Sat. Dec. 22, 2007

My Unique Investing Process *

Show all The Process… posts in reverse chronological order.

Every investor has a unique process that they follow when buying and selling stocks. In the past, I have written about certain aspects of my process and I am currently working on several additional posts. To pull all of this together in a logical format, it will be helpful to introduce the conceptual framework that I use.

A. Why Buy Dividend Stocks?

B. Understanding and Measuring Risk

C. Determine Your Goal and Asset Allocation

D. Identify Potential Investments for Evaluation

E. Pre-screen the Investment

F. Perform Detailed Quantitative Analysis

G. Perform Detailed Qualitative Analysis

H. Begin Accumulating the Security

I. Evaluate Your Holdings

J. Formulate an Exit Plan

In the future I will continue to add substance to the above framework by filling in specific details. You can always reference this post by clicking on The Process… in the header menu.

5 Responses to “My Unique Investing Process *”

  1. Seeking Unofficial Advice says:

    Interesting framework. This is pretty good for someone like me, but do you think the average investor has the discipline and patience for a 10 year plan?

    Seeking Unofficial Advice

  2. Dividends4Life says:

    Seeking Unofficial Advice: It is hard to stay the coarse when near-term rewards are small. By nature we are all impatient. I have to constantly work at it.

    Thanks for stopping by.

    Best Wishes,

  3. Anonymous says:

    I appreciate your sharing your analytical approach. I have been accumulating your individual stock analysis reports to review and see how well your approach works over the next year … presumably through a down market this Sept to Nov. Meanwhile, it would be useful to us “readers” to have your entire philosophy in one document to print out and carefully review. You might consider combining the various posts. And, I can see that someday you will open a for-profit advisory on-line advisory newsletter service. Maybe even retire from your “day job”???
    With much thanks for your untiring work on the behalf of us dividend investors.

  4. Anonymous says:

    I like much about your approach. It seems well thought and and methodical; that is a good thing, in my view.
    But I have a question about how you came to this method. You have clear distinctions about which ranks to buy/not buy (0 – avoid, 1 star, etc). Have you done any backtesting to validate that in fact the 0 star, or 1 star, etc perform more poorly over the long haul in terms of total return? It would seem like they should, but my experience with stocks has been what I think “should” happen often doesn’t (… which may explain why I frequently end up just buying index funds!)

  5. Dividends4Life says:

    Anon #1: There is no plan for me open a for-profit advisory on-line advisory newsletter service. I am not licensed to give financial advice, and I don’t want to be. Dividends4Life just documents my journey to financial freedom.

    Anon #2: Be careful and read my disclaimer. The quantitative star rankings, buy, etc. assume the stock will perform in the future as it has in the past. It is only the starting point. Once you determine a stock is a good investment on a quantitative basis (looking backwards), you then must determine is it would be a good investment on a qualitative basis (looking forward). Obviously, this is the more difficult of the two since there is set calculation to make this determination.