Friday, June 6, 2014

Big Bet on Ford (F) Stock!

I've never truly been a follower of the investment dogma to diversify my stock holdings.  In fact, in my ten years of investing in stocks (I'll be 38 in September), I've never once passed an "Am I diversified" test, the iconic exam Jim Cramer of CNBC puts callers through when they call asking for his help.

I've also never held more than 6-7 stocks at any one point in time during my investment career.  I've bought stocks of companies within the same industry, when I felt the industry would fare well and in particular the two companies within this industry I believed would fare the best.  Why?  Because I couldn't make a decision on the "one" that would fare the best, i.e., I equally valued them.

Doing what is conventional will produce conventional and ordinary outcomes.  Following the herd, will lead you to trimmed down pastures.  True, there is safety (sometimes) in investing conventionally, diversifying, making sure you keep tabs on your weights of different stocks within your portfolio in the event of substantial gains, and re-balancing, etc.  But I can assure you of one thing when you invest in equities this way: You will get rich very slowly.  Most people are okay with this, investing conservatively for 30 years and using compounding to creep toward a big finale over the course of their careers.  I am too.  But I am not opposed to the other side of the coin either, looking to bet big on one stock or a couple of stocks whenever the conditions are right.

In October of 2013, I bought an initial 200 share position of Ford (F) stocks at a cost of $17.80/share.  Looking at my "detail" summary, to date, I am down $164.05 on this trade.  I have bought shares of Ford stock 21 other times.  Wow, that's a lot of trading isn't it?  It's a good thing every single one of these trades has been commission free with my Wells Trade Brokerage account.  (I get 100 free trades a year).  Okay, so trading costs have been kept at zero.  I am now sitting on a position valued today at $24,235.03, 1,426.891 shares.  My Adjusted total cost for these shares is $23,124.790.  I am up to date, $1,110.24, representing a 4.801% return.  Left in my Roth Account where this position is held is cash amounting to $2,406.  I have left this cash untapped for a major crash, so I can purchase even more shares of Ford stock!

Cover photo

Obviously one can see that I am quite committed to the prospects of Ford for this year and 2015.  I am not going to explain why I believe Ford will continue to rise and perform.  That is up to you to look into.

This is a case of putting all of your eggs in one basket.  How many investors out there will share with you this type of personal information?  I am willing to share this with you so you see that given the right conditions, 1) hours upon hours of due diligence on a stock, 2) confidence in the company's growth prospects and economic performance, 3) the right time for a given industry, 4) an investor who has a high risk tolerance and 5) a willingness to buy (strategically when shares fall for whatever reason so long as it is not due to something changing with #2 on this list) and hold long term (1-2 years minimally), you too can bet big.  I say "bet" mostly for jargon's sake.  Yes it is somewhat of a bet.  But it is a calculated bet, one that has calculated risks.

This is the stuff of legends.  I am no legend, but many investing legends have made their fortunes by NOT diversifying.  And you can too!

*This is not a recommendation for you to go out and start doing this today.  And if you do, you do so at your own peril (see #4 above).

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