Frequently Asked Questions

Here are some answers to questions I often receive.

What’s your investing philosophy?

My investing philosophy is very simple: Investors ought to buy and hold great companies. It doesn’t get any simpler than that. Avoid trading in and out of stocks, and be well-diversified. Investors should own at least 12 stocks, and have a goal of owning 25.

Be prepared for bear markets. A lousy market can strike at any time without warning. All stocks go down. It doesn’t mean the stock is broken. Stocks are volatile by nature. That’s the price you pay for superior returns. If you can ride out the bad times, you’ll be rewarded. If you can’t bear to see your portfolio drop by 50%, do not invest in the stock market.

Before you make any investment decisions, make sure that you have the appropriate financial resources. Although I use margin, I don’t recommend it to others. If you never go on margin, you’ll never go bankrupt. Don’t invest in the market if you’re heavily in debt. Paying off a revolving credit-card debt is a lot more important than owning shares of stock. You also need to look at your tax status. These are issues I can’t help you with, so please check with a tax professional before you make any decisions to buy or sell a stock. Please read my disclaimer for more details.

What are you favorite stocks?

You can see my favorite stocks on my Buy List.

On your Buy List, you list your Buy Below prices. What do they mean?

The Buy Below prices are guidance for current entry into our Buy List stocks. As long as the share price is below the Buy Below price, then I think it’s OK to buy them. The Buy Below prices are not price targets nor are they indications of fair value. I change the Buy Below prices frequently.

Do you own the stocks on your Buy List?

Yes. You can assume that I own all of the stocks I recommend. Your pain or gain is also mine.

Are you paid by any of the companies you recommend?

Not at all. All of the opinions I give are my own.

Do you recommend any online brokers?

I don’t have any specific recommendation although I use TD Ameritrade, which I like. Here’s a good survey of brokers by Barron’s.

I think full-service brokers are too expensive, but if yours is doing a good job for you, then there’s no reason to leave.

Where can I get more information on your ETF?

I can’t discuss the ETF online, but you can get more information here. You can also call our friends at AdvisorShares at 877-843-3831.

I’m new to investing. Do you recommend any books to learn about the stock market?

I think the best place to start is Peter Lynch’s “One Up On Wall Street.” It’s easy-to-read, and Lynch’s conservative message is still timely. Another excellent book is “The Essays of Warren Buffett,” which is a collection of Buffett’s writings over the years.