- Do some research. To me, research isn't necessarily about learning everything about a company - there isn't enough time in the day to do that for the thousands of public companies. My advice to my daughter was to check a few key things about each stock you looked at. Is it generating cash flow? Is it burdened by too much debt? Is it in an industry worth being in?- Have some growth and income. The conventional wisdom for a young person is to ignore income and go for growth because your time frame is long enough to ride through the volatility. But I think (and told my daughter) that the virtue of having some income-producing stocks at all times gives you a steady supply of cash, so that if the market declines a little or a lot, you can buy more of what you own, or find something new and good that's temporarily 'on sale.' - Diversify across industries. This was actually easy for my daughter to understand as it is for most people who've ever heard about what not to do with eggs and baskets. - Diversify across geographies. For this, I tried to explain the concept of currencies and foreign exchange. I don't think I did a very good job! It was the only time I had to say, "trust me." - Be patient. I told my daughter that I wanted her to choose stocks that she would hold for a full year. Cramer is wrong, I explained: you don't have to "buy buy buy" or "sell sell sell" something every day. So this would be her version of a "Lazy Portfolio." - Watch your costs. I had to explain what commissions were and how they worked. And since she had only $180 to spend, I decided to "comp" her initial commissions. Even though I went into this thinking of it as a learning experience, that didn't mean she had to take a 13% loss just to get started. But the upside was it made clear to her how simple transaction costs can eat up your returns before you even start. To see the stock market again through my daughter's eyes was illuminating and humbling. So what did she buy? Not much, given her investible cash. But she did manage to acquire two or three shares each of three companies:
July continued this year's pattern of choppy performance for the Crabtree Technology portfolio. The portfolio fell 3.7% in the month, relatively better than the 6.1% drop for our Russell 2000 (RUT) benchmark but worse than the 1.5% decline in the S&P 500 (SPX). Our internal benchmark, the Merrill Lynch Technology 100 (MLO), also fell 1.5% in July.The most widely held technology ETF, the Technology Select SPDR (XLK), rose 1.7% during the month. To learn more about investing with the portfolio managers on Covestor, contact our Client Advisers at firstname.lastname@example.org or 1.866.825.3005. Or you can try Covestor's services with a free trial account. DISCLAIMER: The investments discussed are held in client accounts as of July 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Investments in securities of small-cap and growth companies may be especially volatile. Past performance is no guarantee of future results.
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