On July 2, 2008, I recommended the purchase of a stock, New Flyer Industries, the largest builder of buses in North America. It made sense to me that with the increase in oil prices that more people would be taking public transportation.
How has the stock done? Take a look:
You can see from the chart at the top, the stock has had its ups and downs along with the rest of the market. The share price has decreased about 8% since July 2, 2008. However the dividend is over 10% per year. Your $10,000 investment would have been reduced to $9,200 through depreciation of the share price, but you would have made 10% per year through the dividend, giving you a net gain of about 10%. That’s a good return for a most difficult time in the history of the stock market. My figures are rough and do not include tax implications.
I rarely buy stocks. When you consider that a stock should never be bought out of fear, greed, hope, disappointment, boredom, desperation, or excitement, it reduces the opportunities tremendously and actually gives you a chance of making money. Of course, neither should you sell a stock out of fear, greed, boredom, desperation, or excitement. When you buy or sell on the basis of those emotions, you’re gambling. Next time you are ready to buy a stock, ask yourself, “Am I buying (or selling) this stock out of fear, greed, hope, disappointment, boredom, desperation, or excitement?”
You won’t execute your trade with perfect equanimity, no one does, but your chances of a successful trade will be improved if you can keep your head above the tide of emotion.