything about stocks, I started buying shares of companies with which I had firsthand experience. I checked out companies’ financials, such as earnings, margins, and growth before purchasing the shares. While I monitor the stocks, checking economic news, quarterly earnings, and market fluctuations, I don’t panic and sell shares prematurely. Consequently, although I have experienced some setbacks in stock picks, such as dot.com stocks. I have made a considerable paper profit and wish I could have sold them sooner, my 16-bagger Microsoft and six-bagger Intel make the hold strategy worthwhile.
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I welcome you to share your investment experiences with me.
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